Breaking Paradigms and Organizations as Systems

There are not unique business models or organizational structures. The main principle is that first comes strategy design and then the organizational structure or design. This means that, depending on what the organization wants to do, it will decide how to use all its resources to work together to achieve the strategic goals. It is important to review the concept of organizational design according to the analytics process as it has been introduced in this book. Organizational design requires principles such as the following:

• ? Thinking strategically, involving risk management from the beginning of the strategic design process and review of the performance evaluation and the variation of the expected results.
• ? Thinking creatively in order to decide where to go and what to achieve with the business. This means defining the goals under the observation feasibility and ideal assumptions.
• ? Creating value in all dimensions of the business definition (who, what, how) and for all stakeholders. Evaluating what is or is not feasible.
• ? Keeping in mind that good implementation is the core of the functioning in the organization. Under the analytics process, the emphasis is on starting with the answer to what else can I do with the resources that I have today? This includes, for example, with data and analytics capabilities in organizations.
• ? Using an analytics view in the integration of information systems, operation management, customer care, and risk management.
• ? Getting a plan to manage strategic risk. This means learning from the beginning the strategic steps that need to be performed and the risk associated with those steps. Defining potential early warning systems about strategic risk, which will connect to many other risk control activities.
• ? Modifying the order of first compliance in risk management regulation and moving in the direction of thinking in risk management as a strategic opportunity. This means converting risk management into a means of strategic competency.

Strategic and organizational design for implementing strategy is not a task that is learned just through imitation or by considering the best practices that are seen in the market or economic sector. There are examples of organizations that have been very successful using structures outside of any paradigm, such as SEMCO Brazil Empowerment and the way to define management and employee relationships, developing a more open schema of working. This schema is based on the meaning and value of each employee in the joint achievement of goals and the control and decisions related to the use of resources. Fundacion Social Colombia decided to have two heads sharing power. This means two boards: one for social mandate and another for corporate mandate. The reason is that the model of Fundacion Social is a not-for-profit organization that has companies that produce the funds to achieve the final objective of intervening in society’s improvement. Another example is Woodland (Hamel 2011) in which the flat organizational policy, modifying the structure of the hierarchical levels in organizations, allowed employees to share responsibility in the decision of what organizational resources could really provide value to the organization.

Moreover, according to the variety of business models, there are multiple strategies; they are not unique. As Mintzberg et al. (1998), in their book The Strategy Safari, present, there are various ways to develop strategies:

• ? Design: planned perspective, cerebral, simple and informal, judgmental, deliberate
• ? Planning: plans decomposed into substrategies and programs, formal, decomposed, deliberate
• ? Positioning: planned generic positions, analytical, systematic, deliberate
• ? Entrepreneurial: personal, unique perspective, as niche, visionary, intuitive, largely deliberate
• ? Cognitive: mental perspective, mental emergent, descriptive (main proponent Simon)
• ? Learning: patterns, unique, emergent, informal
• ? Power: political and cooperative patterns and positions, conflictive, aggressive
• ? Cultural: Collective perspective, ideological, constrained, collective
• ? Environmental: specific positions, generic, passive, imposed, hence emergent
• ? Configuration: any to the left, in context, integrative, episodic, sequenced

The variety of development of strategies and the options of business models affect directly all dimensions (who, what, how) of the organizational design and management control systems. These two aspects, the multiplicity of ways to develop strategy and business models, open the need to observe the support that the analytics process can provide. The analytics process needs to adapt to the selected strategies and, at the same time, to help in the definition of the strategies. This requires analytics to be a systematic approach of support for the following:

• ? Organizational structure definition
• ? Decision-making process and authority
• ? Management familiarity with industry
• ? Driver of operation on finance
• ? Culture building
• ? Strategic planning and budgeting
• ? Transfer pricing and resource allocation

Figure 3.1 The general concept of a system.

• ? Balance among compensation, incentives, and HR mobility
• ? Improvement of resource management: synergies of scale and scope

In the organization’s design, the analytics process can be considered as a flow that keeps awareness and helps the problem-solving process of the organizational system—the system that performs a process of planning, coordinating, communicating, evaluating, deciding, and influencing. An organization, as an open system, is permanently adapting the organization to the environment. The adaptation is part of strategy formulation and the organization’s design. The organization as a system has a brain that processes information, learns, and creates knowledge to develop the organization itself. The organization’s brain develops strategic intelligence to manage all the relationships of areas and business units (see Figure 3.1). Analytics knowledge management feeds and maintains the process of strategic intelligence improvement for a better system performance.

Based on the above points, the next sections present the relationship of the organization to management control systems.