Click here for audio from the April 9 seminar
Jay Galbraith spoke on April 9 about Designing the Enterprise Organization.
Jay writes, “The design of the enterprise organization has long followed the structure-follows-strategy model first described by Alfred Chandler in Strategy and Structure. He found that if a company followed a single business strategy, it would adopt a functional structure. When the company diversified, it would adopt the multiple business unit structure. And when the portfolio of multiple businesses was related, the structure was the divisional model. When the portfolio consisted of unrelated businesses, the structure was the holding company model.
Today every consulting company has its version of the continuum from single business to unrelated diversification strategies and the corresponding structures. Indeed we can find many of these models today.
In addition, we can find some quite different models that are emerging. First, there are the value-adding conglomerates. These are of two types: the solution providers, best illustrated by IBM, and those who leverage intellectual property, like Walt Disney. Second, there are the complex multi-dimensional matrix designs embodied in Nestle’s three dimensions and Procter & Gamble’s Four Pillar structure.
In this session I will first address the value-adding conglomerates with examples from IBM and Cisco. They clearly have portfolios that would be classified as conglomerates. Yet both have changed their structures to the functional design. Then I will discuss the Disney leverage model in the context of the fashion industry structure of VF Corporation and Armani.
Clearly some interesting changes are underway in the design of the enterprise organization, and this session will show what is driving those changes and how companies are adapting to them.”