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In most of the organization, in order to sustain the growth in the performance, most of the top executives try to reorganize the structure. But as a result, most of the organizations showed no effect and only some companies have shown a meaningful improvement in the performance. This failure is basically in the misunderstanding about the linkage between Structure and Performance, as it depends upon qualitative business decision making and in the execution of the decision (Campbell, Whitehead and Finkelstein 2009). Corporation's Structure will produce better performance if and only if it improves the organizations ability to make and execute key decisions better and faster than its competitors. While re-organizing the company, instead of analyzing the Strength, Weakness, Opportunities and Threats, changes in structure should start with the decision making called as "Strategic Audit".
The proper alignment of organization structure with its decisions will give a better performance. This paper attempts to examine the basic principles for reorganizing around decisions to improve the performance of an organization by investigating what is undermining or supporting effective decisions, and the linkage between strategic decisions and structure.
The subsequent sections present the structure of the strategic management and trace the recent developments in the strategic management research. The next section proposes a conceptual model on strategic organizational alignment and recommends a four-step framework. The concluding section presents the summary and highlights the contributions.
Strategic Management is the set of managerial decisions and actions that determine the long run performance of a corporation. Strategic management is the processes by which organizations try to determine what needs are to be done to achieve corporate objectives and how these objectives are to be met. It is concerned with the formulation and implementation of strategy within an organization. Strategic management is not a task, but rather a set of managerial skills that should be used throughout the organization, in a wide variety of functions. Furrer, Thomas and Goussevskaia (2007) carried out a content analysis of 26 years of strategic management research to examine the structure and trace the evolution of the strategic management field.
Strategic Decision Making
Even the best-designed strategic planning systems will fail to produce the desired results if strategic decision makers fail to use the information at their disposal effectively. Strategic decision making is the purposeful selection from among a set of alternatives in light of a given objective. Decision-making is not a separate function of management. Decision-making is intertwined with the other functions, such as Planning, Coordinating, and Controlling. These functions all require that decisions be made, rather than reproducing conventional notions that strategy concerns top management teams and their corporate ambitions, Carter, Clegg and Kornberger (2008) suggest broader and more inclusive conceptualization about what strategy could be and how it is accomplished.
Before selecting a particular decision, a decision audit should be done; it is to understand the set of decisions that are critical to the success of the company's strategy (Blenko, Mankins, and Rogers, 2010).
It is the responsibilities, authorities and relations organized in such a way as to enable the organization to perform its functions. It is normally believed that the structure is strongly associated with the organizational performance. The CEOs always make major structural changes in pursuit of better performance.
Strategy and Structure
Strategy and structure goes in an inter-related way. Organizational structure is not the only determinant of performance, changing a company's structure to meet a particular strategic goal can create problems rather than solving it.
Structure and Decision
A corporation's structure will produce better performance if and only if it improves the organization's ability to make and execute key decisions better and faster than its competitors
Strategic Decisions and Structure
The organizational structure and strategy-making processes are highly interdependent and must be complementary to ensure good performance under challenging condition (Miller, 1987). During economic liberalization in India, firms that recognized the favourable and unfavourable changes in the environment early and changed their strategy aggressively achieved superior performance (Ray, 2004).
Decision-makers in firms with superior performance, systematically cultivate critical information by capturing and sharing a range of inputs on the firm, its markets, the industry, and the environment, then translating these data into useful form. Allio (2008) describes in this article how these information could be converted into a strategic databank. The strategic databanks supports the firm's strategy development process to ensure a sustained superior performance.
Beyond Blue Ocean Strategy
Kim and Mauborgne (2009) advocate a Reconstructionist approach in place of Structuralist approach. The Reconstructionist approach aims for achieving a strategy alignment among the firm's value proposition that attracts buyers, profit proposition that enables the company to make money out of the value proposition and people proposition that motivates those working for or with the company to execute the strategy. Thus the authors of Blue Ocean Strategy describe how to craft a strategy that defines the business environment instead of letting the environment define the business strategy.
3.3 Decision Driven Organizations
Whichever type of approach chosen, the success will depend on the institutionalization of the strategy within the organization irrespective of the stage in Strategic Business Cycle (Bromiley, Navarro and Sottile 2008). Mankins and Rogers (2010) describe that when an organization try to go for reorganization, the company must focus only on Decisions, not on structure. For better performance, the company's structure has to improve the organization's ability to make and execute key decisions better and faster than the competitors. Synchronizing the organisation's structure with its decisions makes the structure work better and improves the performance.
They recommend a six-step procedure: "First, be clear about which decisions are most important. Second, figure out where in the organization those decisions need to be made. Third, organize your structure around sources of value. Fourth, figure out the level of authority your decision makes need, and give it to them. Fifth, adjust other parts of your organizational system to support decision making and execution. And sixth, equip your managers to make decisions quickly and well"
Proposed Model and Framework
A conceptual model has been developed based on the concept proposed by Mankins and Rogers (2010) in their article. The model describes the process of organizational performance improvement through the linkage between organizational structure and strategic decisions that establishes the decision driven structure within the organization.
Strategic Decision Making Mechanism
Strategic Organizational Alignment
In Decision-driven reorganization, the challenge is to align the structure and the strategic decision making mechanism, because any changes in structure may necessitate changes in the decision roles, information flow and processes. This alignment is named as Strategic Organizational Alignment (SOA).
If the company wants to make good decisions and executes them effectively there are four steps to Decision-Driven Reorganization.
1. Identify the organization's key decisions.
2. Determine where in the organization structure those decisions should happen.
3. Fix the level of authority decision makers need.
4. Align the information flow and the processes for decision making.
The CEOs are struggling in sustaining the performance of their organizations. The strategic management research came up with different approaches even though the consensus is still elusive. An attempt has been made to develop a conceptual model that can be used in future strategic management research for finding an acceptable solution for CEOs' organizational restructuring problems.