A proper alignment between strategy and organization structure is a necessary requirement to successful strategy implementation. An authoritarian management style removes control and discretion from employees increasing their sense of powerlessness. Facebook has approximately 2,320 million users and is ranked the most popular social media site worldwide. Note the dramatic difference between high and low performers on each measure. What is an IT-business alignment model? 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. People in organizations with a decentralized structure tend to participate more in decision-making related to the strategy and its execution. Facebook business strategy integrates the following four principles: 1. increases commitment and performance of employees. Nevertheless, an uncompromised approach on user experience and an adequate balance between standardisation and … A company rewards itself when exponential leaders align culture with strategy. Individuals have a desire for personal control. LinkedIn. He received his PhD in Strategy from Rotterdam School of Management, Erasmus University. 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. 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. When implementation tasks are new, complex and contain matters not foreseeable by management, a top-down implementation tactic is problematic. Twitter. Such improvement focuses on Facebook’s mission and vision statements . Exhibit 2. Aligning organization structure to strategy is crucial for strategy execution success. It refers to the way in which tasks and responsibilities are assigned, coordinated and controlled in an organization. Facebook did not have a first mover advantage in online social networking segment, as it was launched after Friendster and MySpace. 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. Facebook Inc. Report contains more detailed discussion of Facebook business strategy. Collectively, the best practices allow executives and managers to successfully executie their strategy and achieve the goals of their organization. Dr. Arnoud van der Maas is strategy consultant and owner of Strataegos Consulting - a strategy consultancy specialized in strategy execution. 4. Therefore, strategy execution often requires a revised organization structure. When only a few individuals make decisions, too few decisions tend to be made and decision-making tends to take too long. In highly decentralized organizations are organizational members at all hierarchical levels empowered with decision influence. The best organizational structure for a business arranges jobs in a way that helps a company accomplish its strategic goals. d. Borders' decentralized structure led to poor decision making. When the existing structure does not meet these requirements, it is a hindrance to strategy implementation and needs to be changed. In 2014, the company purchased Oculus VR, Inc. (Oculus), a company developing virtual reality technology and WhatsApp Inc. (WhatsApp) messenger application for mobile devices. What could be a cause for this performance trend? Lower-level employees have more knowledge about day-to-day operations activities and are more familiar with the issues at hand. 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 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. 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. New product development. 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. 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. My research found that a clear, relatively decentralized and relatively formalized organization structure has a positive influence on implementation performance. Aligning the Organization with Strategy, Vision and Values [2] The most successful business organiza-tions intentionally focus and align the efforts and energy of all employees on defined end results. Google is the most significant tech, distribution and commercial success of the previous decades. When information finally reaches top management it is often distorted by middle management. Centralization reduces motivation and competence of employees. ... to its business strategy ... but even the best strategy is useless unless supported by appropriate organizational capabilities. This increases the quality of decisions as specialized and operational knowledge of lower-level employees is tapped into to. This in turn increases their commitment to the strategy. There are generally four steps to the Alignment Planning Process for the strategic planning team to engage in. 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. c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy. Growth via acquisitions. 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. d. Borders' decentralized structure led to poor decision making. 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. Centralization creates a false appearance of compliance. Under this model, every aspect of the IT strategy should support the goals of the business. Borders did a good job of implementing its strategy but its structure was wrong. Once competent and ambitious employees start leaving an organizations is in great trouble. Moreover, the report contains analyses of Facebook leadership and organizational structure and marketing strategy and discusses the issues of corporate social responsibility. c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy. Another concept actually in use is the project management. Receive articles and blogs by email with best practices for strategy development, strategy execution and strategy control based on my leading edge academic research. It refers to a state where an organization’s strategies align internally and externally, with its users, marketplace, and customers. 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. The secret ingredient. 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”[3] is one of the key competitive advantages of Facebook. When we think of Google, that's easy to think of it as the most significant tech success of the last decades. The strategic planning could be defined as the process of creating and implementing decisions about the organization future (Kerzner 2002). Borders did a good job of implementing its strategy but its structure was wrong. Extensive and continuous focus on user experience. An organization structure is a system that arranges the hierarchy in an organization. “Alignment” is … Often decisions have to wait for such meetings resulting in a loss of valuable time. This is what enterprise alignment looks like. In a decentralized organization is decision-making authority delegate… Since its inception in 2004, this social network has grown exponentially. In a decentralized organization is decision-making authority delegated to lower-levels in the organization. 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. Unforeseen circumstances are ignored or slowly acted upon. This increases the strategy execution performance of organizational members. 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. Decentralized structures are more tolerant of change. It involves who reports to whom and how information flows between the different levels of management. 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. a. 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. Facebook constantly experiments with different strategies finding and utilizing news ways of monetization in a regular manner. Take a look at who we are as leaders. A failure to involve organizational members in strategy formulation and implementation is a very common source of implementation failure. About five years later, Alfred Chandler recognized and published the importance of a single all-encompassing organizational strategy (Wikipedia, 2007). When organizational members are not involved in the strategy formation process, they are not likely to be committed to the strategy. There was a time when organizations could succeed even though they were unaligned and semi-dysfunctional. Modern human resources departments manage much more than hiring, onboarding, and benefits. When employees only do what they are told and are not allowed to take initiative, management has to specify everything to get things done. During an implementation effort, unforeseen circumstances may arise, which may require organizational member initiative to deal with the situation. Top management later reviews their proposed changes with the task force, which then evaluates the proposals on its own. First, we’ll review why it’s so important to align your project and the benefits. Today we’re talking about how to align your project to business strategy. 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. centralized organizational structure with rigid organizational policies combined with a perceived lack of control results in passive maladaptive behavior in organizations (Martinko & Garnder, 1982). The strategic center firm manages intricate relationships between network partners. Facebook business strategy focuses on establishing presence in various branches of e-commerce via acquiring relevant businesses. For example, if an automobile manufacturer is divided into four strategic operations in geographically distant locations, the center of the company must coordinate all of the activities to ensure that each network partner is meeting its share of the organizational objectives. As we discuss later on, the availability of competent employees and especially managers is the most important success factor for successful strategy execution. The best companies maintain an alignment between the two paths. Valuable expert knowledge is not tapped into. Decentralization increases quality of decisions. The leadership attributes its early success to its structure and strategy being aligned. Organizational alignment is the secret ingredient that is often missing for many businesses. It is a well-established organizational precept that decisions should be taken as close to the action areas as possible. 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. Yet, Google isn't only that. A decentralized organization structure results in more effective strategy execution. Porter (1996) argues that the strategy’s essence remains in choosing the activities to be made in a different way. How to Determine the Best Organizational Structure. Valuable information is often filtered as it travels up the chain of command. When organizational members are more involved in strategy development and execution decision-making this increases their understanding of the strategy. His passion is to help organizations better develop, execute and control strategy. ALIGNING ORGANIZATION STRUCTURE TO STRATEGY, INVOLVING EMPLOYEES IN STRATEGY EXECUTION. b. structures rarely evolve in response to strategic change. Structure and strategy are married to each other. 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 a company makes major changes, it must carefully think out every aspect of the structure required to support the strategy. My research found that a clear, relatively decentralized and relatively formalized organization structure has a positive influence on implementation performance. When possible, management must ensure that the organization structure is clear, decentralized and formalized. Individuals working in centralized organizations, tend to feel that management does not trust their knowledge, skills and abilities resulting in a sense of incompetence. Facebook business strategy integrates the following four principles: 1. This article is based on my PhD research at Rotterdam School of Management, Erasmus University – one of the top business schools in Europe. Furthermore, participation increases the speed of decision-making as decisions do not need to be referred up the hierarchy. Centralized control reduces self-determination, which in turn reduces the intrinsic motivation of organizational members. ... Have a cost structure (combination of selling and administrative expenses) in the top quartile in the industry. Culture must ripple through every act of policy and business strategy. 2. settings are more tolerant of change because organizational members are more aware of the rationales that lie behind the strategy. Alignment: Bridge Between Strategy, Execution The key to profitable performance is largely dependent on the extent to which four business elements are aligned: Facebook Inc. describes its corporate culture as a hacker culture, which pushes employees to strive for improvement. Competent organizational members leave the organization. Here are a few ridiculously powerful Facebook ad … This requires a great deal of close supervision from management taking up a lot of time and energy. Therefore, strategy execution often requires a revised organization structure. Extensive and continuous focus on user experience. That is the only way to implement lasting improvements. He is an expert in strategy management. Currently, Facebook product portfolio includes Profile, News Feed, Messenger, Groups, Events, Video, Photos, Search, Pages, Instagram and others. 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. 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. Strategy is the Structure. 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. 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