THE HORIZONTAL ORGANIZATION MIT Course 16.852J/ESD.61.J- Fall 2002 Dr Joe h. mize October 23 2002
THE HORIZONTAL ORGANIZATION MIT Course 16.852J/ESD.61.J – Fall 2002 Dr. Joe H. Mize October 23, 2002
The horizont anization REFERENCES Portions of this presentation were adapted from the following: Ostroff, Frank, The Horizontal Organization(New York, Oxford University Press, 1999) Hammer, Michael, Bevond Reengineering(New York, Harper BusinesS, 1996) Hammer Michael, "Process Management and the future of Six Sigma", MIT sloan Management Review (42: 2 winter 2002) Majchrzak, Ann and Qianwei Wang, "Breaking the functional Mindset in Process Organizations", Harvard Business Review (Sept-Oct 1996) Galbraith, Jay, Designing Organizations(San Francisco, Jossey-Bass, 2002) Mze(10-2302)
The Horizontal Organization REFERENCES Portions of this presentation were adapted from the following: Ostroff, Frank, The Horizontal Organization (New York, Oxford University Press, 1999) Hammer, Michael, Beyond Reengineering (New York, HarperBusiness, 1996) Hammer, Michael, “Process Management and the Future of Six Sigma”, MIT Sloan Management Review (42:2, Winter 2002) Majchrzak, Ann and Qianwei Wang, “Breaking the Functional Mindset in Process Organizations”, Harvard Business Review (Sept – Oct 1996) Galbraith, Jay, Designing Organizations (San Francisco, Jossey-Bass, 2002) Mize (10-23-02) 2
The horizont anization ORGANIZATIONAL STRUCTURE Comprises the organizational components(units), their relationships and hierarchy Portrays where formal authority and power are located · Provides a"“home” and identity for employees
The Horizontal Organization ORGANIZATIONAL STRUCTURE • Comprises the organizational components (units), their relationships and hierarchy • Portrays where formal authority and power are located • Provides a “home” and identity for employees Mize (10-23-02) 3
The horizont anization FUNDAMENTAL QUESTIONS REGARDING ORGANIZATIONAL STRUCTURE · Who goes where? · What do they do? What are the positions and how are they grouped? What is the reporting sequence? What is each person, and each unit, responsible for? How does authority/accountability flow?
The Horizontal Organization FUNDAMENTAL QUESTIONS REGARDING ORGANIZATIONAL STRUCTURE • Who goes where? • What do they do? • What are the positions and how are they grouped? • What is the reporting sequence? • What is each person, and each unit, responsible for? • How does authority/accountability flow? Mize (10-23-02) 4
The horizont anization DEPARTMENTALIZATION Definition: The grouping of employees Bases for departmentalization by function or specialty · by product line by customer/market segment by geographical area by work flow process combination
The Horizontal Organization DEPARTMENTALIZATION Definition: The grouping of employees Bases for departmentalization • by function or specialty • by product line • by customer/market segment • by geographical area • by work flow process • combination Mize (10-23-02) 5
The horizont anization Functional Organization Structure President Finance Legal Corporate Develoment Public Relations Product Marketing Customer Support Research Development Production Operations Distribution ceiving Storage Quality Assurance
The Horizontal Organization Mize (10-23-02) 6 Functional Organization Structure Finance Legal HR Corporate Develoment Public Relations Product Marketing Customer Support Research & Development Quality Assurance Receiving & Storage Production Operations Distribution President
The Horizontal Organization Product Oriented Organization Structure President Finance HR CD Cabinets Disk Boxes Accounting Accounting Production Production Marketing Marketing
The Horizontal Organization Mize (10-23-02) 7 Product Oriented Organization Structure Finance Accounting Production Marketing CD Cabinets Accounting Production Marketing Disk Boxes HR President
The horizont anization Geographic oriented Organization Structure President Finance Western Division Southeast Division Internationa Accounting Accounting urope Production Production South america Marketing arketing Asia Mze(10-2302)
The Horizontal Organization Mize (10-23-02) 8 Geographic Oriented Organization Structure Finance Accounting Production Marketing Western Division Accounting Production Marketing Southeast Division Asia South America Europe International HR President
The Horizontal Organization Process Organization Structure (Horizontal Organization) General Manageer New Product Development Process Order Fullfillment Process Customer Acquisition and Maintenance New product teams Product Teams Customer Teams Mze(10-2302)
The Horizontal Organization Mize (10-23-02) 9 Process Organization Structure (Horizontal Organization) New Product Development Process Order Fullfillment Process Customer Acquisition and Maintenance General Manageer New Product Teams Product Teams Customer Teams
The horizont anization VERTICAL (FUNCTIONAL ORGANIZATION MODEL Inherent shortcomings Internal focus on functional goals rather than outward-looking concentration on winning customers and delivering value Loss of important information as transactions travel up and down the multiple levels and across the functional departments Fragmentation of performance objectives brought about by a multitude of distinct and fragmented goals Added expense involved in coordinating the overly fragmented work and departments Stifling of creativity and initiative of workers at lower levels Slow responsiveness to changes in the external environment and to customer issues
The Horizontal Organization VERTICAL (FUNCTIONAL) ORGANIZATION MODEL Inherent Shortcomings • Internal focus on functional goals rather than outward-looking concentration on winning customers and delivering value • Loss of important information as transactions travel up and down the multiple levels and across the functional departments • Fragmentation of performance objectives brought about by a multitude of distinct and fragmented goals • Added expense involved in coordinating the overly fragmented work and departments • Stifling of creativity and initiative of workers at lower levels • Slow responsiveness to changes in the external environment and to customer issues Mize (10-23-02) 10
