Thoughts on form / function / structure / strategy...

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.