STRATEGY VS STRUCTURE
An organization’s strategy is its plan for the whole business that sets out how the
organization will use its major resources. In other words, an organization’s strategy is a plan
of action aimed at reaching specific goals and staying in good stead with clients and
vendors.
On the other hands, an organization’s structure is the way the pieces of the organization fit
together internally. For the organization to deliver its plans, the strategy and the structure
must be woven together seamlessly. In other words, organizational structure is a term used
to highlight the way a company thinks about hierarchy, assigns tasks to personnel and
ensures its workforce works collaboratively to achieve a common goal. The goal is to avoid
task overlap and workforce confusion, especially when it comes to laying a strong foundation
for long-term productivity. Task overlap, a situation in which two or more employees perform
the same task in different departments, costs a company money. This creates confusion,
inefficiencies and lack of accountability -- because no employee ultimately has a clear
responsibility over who does what, where and when.
It is important to highlight that for too long, structure has been viewed as something separate
from strategy. Revising structures are often seen as ways to improve efficiency, promote
teamwork, create synergy, eliminate or create new department or reduce cost, including
personnel. Yes, restructuring can do all that and more. What has been less obvious is that
structure and strategy are dependent on each other. You can create the most efficient, team
oriented, synergistic structure possible and still end up in the same place you are or worse if
a good strategy is not adopted.
Organizational structure and strategy are related because organizational strategy helps a
company define and build its organizational structure. A company's organizational structure
is based on the result of the analysis of organizational strategy. The company will use these
results to determine its areas of concentration and how to position itself in order to succeed.
One of the first steps a company takes in its initial stages is assessing its operational
environment in order to determine the conditions in which it must operate. This involves
checking out the competition, consumer trends, culture and other factors. The company will
find out the strengths and weaknesses of its competition, the buying habits of the
consumers, and its economic capabilities.
The relationship between organizational structure and strategy becomes clearer when the
company’s strategy is in place. With a clear focus of what it wants to achieve, the
organization will proceed to align its structure in such a manner to best achieve this. It will
allocate responsibilities for optimal results, create branches, and decide whether individual
efforts or group participation is the best method for it to achieve its goals. The organizational
structure and strategy will also help the company decide if the tone of the company should
be strictly formal, semi-formal or informal. All of these decisions can be made after
determining the organizational strategy of the company.
Structure is not simply an organization chart. Structure is all the people, positions,
procedures, processes, culture, technology and related elements that comprise the
organization. It defines how all the pieces, parts and processes work together. This structure
must be totally integrated with strategy for the organization to achieve its mission and goals.
Structure supports strategy. If an organization changes its strategy, it must change its
structure to support the new strategy. When it doesn’t, the structure acts like a bungee cord
and pulls the organization back to its old strategy.
Strategy follows structure. What the organization does defines the strategy. Changing
