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Evolution and Choices in Organizational Structures

Evolution and Choices in Organizational Structures. Harold V. Anagnos. March 2011. Evolution in Organizational Structures Snapshot of Status Quo. Established businesses need to invent and innovate intensely and overcome complacency and inertia .

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Evolution and Choices in Organizational Structures

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  1. Evolutionand Choices inOrganizational Structures Harold V. Anagnos March 2011

  2. 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.

  3. Evolution in Organizational StructuresSnapshot of Status Quo • 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.

  4. Evolution in Organizational Structures • The two models are: 1. Enterprise (Complex Model) a. Engage targeted customers. c. Develops complex method logistics c. Margins improve as value chains develop d. Simplification of value chains to improve service,delivery and margins 2. The consumer (volume operations) model a Organizes around products and technologies b. Forced volume growth through explosion in transactions c. Companies must adopt one or the other and defend their choice. Optimize for dominating style and avoid blending the two.

  5. (CO) Enterprise ModelsComplex Organization Targeting Customers Solutions Sales Force Business Applications Packaged Services Solutions Architecture (Vertical Markets) 1st 2nd 3rd 4th 5th Main Platform Architecture Integrated Platform Established Line I Established Line II Established Line III Established Line IV Typically High Margin Models 40-60%

  6. (VO) Consumers Advertising Brand Branding Distribution Symbolic Properties End Users End Users Functional Properties Outsourcing OFFER 4 3 OFFER Advertising Non-Core Non-Core Advertising Wholesalers Channels 5 2 OFFER OFFER Brand 1 Symbolic Properties Retail or End Users Infrastructure OFFER Functional Properties Co-Opitition Consumers Web Site Advertising Channel Partners Brand Web Traffic End Users Volume Operations Model Core Technology & Products 1. Advertise and Promote Functional Properties 2. Brand and Promote Emotions and Symbolism OFFERS 1-5 Sequential products in evolutionary series Lower Margins / Higher Volumes

  7. Enterprise ModelDifferences in Deployment Value Delivering Chains Complex Volume Operations

  8. Complex Volume The Models • 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

  9. Complex Organizational Structures Volume • There is no third model - must choose one • Mix and Match  Yes! - but keep cleanly separate • Blend together  No! - No! • Can front loadand back end Complex Volume

  10. Global 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.

  11. Global 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.

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