Interorganizational Strategies

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Firms are facing a growing need to be more competitive. Organizations are facing unprecedented challenges brought on by increased technological needs and a growing focus on international business. Firms are looking to interorganization relationships in order to meet the challenge. From aerospace to biotechnology, companies are creating a new type of organizational strategy through interorganization adjustments and cross-functional collaborations. The following will illustrate how interorganization strategies are helping to create greater flexibility and agility at a time when adaptation can mean the difference between business success or failure.

Communication

  • Interorganizational management emerges from one basic need: communication. Executive management must develop consistent methods to communicate quality and delivery goals to all levels of employees. They are also looking for better ways to coordinate initiatives across different departments. Interorganizational strategies focus on managing business processes across functional areas. The goal is to create synergies by leveraging the innovation of building cross functional teams with cross functional goals.

Common Language

  • Measurable goals related to market share and profits are primarily driven by competition and pressure from stakeholders, both internal and external. These goals require improvements to process which are not contained within one department or function. Failure to include one function in planning strategy sessions can lead to low customer service, increases in cost structure, poor delivery and new product innovation. Interorganizational strategies focus on creating horizontal relationships which cut across the entire organization. The challenge is creating a common language across functions, developing a uniform system of measurement and obtaining the right data.

Convergence

  • By creating a new approach to decision making and thinking top managers can create a new paradigm for employees to foster collaborative networks instead of functional silos. In order to do this, top managers must also develop their own cross functional expertise. Microsoft founder Bill Gates calls this need to collaborate "convergence". While technology is at the heart of automating functions, managers must be capable of identifying the opportunity. Interorganization strategies must focus on creating a broader view of how functional processes fit into the overall strategic direction of the company. Quality management systems (QMS) like ISO 9001, Six Sigma, and Lean provide management with a tool-set designed to greatly improve the efficiency of information flow and communication across the organization. See Resources for a link to Bill Gate's "convergence" letter.

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