Alfred Chandler suggested in the 60’s that organizational structure follows the strategy set out by the company to support successful execution / implementation. Later, the resource-based view has been introduced, suggesting that the strategic direction for a company should be based on key competences already present in the corporation which to some extent challenges the ‘structure follows strategy’ thinking

While it is of course crucial to be aware of – and exploit – the core competences of a company, focusing only on this creates a dangerous situation for the company – the resource-based view tends to drive an inside-out view on the strategy, thereby risking a downplay of the forces influencing the market you’re in. The resource-based view builds on the belief that a company’s core competences are unique to the company, very hard to imitate and offers a long-term sustainable competitive advantage

Trust in core competences equals corporate complacency

The belief that your current market position, strength and core competences are enough to keep you safe and sound in the future is a very dangerous one. I hear this too often, when executives compare their companies and efforts to peers in the same industry, being satisfied having a leading position in their market. There’s a real risk of falling into the complacency trap with this attitude

It’s like the Pony Express comparing horses to determine which horse can deliver the letter quicker while ignoring the telegraph poles being raised next to them. Or horse carriage companies comparing which wagon is the best while Henry Ford is assembling his cars next door. Or the recent classical examples; the taxi companies did not see Uber coming nor did the hotels understand the rise of Airbnb

Having a great market position with a strong company today does not necessarily guarantee you a place at the table tomorrow. You might be in pole position on your racetrack, but if the competition changes the game from the racetrack to off-road, how will your Formula 1 racer perform?

The biggest threat is in your blind spot

Company complacency is the biggest threat to companies today. Being happy and contempt with what you’ve got creates a company blind spot so big that no one will see the real threat before it’s taken a significant chunk of the market, if not all. Do not compare yourself with your peers, it is the recipe for disaster

Going forward, you will need to take on the outside-in perspective of your industry, actively understanding and defining what it is your customers is buying from you. It’s not a delivery of a letter, nor a taxi ride. It’s delivery of a message and a transport from one point to another. You must redefine the “customers’ job to be done” to understand where to look for your next challenger

Structure should follow strategy

To me it’s clear that your organizational structure should follow your strategy and I hope this article gives you food for thought to consider the same. It makes little sense to have the best ponies in the world if no one wants to use them for message deliveries. Your core competences are not the assets and unique internal processes anymore. The core competences of today should be the lever for you to build the core competences of tomorrow

I believe there’s only one true core competence; the ability of a company to constantly change shape and redefine / reinvent itself. Which very(!) few companies are capable of

 

 

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