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Business Model With the Galbraith Star Model

Abstract from http://blog.strategyzer.com

Organizations struggle to know how to successfully execute their business models and value propositions. They often don’t know what to do after they’ve successfully designed, tested, and validated their business models and value propositions.

A valuable tool for “executing” your business models and value propositions is Jay Galbraith’s Star Model, that helps companies holistically create the organization necessary to sustain a company’s business models and value propositions over time.

The Star Model consists of five areas that should be connected and aligned to successfully shape the decisions and behaviors of your organization: Strategy, Structure, Processes, Rewards, and People. The business model is placed in the middle of the star: decisions about the business model impact implementation across these five areas.

Strategy

Strategy sets out the direction of the organization. It comes first in the Star Model because it establishes useful criteria for making trade-offs and choosing among alternative options in the remaining four elements or organizational design. Strategy drives the business model.

Structure

An organization’s structure determines the type and number of job specialties needed as well as decides the number of departments and people in each department. The characteristics of the business model determine the optimal organizational structure for its execution.

Processes

Organizational processes are defined by the flow of information and decisions. Those flows can happen vertically or horizontally. Each business model demands different processes.

Rewards

Reward systems align the goals of employees with the goals of the organization. The system must use appropriate incentives to motivate workers to do the right things to fulfill the strategic direction of the organization. Different business models require different reward systems.

People

An organization’s human resource policies govern recruitment, promotion, rotation, training and development. Certain business models call for people with particular skills and mindsets.

 

Each area must be congruent with the other design areas to influence strategic direction.

In addition, the formal organization must continue to be re-examined over time. It must remain malleable to respond to changes in strategy, in market forces, and in the rest of the external business environment.

More details at: http://blog.strategyzer.com by Benson Garner

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