Unit IV LDR 7302

LDR 7302, Designing Organizations for Competitive Advantage 1

Course Learning Outcomes for Unit IV At the end of this unit, you should be able to:

4. Summarize organizational design principles. 4.1 Examine leadership philosophy in relation to organizational design. 4.2 Adapt restated organization design principles to an optimal new design.

Required Unit Resources Chapter 3: Strategy (ULO 4.1) Read the following sections: Why Strategy Is an Important Concept for Organization Design, What Is Strategy?, Types of Strategy, and Key Concepts. These sections open Unit IV’s exploration of leading in changing organizations by reviewing the ideas of strategy. Organization design strategy is pertinent as a starting point in organizational leadership thought because, as Anderson (2019) describes, no decision or action is feasible if leaders do not know, accept, or agree on the organization’s objectives, goals, and strategy to achieve them. The strategy is best directed when its weighted effort is toward what the organization does best in creating value more than the cost of the effort. To the extent that the organization creates what customers favor or prefer, this is its competitive advantage. Even better than creating the best and most favored value is succeeding at a blue ocean strategy, with doing or creating something is so new and better for external stakeholders that it redefines the market or external environment. Chapter 4: Structure (ULOs 4.1, 4.2) Read the Introduction and Connecting Strategy and Structure sections. Chapter 4 continues the exploration of strategy and a leadership medium, as a senior business leader must be sure that neither strategy nor structure are influencing leadership beyond the leaders’ consent. Dissatisfied leaders can change both, but with care. Changing structure means an organization redesign; changing strategy may dramatically redirect the organization’s activities. Chapter 5: Processes and Lateral Capability (ULOs 4.1, 4.2) Read the Introduction and Enablers for Successful Lateral Capability sections. Exploration in Chapter 5 can help leaders link advanced leadership concepts to optimal organization design. What is usually missing in a conventionally designed, vertical hierarchy is lateral capability, which is demonstrated in the example of Disney. Lateral capability counteracts limitations of vertically dominated communication and control by sharing activities, efforts, and achievements across the organization’s departments or sections. Ideally, lateral activity supports the vertical (or matrix) hierarchy with producing results and providing a sustainable flow of information vital to continuous operations. In turn, the sum of these mutually supporting efforts uphold a high degree of knowledge management in an organization. Success in this manner means a competitive advantage is realized. Chapter 8: Reorganizing, Managing Change, and Transitions (ULOs 4.1, 4.2) Read the following: subsection Communication and section Leadership and Organization Design. Communicating clearly and inspirationally are among a leader’s core attributes; it is difficult to exercise leadership without these. In these sections of Chapter 8, these attributes and more are described to show how a leader completes a design, the design process, and leads the organization through the transition. Chapter 9: Agility (ULOs 4.1, 4.2) Read the following sections: Introduction, Why Agility Is Important Today, Continuous Design and Reconfigurable Organizations, and Agile People. Career development and experience would enable a leader to conduct an organization design in former times; agility is also a needed attribute to do this today. Without agility, organizational leaders and owners could accept only a safe, incremental change where conditions are certain. Such designs are rarely feasible, and if they are, they likely would not lead

UNIT IV STUDY GUIDE Leading to Design, Designing to Lead

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to a competitive advantage. As these Chapter 9 sections explain, the leader must still have an objective/goals/strategy focus, but in other aspects maintain an imaginative, liberal mind regarding the internal and external environments where the organization exists. Unit Lesson Lesson: Leading to Design, Designing to Lead (ULOs 4.1, 4.2) What does a leader need to know, do, or be to achieve a competitive advantage with an organization design and its process? These are not routine leader activities. A new organization design will be a memorable event and major undertaking and will change the familiar characteristics of the organization and its members alike. Much will be required of participating leaders and no leaders may choose to decline to participate. The senior business leader can be expected to already have a strong familiarity with leadership ethics, principles, theories, and models. Here in Unit IV, leaders can proceed from such a basis of leadership knowledge to explore what leadership should best match the organization design challenge.

The Practical Application of Leadership Theories As a starting point, it should be accepted and understood that self-serving leadership practices, even those that realize mild benefits for leaders and minimal adverse impacts on others, are incompatible with organization design campaigns undertaken to win (to achieve a competitive advantage). Market and operating conditions, constantly in motion, will not allow for time to be taken in searching for a leader with the right stuff, which might be understood as the needed traits to lead and achieve in the most difficult of circumstances. As a rebuttal to the trait theories of leadership, rather than waiting for a legendary leader, chances are that the organization already has such leaders if they would look hard enough to find them. Further, any leadership model aligning with transactional principles as in “you do something for me, and I’ll do something for you,” inherently do not fit well within a design campaign when the organization’s members need to move forward decisively with motivation and inspiration. Leader-member exchange models in which everyone on two general sides, the leaders and the led, agree in a general charter to cooperate will not be enough to cope with the scope of work entailed in an organization design and its process. Another consideration of organizational leadership choices is that the traditional vertical hierarchy is fading from global use, at least as a sole pillar of organization design. There are good reasons why this design should disappear from widespread use, but the external environment has exerted a decisive influence in this direction. Hsieh et al. (2021), in exploring leadership and organization design, point to the growing volatility of markets, caused by internet connectivity, innovations in manufacturing and transportation, and expanded markets. These factors create promising and new opportunities but also signal the end of slow-paced management based on high predictability and a plodding operational pace.

The Art and Science of Leadership Leaders exercising organization leadership will face the challenge of working effectively in fast-paced and constantly changing environments. Leaders develop and choose their own leadership style and personal plan, but there are known philosophies, principles, and models that are known to fit better than others. The categories of contingency theories seem to approach what will be needed because of their orientation on the operating environment and what is going on in the instant decisions are needed. These models can be a close fit, but organization designs are of strategic significance and seem to need more to guide leadership than the challenges of the day. There is the most recently developed model left that seems the most promising: Transformational leadership is the model and style that leaders striving to get and stay in front of challenges and changes seem to use.

Transformational Leadership and Organization Design Transformational leadership is not named to match the phenomenon of transforming organizations, though the names and general idea of what is gained are close. As described by Bass (2008), transformational leadership is exercised to transform an organization from its present to a better, envisioned future. The dynamics of this leadership style is in the exercising of idealized influence, individual consideration, inspirational motivation of others, and heightened performance of followers, preferably themselves exercising

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inspired followership. Transformational leaders concentrate everything they know and can do in leading, which is what is needed throughout an organization design. The way Bass (2008) describe the model, they may have had organization design in mind, and indeed the two concepts complement each other well. Transformational leaders seek to significantly reset the organization from its present, not just improve it in incremental ways. A transformational leader envisions the organization at a higher and newer level of collective satisfaction and effectiveness, not by improving a few things, but by better meeting members’ needs and making clearer, constructive, and inspirational leadership decisions and actions. Transformational leaders use an organization design as an opportunity to increase organizational members’ belief that they are somewhat special in their industry and that their followership is special work that produces top results. The hallmark of transformational leadership is spreading credit to others (and not oneself), encouraging, and testing new ideas, and challenging everyone to achieve at new levels, which in this venue would be under a new organization design. History students may know of the legend of the Roman Consul Cincinnatus, who was recalled from his farm to lead the army and win in a time of danger to the Roman Republic, and when victorious, resigned his commission and returned to his farm. Cincinnatus returned his emergency dictatorial powers to the Senate when he could have retained the reins of power, as no one of the day could have stopped him. Instead, the Romans lived on as a free republic for centuries longer.

About 2,100 years later, the American Revolution ended in victory and freedom for the new United States upon ratification of the 1783 peace treaty. Upon hearing that, General-in-Chief George Washington intended to resign his commission, relinquish power over the only remaining army in North America, and retire to his home. British King George III remarked, “If he does that, he will be the greatest man in the world.” It was well known that the legacy of human history was to hold on to power if you had it and fight to keep it, destroying people, whole nations, and even themselves in the process, all to determine the ancient question: who shall rule?

Washington, an admirer of the Cincinnatus precedent, lived up to the legend himself as he did just as he had announced. Washington reported to Congress, resigned his commission, bade the U.S. government farewell, and returned to his beloved Mount Vernon estate in Virginia. National leaders, undertaking the organization design we know as the U.S. Constitution, had to work hard to coax Washington back to preside over the Constitutional Convention of 1787–1788. Upon completion of the Constitution, Washington, seeing the national need with the organization design process still underway, reluctantly accepted the nomination and eventual election to serve as the nation’s first president for two terms. During his undoubtably transformational presidency, Washington forbade imperial courtesies and the addition of his portrait on new U.S. coins, sidestepping yet more ancient traditions and setting a new, distinctively American democratic one as an organization design detail that has lasted to this day. By looking to inspirational, historical examples such as what President Washington set, and perceiving the reality possible behind the theory, we can envision transformational leaders using their practiced tools and leadership beliefs to influence a design outcome they understand to be best for the organization. Leadership is exercised to inspire followers to overcome a challenge, and an organization design and process are inevitably challenging. The process that is change that transforms work for the members is challenging enough, but where inspirational leadership pays off the most is during sustained activities under the new design. While work proceeds and junior leaders and followers struggle to adjust, decisions and modifications must be made; short-term goals set; performance assessed; new coordination steps taken; and subordinates’ performance praised, coached, and constructively critiqued. Operating laterally and not just looking up in a hierarchy is a transformational leadership capability, as such leaders accept hierarchy well enough but thrive on better results with matrix structures and with members organized into teams. These leaders set the example on how these approaches are practiced. As Lagorio-Chafkin (2020) wrote in Inc. magazine, Viking River Cruises owner and CEO Thorstein Hagen, low on prospects from his shipping ventures in Norway, purchased four Russian river sightseeing boats to begin the Viking River Cruises company. Hagen chose not to compete with ever-escalating levels of showmanship, amusement park-style features, casino gaming, flashy and loud shows, and family recreation found on other companies’ cruise ships and vacation boats. Instead, the Hagens (including daughter and Vice President Karine) offered extraordinary quality in their few river boats, including staterooms and dining, excursions for mature people to appreciate culture and arts, and a quiet ambiance in sailing their boats.

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Viking calls it “the thinking person’s cruise.” Their timing was fortunate, as this period of Viking growth was when prosperous Westerners (mostly North Americans) were available and ready for a less-showy experience that is found on other cruise vessels. Even so, the Hagens transformed the industry with their blue ocean strategy; they occupied a formerly vacant niche and performed better than any other company in the industry.

References Anderson, D. L. (2019). Organization design: Creating strategic and agile organizations. SAGE.

https://online.vitalsource.com/#/books/9781544338002 Bass, B. M. (with Bass, R.). (2008). The Bass handbook of leadership: Theory, research, and managerial

applications (4th ed.). Free Press. Hsieh, Y.-Y., Chen, C.-C., & Chen, W.-Y. (2021, September–December). How the design leadership and

strategic design drive new value in enterprises and organizations. Strategic Design Research Journal, 14(3), 474–483. https://doi.org/10.4013/sdrj.2021.143.02

Lagorio-Chafkin, C. (2020, March/April). Scandinavian minimalists: Viking River Cruises by dimming that glitz

and emphasizing culture, and company reinvigorated an industry. Inc., 42(1), 92–94. https://research- ebsco-com.libraryresources.columbiasouthern.edu/c/iuzu2i/viewer/pdf/pion7bqb5z