{"id":885,"date":"2019-04-24T23:13:44","date_gmt":"2019-04-24T23:13:44","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/?post_type=chapter&#038;p=885"},"modified":"2024-04-24T22:41:04","modified_gmt":"2024-04-24T22:41:04","slug":"organizational-structure-and-success","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/chapter\/organizational-structure-and-success\/","title":{"raw":"Organizational Structure and Success","rendered":"Organizational Structure and Success"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Organizational structure and its impact on success<\/li>\r\n<\/ul>\r\n<\/div>\r\nOrganizations grow and change all the time, and the organizational structure that worked for a company once upon a time doesn\u2019t always work for a company as it grows. We\u2019ve talked about how smaller companies in uncertain environments can have organic organizational structures and be very flexible about how they respond to customer needs. But as they grow larger, there\u2019s a need for a more mechanistic approach. After all, a company can\u2019t have 2,000 employees with decision making power, all doing business the way they think is right.\r\n\r\nWe\u2019re going to take a look at a couple of organizations that went through some organizational structure changes, so we can see where the original organizational structure was going wrong and how changes to that structure once again set that organization up for success.\r\n<div class=\"textbox examples\">\r\n<h3>Google<\/h3>\r\nGoogle is an excellent example of how a couple of guys in a garage changed the world. They started out with a single focus\u2014to develop the world\u2019s best internet search engine.\r\n\r\nThat was about the last time that Google had a single focus.\r\n\r\nGoogle grew up fast, and in 20 years they\u2019ve accumulated dozens of locations, over 90,000 \u201cGoogler\u201d employees, and many, many different interests. Among their offerings are Google Docs, Google Translate, Google Maps, Waze, Android, YouTube, Blogger, Google Fiber, Google Home and self-driving vehicles. Just to name a few. Google\u2019s single umbrella, with its relatively \u201cflat\u201d organizational structure, was growing monstrously diverse.\r\n\r\nHow does a single, relatively flat organizational structure support \u201cmonstrously diverse\u201d? The short answer is, it doesn\u2019t.\r\n\r\nCEO and founder Larry Page created a holding company for all of Google\u2019s projects and called it Alphabet. Then, each of those Google interests (26 in all, as you might have guessed) became its own company, with its own CEO. The CEO of each of those companies is now able to concentrate on the goals of that company without worrying about the mission of Google overall. It allowed greater autonomy to those smaller companies under the Alphabet umbrella.\r\n\r\nLarry Page explained in a blog post: \u201cFundamentally, we believe this allows us more management scale, as we can run things independently that aren\u2019t very related. Alphabet is about businesses prospering through strong leaders and independence.\u201d\r\n\r\nPage admitted the reorg was radical in the same post, saying, \u201cin the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.\u201d\r\n\r\nThe reorganization of Alphabet as a holding company for the 26 Google subsidiaries has been going strong since 2015. Employees are able to concentrate on the mission of their own company and, with each company accountable for its own expenditures and income, Page expected that they\u2019d find innovating more meaningful.\r\n\r\nThis is an example of how a very large company, forced into mechanistic structure by its sheer size and scope, made an organizational move to allow its smaller divisions to innovate and adopt more organic structures if that better fit their needs. Alphabet\u2019s 2018 revenue was $136.82 billion last year, and that\u2019s a good indication that it\u2019s working.\r\n\r\n<\/div>\r\n<div class=\"textbox examples\">\r\n<h3>Microsoft<\/h3>\r\nMicrosoft had established themselves as the world\u2019s go-to in personal computer operating systems and Office suites. But suddenly the behemoth technology company was struggling. Departments that had been established to innovate were now in competition with one another, creating a toxic environment that threatened the company\u2019s future success.\r\n\r\nWhile Google was the dominant online provider and Apple was the ruler of the world of mobile products, Microsoft was struggling to invent, and then losing interest in their own products when they did. Zune is a great example. Does anyone remember what Zune was?\r\n\r\nIn 2014, a new CEO, Satya Nadella, started his tenure with a major restructuring of the company. His first order of business was to do away with the damaging internal competition that posed so much of a threat, but he also wanted to reinvent productivity and business processes, build an intelligent cloud platform and create more personal computing. With a restructure plan and this three-pronged mission in hand, he went to work.\r\n\r\nNadella waited two years before he merged Microsoft Research Group with the Bing, Cortana, and Information Platform group teams to create a new artificial intelligence and research group, whose goal it is to innovate artificial intelligence across Microsoft\u2019s product lines.\r\n\r\nRestructuring this organization was a success in that it refocused Microsoft\u2019s people. The company was suffering from low employee engagement, and manipulating the organizational structure to eliminate harmful competition and create new team focus was a huge win. Nadella helped Microsoft\u2019s employees find a new sense of meaning in their work.\r\n\r\n<\/div>\r\nIn both of these instances, CEOs reviewed current operations and decided it was time for a new organizational structure that would better impact the company\u2019s success. Whether it\u2019s a change in functional strategy, as was the case for Google, or in people strategy, in the case of Microsoft, both CEOs chose to redo the structure to support the new strategy. The new structures then set the companies up for future success.\r\n\r\nWhat should every good organizational structure do for a company? The list includes, but is not limited to, the following:\r\n<ul>\r\n \t<li>Aids effective communication<\/li>\r\n \t<li>Aids in performance evaluation<\/li>\r\n \t<li>Increases efficiency<\/li>\r\n \t<li>Unburdens employees from excess or redundant work<\/li>\r\n \t<li>Provides faster and better decision making<\/li>\r\n \t<li>Provides clear reporting and working relationships<\/li>\r\n<\/ul>\r\nA company should always be reviewing its strategy, size, technology and environment to decide if the organization\u2019s structure still supports the business. If it\u2019s in need of a change, then change should occur. We\u2019ll talk about how to manage these kinds of changes in the next module.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/da144ae7-6981-4ca7-baeb-b7a9c6ef0b40\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Organizational structure and its impact on success<\/li>\n<\/ul>\n<\/div>\n<p>Organizations grow and change all the time, and the organizational structure that worked for a company once upon a time doesn\u2019t always work for a company as it grows. We\u2019ve talked about how smaller companies in uncertain environments can have organic organizational structures and be very flexible about how they respond to customer needs. But as they grow larger, there\u2019s a need for a more mechanistic approach. After all, a company can\u2019t have 2,000 employees with decision making power, all doing business the way they think is right.<\/p>\n<p>We\u2019re going to take a look at a couple of organizations that went through some organizational structure changes, so we can see where the original organizational structure was going wrong and how changes to that structure once again set that organization up for success.<\/p>\n<div class=\"textbox examples\">\n<h3>Google<\/h3>\n<p>Google is an excellent example of how a couple of guys in a garage changed the world. They started out with a single focus\u2014to develop the world\u2019s best internet search engine.<\/p>\n<p>That was about the last time that Google had a single focus.<\/p>\n<p>Google grew up fast, and in 20 years they\u2019ve accumulated dozens of locations, over 90,000 \u201cGoogler\u201d employees, and many, many different interests. Among their offerings are Google Docs, Google Translate, Google Maps, Waze, Android, YouTube, Blogger, Google Fiber, Google Home and self-driving vehicles. Just to name a few. Google\u2019s single umbrella, with its relatively \u201cflat\u201d organizational structure, was growing monstrously diverse.<\/p>\n<p>How does a single, relatively flat organizational structure support \u201cmonstrously diverse\u201d? The short answer is, it doesn\u2019t.<\/p>\n<p>CEO and founder Larry Page created a holding company for all of Google\u2019s projects and called it Alphabet. Then, each of those Google interests (26 in all, as you might have guessed) became its own company, with its own CEO. The CEO of each of those companies is now able to concentrate on the goals of that company without worrying about the mission of Google overall. It allowed greater autonomy to those smaller companies under the Alphabet umbrella.<\/p>\n<p>Larry Page explained in a blog post: \u201cFundamentally, we believe this allows us more management scale, as we can run things independently that aren\u2019t very related. Alphabet is about businesses prospering through strong leaders and independence.\u201d<\/p>\n<p>Page admitted the reorg was radical in the same post, saying, \u201cin the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.\u201d<\/p>\n<p>The reorganization of Alphabet as a holding company for the 26 Google subsidiaries has been going strong since 2015. Employees are able to concentrate on the mission of their own company and, with each company accountable for its own expenditures and income, Page expected that they\u2019d find innovating more meaningful.<\/p>\n<p>This is an example of how a very large company, forced into mechanistic structure by its sheer size and scope, made an organizational move to allow its smaller divisions to innovate and adopt more organic structures if that better fit their needs. Alphabet\u2019s 2018 revenue was $136.82 billion last year, and that\u2019s a good indication that it\u2019s working.<\/p>\n<\/div>\n<div class=\"textbox examples\">\n<h3>Microsoft<\/h3>\n<p>Microsoft had established themselves as the world\u2019s go-to in personal computer operating systems and Office suites. But suddenly the behemoth technology company was struggling. Departments that had been established to innovate were now in competition with one another, creating a toxic environment that threatened the company\u2019s future success.<\/p>\n<p>While Google was the dominant online provider and Apple was the ruler of the world of mobile products, Microsoft was struggling to invent, and then losing interest in their own products when they did. Zune is a great example. Does anyone remember what Zune was?<\/p>\n<p>In 2014, a new CEO, Satya Nadella, started his tenure with a major restructuring of the company. His first order of business was to do away with the damaging internal competition that posed so much of a threat, but he also wanted to reinvent productivity and business processes, build an intelligent cloud platform and create more personal computing. With a restructure plan and this three-pronged mission in hand, he went to work.<\/p>\n<p>Nadella waited two years before he merged Microsoft Research Group with the Bing, Cortana, and Information Platform group teams to create a new artificial intelligence and research group, whose goal it is to innovate artificial intelligence across Microsoft\u2019s product lines.<\/p>\n<p>Restructuring this organization was a success in that it refocused Microsoft\u2019s people. The company was suffering from low employee engagement, and manipulating the organizational structure to eliminate harmful competition and create new team focus was a huge win. Nadella helped Microsoft\u2019s employees find a new sense of meaning in their work.<\/p>\n<\/div>\n<p>In both of these instances, CEOs reviewed current operations and decided it was time for a new organizational structure that would better impact the company\u2019s success. Whether it\u2019s a change in functional strategy, as was the case for Google, or in people strategy, in the case of Microsoft, both CEOs chose to redo the structure to support the new strategy. The new structures then set the companies up for future success.<\/p>\n<p>What should every good organizational structure do for a company? The list includes, but is not limited to, the following:<\/p>\n<ul>\n<li>Aids effective communication<\/li>\n<li>Aids in performance evaluation<\/li>\n<li>Increases efficiency<\/li>\n<li>Unburdens employees from excess or redundant work<\/li>\n<li>Provides faster and better decision making<\/li>\n<li>Provides clear reporting and working relationships<\/li>\n<\/ul>\n<p>A company should always be reviewing its strategy, size, technology and environment to decide if the organization\u2019s structure still supports the business. If it\u2019s in need of a change, then change should occur. We\u2019ll talk about how to manage these kinds of changes in the next module.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_da144ae7-6981-4ca7-baeb-b7a9c6ef0b40\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/da144ae7-6981-4ca7-baeb-b7a9c6ef0b40?iframe_resize_id=assessment_practice_id_da144ae7-6981-4ca7-baeb-b7a9c6ef0b40\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-885\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Organizational Structure and Success. <strong>Authored by<\/strong>: Freedom Learning Group. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":17,"menu_order":9,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Organizational Structure and Success\",\"author\":\"Freedom Learning Group\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"2cb72575-cbd8-4713-a4f6-d77bbac9de67, 2d639345-bda7-4b5a-8c11-3066d85bd33e","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-885","chapter","type-chapter","status-publish","hentry"],"part":35,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapters\/885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":6,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapters\/885\/revisions"}],"predecessor-version":[{"id":2133,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapters\/885\/revisions\/2133"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/parts\/35"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapters\/885\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/wp\/v2\/media?parent=885"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/pressbooks\/v2\/chapter-type?post=885"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/wp\/v2\/contributor?post=885"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/wp-json\/wp\/v2\/license?post=885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}