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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
PubMed
Summary
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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.

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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.