Answer the questions under this case: (organization design and development)

Choosing a model and an approach for an Organization Design

This case illustrates how one organization initiated a design and implementation project around a specific business issue. The choice of model and approach was part of early thinking about how the design project should be set up. This formed the basis for resolving the issue in a participative and speedy way.

The organization

ABC is a multinational pharmaceutical company with 91, 000 employees in 140 countries. It is a world leader in offering medicines to protect the health, cure disease, and improve well-being. Its stated goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. It has leadership positions in both patented and generic pharmaceuticals. It is strengthening its medicine-based portfolio which focuses on strategic growth platforms in innovation-driven pharmaceuticals, high quality, and low-cost generic and leading self-medication over-the-counter brands. In 2005t, the groups business achieved a net sale of 32.2 billion and a net income of 6.1 billion. Approximately 4.8 billion was invested in R&D.

The issue

The pricing of drugs is currently done within each geographic location. Thus there are many pricing teams each responding to local conditions and each with their methods and criteria for pricing. There is a headquarters view that this model leads to overlap and duplication for work, inconsistent pricing for customers, and a lack of transparency on anticipated sale volume.

The requirement

An organization design model and approach for designing and developing a pricing organization and strategy that will result in cost-saving, efficiency gains, appropriate standardization of pricing policies and processes (allowing for local conditions if necessary), and local reinforcement of the desired business image of the global company.

Discussion

A group of managers met to look at new ways of thinking about pricing. They agree that the design envisaged as transactional rather than transformational; that is, the overall business vision, mission, and strategy would be unaffected.

However, they felt it likely that thinking differently about pricing and how to price and pricing teams would result in a significant new design of many components of the organization.

Before looking closely at the models, the managers agreed that:

- The function of pricing was to determine the best price to cover costs and ear overall profit for the whole enterprise;

- Pricing was determined by a relatively complex input, throughput, and output process, shaped by the environment;

- They needed a common, agreed, and adhered to a pricing strategy that dovetailed with the overall business strategy at the enterprise level but allowed for differentiation at the local level;

- The new pricing organization should eliminate overlap, duplication, and customer satisfaction.

This agreement ruled out a couple of the models immediately. The 7S Model does not specifically mention the external environment and operating context and nor does Galbraiths Star Model, though both could be adapted.

The managers looked more closely at the remaining four models. The Burke-Litwin model with its many boxes, arrows, and feedback loos looked too complex to grasp easily and quickly by busy line staff operating in a range of geographies. The Weisbord 6-box model did not parcel the organizational elements in a way that seemed right to the group; for example, it was not clear what helpful mechanism might look like across the current pricing process. Leavitts Diamond w3as considered more fully but it was weaker in distinguishing between people as a workforce- in terms of work activity, roles, and skills- and the informal, cultural aspects of an organization-the language, norms, and relationships.

This left Nader Congruence Model as a possibility. This too had some constraints:

- It appeared to militate against consideration of the different operating environments. In designing the characteristics of the pricing function, the managers were determined that this should include what Nadlere calls that twin principles of integration and differentiation

integration means that each geography focused on the same business and pricing strategies; and differentiation means the ability for each geography to implement the strategies in a way that made sense locally.

- The managers were not convinced that it would result in a swift, innovative design and implementation. They were looking for a very different pricing function that would be operational within weeks rather than months, so they were not interested in going through the type of long-winded organizations design process that had experienced in the past. They were looking for speed in the design process and innovation in the resulting design.

However, they then realized that the Congruence Model had been updated to resolve these problems. The basic principles remain the same, but in the newer version, the model is applied at each business unit level but within a single enterprise vision. The managers felt that in their case they could start to envisage an organization design that built alignment, congruence, and linkage (that is, integration) across all the geographic locations in the areas of formal organization and work activities, as well as differentiation for each geographic location in the areas pf people e and culture. The outcome would be people using the same systems and processes to carry out the same work activities, but their ways of working could be different. The managers understood that the people and culture aspects of each geographic location would have to mesh with the formal aspects and the work activities, but they believed this was achievable. Recognizing that they were at an early stage process, the managers decided not to jump into the immediate solutions to the business issue. Instead, they worked through the diagnostic questions to see if their initial selection of the Updated Congruence Model made sense in their situation. They then started to consider the range of approaches they could use to develop and implement the design. As they went through the diagnostic questions, the discussion got more heated. A challenger to this argument suggested that successfully using the future search or other participative approaches could start to move the culture towards being a genuinely more involved one. In his view, this would improve organization effectiveness because his experience was that participative business cultures were more highly performing than command-and-control ones.

Questions:

1- Describe briefly ABC organization, mission, vision, number of employees, values, management style...

2- What is the ABC organization issue based on the case?

3-Draft the design model based on ABC.