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Week9lecturevideoscript  Part1:WhydoIneedtothinkaboutstrategy?  Strategysimultaneouslyneedsblueskythinking,deepanalysis,pluscollaborationskills,attentionto detailsothestrategicoutcomescanberealized.AsanundergraduateUNSWstudent,youmaybe thinking“whydoIneedtothinkaboutthismacrotopicofstrategy?Howdoesitimpactme?”  Someofyoumayalreadyhavebigaspirations,inwhichcaseyoumightbethinking“thistopicis goingtostartmeonthejourneytobecometheCEO.”  Thoughformanyofyou,careeraspirationsarelikelytobejustemerging.Ifthisisthecase, understandingorganisationalstrategyisperhapsevenmoreimportant.Thestrategyofan organisationcanbemotivationalandinspiring.Putanotherway,knowingthestrategyof organisationsyoumightapplyforwillhelpdetermineifyouwill,inthefuture,beabletosaythings like“I‘fitin’atmyorganization.Thisorganisationinspiresmetodomybestwork!”  Totacklethismanagementtopicofstrategyheadon,wehaveaninterviewwithProfessorLeisa Sargent.Shehasastellarinternationalreputationasamanagementscholarpublishinginthetoptier journalsonawiderangeoftopics,includingleadershipdevelopment,andisanaward‐winning teacher.AtUNSWProfessorSargentiscurrentlytheSeniorDeputyDeanoftheBusinessSchooland Co‐DeputyVice‐ChancellorforEquity,DiversityandInclusion.   Part2:Whatisstrategy? Whatisstrategy? Inthisvideowewillgothrougha5stepstrategyprocess.  Strategyisdynamicsoitremainsrelevantfortheorganisation,theircustomersandsocietymore broadly.  Asweprogress,wewillapplysomeconceptstotheorganisationResMed.  Vision,whendonewell,involvestheexecutivesaswellasfrontlinemanagersandemployees. Aligninggoalssoactionsthroughouttheorganisationmoveeveryoneinthesamedirection.  A n.ItisNOTaboutmakingprofit.A   .  Strategyisimportantforcreatingacompetitiveadvantage.  .

 .

 Smallcompaniesbenefitsignificantlyfrom advantagewhentheyareinaverycompetitiveindustry.  Let’stakealookatResMed. Thenextstepofthestrategicmanagementprocess, . 1 



 

Asituationanalysishaslayersthataretightlyconnected.Thereare    Lookingtothe ,thebroaderissueshappeninginsociety.  A focusedonthe orindustries.  Andthe oftheorganisation.  PESTELprovidesanacronymsummarisingthe thatimpactorganisations.  P .Thisisabouthowandtowhatdegreeagovernmentintervenesintheeconomyora certainindustry.Forexample,governmentpolicy,politicalstabilityorinstability,corruption, foreigntradepolicy,anation’seducationsystem,infrastructureandhealthregulations.  Eisthe includinginterestrates,inflation,unemploymentandeconomic growth.  Sisthe aretheoutcomesofchangesin,orchangingattitudestowardsthe characteristicsofapopulationsuchasage,gender,ethnicorigin,race,sexualorientation,social classes.Demographicchangesintheworkforcearealsoconsideredhere.  Tarethe thataffectthewaythatorganisationsdesign,produceor distributegoodsorservice,makingestablishedmethodsorproductsobsolete.  Eis includingclimatechangeandmostrecentlythereisalsotheCOVID‐19 pandemictoo.  Listhe .Lawsthatcoverdiscrimination,antitrust,employment,consumer protection,copyrightandpatent,andhealthandsafety.  Tolookatindustry,Professor putforwardfiveforcesimportantforunderstanding theprosandconsofenteringanindustry. 1.  Forexample,Nikoncameraswere renownforexcellentqualityphotography,butdidnotforeseehowthemobilephoneindustry wouldbecomeacompetitor. 2.  .Thisdependsonthesupply–demandscharacteristicsforthe suppliers.Forexample,supermarketsinAustraliahavealargeamountofpoweroversuppliers giventhemonology. 3.  similarlyisdeterminedbythesupplyanddemandcharacteristics, albeitdependingonhowmuchisbought.Forexample,withtradeoutletsthatsellengineering productsindustrypartnerssuchasBHPhavelargebargainingpowerbecausetheybuysomany oftheproductscomparedtotheaveragepersonwhojustwantstotinkerinthebackshed. 4.  orservice.Itissimplertoenteramarketforsubstitutesthat provideadiscount‘noname’brandcomparedtoshiftingtoelectroniccarsthatalsoneed energysuppliestoo. 5.  .Thesefourforcesinfluencethescaleofrivalrybetweencompetitors  Turningtotheinternalorganisationalenvironment,thisislooksattheavailableresourcesinthe organisation.  arerelativelyeasytoidentify:  the oftheorganisation  aswellas Buildings,equipment,vehicles,computersandothertechnology  Therearealso      andmoreintangibleassetsembeddedin thathaveevolvedover time,suchashow .  2 

ThesituationanalysisisthenutilisedtoconductaSWOTieanacronymforstrengths,weaknesses, opportunitiesandthreatsaffectingtheorganisation.Thistooldrawstogethertheexternaland internalenvironments,boththenegativeandpositivesituations Let’slookatResMedtounpack   —enableperformanceandneedtobeleveraged.ForResMedtheResMedFounder andChairman,DrFarrellidentifieskeyresearchfindingsthatareshapingthefieldofsleep medicinetoday.Theresearchandassociatedreputationisastrength.   —aretheexternalenvironmenttrends.ForResMedthatmanufactures respirators,COVID‐19isamassiveopportunity.   —characteristicsthatpreventyourorganizationorunitfromperformingwell. ResMedhascrappledwithhavingsufficientqualifiedemployeestoexpandrespirator production.   —possibleeventsorforcesoutsideofyourcontrol.ForResMedthelegalsystemsfor utilisingtheirrespiratorsdiffers,evenbetweenAustraliaandNZ.  Afterallthatanalysis,strategyisdetermined,thereare3levels.  Firstisthe thisexplainhowthe .Itis analogoustocorporatelevelstrategies.  Secondisthe .Astrategythatseeksto    Third,is .Marketing,finance,HR,manufacturingandR&Dwillallrequire strategiestosupportthelargergrand/corporatestrategies.It’sacascadingapproachtogoals.  Letsgobacktothegrandstrategy.Thisgrandstrategycouldjustbe whichinvolves reductioninanorganisation’sefforts. nd thelike.IntheCOVID‐19pandemic,manysuccessfulbrandshavemovedtoadefensivestrategy.  Nikeisone;itclosedclosedstoresandprovideddigitalservicestoconsumerswhowanttobuy online.Stabilityisthestrategythatinvolveslittleornosignificantchange.Duringthepandemicthis mightbeasmallfamilybusinessthatalreadyprovidedaserviceremotely.Anotherstrategyis growth,expansionwhetherthanbefromsalerevenues,marketshare,numberofemployees,or numberofcustomers.  ResMedhasagrowthstrategy.Asagloballeaderinrespiratorymedicine,thereisgrowthintheir needtoworkworldwideduringtheCOVID‐19pandemic  Thenextstepis ,thenext1to5years.Theseplanscreateactionablestepstoproducethecashflowand profits. Porter’scompetitivestrategiesisatoolforanalysinghowanorganisationaddsvalue.  AccordingtoPorter,valueiscreatedin2ways  Firstconcernsthe ,whethertheorganisationchoses  sohigherpricescanbeachievedorloweringcosts.  Theseconddimensiontocreatingvalueisthe either  d.  Thisresultsininthiscase   3 

pseekstocreatea  m.UsuallytheseorganisationsinvestmoreinR&D,marketingand/or customerservice.ThisiswhereResMedfit.  usesa  .Ripehasafocusedrangeofclothingformaternityandnursing wear,thusabletoaskforahigherprice…..PerhapsnotthemainfashionoutletsforUNSW undergradstudents!  isexemplifiedbyAmazon.Theorganisationseeksto     Costfocuswouldbethelocal‘rejectshop’.Theconcerniskeepingcostsandpriceslowforanarrow market.  Interestingly,someorganisationalstrategiesare‘stuckinthemiddle’ofPorter’scompetitive strategymatrix.Thiscanbeaneffectivestrategy.TakeforexampleIkeawhichhasthemissionto providebettereverydaylifeforpeople.Themoderatepricebracketcombinedwithamoderate rangeofproducts(typicallyahandfulofoptionsforeachhomewarecategory).  Withaplaninplacetoaddvalue,anorganisationalsoneedstodecide ,if anywhentheyonlyhaveasingle‐productstrategy,thatissellsonlyoneproductorservice.Thisis typicalinsmallretailbusinesses,includingflorists.  However,itisthroughdiversificationthatorganisationsbyspreadtherisk.   suchasthecaseofResMed,whereproductsorservicesarelinkedvia respiratorymedicine.  ,withseveralbusinessesoperatingunderoneownership. WestfarmersstartedinWesternAustraliaasaruralcooperative,andhasnowmovedintoretail, insuranceandcoalmining.  Whenanorganisationisdiversified–relatedorunrelated‐managersneedto  s.TheBostonConsultingGroup–BCG– isastrategytoolthathelpsthisdecision‐making.Thismatrixholds2issuesintension  the theproductorserviceholds,and  the rateoftheproductorservice.  Thiscreatesthefour‘types’ofproductsorserviceswhichareexpectedtoenhanceordrain organisationalresources.  Acriticalbundleofproductsorservicesarethe whichhave  . ForResMed, withtheCOVID‐19pandemic,twooftheirventilatorsarestarproducts.  Starproductstypicallydroptobea ForResMed,theremainproductwhichmonitors breathingduringsleephaswhatwecallamaturemarket,sothereislessgrowthrateanticipated. Thisproductcategorygenerateslargeamountsofcash.Managersseekto‘milk’cashcowsforas muchastheycan,yetalsolimitanynewinvestments. 4 

 Someproductsare

Theseproducts

 .Thiscategoryofquestionmarksarethe

hardestdecisionareaformanagers.

 .

 Thatbringsustothe‘

products Thusmanagersusuallyseekto

 

    Recallthatstrategyinvolveseveryoneintheorganisation?Thishelpsalignthestrategywithits implementation.  InaknowledgeorganisationsuchasResMedthecompetitiveadvantagearethepeople.ResMedhas beenbuildingcapabilityviasoftwareengineerstobuildtechpredictingpatientexperience& outcomes.Thisinvolvesrecruitingpeoplewhoareopentoexperience,haveahightolerancefor ambiguity,notafraidtoquestionstatusquo,&keentocontributetoalearningcultureierecruiting toachieveanemployee–organisationalfitwiththe Theseemployeesthenare trainedcross‐functionallyandtoworkacrosscultures,withperformancemanagementreinforcing thesemessages.  TheresourcesforemployeesthenflowthroughintohowResMedrunsitsoperations,whichisabout howtheresponsibilitiesaredividedupamongstspecificpeopleorprocesses.Thisiswhat organisationalstructureisallabout;moreonthatlater.  Thefinalstepinthestrategicprocessis .Inshortthisisallabout obtainingfeedbackandevaluatingifthestrategicgoalsaremetinreality.Insightsfromthisanalysis isusedtofeedforward,creatingaconstantiterativeprocesssothatthestrategyisalive.This iterativeprocessiswhatmakesstrategysomessy. Thetakeawayfromthestrategicmanagementprocessisthateveryoneintheorganisationis involved,evenfrontlineemployees.Andtheprocessinvolvestoolsthatenableemployeesto engageinasearchforevidence,analysis,andconstantmonitoringtoevaluateprogressongoals.   Part3:Whatisorganisationalstructure?  enablesorhindersstrategyimplementation.Tolookatcommonstructures occurringinorganisationstoday,weneedtounderstandsomekeyterms,soletsstartwiththose.  areasontoworktogether.Howemployees worktogether,howtasksareallocatedandcoordinatedistheorganisationalstructure.  Inanyorganisationalstructurethereare ,thatis make decisionsabouthowresourcesareutilised.  Thesepeoplewithauthorityalsoneedto someresponsibilitytoemployeeslowerinthe hierarchy.  5 

Ifauthorityis theexecutiveteamandthoseintopmanagerialpositions,thenweend upwitha sometimesreferredtoas .That isdecisionsmadebyhigher‐levelmanagers. Whereasifthatauthorityis ,withimportantdecisionsmadebymiddle‐leveland frontlinemanagers,weendupwitha ,sometimesreferredtoasan    Ina withmanymanagers. Whereasina ,flatterwithlessmanagers. Herewearetalkingabouta ,thatisthenumberofpeoplereportingdirectlytoa givenmanager. Inthisexampleorganisationalstructure,notewehavethesameno.ofpeopleintheorganisation, 4,096.Howeverthecentralisedorganisationwithanarrowspanofcontrolhasatotalof1,024 managers.Whereasthedecentralisedorganisationhasalmosthalfthatnumberofmanagerswith 512intotal.Mostorganisationstodayhavewidespansofcontrol. Whatdoesthismeanforthosewantingto‘climbthecorporateladder?’(pause)Well,ifyourcareer aspirationsaretomoveupthehierarchicalladder,thereislessopportunity!  Whenputtogether,theseconceptsof ,andtheextentof  willcreatedifferentorganizationalstructures. Choosingamongstthevariousorganizationalstructuresis  .In .Think mining,whereactivitiescannotbereconfiguredquickly. Whereasdy   Theorganizationalstructureisalsocontingentuponthestageoftheorganizationallifecycle.  Earlyin‘birth’ofaneworganization,anentrepreneurneedstohiremorepeople,creatingasmall workteam.Inthissimplestructureofthegrowingbusiness,theownercanresolveissueseasilyover lunch.Theteamcanmovequickly.BothHewlett‐PackardandAppleComputerbeganastwo‐person garagestart‐ups.  Asanorganizationgrows,challengesemergewithasimplestructure.Therearetoomanyprojectsor customerproblemsfordecision‐makingstructureoftheownerbeingoverallcoredecisions.Such growingpainstypicallyemergewhenemployeescannolongerfixcustomerproblemsinformally overthewatercooler,orinthelunchroom. Thisiswhena .Thesestructuresbothdelegate authoritytospecialists.  Ina Suchfunctional structuresiswhatweseeinatypicalcorporatesetting.  A . Thisdivisionalstructurecouldbeby .  ZapposisanonlinestoreoutofUSA.Itstartedasasma;;simplebusinesssellingshoesonline.Once theworkteamwasat30people,thegrowingpainsweretoomuch,arestructurewasneeded.They movedtoafunctionalstructuretopartitionauthorityanddelegation.  Someorganisationsthenmovetoa Thisisbecauseasthebusinessgrowsfurther,a solespecialistorientationisnotworking.Siloedthinkingemerges.Financepeopleareignoringhow 6 

employeesneedtobemanaged,andarenotadaptingpracticesrequiredofdifferentcountries.This iswhenthematrixstructuretypicallyemerges.Herethereare2specialisations.Eachemployeehas twomanagers.Employeesareembeddedinaprofessionalspecialisationsuchasfinance, engineeringandsoforth.Thenthoseemployeesareallocatedtoaspecificproject.Itresolvesmany challengesforthecustomers,howevercanbeamajorheadachefortheemployees.Whichbossdo youlistentotoday?Whichprojectismoreimportant?  Thisiswhynewerorganizationalstructuresareemerging,suchas Thisapproachis  . Zappos,whichhadaclanculture.PartofwhatdrovetheclanculturewastheHolocracy organizationalstructurewiththeverydecentralizeddecision‐makinginteams.  TounderstandtheHolacracyorganisationalculture,hereisasnippetoftheTEDtalkgivenbyBrian Robertson.Noticehowdecisionsarenotdrivenbymanagers,ratheritisdrivenbytensions.  AsyouheardintheTEDtalk,manymanagementissuesarebeingtransformedasaresultofthisnew organisationalstructureofHolocracy.  Largecorporatesorgovernmentinstitutionshaveorganisationalstructuresthataremuchmore complexinordertomeetthevariousdemandsthecomplexorganisationsenvironment. HereisanexampleoftheReserveBankofAustralia.  Someemployeesworkina .HerewecanseethereisIT,finance,risk,audit andsoforth.  Otherareasfocuson basedon –payments,andnoteissuesforexample,  Andyetotherareasofthisbankfocusingondivisionswhichare domestic,international, LondonandNY. Asyoucanseeorganizationalstructuresbecomeverycomplex.  Andperhapsitgoeswithoutsayingthatnewerforms– –areontherise.And althoughthemodeofinteractionisdifferent–decisionsabouthowdecentralisedorcentralisedthe organisationisstillpervade.  Whatarethetake‐awayimplicationsforyouasgraduates? 1. 

2. Also,todaythetrendisfororganisationalstructureswith , thusskillsandresilienceisalsoneededforworkingwithautonomy   Part4&5:ManagementinAction–Longworkhoursinaprofessionalservicefirm  Forknowledgeorganisations,thecompetitiveadvantageisembeddedintheir‘people’.Andfor manyprofessions‘arealityoflife’hasbeenextremelylongworkhourstoensurethecompetitive advantagefromtheirexpertknowledgeisdelivered.  Letstakealookattheselonghoursinaprofessionalservicefirm.WhataretheHRMandStrategy implications?  WewillfocusonalawfirmGilbert&Tobin–knownasG+Tforshort.  7 

TherangeofservicesdeliveredbyG+Tisvast.Thisfirmisnowrecognisedasaleadingtransactions, regulatoryanddisputeslawfirm.TheyhandlesomeofthemostcomplextransactionsinAustralia, advisingacquirers,targetsandfinanciers,includingforRoyalCommissions.Thefirmisalso committedtosocietalissueswithprobonolegalservices.Gilbert&Tobinisalsocommittedto diversity;thefirmhasthehighestproportionofwomenpartnersamongmajorAustralianlawfirms. BeforeturningtowhatPartnersinthislawfirmsayabouttheirstrategyandHRMpractices,letus takeamomenttoconsiderhowGilbert&Tobinhaveattractedattentioninthemediacross2018to 2020.  Thisattentionhasbeenverynegativeattentionindeed.(click–pause)Therehavenowbeen2 allegationsrelatedtoexcessivelonghours,alargechunkofwhichwereunpaid.Inallcases,these conditionswereaffectingjuniorlawyersthemost;theseemployeesweretheyareusuallygiventhe mostadministrativeormenialtasks.  Theseallegationswerenottrivial.TheywerereportedtoSafeWork,whichistheNewSouthWales workplacehealthandsafetyregulator,whichcoversphysical,mentalandemotionalaspectsofwork. Thelonghourswasnotanoccasionalmatter.Itwasaboutsustainedworkload  ThefirstSafeWorkcomplaintfiledagainstGilbert+Tobinallegedsomelawyerssleptintheiroffices "60‐80nightsperyear"and"abuse[d]supplementsanddrugsinthebankingandcorporateteam"to "keepupwithdemands".  ThesolicitortoldSafeWorkinNovemberlastyearthattheyfeared"extreme"workingconditions hadreacheda"pointsomeonewilldieorhavesomeotherphysicalormentalhealthepisode". Andmorerecentlyin2020GilbertandTobinhasprogressedbackpaymentsrangingfrom$300to morethan$15,000becauseoftheextremeworkhourspushedtheirwagesbelowtheminimum hourlyrate.  InthenewspaperstheManagingPartnerDannyGilbertdeniedtheproblem.However,therewas alsoaflurryofmediareleasesfromtheGilbertandTobinaboutinnovationsintheorganisationto protecttheircompetit...