centralized organizational structure with rigid organizational policies combined with a perceived lack of control results in passive maladaptive behavior in organizations (Martinko & Garnder, 1982). Aligning HR with business strategy can boost employee satisfaction and performance, ensure teams are aligned to help the business achieve its strategic objectives, and increase their influence and decision-making power across the organization. Implementing a strategy with a low level of involvement of organizational members is only effective when the implementation tasks are routine, simple and can be foreseen by management. Facebook business strategy integrates the following four principles: 1. It involves who reports to whom and how information flows between the different levels of management. When lower-level organizational members are not involved in the formulation and implementation of a strategy their potentially valuable expertise is not tapped into. Once competent and ambitious employees start leaving an organizations is in great trouble. Amazon is the world’s largest online retailer and is indeed a pioneer in the online retailing space. d. Borders' decentralized structure led to poor decision making. Most of this earlier research focused specifically on the strat… Borders did a good job of implementing its strategy but its structure was wrong. Exhibit 2. Centralization requires micromanagement. Therefore, strategy execution often requires a revised organization structure. A high level of centralization has the following eight consequences for strategy implementation. In addition, employees will not dare to go in against the imposed implementation but they will not be very motivated or committed either, so the implementation tends to progress slowly. With a clear focus of what it wants to achieve, the organization will proceed to align its structure in such a manner to best achieve this. Strategic alignment involves linking a company’s business environment and strategy with its resources (including people skills and tools) and structure. Furthermore, as top management tend to have very busy agenda’s many decisions are only taken during periodic board meetings. Structure and strategy are married to each other. Valuable information is often filtered as it travels up the chain of command. When the existing structure does not meet these requirements, it is a hindrance to strategy implementation and needs to be changed. When we think of Google, that's easy to think of it as the most significant tech success of the last decades. When only a few individuals make decisions, too few decisions tend to be made and decision-making tends to take too long. Lower-level employees have more knowledge about day-to-day operations activities and are more familiar with the issues at hand. Aligning organization structure to strategy is crucial for strategy execution success. Continuously exploring new ways of monetization. New product development. Furthermore, participation increases the speed of decision-making as decisions do not need to be referred up the hierarchy. Facebook did not have a first mover advantage in online social networking segment, as it was launched after Friendster and MySpace. Centralization reduces motivation and competence of employees. Strategy Management and Projects Caption: The left bar in each set indicates the frequency with which that metric was reported by the top performers in the survey; right bar indicates the reported use of that best practice by low performers. Dr. Arnoud van der Maas is strategy consultant and owner of Strataegos Consulting - a strategy consultancy specialized in strategy execution. Alignment: Bridge Between Strategy, Execution The key to profitable performance is largely dependent on the extent to which four business elements are aligned: EMPOWERING EXECUTIVES AND MANAGERS TO BETTER DEVELOP AND EXECUTE STRATEGY The best organizational structure for a business arranges jobs in a way that helps a company accomplish its strategic goals. Decentralization increases quality of decisions. Membership is free, with the platform generating most of its revenue from paid advertisers, who are able to reach prospects and customers in a highly targeted and engaging way. c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy. Individuals working in centralized organizations, tend to feel that management does not trust their knowledge, skills and abilities resulting in a sense of incompetence. IT Governance is defined as collective tools, processes, and methodologies that enable an organization to align business strategy and goals with IT services, infrastructure or the environment. Centralized decision-making, one-way top-down communication and lack of input from lower levels of the organization are barriers to strategy formulation and implementation. A company rewards itself when exponential leaders align culture with strategy. Alignment means everyone has a line of sight to the enterprise strategy and knows how they fit and why they matter in the overall strategic picture. There are generally four steps to the Alignment Planning Process for the strategic planning team to engage in. a. What is an IT-business alignment model? The strategic planning could be defined as the process of creating and implementing decisions about the organization future (Kerzner 2002). A highly centralized organization can negatively influence the level of competence, feeling of competence and job motivation of employees. The best companies maintain an alignment between the two paths. The leadership attributes its early success to its structure and strategy being aligned. Indeed, the company managed to conquer the web and build an over a hundred billion a year turnover based on digital advertising alone! Modern human resources departments manage much more than hiring, onboarding, and benefits. The strategy path defines what needs to be done; the culture path emphasizes how things are normally done. This is especially the case in more collectivistic cultures with a high power distance such as in Asia, Africa and the Middle East. When implementation tasks are new, complex and contain matters not foreseeable by management, a top-down implementation tactic is problematic. Porter (1996) argues that the strategy’s essence remains in choosing the activities to be made in a different way. In 2014, the company purchased Oculus VR, Inc. (Oculus), a company developing virtual reality technology and WhatsApp Inc. (WhatsApp) messenger application for mobile devices. This increases the quality of decisions as specialized and operational knowledge of lower-level employees is tapped into to. What could be a cause for this performance trend? The sum total of how an organization goes about its work is its strategy. Alignment means every member of the organization is synchronized and can make decisions, take action, and allocate resources and energy that is consistent with the strategy. When a company makes major changes, it must carefully think out every aspect of the structure required to support the strategy. Valuable expert knowledge is not tapped into. Competent organizational members leave the organization. January 3, 2017. Individuals have a desire for personal control. My research found that a clear, relatively decentralized and relatively formalized organization structure has a positive influence on implementation performance. Facebook. Facebook did not have a first mover advantage in online social networking segment, as it was launched after Friendster and MySpace. a. A proper alignment between strategy and organization structure is a necessary requirement to successful strategy implementation. He received his PhD in Strategy from Rotterdam School of Management, Erasmus University. The strategic center firm manages intricate relationships between network partners. How to Ensure That Your Strategy and Culture Align 1. c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy. The approach according to Richards-Gustafson is a process that requires management to change and align its vision with leadership goals, organizational culture, and individual staff members. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Facebook Inc. My research found that a clear, relatively decentralized and relatively formalized organization structure has a positive influence on implementation performance. His passion is to help organizations better develop, execute and control strategy. 8 best practices for aligning strategy, planning, and risk ... Its vision: To be the best company in the industry based on superior financial strength, high dividends, and delivering a high-quality customer experience. At its core, strategy is about alignment. This increases the strategy execution performance of organizational members. Today we’re talking about how to align your project to business strategy. ... to its business strategy ... but even the best strategy is useless unless supported by appropriate organizational capabilities. A result is that people are not committed to their work and organization. It refers to a state where an organization’s strategies align internally and externally, with its users, marketplace, and customers. The main advantage of a decentralized structure is that it increases the commitment of organizational members to decision-making, decisions can be made more quickly, and improves the quality of decisions as it makes more use of specialized knowledge of employees at lower levels in the organization. Top management later reviews their proposed changes with the task force, which then evaluates the proposals on its own. Currently, Facebook product portfolio includes Profile, News Feed, Messenger, Groups, Events, Video, Photos, Search, Pages, Instagram and others. People in organizations with a decentralized structure tend to participate more in decision-making related to the strategy and its execution. Centralization creates a false appearance of compliance. The ability to develop new products and services according to its mission statement “to give people the power to share and make the world more open and connected” is one of the key competitive advantages of Facebook. A proper alignment between strategy and organization structure is a necessary requirement to successful strategy implementation. The right arrangement allows for the best use of resources and establishes fruitful working relationships throughout a … Here are a few ridiculously powerful Facebook ad … When organizational members are more involved in strategy development and execution decision-making this increases their understanding of the strategy. This is because organizational members relay many decisions to someone higher in the organization, which may take considerable time, which may not always be available. Facebook business strategy focuses on establishing presence in various branches of e-commerce via acquiring relevant businesses. Moreover, the report contains analyses of Facebook leadership and organizational structure and marketing strategy and discusses the issues of corporate social responsibility. Employes are not committed to the strategy. settings are more tolerant of change because organizational members are more aware of the rationales that lie behind the strategy.  Rusli, E.M. (2012) “Facebook Buys Instagram for USD1 Billion” New York Times, Available at: http://dealbook.nytimes.com/2012/04/09/facebook-buys-instagram-for-1-billion/?_r=0, Interpretivism (interpretivist) Research Philosophy. The second article, by Flora Richards-Gustafson, defines strategic alignment as, "lining up a business' strategy with its culture." Note the dramatic difference between high and low performers on each measure. Yet, Google isn't only that. It is a well-established organizational precept that decisions should be taken as close to the action areas as possible. An organization’s long term success relies heavily on leadership, its ability to embody/implement your company culture and to lead the company toward its strategic goals. There was a time when organizations could succeed even though they were unaligned and semi-dysfunctional. Furthermore, delegation gives organizational members a greater scope for action and opportunities to develop their skills and abilities, and increase their commitment to the organization and strategy. A decentralized organization structure results in more effective strategy execution. Though it started as an online bookstore, its success in its venture spurred it to diversify into selling anything that can be sold online. When organizational members are not used to making decisions, taking responsibility or initiative, and have little to say about the way in which they perform their work, they will not come to view themselves as competent and independent organizational members, having a negative influence on their level of self-efficacy and job motivation. This means that every IT-related investment, activity, service or project must create or optimise business value. Facebook business strategy integrates the following four principles: 1. Such improvement focuses on Facebook’s mission and vision statements . Nevertheless, an uncompromised approach on user experience and an adequate balance between standardisation and customization of the website resulted Facebook becoming the most popular social networking site within a matter of a couple of years. In 2015 the company generated revenues of USD17.93 billion, which is an increase of 44% year-over-year and ad revenue was of USD17.08 billion, which is an increase of 49% compared to the previous year. Nevertheless, an uncompromised approach on user experience and an adequate balance between standardisation and … Therefore, strategy execution often requires a revised organization structure.  Solid financial position that can enable more strategic acquisitions in the future is one of the key sources of Facebook competitive advantage. Facebook Inc. Report contains more detailed discussion of Facebook business strategy. Unforeseen circumstances are ignored or slowly acted upon. Google is the most significant tech, distribution and commercial success of the previous decades. Competent organizational members who want more responsibility may become frustrated and leave the organization, having a negative influence on an implementation effort and the organization as a whole. b. structures rarely evolve in response to strategic change. Centralization slows decision-making. When organizational members are not involved in the strategy formation process, they are not likely to be committed to the strategy. Once the task force has completed its report and left the room, the top team uses this information to reevaluate the organization and develop a vision of how they and the company need to change to reach optimum alignment. An organization structure is a system that arranges the hierarchy in an organization. Under this model, every aspect of the IT strategy should support the goals of the business. Facebook constantly experiments with different strategies finding and utilizing news ways of monetization in a regular manner. Such micromanagement also reduces the motivation and thus work performance of employees. Extensive and continuous focus on user experience. Growth via acquisitions. Therefore, it is not always clear if subordinates are really going to follow the instruction. In a decentralized organization is decision-making authority delegated to lower-levels in the organization. 2. You can target audiences on Facebook with a dozen different ad formats and thousands of possible ad targeting parameters.. Mastering your Facebook targeting strategy gets you in front of very specific and often motivated segments of your audience, on the network where Americans religiously spend an average of 40 minutes of their day. ALIGNING ORGANIZATION STRUCTURE TO STRATEGY, INVOLVING EMPLOYEES IN STRATEGY EXECUTION. The aim of my research was to understand why strategies succeed or fail. The organization structure needs to support the strategy and its execution. Managers and executives are not always knowledgeable about issues at a lower level in the organization. A centralized organization structure can be problematic because employees tend to agree with everything a manager says even if they do not agree. A decentralized organization structure results in more effective strategy execution. Borders did a good job of implementing its strategy but its structure was wrong. 3. d. Borders' decentralized structure led to poor decision making. “Alignment” is … In a decentralized organization is decision-making authority delegate… Twitter. While managers are well-informed about the ways in which structure shapes strategy, 4 there is little knowledge of how to align the three propositions so that strategy can shape structure. These include: Outline the organization’s mission, programs, resources, and needed support areas; Identify what’s working well and what needs to be adjusted; Identify how these adjustments should be made and determine the best approach This is what enterprise alignment looks like. When a … That is the only way to implement lasting improvements. Receive articles and blogs by email with best practices for strategy development, strategy execution and strategy control based on my leading edge academic research. During an implementation effort, unforeseen circumstances may arise, which may require organizational member initiative to deal with the situation. When information finally reaches top management it is often distorted by middle management. Since its inception in 2004, this social network has grown exponentially. Aligning the Organization with Strategy, Vision and Values  The most successful business organiza-tions intentionally focus and align the efforts and energy of all employees on defined end results. LinkedIn. b. structures rarely evolve in response to strategic change. ENTER YOUR EMAIL ADDRESS TO SUBSCRIBE TO MY NEWSLETTER ON STRATEGY MANAGEMENT. Research has shown that most strategies fail in the execution phase. At the beginning Facebook website was only limited to Harvard students, then for the following years, it became a worldwide social-networking website. Recently, mobile user monetization proved to be an effective move in terms of revenue maximization, increasing Facebook advertising revenues by 63 per cent (year-over-year) to USD 6.2 billion in the second quarter of 2016…. When possible, management must ensure that the organization structure is clear, decentralized and formalized. This article is based on my PhD research at Rotterdam School of Management, Erasmus University – one of the top business schools in Europe. As we discuss later on, the availability of competent employees and especially managers is the most important success factor for successful strategy execution. This series of articles gives a comprehensive overview of the best practices that contribute to strategy execution success or failure. Decentralized organization structures help organizational members feel that they are contributing to the operations of the organization, increasing the sense of having impact and motivation of organizational members. About five years later, Alfred Chandler recognized and published the importance of a single all-encompassing organizational strategy (Wikipedia, 2007). Centralized control reduces self-determination, which in turn reduces the intrinsic motivation of organizational members. In highly decentralized organizations are organizational members at all hierarchical levels empowered with decision influence. A failure to involve organizational members in strategy formulation and implementation is a very common source of implementation failure. How to Determine the Best Organizational Structure. The company applies its organizational culture as a tool for supporting business resilience and competitiveness. 4. The relationship between organizational structure and strategy becomes clearer when the company’s strategy is in place. The central bar expresses the mean. We’ll also review two different types of organizational structures and how you would go about aligning your project, depending upon which organization you’re in. ... Have a cost structure (combination of selling and administrative expenses) in the top quartile in the industry. Earlier in 2012, Facebook bought Instagram a popular photo-sharing application for USD 1 billion cash and stock.. Calming Industries, a hospitality company, has experienced growth. Development of new products and services is placed at the core of Facebook business strategy with positive implications on the numbers of its user base. Current turbulent business environments requires quick decision-making. Facebook Inc. describes its corporate culture as a hacker culture, which pushes employees to strive for improvement. Strategy is the Structure. Facebook is an online social media and social networking service enterprise located in Menlo Park, California, the USA.The founder and CEO Mark Zuckerberg was a Harvard College student. The concepts of strategic management dates back to the early 1950’s, when Peter Drucker first proposed the theory of Management by Objectives (MBO), and Philip Selznick introduced the matching of an organization’s internal factors with the external environmental circumstances in 1957. Another concept actually in use is the project management. Aligning the IT and business strategies involves more than combining them into a single document.