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Managing Organisations: Responding to a radical change in strategy

Throughout the 1960s and 1970s, IBM dominated the computer market with the provision of state of the art, technologically superior mainframe computers. In 1076, Steve Jobs founded Apple Computers and this initiated a market change, the profoundness of which was not appreciated by IBM until 1980, when it recognised that the personal computer was the wave of the future.

IBM also realised that the organisational structure they had in position was not compatible with the imagination, speed and flexibility it would need to develop, launch and sell their own PC. Engineering skills would have to be different, decision making systems would have to be faster, different kinds of people would be needed, new channels of marketing would be needed.

Rather than insert a new division into the existing IBM organisation, the company set up an entirely new facility in Boca Ratan organised for speed and flexibility. It kept this sub organisation insulated from the rest of IBM and within a year IBM PC was born. By 1983, it was the best selling PC in the world.

For some time afterwards the concept of the ‘skunk works’ was popularised. These were loosely structured Research and Development units, protected from host organisations and built to foster creativity. In every respect they differed from their host organisations and the way they were designed sought to support the strategic imperative of innovative product development rather than the strategy of the host organisation, which was usually to dominate a given sector of the market.

When confronted with a major change of strategy the organisation may have to change the way it operates in as a radical a way. This is likely to affect all aspects of the organisation, the structures, the processes and the people who operate them.

Next week: Business processes

Excerpts from The University of Leicester Diploma in Management – Resource Development International (RDI) Jamaica.
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