Don’t spit into the wind

In a flash of the obvious, this week I came across research that moved my thinking on organisational strategy and design. For me, the linear progression from vision to strategy to structure had been a golden path. However – what I now realise is that in certain circumstances it might be better to start with the nature of the leader which determines viable structure and strategy, or to start with the existing structure and determine strategic options. If that goes against what you believe, here is a brief explanation.

More than 60 years ago, Alfred Chandler[i] wrote “structure follows strategy”. He was researching corporate diversification strategies and arguing for the need to divisionalise to optimise results from diverse businesses. Two decades later, Danny Miller[ii] questioned whether it is true that structure follows strategy – and concluded that “often, … strategy may follow structure.”

While the external environment has an influence on strategy, so too does the existing internal structure and the personality of the CEO. Strategy, leadership, and structure are interdependent, not linear. Because they are interdependent rather than linear, sometimes strategy follows structure. And sometimes the strategy and structure options are limited by the nature of the leader. Ignoring this and trying to set vision and strategy as if they were divorced from the existing structure and leadership can be expensive.

My interest in Danny Miller comes from listening to Alon Raiz as we look for the links between strategy, structure and leadership. Danny Miller has thought (and continues to think) a lot about strategy, structure and leadership – you can access a list of his publications here. From our limited review so far, in the 1980’s Miller wanted to know whether it could be said that there were patterns of strategy, structure and leadership (configurations) that work well together. 

In 1984 (published in 1986) Miller thought that a small firm, autocratically run by its founder, in a highly competitive market, was likely to have a predictable structure and follow a predictable strategy. He also believed it unlikely that the firm would have more than one or two viable strategies open to it given its structure and the nature of its CEO. In 1986[iii] he published more findings, demonstrating links between CEO personality and the strategy and structure of the small firm.

Settling down and articulating a vision and strategy is a crucial step in charting a way forward for an organisation. We do not dispute that – but in many organisations, strategy is wishful thinking. Most strategies fail to execute. One reason is that we need less wishful thinking and more pragmatic approaches that are sensitive to the internal and external context of the firm – including the nature of the existing leadership and the existing structure (along with the external forces). 

At WorldsView, we start our core strategy and organisation design programs by clarifying and describing the existing design (and the elements shaping that design) that must be faced before attempting to redesign. Start where you are, even as you dream of where you might be. The alternative may be like spitting into the wind – it requires a lot of clean up.

[i] Chandler, A. (1962). Strategy and Structure. MIT Press, Cambridge, MA.

[ii] Miller, D. (1986). Configurations of strategy and structure: Towards a synthesis. Strategic Management Journal, Vol. 7, 233-249, Received 18 June 1984, Revised 27 December 1984.

[iii] Miller, D. (1986). Chief Executive Personality and corporate strategy and structure in small firms. Management Science, Vol. 32, No. 11, November 1986.