Organization structure is not a critical performance factor in an organization. Changing organizational structure has been found to add up to a company’s challenges but not deal with them. The authors emphasize that the focus on decisions rather than structure is the critical factor in an organization. An audit based on SWOT analysis is inaccurate as decisions made end up impacting on a company’s future. The result is that the reorganization is aligned with the analysis rather than critical decisions. One out of three strategies fails, and the organization collapses. Organizational structure should be based on decisions and their possible impact on the company performance.
I agree with the authors’ argument that operations and policies in an organization should be based on decision audit. Organization’s executives rush towards restructuring its departments and management layout without considering the impacts of their decisions. The authors use the examples of Yahoo and Ford to prove his argument. The information is credible based on the fact that Ford launched costly and dramatic restructuring in 2006. The company managed to rise from a $5.6 billion debt in 2006 to the revenue of $9.2 billion in 2010 (Marcia, Michael, & Paul, 2010). Yahoo restructured its sales, customer management, and information technology departments without evaluating the impact of the decisions. Executives had to create new management levels, a factor that slowed down decision-making and operations (Marcia, Michael, & Paul, 2010). Forbes reported that Yahoo decided to fire more than 2000 employees as it lost market share to Google and Facebook. Ford, on the other hand, embraced an organizational model based on evaluating decisions and their impact on the production efficiency. Ford’s CEO started in the opposite direction ensuring that few people made decisions while the rest promoted production and consumer satisfaction. As a result, the automaker managed to stabilize its profitability and global market share. Efficiency in decisions implementation rather than structure determines the success of an organization.
The authors highlighted six main steps to achieving a decision modeled organizational structure. Identifying the central business decisions is the first step. The best way to distinguish and make decisions is to look at the unit of value. The unit of value, in this case, refers to the customers. All decisions must be geared towards improving customer experience. The next step includes implementing changes in decision-making and evaluating the macrostructure. The following two steps are assessing the amount of authority and aligning information flow and resources. The final step involves training of the managerial team to implement and ensure the success of the new structure. I agree with the authors’ criteria of restructuring an organization. Identifying the decisions to be made and the areas they will impact is critical to ensuring a smooth transition. In restructuring information flow and duties, delegation and reporting is a huge challenge. Analyzing the restructuring at Yahoo and Chrysler and creating complex structures that limit information flow and decision implementation led to the failure. Creating a smooth information flow and departmental cooperation is the key organization’s success.
The authors also highlight the decision-based reorganization that presents management challenges. Running a decision audit and making the big decisions correctly is not enough. Executives must make several other small decisions impacting the departments. Reorganization, therefore, creates macro- and microstructures in an organization. Reorganization means changing the way departments and units within departments work. If not well guided, it will create confusion as some employees will be misplaced. Confusion leads to a communication barrier which is unhealthy in an organization. In auditing, when making big decisions, managers must consider smaller ones that may limit efficiency.
There is an opposing view that reorganization should be simplicity-oriented enabling the transfer of information, decisions, and feedback. The argument is that breaking bureaucracy and monopolistic structures is a key to successful business reorganization. Modern leaders are multirole cutting across motivation, facilitation, and oversight. Reorganization should be aimed at simplifying communication channels, a factor that will ensure a smooth decision implementation and feedback.
In conclusion, organization performance is a summary of the decision it makes and effectiveness of its implementation. Based on the structure, organizations have more decisions nodes, less efficiency, and small implementation team that increase the risk of failure. Organization based on decision efficiency has few decision nodes and a large implementation team hence improved response and performance.