The Multiuse Enterprise AT FIRST BLUSH, giant corporations such as Collector, C.V., Hertz, Home Depot, Kroger, Marriott International, united Parcel Service, Wall-Mart, and Yum Brands seem to have thing in common, apart from appearing on the Fortune 500 list in 2007. They operate in different industries and face distinct business challenges. Yet That’s the gap in management thinking we set out to fill. Structurally they are very much alike. Each is, wholly or partly, How typical is this organizational structure?
What special what we call a multiuse enterprise – a geographically dispersed challenges does It pose? Can multidimensional companies learn organization built from standard units such as branches, segregating from multiuse enterprises? To find some answers, ice centers, hotels, restaurants, and stores, which are agree adopted a two- pronged research approach. First, after contacted Into larger geographic groupings such as districts, reduction a literature review, we studied Staples – the world’s goons, and divisions.
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Every tier has its own set of managers. Largest office supply company, headquartered In Birmingham, Those higher up have larger profit-and-loss statements, based Massachusetts – In microscopic detail. We observed and Non the number of operating units reporting to them. All these terrified managers at several levels of the company over a levels of management constitute the field organization, and two-year period. Staples provided us with unfettered access, they are responsible for meeting financial and operating targets set by corporate headquarters.
Meanwhile, various dean because Its operational and financial performance has apartments at headquarters frame policies, develop programs, been budgeting, pricing, and marketing article. Second, to ensure that our arguments were valid, we decisions that shape the field organization’s interviewed managers and collected data at priorities, behavior, and actions. 12 other multiuse enterprises, including Boardinghouse’s. G Multiuse enterprises have become the deer, C.V., Sovereign Bank, Cataracts, and For details on the authors’ research, norm in several industries, such as apparel, Victorians Secret (owned by Limited Brands). See the Harvard Business School case studies titled “Management Levels banking services, consumer electronics, food In the following pages, we discuss the unique at Staples” (A, B, C, D, E, and F) at and drug stores, general merchandise, hospices that multiuse corporations face, derivativeness. Org. Laity, hardware, mail and package delivery, scribe how managers tackle them, and draw and toys and sporting odds. Many of them some lessons from our research that will are large corporations, with national or international foothill managers at all kinds of organizations execute strategy. Prints. By our count, they include 10 of the 25 largest employer key findings: Multiuse enterprises employ four levels of errs in the world and six of the 25 best employers in the United field managers with carefully defined responsibilities and use States, as listed by Fortune magazine.
According to Chain Store five organizational-design principles to implement strategy Guide, in 2007 the top 10 U. S. Eluting retailers (in terms of effectively. Annual sales volume) generated more than $717 billion in sales and employed 3. 45 million people. Of the Fortune 100 compete Challenges of Multiuse Enterprises nines, 20% are to some degree multiuse enterprises. Fewer of It isn’t easy to make a multiuse enterprise hum like a wealthy exist in developing countries, although that will change oiled machine. In addition to issues such as specialization, as those economies become more services-intensive. Ordination mechanisms, decision rights, and organizational Despite its prevalence, he multiuse enterprise has received boundaries, which all companies confront, such a structure little attention from academics and consultants over the years. Faces four distinct problems. Instead, they have associated the operation and management First, multiuse enterprises find it hard to maintain consists large corporations with the multidimensional organizational teeny, because they are agglomerations of hundreds, constructive.
That form, pioneered by DuPont and General Motives thousands, of branches, service centers, hotels, resonators in the sass, divides companies into independent divisions rants, or stores. To create one company out of so many units, specializing in different products, services, technologies, or managers must pay a great deal of attention to implementations. Most books on organization describe the multifunction. They must focus continually on aligning priorities, plans, signal enterprise in detail but say nothing about the multiuse and practices across a highly dispersed field organization. Enterprise – or else dismiss it as old hat, because its managerial Since these companies promise customers the same brand hierarchy, specialized Jobs, and centralized power structure experience everywhere, employees must adopt common operates to resemble the traditional bureaucracy that sociologist eating practices, serve customers in similar ways, and present a Max Weber described in the early sass (see, for instance, his uniform image.
While flawless execution is the goal, it’s diffusion The Theory of Social and the 108 Harvard Business Review communication, control, and deployment processes necessary to deliver consistently high levels of service. Second, multiuse organizations must ensure some degree of customization even as they pursue standardization. They must respond to the extinctive features of local and regional markets to achieve the best results. For instance, in some cities, Wall-Mart, Cost, and Target compete on a relatively equal footing; in others, one dominates the market.
If any of them adopts a uniform pricing policy for both types of locations, it is likely to lose market share in some areas while forgoing profits in others. Multiuse corporations must customize their marketing and merchandising programs because consumer demographics and tastes vary from place to place. Employees’ availability, skill sets, and wage levels differ by region, as ell, so companies have to adopt different labor practices.
These enterprises constantly wrestle with issues such as how much tailoring corporate headquarters should allow; how to balance the advantages of local responsiveness with those of global uniformity; and whether to leave differentiation to the discretion of the store, the district, or a larger region. Third, the sharp division of responsibilities between corporate headquarters and the field organization causes many problems. For the most part, executives at headquarters make strategy decisions that relate to, say, reduce positioning and advertising, as well as financial decisions such as the size of annual budgets and performance targets.
Decisions about implementation – how to roll out initiatives, how to reinforce desired employee behaviors, how to deliver revenue increases – are the province of field managers. The physical and psychological gulfs that separate the two groups present a number of challenges. For instance, can headquarters develop new products, programs, and policies that fit with field units’ capabilities? How should the company communicate information about fresh initiatives to a large workforce without having distortions or considerations creep in?
How can the organization spot problems in faraway locations after launching initiatives? Finally, multiuse enterprises often struggle to get the best out of field managers, who are surprisingly hard to classify. Field managers are neither traditional general managers nor typical middle managers. On the one hand, they manage a P and coordinate diverse tasks, which are general management responsibilities. On the other, they lack organizations. Many don’t control marketing dollars, pricing flexibility, and other levers that determine the unit’s success.
Defining field managers’ responsibilities and seceding how they will exercise influence isn’t easy. In addition, a multiuse enterprise resembles a Russian nesting doll, in that the P of one level are incorporated in those of the level immediately above. Sometimes this makes it tough to differentiate jobs from level to level, which may generate confusion and affect performance. The Four Levels of Field Managers These challenges result from breakdowns in coordination, communication, and control, especially since these are large organizations with diffuse responsibilities and unclear levels of accountability.
If problems remain unresolved for long periods, hey can have a major operational and financial impact. To prevent that, multiuse enterprises try to define the roles of field managers and distribute responsibilities in a novel way. All field managers work on the same problems, taking on some roles, sharing others, and dispersing responsibilities across levels. In this respect, the multiuse enterprise is the opposite of the classic bureaucracy. Rather than featuring specialized Jobs, it creates a set of general management Jobs with overlapping responsibilities.
Together, the managers form a multilayered net to catch all of the problems that can affect strategy implementation. Interestingly, the companies we studied employ similar structures in spite of wide variations in the size of their base units. Designations differ, but these organizations have all created the same four levels from bottom to top: store managers, district managers, regional vice presidents, and division presidents or senior vice presidents. At the top of every field organization is a senior executive, usually a member of the corporate management team, with significant strategic responsibilities.
We don’t discuss that Job in this article because it is similar to those of other senior executives. Since the manner in which A multiuse enterprise resembles a Russian nesting doll, in that the P&Ls of one level are incorporated in those of the level immediately above. Sometimes this makes it tough to differentiate Jobs from level to level. hub. Org Harvard Business Review 109 multiuse organizations tailor Jobs is central to their success, we’d like to start by describing the work of field managers.
Store managers. Store managers, branch managers, or restaurant managers (depending on the industry) are responsible for studied, they work within tight constraints set by corporate headquarters, which intros everything from store layout and product selection to pricing policies and inventory levels. Although store managers are evaluated on the achievement of financial targets, along with numerous operational, customer-service, and multidimensionality goals, they have very little say in setting those targets.
At the same time, they do control the selection, assignment, training, and motivation of frontline employees and the timing, oversight, and follow-through of key activities. In some companies, they also have a small amount of leeway in modifying merchandise splays, ordering goods locally (usually no more than 15% of the store’s inventory), and pricing markdowns. Overall, store managers have little control over what they must do but considerable discretion over how to assign, sequence, and accomplish tasks. Their focus is short-term and more tactical than strategic.
In the words of one store manager, every day is “a day of small things to be accomplished. ” At Staples, for example, a store manager arrives at 6 am, turns off the alarm, counts the money in the safe, prepares the cash registers, checks on the store’s cleanliness, and develops he days agenda for employees. After reviewing voice mail, which is frequently from district managers and usually about the store’s performance, he or she checks the company intranet for messages, paying special attention to the Management Action Planning (MAP) system. Run by Staples’ U. S. Tore operations, MAP informs store managers about new corporate initiatives, deadlines for changes to displays, and new promotional programs, and identifies the associated store-level tasks. Home Depot similarly employs a Merchandise Action Planner, which communicates all the details about the month’s merchandising presentations. These systems provide elaborate “to do” lists. For several hours thereafter, store managers direct work flows and ensure that employees attend properly to customers – a role that Staples calls “manager on duty’ and Victorians Secret calls “client sales lead. During the rest of the day, managers walk around, interacting with customers and coaching associates on tasks such as selling, managing inventory, and restocking. They also tackle the problems that crop up, such as delayed deliveries, product shortages, unhappy customers, and broken fixtures. This forces them to refocus their attention instantly. As one store manager told us, “Many things can happen, and sometimes they happen all at once. The impact store managers have on a company’s P&L statement comes from paying attention to customer service, improving the store environment, keeping employees engaged, and assigning employees according to their skills. As J. C. Pen- nee found from customer surveys, little things such as clean dressing rooms are critical determinants of sales. According to several store managers at Staples, another key to success, especially in the case of a new initiative, is motivating employees. My Job is to get my managers and associates excited,” one store manager explained. People are never going to believe in a program unless you make them believe in it. ” Store managers can run into a number of problems (see the sidebar “Traps to Avoid”). First, they may fail to delegate properly. Most are skilled at performing routine tasks such as checking inventory and ringing up sales, having employees botching them up. But executing routine tasks often reflects a store manager’s unwillingness to delegate. Taking over doesn’t build organizational capabilities; coaching and working side by side with associates does.
Second, some store managers make the mistake of treating all store associates alike. Smart managers maximize productivity by designing schedules and roles around employees’ personal needs (“Bill has child care only until 3 pm, so I always schedule his shift to end at 2:30”), strengths (“Mary is a good salesperson, so I never take her off the floor to unload freight”), and weaknesses (“The two students who work here on weekends are chatterboxes, so I put them on separate shifts”).
Third, store managers run into trouble if they don’t draw up plans to handle unexpected disruptions such as absences and delayed deliveries. District managers. District managers focus on ensuring consistent execution, improving performance, and developing bench strength in all their stores. They manage by driving around, spending three to four days a week in different stores. The time between visits to a store ranges from two weeks to two months, depending on the company.
District managers are responsible for opening new stores and implementing new initiatives and have a little more say than store managers do in budget making, real estate decisions, and local advertising. In a few organizations, the Job also entails managing specialized stores thin stores, such as pharmacies in retail stores, and helping headquarters design merchandising and service initiatives. When district managers call, they ask store managers for performance updates and propose remedial plans when necessary.
They help tackle operational problems either by intervening locally or by working with staff at headquarters. Because of their organizational knowledge, contacts at headquarters, and experience, district managers often serve, in the words of several store managers, as “connectors”: They provide links to people who can fix a problem immediately, or they bring the issue to the attention of senior executives. District managers communicate news from headquarters about upcoming promotions, possible delivery problems, and system breakdowns.
They also audit stores to ensure compliance with the company’s policies and procedures. 110 Harvard Business Review The district manager’s main challenge Like their peers in other comparators to Avoid is to balance monitoring with coaching. nines, Staples’ district managers devote Many overemphasized the auditing functions of their in-store time to walkovers in Eluting firms face Zion, zeroing in on minor infractions by inning around and effort managers, assistant managers, association developing people. Some are content dates, and customers.
They usually bestows managers to tell store managers what changes to gin by “checking the buildings pulse,” Taking over tasks rather than make without explaining why. Providing starting at the front of the store and delegating them a rationale may take longer, but district taking a quick walk through the aisles. Failing to respond to individual managers make a more lasting impact They then induct a detailed assemblywomen’ needs, strengths, and when they probe for understanding and meet along with the store manager weaknesses engage their charges in conversation.
Minor an assistant manager. They examining unprepared for contingencies experienced district managers tend to adenine each aisle, see whether associates evocate a single management style, usually are waiting on customers and prehistoric managers their own, and refuse to entertain outperforming other tasks properly, check Failing to build store-level management encase in approach.
Our studies show that for signage about out-of-stock items, teams effective district managers realize store and make sure the store has changed Overemphasized compliance by managers can have different styles, build prices where necessary. They may also focusing only on audits on each person’s strengths, and help predetermine whether a problem they Relying too heavily on direction and come individuals’ weaknesses. Noticed in another store – for example, control and not enough on coaching a shortage of binders during backbreaking vice presidents.
These Imposing a single management style to-school season – is an isolated managers focus on markets, key competencies or a trend. At Staples these torso, growth opportunities, and systemic store walks depend on each district problems. They are critical intergenerational vice presidents manager’s style; at Victorians Secret, sees between the field organization and Over- or underemphasize regional by contrast, managers follow a preparedness’s, linking stores with conferences determined checklist. Panky goals.
Usually the regional human Failing to recognize patterns and District managers wield considerateness, sales and marketing, finance, systemic breakdowns able authority because they control and loss- reversion departments and Focusing on local issues rather than district labor pools, which they treat occasionally the real estate function reinforcing corporate priorities as a flexible resource. (At Staples a port to them on a dotted-line basis while pool consists, on average, of 14 store maintaining direct lines of reporting Divisional heads managers, 28 assistant managers, and with headquarters departments.
Most refilling to filter information 400 associates. ) Without disrupting signal vice presidents spend three days a Oversimplifying with the field store teams overmuch, hey move week in the field and the rest with headlining too much time at headquarters employees around to improve forequarters departments or task forces, typing distinguishing their Jobs from those menace or respond to sudden needs. Calla working on new projects, marketing of regional vice presidents For instance, a district manager will programs, and site selection.
At Staples, assign to a manager whose store is these managers communicate regional good operationally but doesn’t excel priorities upward and corporate direct customer service an assistant manager who can help with dives downward. In the process, they perform feedback to headquarters on proposed initiatives, turning sues. Because district managers, more than store managers, broad programs into detailed action plans, ensuring alignment are responsible for developing assistant managers and deterrence the region and headquarters, and troubleshooting. Inning their assignments, they are particularly sensitive to At Staples a region consists of 80 to 100 stores located in the stores’ top teams. As coaches, they teach with questions a major city such as New York or in a larger area such as the rather than directives, skiing, “How do you think that episode Carolinas; it’s usually a distinct market. The regional vice previews handled? What should have happened? What might you dents are the guardians of the markets’ idiosyncratic needs, do now to ensure that things happen differently next time? Which gives them a voice at the table when the company They also identify best practices. At Borders, for example, one makes decisions. Interestingly, there’s a growing trend in the manager takes photographs of the most attractive window companies we studied of assigning regional vice residents displays in the district’s stores and shares them with all her more responsibility and reducing the authority of headquarters managers. Terse departments.