Types of organisations

As Lauren Keller Johnson (2004a) states, organisations encounter predictable challenges related to growth and change. For example,

- some organisations become bureaucratic, slow and overly-politicised as proliferating layers of management interfere with decision-making

- others, forced by their increasing mass to decentralise, spawn confusion by setting up uncoordinated structures and processes across functions

- healthy qualities of resilience, adaptability and focus give way to sluggishness, chaos and passivity.

Furthermore, Lauren reports that there are 7 types of organisations

"...i) resilient: anticipates and proactively adapt quickly to market shifts, yet remains focused on and aligned with a coherent business strategy

ii) just in time: is less proactive but can "turn on a dime" without losing sight of the big picture

iii) military: succeeds through sheer force of top executive's will

iv) passive-aggressive: demonstrates surface-level agreement and congeniality but entrenched, underground resistance defeats attempts at change

v) fits and starts: has scores of smart, motivated, talented people but they don't pull in the same direction at the same time

vi) has grown: is too large to be controlled by a small team of top executives but moves slowly because it doesn't have democratic decision-making

vii) over-managed: has multiple layers of management and suffers from "paralysis by analysis" ..."

Lauren Keller Johnson, 2004a

It is generally accepted that knowledge-based organisations are the way of the future. According to Karl-Erik Sveiby et al, (2006), there are 10 characteristics for successful knowledge-based organisations;

i) daily leadership (recognized expert(s) show leadership based around the core knowledge/competencies of the organisation)

ii) quality and quality control (true experts do not accept inferior quality; quality control involves self-assessment; flat organisational structure; high levels of trust)

iii) respect for know-how (the power structure is based on individuals' levels of knowledge and respect, not on positional power; leadership roles are context-specific, especially in professional/technical areas)

iv) combination of the professional and management know-how (leaders possess managerial/professional know-how and are respected for it)

v) a strong, well-defined culture (staff know what the organisation stands for, ie understand its statements (values, vision and mission) and 'walk the talk')

vi) focus on the core knowledge (staff are multi-skilled but each person focused on fulfilling their role)

vii) knowledge preservation (retain key staff; secure knowledge management procedures and processes

viii) develop the staff (training, career paths, performance management, mentoring, etc are all in place)

ix) process for changing key people (succession planning, recruitment and selection process, etc in place)

x) stable organisational structures (stable administrative procedures and processes are in place)

For organisations it is difficult to sustain performance without growth. There are 3 components to growth:

i) portfolio momentum (growth achieved through the underlying growth rates of the market your organisation participates in)

ii) merger and acquisition (net revenue growth from your organisation acquiring or divesting activities)

iii) market share (revenue growth achieved through gaining or losing market share)

Generally portfolio momentum accounts for around 66% of growth; M & A account for around 30%; market share around 4%. Furthermore,

"...a company's choice of where to compete is almost 4 times more important than out-executing its competitors within its market. Superior execution to drive market share gains explains on average only 21 percent of the differential gross performance. It's hard to escape the conclusion that the effort companies put into hard work and smart execution doesn't get them very far......That doesn't mean execution is no longer important but it does mean that it has become a ticket to the game - not a differentiator..."

Mehrdad Baghai et al, 2008

"...in terms such as growth industry and mature industry.....are loaded, imprecise and often downright wrong......the real definition of a growth market exists at a level much steeper than industry. Most so-called growth industries have sub-industries or segments that aren't growing, and most mature industries and geographies have a few sub industries or segments that are growing rapidly..."

Mehrdad Baghai et al, 2008

For example, in the telecommunications industry, the wireless and mobile areas are growing more quickly than the fixed line segment, and within each there are significant variations, eg fixed line broadband Internet is experiencing rapid growth, while voice is declining.

Thus need to have a good knowledge of market segments within an industry in order to understand customers' needs and the capabilities required to meet their needs effectively.

"...to uncover pockets of opportunities, executives need to dig down to the deeper levels of a business and organisation..."

Mehrdad Baghai et al, 2008

This is called granularity and refers to the

"...size of the components within a larger system..... Involves a large number of components. Insights into sub industries, segments, categories and micro markets systems..."

Mehrdad Baghai et al, 2008

For example, in the food industry there is frozen food, and this can be further divided into the weight conscious segments, etc.

In summary, an organisation which is

"...formulating its growth strategy needs to develop insights into trends, future growth rates and market structures at a much greater depth than the aggregate industry level..."

Mehrdad Baghai et al, 2008

To correct an under-performing organisation, the following ingredients are useful

- understand the varied forms of dysfunction that organisations typically encounter as they evolve, eg culture of "no", too much concentration on process, using diversification as a smoke screen to hide problems, paralysis by analysis, passive-aggressive, etc (for more detail, see the section on common management errors)

- diagnose your organisation's dysfunction

- define a healthier way of operating

- manipulate organisational structures, incentives and other levers to achieve that optimum state

- recognize and diagnose any dysfunctionality (personal, organisational, etc)

High performing workplaces have a concept of flow, ie

"...a mental state of operation in which the person is fully immersed in what he or she is doing, characterised by a feeling of energized focus, full involvement, and success in the process of activity..."

Mihaly Csikszentihalyi as quoted in Catherine Fox, 2006g

There are 8 components of the concept of flow, ie

i) clear goals (expectations and rules are discernible)

ii) concentrating and focusing: to a high degree of concentration on a limited field of attention (a person engaged in the activity will have the opportunity to focus and to delve deeply into it)

iii) a loss of self-consciousness: the merging of action and awareness

iv) a distorted sense of time ones subjective experience of time is altered

v) direct and immediate feedback (successes and failures in the course of the activity are apparent, so that behaviour can be adjusted as needed)

vi) balance between ability level and challenge (the activity is neither too easy nor too difficult)

vii) a sense of personal control over the situation or activity

viii) the activity is intrinsically rewarding, so there is an effortlessness of action..."

Catherine Fox, 2006g


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