A LOOK AT THE TOTAL PROCESS

Strategy does not exist in a vacuum, and has both an influence on and is influenced by the culture of the organisation, its structure and the people it employs. How you want people to act is driven by strategy: how they actually act depends on reward systems, control mechanisms, and the climate of the organisation. Strategy management has to get all these things in harmony, and ensure that the strategy the organisation is following is appropriate. Leavit drew attention in 1964 to the interlinking of task, structure, people and technology (tools) and showed how changes to one factor would cause changes to the others. Leavitt’s ‘diamond’ was worked on by others, particularly Mckinsey and Company with their 7s model .

These models began to add dimensions such as strategy, culture, and reward systems. Considerable research had been undertaken during the 1960s and 1970s into the relationship of strategy and structure.The ‘organisation’ is looked at in terms of eight boxes.

Tasks
A strategy leads to a need for certain things to be done by people. A change in strategy may change those tasks.

People
This means the nature, knowledge and skills of the various individuals already in the organisation, or who need to be recruited to the organisation to implement the strategy. The people required are influenced by the tasks, but also can influence the way the organisation looks at those tasks in the first place.

Reward systems
How people are rewarded will affect whether they perform the tasks in the way the strategy required. Frequently reward structures are out of step with the strategy.

Control systems
How people are controlled will also affect what they actually do. Control mechanisms that emphasise individual effort, particularly if linked to reward, will affect behaviour far more than a management exhortation for teamwork.

Information systems
Organisations are also affected by the way information is collected and disseminated. Empowerment of lower levels of management can only take place if they also receive the information needed to do the job. Information should also be related to the structure of the organisation. In many organisations it lags behind structural changes, making it harder for managers to manage. Strategy can become impossible to implement because of the failure of information systems to meet the needs of organisations.

Decision-making systems
Where and how decisions are made, and who is allowed to make them will affect all parts of the model. The airline, SAS, caused a revolution in thinking in its organisation when it empowered the person in contact with the customer to make all reasonable decisions about matters that affected the customer. Previously these were all referred upwards in a bureaucratic process. This change had a fundamental impact on the culture of SAS.

Culture
The culture of an organisation is increasingly seen as one of the most important components to manage. Culture depends on all the other boxes in the model, and is also influenced by the nature of the company’s business, its history, and where it operates. If culture does not fit with strategy, something will have to give, and it will probably be the strategy.

Structure
Finally there is the way the tasks are grouped into jobs, and jobs are grouped into organisational units. Structure like the other components of the model has a two directional link with every other component, and can help a strategy to be implemented, or can make it totally impossible. The circle outside the components of organization represents the competitive arena in which the organisation operates. The eight sided circle represents the external business environment in which the organisation operates.