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How to implement a new strategy without disrupting your organization.
Robert S Kaplan1, David P Norton
1Harvard Business School, Boston, USA. rkaplan@hbs.edu
Harvard Business Review
|March 7, 2006
Summary
Rethinking corporate strategy, this study finds structural changes are often ineffective. Instead, aligning organizational design with strategy using the balanced scorecard framework unlocks value with less disruption.
Area of Science:
- Business Strategy
- Organizational Management
Background:
- Corporations historically pursued value creation through various structural changes like centralization, decentralization, and matrix organizations.
- These traditional restructuring efforts often prove costly, inefficient, and disruptive, leading to new organizational problems and loss of tacit knowledge.
Purpose of the Study:
- To question the efficacy of structural change as the primary tool for unlocking corporate value.
- To propose an alternative approach for aligning organizational structure with strategy to enhance performance.
Main Methods:
- The study advocates for selecting a suitable organizational design first, followed by implementing a customized strategic management system.
- It highlights the balanced scorecard framework as a key tool for aligning strategy and structure.
Main Results:
- The balanced scorecard, with tools like strategy maps and scorecards, enables managers to define, communicate, implement, and monitor strategies effectively.
- Case studies of DuPont and the Royal Canadian Mounted Police demonstrate successful value realization through this approach.
Conclusions:
- Aligning strategy and structure through the balanced scorecard framework is a less disruptive and more effective method for unlocking organizational value.
- This approach avoids the pitfalls of frequent, costly, and often ineffective structural reorganizations.