Sunday, March 15, 2009

Business Strategy and Alignment

Which relationships dominate an organization? Some organizations are driven by customer relationships, some by partner/supplier relationships, and some by technology and research.

One of the ideas I picked up many years ago from a paper by Professor Joseph Tidd was the strategic importance of this choice: which external relationships are dominant, and how this affects the internal power relationships within the organization.

  • For example, a technology breakthrough strategy would be driven by R&D, often in close collaboration with companies that would normally be regarded as competitors.
  • By contrast, a strategy of technology fusion would require a much stronger role for production, with close links to suppliers of component technology.

Obviously such business strategies will need to be supported by information systems that communicate across and between organizations in an appropriate manner. Some strategies may require so-called Chinese walls, providing a level of protection from information leaking prematurely to competitors. Some strategies require a degree of proximity bordering on intimacy - business jargon refers to this as "getting into bed with" your suppliers or customers or business partners.

So I was interested to read an interview with Prith Banerjee, director of HP Labs (Riding the Recession the HP Way, BBC News, 14 March 2009). Here are some key quotes.

The world's largest technology company says a major reorganisation of research efforts last year will help it survive the downturn and secure its future. In 2008 HP announced a "groundbreaking" move to align the work done in its labs more closely with business goals. ... While most companies keep their most valuable research projects under wraps, HP has taken a different tack. Everything is out in the open and there is a real emphasis on collaboration with universities, government and other industry players.

In other words, HP believes the business architecture implemented last year gives it greater viability in the current environment. We shall see if they are right.

Tidd, J. 'Technological Innovation, Organizational Linkages and Strategic Degrees of Freedom', Technology Analysis and Strategic Management 5(3) 1993, pp 273-284

No comments: