Google Case Study: “Strategy Development Processes” – Who drives the strategy?
Strategic management involves the implementation and formulation of major initiatives and goals taken by the top management of the organization on behalf of the owners, based on consideration of resources and a valuation of the external and internal environments where the organization thrives. Strategic management offers a direction which the organization takes and there must be an analysis of the objectives of the company, development of plans and policies that serve the purpose of achieving these objectives. Resources are then allocated so that the plans can be implemented (Johnson, Whittington, Scholes, 2011).
Emergent strategy (trial and error)
Google’s success can be attributed to its strategy. Unlike other companies Google does not have a defined organizational strategy based on its unstructured style of leadership. Google applies the trial and error strategy according to the CEO, which has culminated into the success of the company. The theory or trial and error involves an organization making various attempts in a continuous mode until the desired results are achieved. Google has become very successful by learning from their mistakes to form a perfect solution to its strategy. Google is organized from the bottom up and the employees in the organization are given a free role to do what they view is best for the company. The company does not have a defined time plan for their strategies like it does not have a five year plan of what the company is supposed to do and what is supposed to be achieved. In addition, Google is known to launch half-finished products into the market without the control of the flow of information as they do not advertise the products. Hence, when Google fanatics find the product, work with it and check for errors and then debug it. This is a significant release of control and making good use of the end users.
The leadership style used in an organization has a major impact of the success that is achieved by that organization (Johnson, Whittington, Scholes, 2011). Google was started by two people, Sergey Brin and Larry Page after they completed their University education. When Google undertook its IPO, it did not follow the normal channels followed by other companies. The two founders launched an open IPO instead of using the investment banks as determinants of the initial share price. The buyers decided what the share price would be and the investment banks were not involved. Google then set up a two-tier board of directors which is not common in the U.S like in the U.K. The advantage of this system is the gap it places between Brin and Page and their shareholders, and also the augmented freedom for managers for them to run the organization their way. Therefore, the kind of leadership style witnessed in the Google Company is Laissez-Faire. This is because of the lack of direct supervision of employees. In addition, the employees do not have to provide regular feedback and all that is required from them is output. This is the reason why Google hires highly trained and experienced employees, who require minimum supervision. For instance Google hires Engineers who must have either a Doctorate or Masters from a prominent University. In addition, these applicants must pass through a sequence of interviews and assessment tests. Therefore this kind of leadership style has culminated into augmented innovation among the employees leading to the success of the Company.
Systems & routines structures
The systems of a company highlights how a company undertakes its business. The routines portray the daily undertakings of a business organizations. It shows the steps that must be taken by a company on a daily basis to enhance the smooth flow of business activities (Johnson, Whittington, Scholes, 2011). Google is the most dominant player in internet search and has a market share of 67.5%. The company’s system is highly diversified as a result of its highly acquisitive strategy of business. The company is guided by the acquisition principle that if they cannot innovate, they buy it. In this way Google takes over the fan base, the technical expertise and the product of the early adopters. Between 2001 and 2009, Google had acquired around 50 companies.
In terms of routine, Google is a light-managed organization, where the managers to employee ratio is 1:20 unlike in contemporary organizations where the ratio is 1:10. There is no defined routine of what employees should do and engineers are even given 20% of their work time to work on projects which stimulate innovation as they work on personal projects. However, this has often worked to the disadvantage of the company since employees spend over 30% of their time undertaking labor of their choice, which has led to chaos in the organization.
This is a concept of strategic management that deals with the response that an organization takes when undergoing a dynamic environment. Diverse challenges and situations are common aspects that may occur during a strategic drift. The strategic drift can then be regarded as those situations that organization fails to meet the desired outcomes (Johnson, Whittington, Scholes, 2011). In the case of Google, the strategic drift occurred when the image of a disorganized organization manifested itself. This is because the organization could not distinguish between the various responsibilities of the employees. For instance, in Germany, Google failed to renew its domain name in 2007. In addition, there was an incident when Google failed to provide its legal representation at a Belgian law suit. Therefore, the unorthodox way of how Google strategizes has not always paid off like in the mentioned examples.
The attention-based view
In the field of strategy, determining how organizations behave is very imperative. By analyzing how firms behave, enables the understanding of whether firms are in a position to adapt to the changing environment, whether their respond adequately to their competitors and whether they successfully alter their capabilities and strategies (Johnson, Whittington, Scholes, 2011). In regards to Google, its attention-based view has been viable. This is because, the company operates in a disorganized manner and issues are dealt with as they arise. There is no strategic plan for the future which indicates that when issues which require the management’s attention they are handled at this stage.
Hurricane Katrina Case Study: “Organizing for Success” – Human-made disaster?
The aftermath of the hurricane Katrina was marred with confusion. There was so much destruction, death, damaged property and lives that needed rescuing. However, the suffering and damage was augmented by organizational failure. In addition, the organizational design was also responsible for the catastrophe.
Organization structure refers to the hierarchical arrangement of communication, lines of authority, duties and rights of an organization. Organizational structure determines how the responsibilities, power and roles are coordinated, controlled, assigned and the mode of flow of information between different managerial levels (Daft, 2007).
After the 9/11 attack, there was the reorganization of the various departments that was undertaken. There was the amalgamation of various departments to form one department. The new department was the homeland security which was headed by Tom Ridge, the Vietnam veteran and the Governor of Pennsylvania. The new organization structure had 22 departments under one department. Firstly the organization structure did not favor the Federal Emergency Management Agency. The reason behind this is that the one who headed the Homeland Security did not have the viable knowledge which related to disaster management. The organization structure of any department should ensure that the head of the department is competent enough to handle any matters arising in that department. For instance, in the onset of the Hurricane Katrina, Tom Ridge should have possessed the knowhow of how to handle such a disaster. Nevertheless, due to his competence in war issues, he was destined to work well with terrorism issues. In the forefront of this department, the terrorism docket was given more priority. The department had over 180,000 employees which is a very large department which makes the organizational structure of such a department to be very complex. Hence, when dealing with an emergency like the Hurricane Katrina, chances are that the results would not have been viable like when FEMA would have been an independent department.
(2) Organisational culture
Organization culture refers to a system of shared beliefs, values, assumptions, which direct how people behave in an organization. The shared values have a vibrant influence on the individuals in the organization in regards to how they undertake their duties, how they dress and how they act when undertaking their jobs. Each organization maintains and develops a distinct culture. There are seven characteristics of organization culture which are innovation, attention to detail, emphasis on outcome, teamwork, aggressiveness, and emphasis on people (Daft, 2007). In regards to the case study, the repercussions of the Hurricane Katrina were escalated as a result of failed organization culture. This is because the department of Homeland Security was not focused on the attention to detail. The degree of accuracy of how the department depicted the effects of the catastrophe was shocking. The reason is that the response to natural disasters was given a low priority in comparison to other dockets. A FEMA watch officer had forwarded the warning that there was a looming threat of a hurricane in New Orleans and it would have caused thousands of fatalities. Nevertheless, the seriousness with which the evacuation process was undertaken was absurd despite the looming threat. This is what led to the death of thousands of people. Organization culture also stresses on teamwork. Organizations that dwell in teams instead of individual’s work portray a high value of organizational culture. In the case of the catastrophe, team work was not portrayed because in the state of Louisiana, there was supposed to be 400 buses and 800 drivers who were destined to ferry people to the shelters. Nevertheless, there were no buses when the need arose because of the poor teamwork portrayed by the department. In addition the people required 34 truckloads of food, 69 truckloads of ice and 69 truckloads of water. However, FEMA just delivered 15 truckloads of meals, 17 truckloads of ice and 30 truckloads of water. The discrepancy was as a result of the poor teamwork shown by the department. In addition, the risk orientation in this department was low because of there was not innovation applied to mitigate the effects of the disaster. There were no extraordinary measures undertaken after the disaster occurred to mitigate the damage.
(3) Organizational configurations
According to organization Henry Mintzberg, organizational configurations are defined as the generally occurring cluster elements of organizational processes, structures and strategies. At the center of configurational perspective is the assumption that augmented understanding of organizational phenomena can be achieved better by identifying internally, distinct consistent sets of firms, instead of uncovering relationships that bind across all organization (Mintzberg and Westley, 2007). In the case study, FEMA is linked up with unrelated departments like immigration. Such a department would not be of any assistance when it came to a disaster like the Hurricane Katrina. This was witnessed after the disaster in that the only the FEMA department was concerned with disaster management without the mention of other departments. A coordination between various departments would have therefore ensured that the repercussions of the catastrophe was mitigated.
Bureaucracy refers to the system of governance distinguished by its rigid division of labor, clear hierarchy of authority, written inflexible procedures, regulations, rules and impersonal relationships. After its institution, bureaucracy is difficult to change or dislodge (Sadler & Craig, 2003). FEMA used to be represented directly in the cabinet of the president. However, following the formation of the Homeland Security, FEMA was just a mere internal division that did not have Cabinet-level representation. Hence, in the event of a disaster, the immediate response that was initially witnessed when FEMA was an independent body was marred by bureaucracies in the department of Homeland security. This can be witnessed when there was a breakdown in communication after the looting of communication devices. The incident was reported by the officer on the ground, but due to the bureaucracy in the department, there needed to be a second source collaborating the story, but the source was not available hence the information was not relayed up the chain of command. Hence, no action was taken.
(5) Control systems
This refers to the way an organization is controlled. They include quality systems, financial systems and rewards and how they are distributed and measured within the organization. In the case study there was the failure of the control system (Sadler & Craig, 2003). This is because the resources that were used to protect the organization against disasters had been squeezed. In addition, some functions of FEMA were relocated to other parts of the organization. From the initial budget of $550m FEMA lost $80m. The department’s efforts to secure more funds were unsuccessful since the funds were not approved, hence FEMA could not rehearse of a disaster response management. This is why the disaster management after hurricane Katrina was a failure.
Sergio Marchionne Case Study: “Leadership & Strategic Change” – Leading Change in Fiat and Chrysler
1) Types of change
There are various changes that can be undertaken in organization. A CEO may make changes in terms of organizational strategy and structure. Another manager may view changes in terms of processes. When an organization changes its strategy and mission, it means changing the entire belief of the organization. However changes are usually grouped into three categories which are transformation change, transitional change, and developmental change. The developmental change occurs when there is the need to improve the existing situation. This involves the refining of the workflow without entirely changing it. The transitional change takes place when there is the need to implement a completely new course of action. Transformation change refers to a situation which occurs as a result of the failure of another (Sadler & Craig, 2003). The situation molds itself and it takes a new shape. The type of change that took place in Fiat was the transformation change. This is because Sergio Marchionne was adamant in totally eradicating the bureaucratic nature of management in the company. This is because the management style was challenging for the organization and it led to the company being unprofitable, unsuccessful in its launching of new cars, having a reputation of poor quality, and poor relationships with unions. The executives used to communicate via their secretaries hence they avoided problems and spend their time firefighting. Since the level of bureaucracy was highly integrated in the company, 2000 managers and staff were forced into early retirement to completely eradicate the bureaucracy.
(2) Levers of change
Project management possess a set of identifiable tools that support its execution: statement of wok, project charter, schedule, work breakdown structure among others. Likewise, change management also has a set of tools that support the side of change that is associated with people. Change is most effective when it is undertaken under a holistic set of tools. This has led to formulation of the five levers of change which are resistance management plan, training plan, coaching plan, sponsorship roadmap, and communication plan. The word ‘lever’ is used as these plans help in the implementation of change and steering the organization in one direction. Sergio Marchionne undertook a training plan for young managers who initially did not have the chance to move up the ladder in terms of their career. In addition, he undertook the coaching plan of giving the employees more responsibilities and hold them accountable. This was in that a leader who failed to meet the defined objectives were to suffer some consequences. However, he made the employees believe that the failure to meet the objectives was not the end of the world. However, as growing leaders, they were destined to mitigate excuses and explanations and instead show results.
(3) Styles of managing change
Effective leadership is imperative in any organization. Strategic leadership involves the ability to prepare, anticipate and get positioned for the future. The key elements in managing strategic change are diagnosis, levers for change, managing change programs, and leading and managing change. Therefore the different styles of management are education/delegation, participation, direction, coercion, and collaboration (Hill & Jones, 2012). Sergio Marchionne managed change through participation. He made all the employees feel part of the organization by involving them in delivering the desired changes. This translated in the spread of support and ownership of change, making it easier to make decisions in the organization. He also adopted the education and delegation style where he selected 26 young leaders and train them so as to easily manage change in the organization.
(4) Flat and tall organizations
The development of a company’s structure often falls under two categories which are the flat (horizontal structures) and tall or vertical structures. Tall structures is more like the organizational chart where the CEO is at the top of the structure, followed by the various levels of management. On the other hand, the flat structures differ in that employees have more autonomy and there are few levels of management (Hill & Jones, 2012). Sergio Marchionne challenged the tall hierarchy at the company. He undertook the initiative to flatten the organization structure due to the redundancies associated with the old structure. The flattening of the organization structure was meant to drive innovation, improve production quality and also help the business to be more agile. Sergio Marchionne undertook this strategy by crashing the old culture. He moved the CEO’s office from the penthouse to the middle of the engineering department. He also streamlined the senior leadership to yield faster decision making though it increased the workload. He also eradicated the bureaucratic barriers by giving his team full authority.
(5) Kotter & Schlesinger model
Not all employees are usually comfortable with change and they are therefore resistant to change. According to Kotter & Schlesinger, there are various reasons why people struggle with change and the solutions that managers can adopt to help individuals deal with change. People resist change as a result of low tolerance of change, different assessments, lack of trust and misunderstanding, and parochial self-interest. Managers therefore have to devise ways on how to mitigate this resistance (Rao & Krishna, 2005). Sergio Marchionne did not undertake the closure of the two plants and commence the re-aggregating of assets elsewhere, in an effort to do away with dispirited and inefficient who worked in manufacturing units. This was because such a move would culminate into a disgruntled workforce. Instead the company opened grocery stores and kindergartens next to the plant to make it easier for the employees balance their domestic obligations and work. All the bathrooms and dressing rooms were also redecorated. All these measures were undertaken for the employees to cope with the changes that took place in the company.
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