Why strategy and structure don’t create competitive advantage
There is an old saying that “culture eats strategy for lunch” and culture is the collective mindset of the organization. It is both influenced by and made up of the mindsets of the individuals within it.
In many industries at the moment the shared competitive environment leads to very similar strategies
Healthcare organizations have to find ways to work more effectively in multi-stakeholder environments with tough cost pressures. Telecoms organizations need to find ways to attract and retain customers and increase revenue.
As a result many of their strategies at a high level are very similar – take a look on their websites!
In structural terms, almost all global organizations have some form of matrix organization. In just about every case they are pursuing greater international integration and more horizontal working and business processes around the world.
If strategy and structure are becoming relatively similar, then they can’t in themselves be significant sources of competitive advantage – so what is?
The answer of course is the way that the strategy and structure are implemented, and this is done through people.
An excessive focus on strategy and structure can lead to us believing that these are the solutions to all our problems. The symptom of this is constant reorganization, hoping that the perfect structure will bring about change we want. Major reorganizations often don’t help, particularly as they disrupt the networks and relationships that really make things work in complex organizations.
At Global Integration, we focus instead on the change, the skills and the ways of working that enable people to operate this way. Without a new set of skills and ways of working people tend to default to legacy behaviours. With decades of focus on vertical functional silos, simply adding another horizontal reporting line to the organization chart doesn’t change the way people work. Under pressure they often default to their legacy way of working.
That’s not to say that a terrible strategy and a badly thought through structure are irrelevant – they will certainly cause problems. But even a great strategy and a well-crafted structure will not give you the results you want without aligning mindset, skill set and way of working.
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