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Competition with Collaboration August 30, 2009

Posted by Tim Rodgers in Management & leadership, Organizational dynamics, strategy.
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It’s been a few weeks since my last post, and I apologize to my followers out there. Today I read an interesting item in a recent Business Week (August 24 & 31, 2009) about Sergio Marchionne, Fiat-Chrysler’s CEO, titled “Tough Love at Chrysler,” by David Welch, David Kiley and Carol Matlack. It seems that Mr. Marchionne has implemented significant organizational changes, including setting up separate companies for the Dodge, Jeep, and Chrysler brands, headed by a different CEO’s. Each of the brands “compete with each other for marketing and development resources,” which could lead to damaging in-fighting. To minimize that threat, Mr. Marchionne also assigned corporate-wide, horizontal responsibilities to each of the CEO’s, making each of them dependent on the others to achieve brand success.

I’m certainly not a student of organization charts at automobile manufacturers, but this seems unusual and probably unique. I would guess that the more typical models would be either (1) all necessary resources controlled by each brand chief, or (2) common functions like sales and marketing strategy headed by different staff-level executives. Neither of these are ideal. Model (1) would probably lead to inefficiencies, overlap, and possibly competing strategies. Model (2) puts the shared resources under the control of leaders who have an indirect and somewhat distant connection to sales, revenue, and profits.

Mr. Marchionne has created something that looks like a simplified matrix organization, minus several executives and thereby forcing the brand CEO’s to wear multiple hats. It’s a bold move, and I wish him well, but I’m concerned that the success of this model will depend primarily on the personalities of the individuals filling these roles, and specifically how effectively those people will be able to manage their own ambitions for the greater good. I’m sure that each of these CEO’s will have performance measures that reflect both their own brand’s performance, and the contribution of their assigned corporate-wide function to all brands. I can imagine situations where those measures could come into conflict, and it will be interesting to see how those conflicts are resolved. I’m sure there’s a Harvard Business Review case study in the making.

Collaboration between executives and managers and workers at all levels isn’t optional. It’s required, and managers should ensure that organizational structures and processes and performance measures maximize the opportunities for collaboration.

When I’ve managed multiple managers I’ve tried to assign responsibilities in a way that makes them dependent on each other, motivating those who may not naturally choose cooperation over competition. I think it’s important for each person to have performance objectives that are uniquely and unambiguously theirs, but that doesn’t mean that all of the resources necessary to achieve that success have to be under their direct control. In fact, I believe the most-effective managers (and leaders) are those who can manage resources that are not under their direct control, using a variety of social engineering techniques rather than relying on positional power.

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