Articles

If pricing isn't a strategic capability — a contributor to a company's ability to implement its strategy — it's probably a strategic liability.

Over the past couple of decades, management innovations have pushed companies toward the ideal of the “boundaryless” organization. As a result of these changes, formal reporting structures and detailed work processes have a much diminished role in the way important work is accomplished. Instead, informal networks of employees are increasingly at the forefront, and the general health and “connectivity” of these groups can have a significant impact on strategy execution and organizational effectiveness. Many corporate leaders intuitively understand this, but few spend any real time assessing or supporting informal networks. And because they do not receive adequate resources or executive attention, these groups are often fragmented, and their efforts are often disrupted by management practices or organizational design principles that are biased in favor of task specialization and individual rather than collaborative endeavors. The authors initiated a research program two years ago to determine how organizations can better support work occurring in and through informal networks of employees; they assessed more than 40 networks in 23 organizations. They discovered in all cases that the networks provided strategic and operational benefits by enabling members to collaborate effectively; they also found that managers, if they truly wanted to assist these groups, had to overcome six myths about how networks operate. In this article, the authors explain the six myths and why they are harmful; in place of these assumptions, they offer reality checks that can be implemented to help networks become more effective. Senior managers who can separate myth from reality, and act accordingly, stand a much better chance of fostering the growth and success of these increasingly important organizational structures.

Traditional teams are not faring well in today’s rapidly changing business environment. Even when they establish clear roles and responsibilities, build trust among members and define goals according to the book, their projects often fail or get axed. Three MIT Sloan School researchers think they have found the reason: Traditional teams are too inwardly focused and lack flexibility. Traditional team-building activities are still important, they contend, but only when combined with a greater awareness of external stakeholders and information sources. Fortunately, a new, externally focused team has arisen: the X-team. The authors detail the high levels of performance that X-teams are seeing. And they explain how managers in a wide variety of industries and functions can establish the organizational structures that support such teams. The researchers outline the five components of X-teams they have studied: external activity, extensive ties both inside the larger organization and outside the company, expandable tiers or kinds of responsibility, flexible membership (switching roles, moving in and out of the team as needed) and execution mechanisms that facilitate getting the job done. The results are impressive. One observed X-team greatly improved the dispersal of innovation throughout its organization. X-teams in sales were seen to bring in more revenue. Drug-development teams were more adept at drawing in external technology. Product-development teams were more innovative than traditional teams & #8212; and more often on time and on budget. Managers that recognize their own company in the new, flatter organizational structures, the increasing interdependence of tasks and teams, the constant updating of information and the overall complexity of work should consider creating an environment for successful X-teams.

Platform leadership is the ability of a company to drive innovation around a particular platform technology at the broad industry level.

Strategy is increasingly a moving target. And despite strategists’ and technologists’ recognition that developing a productive relationship is critical, it’s been hard to build a technology platform to support visions based on capabilities that may or may not exist. Fortunately, say researchers from the University of Oxford and the Warwick University Business School in England, a few enterprises are showing how to successfully bridge the great divide. Chris Sauer and Leslie Willcocks surveyed CEOs and CIOs at 97 companies that had moved or were moving to e-business. As the companies shrank their development and planning cycles, the gap between strategists and technologists grew. But in a few enterprises, the authors spotted inspired players they call “organizational architects.” These leaders were generally technology-smart CEOs or business-savvy CIOs who developed mechanisms to force communication between strategists and technologists. The success stories point to the value of companywide transformation, with organizational architects guiding the translation of strategy to a flexible, integrated platform. Dialogue between strategists and technologists makes it possible to define and design structures, processes, capabilities and technologies that have a greater chance of being responsive to organizational goals. In true synergy, the platform is shaped by the vision, and the vision is reshaped by the characteristics of the platform that enable the vision. How do organizational architects keep business and technology concerns united? They view technology and organization as equal influences; they standardize and centralize; they manage change intelligently; and they match capability and ambition. Companies such as Oracle, IBM, the utility Citipower and the investment bank Macquarie (the latter two in Australia) have already strengthened their business-technology alignment by applying one or more of these principles.

Farsighted investors can check wayward founder-CEOs by creating strong and independent boards.

New research from MIT’s Center for Information Systems Research and others reveals that successful companies are revolutionizing the way IT investments get decided. Investments are no longer justified merely on the basis of making a functional silo more profitable. Today the strategic needs of the whole company come first. In the last 15 years, write professors Jeanne Ross of MIT’s Sloan School of Management and Cynthia Beath of the University of Texas, a tidal wave of IT-enabled initiatives has elevated the importance of investing strategically. The Internet alone has created numerous opportunities: to reengineer processes, introduce online products and services, approach new customer segments and redo business models. The opportunities seem limitless, but the resources required & #8212; capital, IT expertise, management focus and capacity for change & #8212; are not. How to choose? Traditionally, companies justified a given project by presenting a strong business case. But with IT’s growing strategic importance, companies must now weigh individual ROIs against demands for organizationwide capabilities & #8212; and must assess opportunities to leverage and improve existing systems and infrastructures, create new capabilities and test new business models. The authors recommend a new investment approach based on a framework they developed after studying the e-business initiatives and supporting IT investments of 30 enterprises. The framework encourages simultaneous investment in four kinds of IT initiative. Transformation investments are necessary if a company’s core infrastructure limits its ability to develop applications critical to long-term success. Renewal investments maintain the infrastructure’s functionality and cost-effectiveness. Process improvements allow business applications to leverage infrastructure by delivering short-term profitability. Experiments enable learning about opportunities and testing the capabilities of new technologies. The new tools are helping managers grapple with an increasingly complex world.