The American architect Louis
Sullivan admired rationalist thinkers like Greenough, Thoreau, Emerson, Whitman
and Melville, and coined the phrase ”form follows function” in his article The Tall Office Building Artistically
Considered in 1896. Here Sullivan actually said "form ever follows
function", but the simpler (and less emphatic) phrase is the one usually
remembered. For Sullivan this was distilled wisdom, an aesthetic credo, the
single "rule that shall permit of no exception". The full quote is
thus:
"It is the pervading law of all things organic and inorganic, of
all things physical and metaphysical, of all things human and all things
superhuman, of all true manifestations of the head, of the heart, of the soul,
that the life is recognizable in its expression, that form ever follows
function. This is the law."
In management theory, the thesis
that Structure follows Strategy was proposed by the historian Alfred Chandler.
This means that a corporate structure is created in order to implement a given
corporate strategy.
Chandler substantiated his
Structure follows Strategy thesis based on four case studies of American
conglomerates that dominated their industry from the 1920s onward. Chandler
described how the chemical company Du Pont, the automobile manufacturer General
Motors, the energy company Standard Oil of New Jersey and the retailer Sears
Roebuck managed a growth and diversification strategy by adopting the
revolutionary multi-division form. The M-Form is a corporate federation of
semi-independent product or geographic groups plus a headquarters that oversees
the corporate strategy and coordinates interdependencies. Today, we often think of regions, profit
centers, business units or centers of excellence being part of that “corporate
federation.” This thesis gave me reason
for pause as I looked at the Fortune 100 list of most profitable
companies. DuPont is known for its
market driven innovation and science, and is ranked #72. General Motors has re-focused its business and
narrowed its lines and now sits at #5. Standard Oil has been broken into many pieces,
including Exxon/Mobil – which sits at #1, with Chevron and BP also in the mix
of the Top 10. Finally, retailer Sears
& Roebuck has suffered a series of maladies and continues to struggle just
to survive. I wondered: “What is the difference in the form,
function, structure and strategy of each of those companies?”
Blogger Ryan O’Connor asserts
that “form follows function” is an overused philosophy and that in today’s
virtual product environment, the saying breaks down when challenged. Case in point: user experience designers who design products
based solely on function miss the bigger picture. O’Connor suggests that “structure follows
strategy” is more applicable. Point
taken. To see O’Connor’s Human Factors
Blog, click here: http://roconnorhfblog.wordpress.com/tag/structure-follows-strategy/
Having now considered both form
and function (or structure), let’s focus on building a strategy. Business strategy is a framework of
choices. According to The Art and Discipline of Strategic
Leadership, published by McGraw-Hill, 2003, “Strategy is the framework of choices that determine the nature and
direction of an organization.”
Strategy is…
· The answer to how an organization plans to win
or achieve its goals. Strategic thinking
requires consideration of the external environment and competitors as well as
the internal environment.
· About achieving a winning difference. Competitive advantage is the result of a
balance arising from an organization’s strategic intent and its operational
effectiveness. Operational effectiveness
is the extent to which the organization performs similar activities better than
its rivals. This alone is not a generator
of competitive advantage. Organizations
win when they perform different activities from rivals or perform the same
activities in different ways. They will
win when their employees are engaged, creative and innovative. Granted, organizations need “LEAN” processes,
but LEAN processes, in and of themselves, are not strategic
differentiators.
Strategy is not…
· Goal setting.
Goal setting and setting objectives are critically important to support
and sustain the structure. They speak to
what you want to achieve. Strategy, on
the other hand, is how you intend to achieve those goals. Here’s the litmus test: Look at your strategy document. Are there activities, goals and
milestones? Then re-work it --- it’s not
yet a strategy. Documents containing who
does what by when are business plans, not strategy documents.
· Simply a long-term vision compared to a
short-term vision.
More than anything, strategy
involves choices within a world of finite resources – choices based on what
will bring in the greatest value or create the greatest strategic
advantage. (Adapted from Michael Porter,
“What Is Strategy” Harvard Business
Review 78, no. 2, 2000).
“Give me a lever long enough and a fulcrum on which to place it, and I
shall move the world.” - Archimedes,
Greek Mathematician 280 – 211 BC.
Strategic thinking tools exist to
identify the “fulcrum” or pivotal asset that, if employed correctly or
developed carefully, will provide competitive advantage to an
organization. The following are three
ways that leaders can improve organizational alignment.
1. Responsible
leadership. One of the most critical
roles that organizational leadership plays is working together to create a
common understanding of organizational strategy and to drive execution. Yet, each level of leadership is responsible
for contributing to a different aspect of strategy. Here’s where I see this break down: Business Unit, Profit Center or Center of Excellence
leaders use the excuse “our strategy IS the business strategy.” Simply put, “NO… it is not”. Your form / function / structure should be
designed to serve in support of an over-arching organizational strategy. At the Business Unit, Profit Center and
Center of Excellence level, your strategy should provide the framework from
which to attach responsibilities (the fulcrum) to move the business forward.
2. Realistic
assessment of organization context. An
organization’s capability is the interplay between its internal strengths and
weaknesses and the external opportunities and threats. Taken together, these elements describe an
organization’s ability to compete within its strategic context and to fulfill
strategic intent. An organization’s
strategic context is determined by the interplay of forces that shape the
industry you operate in: your
competitors’ capabilities and intent, the threat of new competitors, suppliers’
bargaining power, customers’ preferences and bargaining power and product (or
solution) volatility.
3. Align
behind a clear strategic intent. This is
the strategic position that the organization’s leadership intends to establish
and/or defend within your industry. Here’s
my inside tip: If you can’t explain your
organization’s strategic intent without a power slide (or God-forbid a 270 page
PowerPoint deck), then you don’t understand it well enough. Go back to the drawing board. I am more than happy to provide tips and
tools on how to accomplish this – inbox me.
