a case for restructuring an organization
TRANSCRIPT
A study of a defense organization -TARDEC
Sarang Bhutada DoMS, IIT Madras
TARDEC is US Army’s Tank-Automotive Research, Development, and Engineering Center, located in Warren, Michigan
Roots back to 1946, when it was formed with the sole mission of building quality tanks and supplying them to the US Army
Army’s hub of R&D activity for ground vehicles and their associated integration and logistics
Underwent a major re-structuring in 1989, when Dr. Kenneth Oscar sculpted a paradigm shift in their internal strategy
Showed characteristics typical of a declining organization like• Shrinking Market Size: Figured on federal Government’s base
closure list• Alternative opportunity seeking: Ventured into civilian space• Employee turnover: Faced consistently declining employee
levels• Centralized in an ever changing environment: Multi-
hierarchical linear structure• Ageing Infrastructure• Outdated management practices
Issues concerning organization effectiveness Quality management not efficient Vehicular technology rapidly changing Delayed decisions and longer response times Lack of clear vision amongst and within the ranks Low input by associates in management decisions
How do you factor this in and restructure (Delayer) an archaic organization?
TARDEC
Customers Suppliers
Government/ Fed Agencies Competitors
Armed Forces
Auto Industry
Academia
International Markets
Demographic, cultural and social forces
Economic Forces
Technological Forces
Political Forces
Specific Environment
General Environment
TARDEC had a structure that was highly complex, formalized and centralized
For its very survival it needed to restructure itself into an organisation that would be less formalized and decentralized
High level of formalization in R&D organizations stifles innovation, and increases red-tapism
A matrix-structure does promise the best-of-both-world effect
Each team would work in a product division and would include management expertise from different VPs
Senior management’s (VPs +) role is now more as a mentor and a guide, than authority
Vertical and top-down
Corporate Level Strategies Business Level Strategies Functional Level Strategies Delve into civilian space Pursue top grade quality awards
Make the organization flatter Tie individual performance with
organization performance Project TARDEC as an innovative
organization to the industry
Detail actions concerning team processes, roles & responsibilities, awards, etc
As per Chandler, new organizational forms are no more than a derivative of strategy
Growth drivers gave rise to the need for an autonomous, multidimensional structure
Highly centralized structure inefficient and impractical in dealing with a complex organization, like TARDEC
For better allocation of resources, accountability of performance and coordination between units team based organization was preferred, which could be monitored
As per Miller and Snow, PROSPECTORS are organisations that
• continually search for new market opportunities. • Their domain is broad and in a constant state of development. • The main tasks are maintaining flexibility in technological and administrative
components. • Technologies are less formalised and more embedded in the minds of the
organisation’s personnel.• Planning is based on incremental adjustments based on feedback from
experiments.
TARDEC followed a typical Prospector Strategy: Tried to exploit a new market opportunity , by extending into civilian space Focused on innovation and applied for various quality awards Demonstrated flexibility in scanning the environment for potential opportunities Decentralized into a number of teams
The number of employees had been decreasing However, with the elimination of a number of levels,
we think TARDEC would be in a position to retrench. This would result in a loss of routine for a lot of
managers, and hence the reduction. Since the size of the organization would be decreasing,
it would aid in reducing formalization and thus help decentralize easily
TARDEC can be classified as an organization using small batch and unit technology
Such organizations have typically low technical complexity
However, flexibility and the ability to respond to a wide range of customer requests make this technology ideally suited to producing new and complex products
Typical characteristics of such an organization, as per Woodward’s Approach includes:
Levels in the hierarchy
Span of Control of CEO
Span of Control of team leader
Structure of organization
Type of structure
Ideal Small Batch and Unit Tech*
3 4 20 Relatively flat, with a narrow span of control
Organic
Before Delayering 8 6 4 Tall Mechanistic
After Delayering 3-4 5 NA Relatively flat, with a narrow span of control
Organic
*Source: J Woodward, Industrial Organization: Theory and Practice. London: Oxford University Press, 1965
Key tenets of TQM incorporatedCease dependence on mass inspection to achieve quality. Quality should be a team responsibility.
Break down barriers between departments.
Put everyone in the company to work to accomplish the transformation
Benchmark the organization against the best in industry. Alternatively, set benchmarks for industry to follow.
End the practice of awarding business on price tag alone. Instead, minimize total cost
We need to check if de-layering has successfully absorbed the environmental changes
When the environment is rapidly changing and on-the-spot decisions need to be made, lower-level employees need to have the authority to make important decisions- i.e. they need to be empowered
The empowered team goes ahead with their decisions, which speeds up the process of decision making
Mechanistic Organizational Structure Organic
Low Environmental Uncertainty High
Mechanistic StructureSimple StructureLow DifferentiationLow IntegrationCentralized decision makingStandardization
Organic StructureComplex StructureHigh DifferentiationHigh IntegrationDecentralized decision makingMutual Adjustment
TARDEC before Delayering
TARDEC after Delayering
Impact of Delayering on Culture On OCTAPACE parameters-
Openness Confrontation Trust Authenticity Proactivity Autonomy Collaboration Experimentation
Effect of Delayering
Analysis across the 3 competing dimensions-
Before Delayering After Delayering
People vs. Organization Organization Centric People Centric
Control vs. Flexibility Control Flexibility
Means vs. Ends Ends Means
Delayering is an effective approach, available to declining organizations
Delayering effects need to be carefully evaluated and the negative ones pre-empted
Dimensions need to be carefully evaluated as discussed above, and validated by existing theories around them