Evolutionand Choices in

Organizational Structures

Evolutionand Choices in

Organizational Structures

Harold V. AnagnosHarold V. Anagnos

March 2011March 2011

Evolution in Organizational StructuresSnapshot of Status Quo

Evolution in Organizational StructuresSnapshot of Status Quo

Established businesses need to invent and innovate intensely and overcome complacency and inertia.

Natural Selection goes on. Organizations compete for resources .The adaptive ones survive. The strong loose out to those that can adapt.

Competitive forces drive innovation for market share but inertia gets in the way.

Inertia needs to be confronted, dealt with and pushed aside. Innovation needs to be defined, detailed and executed. Inventions should stay within a defined arena.

Established businesses need to invent and innovate intensely and overcome complacency and inertia.

Natural Selection goes on. Organizations compete for resources .The adaptive ones survive. The strong loose out to those that can adapt.

Competitive forces drive innovation for market share but inertia gets in the way.

Inertia needs to be confronted, dealt with and pushed aside. Innovation needs to be defined, detailed and executed. Inventions should stay within a defined arena.

Complex systems businesses over time yield to volume operators and allow them to commoditize categories created by them. They respond by creating the next level complex systems or cease to exist.

Evolution goes on and most volume operations overthrow complex systems from the market.

Volume operators supply the commodity type essential elements that enable the next level of invention and innovation for complex system operations.

Complex systems businesses over time yield to volume operators and allow them to commoditize categories created by them. They respond by creating the next level complex systems or cease to exist.

Evolution goes on and most volume operations overthrow complex systems from the market.

Volume operators supply the commodity type essential elements that enable the next level of invention and innovation for complex system operations.

Evolution in Organizational StructuresSnapshot of Status Quo

Evolution in Organizational StructuresSnapshot of Status Quo

The two models are:1. Enterprise (Complex Model)

a. Engage targeted customers.c. Develops complex method logisticsc. Margins improve as value chains developd. Simplification of value chains to improve service,delivery and margins

2. The consumer (volume operations) modela Organizes around products and technologiesb. Forced volume growth through explosion in transactionsc. Companies must adopt one or the other and defend their choice.

Optimize for dominating style and avoid blending the two.

The two models are:1. Enterprise (Complex Model)

a. Engage targeted customers.c. Develops complex method logisticsc. Margins improve as value chains developd. Simplification of value chains to improve service,delivery and margins

2. The consumer (volume operations) modela Organizes around products and technologiesb. Forced volume growth through explosion in transactionsc. Companies must adopt one or the other and defend their choice.

Optimize for dominating style and avoid blending the two.

Evolution in Organizational StructuresEvolution in Organizational Structures

Enterprise ModelsComplex Organization

Enterprise ModelsComplex Organization

1st 2nd 3rd 4th 5th

Main Platform Architecture

Solutions Architecture (Vertical Markets)

Integrated Platform

EstablishedLine I

EstablishedLine II

EstablishedLine III

EstablishedLine IV

Typically High Margin Models 40-60%

SolutionsSales Force

Business ApplicationsPackaged Services

TargetingCustomers

(CO)(CO)

Volume Operations ModelVolume Operations Model

CoreTechnology

&Products

1

2

34

5

OFFER OFFER

OF

FE

R

OFFER

OF

FE

R

Outsourcing

Co-Opitition Infrastru

cture

No

n-C

oreN

on

-Co

re

Distribution

Ch

ann

elsW

ho

lesa

lers

Channel Partners

Advertising

Ad

vert

isin

g

BrandingFunctional

Properties

Sym

bolic Properties Fu

nctio

nal

Prop

ertie

s

Symbolic P

roperti

es

Brand

Bra

nd

Advertising

Brand

Web

Site

Web Traffic

Ad

vertising

End Users

Consumers

Ret

ail o

r E

nd

Use

rs

End U

sers

End Users

Consum

ers

OFFERS 1-5Sequential products in

evolutionary series

OFFERS 1-5Sequential products in

evolutionary series

1. Advertise and Promote

Functional Properties

2. Brand and Promote

Emotions and Symbolism

1. Advertise and Promote

Functional Properties

2. Brand and Promote

Emotions and Symbolism

(VO)(VO)

Lower Margins / Higher VolumesLower Margins / Higher Volumes

Value Delivering Chains

Enterprise ModelDifferences in Deployment

Enterprise ModelDifferences in Deployment

R & D Qualitative AnalysesBest of Breed, Inventive

Quantitative AnalysesInnovative, Cost Driven

Product Design Integrative ArchitectureBring All Together at the End

Modular StructureSnap Together

Building Adaptive and Flexible Methods Processes Determined and Followed, Process Control

Marketing Emphasis on Creating a Reliable Volume Chain. Brands are built by WOM. Communicate success!!

Branding and PromotingFunctional and Symbolic Properties (Features and Benefits)

Selling High TouchOne on One Highly Engaged

Low Touch, High TechHeavy Distribution Share

Servicing Consultative, SupportivePerpetual Dialog

Expedient Transactional Loops

Complex Volume Operations

The ModelsThe ModelsEnterprise Complex System

IBM, Boeing, SAP, Airbus, Lucent

Volume Operations Nestle, P&G, Nike, Dell, Sony, eBay, Hertz, UA, and Google

Hybrids - success varies (Mix vs. Blend) HP, J&J, Nokia, MOT, GE, Cisco

Enterprise Complex System IBM, Boeing, SAP, Airbus, Lucent

Volume Operations Nestle, P&G, Nike, Dell, Sony, eBay, Hertz, UA, and Google

Hybrids - success varies (Mix vs. Blend) HP, J&J, Nokia, MOT, GE, Cisco

Volume

Complex

1. There is no third model - must choose one

2. Mix and Match Yes! - but keep cleanly separate

3. Blend together No! - No!

4. Can front load and back end

1. There is no third model - must choose one

2. Mix and Match Yes! - but keep cleanly separate

3. Blend together No! - No!

4. Can front load and back end

Organizational StructuresOrganizational StructuresVolumeVolumeComplexComplex

VolumeComplex

Global IssuesGlobal Issues China

Playing the Volume game but a bubble is building with over capacity and quality shortcuts.

Japan Migrating to Complex Systems with China becoming their Volume

complementary partner. Korea

Playing a hedge game focusing the Chaebols on the consumer and creating strong brands with the help of US brain power.

India Struggling with decisions. Culture is leaning towards Complex

Systems while market is favoring Volume. Watch out for who will win and how they will mix.

China Playing the Volume game but a bubble is building with over capacity

and quality shortcuts. Japan

Migrating to Complex Systems with China becoming their Volume complementary partner.

Korea Playing a hedge game focusing the Chaebols on the consumer and

creating strong brands with the help of US brain power. India

Struggling with decisions. Culture is leaning towards Complex Systems while market is favoring Volume. Watch out for who will win and how they will mix.

Global IssuesGlobal Issues USA

Business culture favors Complex Systems but slowing down of innovation is hurting Volume Models (In atoms not in bytes)

Costs force outsourcing the middle layer of Complex Systems. Differentiation rests on Technology and Branding. Low cost economies can attack technologies but not well established

brands. IP protection is crucial. Paradoxically culture likes consumer goods

with IP content at low prices. Digital goods are still alive. IP protection and branding is a must for this

category. Marketing and Innovation remain the core competencies to grow upon.

USA Business culture favors Complex Systems but slowing down of

innovation is hurting Volume Models (In atoms not in bytes) Costs force outsourcing the middle layer of Complex Systems. Differentiation rests on Technology and Branding. Low cost economies can attack technologies but not well established

brands. IP protection is crucial. Paradoxically culture likes consumer goods

with IP content at low prices. Digital goods are still alive. IP protection and branding is a must for this

category. Marketing and Innovation remain the core competencies to grow upon.