Many companies feel that changing the structure of organisation, grabbing new innovation and designing new framework can lead to better performance. However JP Morgan case study shows that most of the organisation had no effects and what more some actually destroyed value. This is due to the misconception that company performance is better when its structure is compatible. In reality, a company’s structure results in better performance if it improves the organization’s ability to make and execute decisions better and faster than competitors. If you will sync your company’s structure with its decisions, then only the company will perform better.
How to generate performance?
Involving numerous inputs from the organisation to innovate sometimes make the decision making process more slower. Even if a company has huge resources, assets and manpower still if it will not be able to make the right decision everything is in vain. Akamoi failure in 2009 highlights how its manager decided to reorganize to improve returns on the lead and unhappy customers. By not taking the time to clearly define the corporation’s objective, the CEO made it more difficult for the team to design, engineer and implement an organisation able to support the business in a new direction. According to one study, decision reliability and financial growth are correlated at 94% confidence level or higher for different countries, industry and firms. The study also shows that there is no or very less interlinking between structure and performance.
‘Improving decision making process’
Firms assessed that decision making based on the proprietary composite scoring methodology. Corporate decisions were related to quality, speed, yield and efforts. But if these efforts are given in the context of poorly defined objectives, will it be effective? Clear objectives are key requirements in drafting plans to meet strategic goals. To improve decisions many organisations go for PESTEL and SWOT analysis. Decision making varies if a company goes for revenue generation and when it goes for expansion. John Murray, CEO at LEGO was in urgent need for change as the company was losing market share. But instead of changing companies’ structure he defines the functions that are important for turn around. From there he started building his decision process. Even if a company wants to go for the organisation, the company’s executive must first outline critical decisions needed to make to improve policies and areas where these decisions are needed. For better execution of decisions you don’t need to be faster and make huge expenditure.
Decision – driven structure
Organisation structure should be designed in a way so that responsibilities are broken down at several levels to make it more clear. Top executives can analyse a company’s profitability areas and customers demand to make decisions strategically. Decisions help companies to retain customers, where to invest energy, making investment and finding companies value. Decision making should be flexible and proper auditing should be made, whenever required. To make a decision-driven organisation you need to find organisation goals, where decision made will be fruitful, and behaviour that needs to be incorporated to make employed decisions feasible. People involved in decision making and the level of authorities who implement it are also important part of a decision-driven organisation.
‘Turning with new composition’
For implementation of strategy, a company needs to make changes at macro and micro level. But it will further complicate the procedure of strategy making. If we make the organisation around the company’s central areas, the company’s cost will get reduced. But the company noticed centralised reorganization has caused loss of customer focus. So leaders from different areas make recommendations that will improve decision making without affecting its quality. Making con-current decision making with significant collaboration and virtualization in the corporates will increase credibility of decision making. It will make decision making more accountable and transparent.