0:01
Let's continue talking about strategy execution and
what's required to drive performance.
Just continuing with the 4A model,
we've already talked about alignment and ability.
What we want to do now is to go into architecture.
The infrastructure of an organization that helps it execute its strategy and
create a foundation for driving performance.
0:24
As we go through this particular segment,
think of the questions such as the following.
What are the components of an organization's architecture?
What do we mean by it and which matter most?
Again, like all of the other modules that we've done,
There are many things you can focus on, but in a sense, what are that 20%
that gets you 80% of the way there, and what are the lessons learned from that?
Why does structure help some companies and hold back others.
You saw in some of the earliest part of this module,
we found that some organizations see their
architecture in their organization as propelling the strategy.
Whereas another case, it's a drag.
Why is that?
What's going on?
Let's think about that and look into it more.
And what are the key design principles that firms really need to focus on
to help them execute their strategy?
There's a little bit of theory that we're going to go through on this but it helps
us see what's important about organizing and designing the infrastructure.
1:25
So by the end of this section what we want to do is be able to identify and
evaluate the components of an architecture and how they work together.
We want to be able to assess strategic complexity and change.
Where's that coming from in an organization and how does complexity and
change influence the design of the organization?
Maybe one approach would work best.
And finally, determine the elements that would help increase execution capability.
Based on the companies we work for, we have some things that we think are getting
closer to best practice for the infrastructure the organization.
2:02
Now, when we think of the organization architecture,
there's a lot of different ways to look at it.
This is a pretty simple one that we adapted from KPMG, but
it really looks at the elements that we think are most important.
And the architecture of an organization is really all those pieces that help
manage the flow of information, structure of information and the authority
in the organisation for driving decisions in taking their organisation forward.
It includes structure, it includes technology,
information systems, it includes the rewards systems and
the HR practices that human resources puts in place.
And it includes the workflow in the process,
the design of processes in organizations.
They all work together.
And what they're doing is they're managing the structure of workand the way
things get done and what the focus is.
Now an old saying in architecture is that form follows function.
The form of the architecture depends on what you want it to do.
That there's not one that works for everyone, but
looking at the functional aspects and design it for purpose.
The corollary to that in the strategy world is that structure follows strategy.
So what we're going to do is we're going to think about what's the strategy
of our organization?
And then what does architecture need to do to help implement it.
It's a very simple idea but
there's again, a number of pieces that we want to pay attention to.
Now, one of my favorite examples of the power on architecture is Domino's Pizza.
Tom Monahan, founded Domino's back in the 1970s.
And he did it with a pretty simple formula which was, it's not a better pizza,
it's about a better value preposition.
And Monahan said, what I'm going to do is I'm going to create an organization that
will get you pizza in 30 minutes or it's free.
That's a challenge for them and it was an opportunity for us,
those of us who wanted free pizza.
He said, nobody ever really thought that they could make money with delivery.
In fact, most companies just delivered until they got
enough volume that they could cut out delivery.
But he looked at it and said, no, can I create the organization
that's able to deliver, so to speak, on that promise to customers?
And what he did was unique, and I would say changed the industry.
4:19
Now you can contrast Domino's approach to some others.
One of my favorite pizza places is a place in New York
that is called Lombardi's Pizza.
Lombardi's been around since the early 1900s.
And it's a very different approach than Domino's.
But if you think about what Monahan did,
his approach to structure was to keep it simple.
Every store was exactly the same and
he could standardize that across all the different locations.
In terms of the processes that he used to make pizza,
it was essentially an assembly line.
Monahan grew up in Detroit.
I think he saw a lot of car companies that were using assembly lines, so
he applied that process to making pizza.
Now, contrast that with Lombardi's.
They've got Luigi in the window throwing that pizza dough up and
giving it the love that you need.
That's a very different process than Domino's.
But Domino's would lay it all out in advance, and
the technology they used, was a conveyor belt oven.
Now what that did was, every time anybody else would open and close an oven,
the temperature would become not uniform and it would take longer for
the pizza to bake.
But Monahan, with this assembly line and the conveyor belt oven
was able to take the baking time for pizza down to ten minutes.
So think about this, you've got everything prepared in advance,
the phone call comes in and this pizza's out of the oven in ten minutes.
I promised you it would be there in 30, I've got 20 minutes to deliver the pizza.
And so one of the key things that Monahan did was he designed a delivery system
that was able to get the pizza to your door in that 20 minutes, 10 minutes for
baking, 20 minutes for delivery.
And he wrapped it all together.
6:12
Now again, I love Lombardi's, but
their process is very different, their technology is a brick oven,
just fire that's in the back, and they're not trying to deliver.
They've got a different value proposition,
a different approach to managing the organization.
You can look at other organizations like Pizza Hut or a Papa Johns, etc.
They all have their way of doing things but
what Monahan realized was that he wasn't going to succeed by making a better pizza,
but by having a better organization.
It was the architecture that he put in place that changed the industry.
We can learn a lot from that and apply it to other organizations.
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
