We were talking about Domino's Pizza and the impact that the architecture,
the design of this organization played on the success of this company.
Again, it wasn't about the pizza itself.
In fact, some would say the pizza's not their favorite.
But no one would deny that the design of this organization and
the strategy changed the industry.
So we want to look deeper into the architecture of firms and
how that makes a difference in the ability to execute and to drive performance.
Now, one of the questions that managers often ask is why does the design of
the organization or the architecture help some firms, but not others?
And there's really two extremes here of what we'd maybe think of as
a misfit in terms of the organization architecture.
The first is the underdeveloped organization.
This is a company that doesn't have the infrastructure in place, or
the processes in place.
It's unable to execute because of confusion, or waste, or
lack of coordination.
You may find that there's actually chaos in terms of how decisions get made
in many organizations, particularly early in their life cycle find themselves here.
That they really need to bring a little bit more discipline to the organization
and use the architecture to create that infrastructure.
On the other end, we also see organizations that can't execute
because they're simply too bureaucratic, they're slow,
they're rigid, the structure is hamstringing managers.
Maybe they're operating in silos and they become myopic, and the net result is that
the organization is unresponsive to change and driving innovation.
Now neither of these organizations can execute very well,
but they're very different.
So, the idea is what's the appropriate architecture and design for
your organization where it is?
We're going to look at that a little more deeply.
And there's some principles that really give us an opportunity to look at
this more.
It begins with the idea that organizations,
their structure and their design help them process information and
drive decisions, and that begins with the strategy.
So the strategy actually creates the environment of the organization.
It enacts the environment.
The environment doesn't exist out there and the organization just reacts to it.
But in fact, the strategy defines how complex and
how dynamic the environment's going to be.
How many different markets we're going to be in, how many different products
we're going to bring to market, what's the complexity of the technology, etc?
The strategy determines a lot of that, same thing with dynamism or
the amount of change.
This is an academics word in terms of what's the velocity of change.
And a strategy determines that as well in terms of how quickly our cycles change,
what kind of innovation.
What are the dynamics of the business that's rooted in our strategy?
Both complexity and dynamism, we've talked about them before, lead to uncertainty.
Things aren't stable, things aren't simple.
And when they aren't that way, it's difficult sometimes to make decisions.
We just don't have the information or the information on time that we need.
So if you draw those all together, strategy creates these kind of conditions
that lead to uncertainty that frankly the architecture has to deal with.
So the structure and the architecture helps managers cope with that
uncertainty and manage the information required to make decisions.
Now there's a curvilinear relationship that we're going to get into.
I'll show you a couple ways to think about this.
Michael LenoxSenior Associate Dean and Chief Strategy Officer
Jared HarrisSamuel L. Slover Research Chair in Business Administration
Scott SnellE. Thayer Bigelow Research Professor in Business Administration
