Simple and complex structures - Interdependent structures

5 important questions on Simple and complex structures - Interdependent structures


When is a complex structure, incorporating a wider range of overlapping and mutually interdependent units, needed?

If a company requires multiple dimensions of focus in order to pursue a variety of sources of competitive advantage, there will be no satisfactory way to design self-contained business units.

How can a focus both on more and less aggregated market segments be achieved?

The main business can be defined broadly, but more narrowly focused profit-responsible sub-units, which report to the main businesses, can also be set up. These sub-businesses achieve additional focus benefits by giving dedicated management attention to the needs of their specific target management.

In interdependent structures, the units' responsibilities will be less self-contained and more overlapping. they must work in parallel with the overlay units and coordinate the efforts of the sub-businesses in order to present a coherent face to the market. What do overlapping unit responsibilities do?

They help managers to see opportunities for sharing and cooperation, and make them more willing to work together to achieve synergies that benefit the group. The parent plays a more active role in guiding interdependencies and arbitrating disputes.
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What is the impact of more sharing of responsibilities? And is bottom-line profitability suitable with this?

More responsibility sharing means harder to hold individual units accountable for their own results. Managers should be trying to help other units to achieve their goals, as well their own. 
Bottom-line profitability is therefore not a suitable performance measure, since different kind of units need different measures.

What are the basic features of interdependent structures?

The basic features are multiple dimensions of focus, overlapping units with extensive collaboration between them, and shared accountabilities. 

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