Chapter #9 - Chapter 9 Structuring the Structuring Company...

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Unformatted text preview: Chapter 9 Structuring the Structuring Company for Entrepreneurship Entrepreneurship Copyright (c) 2007 by Donald F. Kuratko All rights reserved. E Introduction Structure r efers to the formal pattern of how people and jobs are grouped and how the activities of different people or functions are connected. different Structures are created to bring order and logic order to company operations. to Once formalized, the structure is not static. I t is Once structure continuously changed as management struggles with the need to balance differentiation of activities and people against integration of activities and people. people E The Components of Structure Differentiation is about the ways decision-making authority is distributed, tasks are grouped, and people are assigned to tasks. assigned I ntegration r efers to the ways in which people and functions are coordinated. people E The Components of Structure H ow many levels should there be in the How organization? organization? What should be the targeted span of control? H ow centralized or decentralized should How operations be? operations H ow formal or informal should structural How relations be? r elations Should the interaction emphasize functional Should specialization or cross-functional interaction? specialization E The Components of Structure H ow much of a sense of bigness vs. smallness How should the structure convey? should T o what extent should the structure To emphasize control vs. autonomy? emphasize H ow rigid vs. how flexible should the How structure be? structure T o what extent should decision making and To communication be more top down vs. bottom up? up? E How Structures Evolve L arry Greiner’s work on Larry organizational life cycle: organizational Evolution and revolution E How Structures Evolve T he transformations that occur as a The company ages, grows, and diversifies include both major redesigns and ongoing adjustments. T hat is, structural transitions take place that r epresent changes in kind as well as degree. degree. Types of Structures: Link to an Entrepreneurial Strategy Regardless of the type of structure currently Regardless in place, as environments become more dynamic, threatening and complex, organizations find that competitive survival forces them to become more entrepreneurial. T his, in turn, means they must find ways to move the company towards more organic structures. structures. E E of Structures: Link to an Types Entrepreneurial Strategy Simple structure M achine bureaucracy Organic Divisional (See Table 9.1) E Elements of Mechanistic vs. Organic Organizational Structures M echanistic Structure Operating Styles – must be uniform and Operating restricted r estricted Reluctant adaptation – with insistence on Reluctant holding fast to tried-and-true management principles despite changes in business conditions in T ight control – through sophisticated Tight control systems control Mechanistic M ore benign or controllable external environment external Conservative management style is Conservative more appropriate more M echanistic/bureaucratic structure is effective is E E Elements of Mechanistic vs. Organic Organizational Structures Organic Structure Operating styles – allowed to Operating vary freely vary Free adaptation – by the organization to Free changing circumstances changing L oose, informal control – with emphasis on Loose, norm of cooperation norm E Organic M ore hostile external environment M anagement style must be more entrepreneurial entrepreneurial Organic structure is needed to Organic facilitate entrepreneurship facilitate E Entrepreneurial Structure and the An Concept of Cycling “Organizational designs that facilitate variety, Organizational change, and speed are sources of competitive advantage. These designs are difficult to execute and copy because they are intricate blends of many different design policies.” blends -Galbraith, 1995 E Entrepreneurial Structure and the An Concept of Cycling Covin and Slevin (1990) propose some Covin additional elements: additional M anagers allowed to freely vary their operating styles operating Authority that is assigned based on the Authority expertise of the individual expertise Free adaptation of the organization to Free changing circumstances changing An emphasis on results rather than An processes or procedures processes An Entrepreneurial Structure and the Concept of Cycling L oose, informal controls with an emphasis Loose, on a norm of cooperation on Flexible on-the-job behavior, shaped by Flexible r equirements of the situation and personality of the employee personality Frequent use of group participation and Frequent group consensus group Open channels of communication with free Open flow of information flow E E M ANAGEM ENT PseudoEffective Entrepreneurial entrepreneurial entrepreneurial firms firms 21 34 Conservative Efficient bureaucratic firms M echanistic Unstructured unadventurous firms Organic Structures to Support New Product/Service Development Projects -- Table 9-4 W hen deciding which type of organizational structure will be When most effective, management must decide to what extent the structure is more: structure E Simple versus Complex Centralized versus Decentralized Formal versus I nformal Autonomous versus I ntegrated Highly Specialized versus M ore Generalist Full-time versus Part-time E Entrepreneurial Projects: Structures within Structures T he company needs a mechanism that The r eflects the evolutionary nature of entrepreneurial events inside the organization. organization. W e recommend that companies adopt an We approach wherein innovation opportunities are produced through 3 different internal channels or structural mechanisms. The Entrepreneurial Project Development Framework Table 9-5 E Ray of Light projects No budget Not approved Early conceptualizing The Entrepreneurial Project Development Framework (Table 9.5) E Emerging Potential Projects Seed capital Approved by Opportunity Review Approved Board Board Concept refinement/prototype Concept testing testing The Entrepreneurial Project Development Framework (Table 9.5) E M ainstream Development Projects Formal budget Approved by senior mgt/directors Formal NPD process E Relationships between Entrepreneurial Structuring Initiatives and the Corporation: Some Organization Unrelated Special Business Independent Complete Spin Design Alternatives Units Business Units Off Partly Related New Product /Business Department New Venture Division Contracting Operational Relatedness Strongly Related Direct Integration Micro New V entures Department Nurturing and Contracting Very I mportant Uncertain Not I mportant Strategic Importance Matching Strategy with Structure: The Value of Venture Teams Collective Entrepreneurship – where individual skills are integrated into a group and the team’s collective capacity to innovate becomes greater than the sum of its parts Example: Signode’s V-Team (venture team) Signode’s approach. A $750 million/year manufacturer of plastic and steel strapping for packaging and materials handling E ...
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This note was uploaded on 10/02/2010 for the course ENTR ENTR 3312 taught by Professor A.lish during the Spring '10 term at University of Houston-Victoria.

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