Actual organizations rarely have an “optimal” strategy-structure fit. When determining an organizational structure, companies are affected by their histories, existing organizational routines, geography, as well as by individual interest groups or powerful individuals. It is extremely difficult for a company to achieve optimal functional, product, and market knowledge simultaneously. Suchard’s Proposal 2, which “maximizes globalization,” may seem “optimal” in terms of functional efficiency in manufacturing and marketing. But it is weaker than the old organization in terms of creating tailored products and using local marketing knowledge. A company like Suchard generally needs to accept some tradeoffs, like in Proposal 1, and then work out problems informally.

Minimizing the centralization-decentralization tradeoff – matrices and informal structures. One alternative is to implement a matrix structure to share centralized resources or functions across different business units. We can also see this with Suchard’s manufacturing centers and global brand programs. But, while matrices reduce duplication and gain efficiencies, they create problems of shared responsibility and authority, and can make reporting lines unclear. Usually, one manager ends up with two bosses, although one boss may be more direct than the other. Companies can also use informal structures to increase integration across units or enable different business units to have more influence over central decision making. Examples in Suchard: task forces, steering committees, personal relationships and broad personal knowledge developed through the rotation system, and the tradition of executives consulting managers on key decisions. Whatever the structure, it is important to try to match responsibility (who is being measured for what) with authority (who has control over what), or at least set up mechanisms to resolve conflicts.

Culture, structure and strategy should be mutually reinforcing. Again we see an example of a company which achieved a high degree of integration among these three aspects of the organization. The values of the Swiss founders are reflected in the choice of structure (decentralization, flat, i.e. low vertical differentiation, profit centers), organization design (strong individual incentives linked to performance, local autonomy, integrating mechanisms rather than rules, job rotation, small corporate staff) and culture (informality, entrepreneurial, cosmopolitan, high risk tolerance, temporary assignments) , all of which support the strategy of sensitivity and responsiveness to and deep knowledge about local tastes and demands.

Structural complexity is linked to environmental heterogeneity. Anticipation of a "frontierless Europe" supported by a burgeoning fad of "globalization" occasioned a fundamental reconsideration of Suchard's strategy and structure. Less environmental heterogeneity was expected and a less complex (i.e. less differentiated) and more centralized organizational structure was viewed as the most viable alternative. The challenge facing the firm in this was less about maximizing the payoff from efficiency gains of consolidated factories as it was about what the impact of that structural arrangement would do to the morale of managers accustomed to a very different organizational and incentive structure.

Formal and Informal Structure. another tradeoff that we witness in this case is that between formal and informal structure. Managers and executives constantly face a choice between achieving coordination and control through formal and informal means. The pre-1992 Suchard was big on the use of the latter, as evidenced by its use of many integrating devices, e.g. frequent job rotation, soft division of labor, and emphasis on open-mindedness and other intangible or soft-skills. One of the potential drawbacks of this perspectives is that it is easy, perhaps inevitable, that important distinctions get lost or glossed over. For example, consider Jacobs’ assertions that he believed in “people” rather than “structure” and that “the people are the structure.” As an organizational theorist, I take exceptional exception to this point of view. To my mind, the roles and responsibilities that managers fulfill should be clearly differentiated from the managers themselves. To fail to do so courts the risk of misunderstanding the bases for advantage that the firms possesses or hopes to acquire, mistaking cause and effect, and “misunderestimating” the vastly increased need for formal integrating, decision-making, and conflict resolution mechanisms in a more centralized and hierarchical structure.

Beware of strategy “fads” and “fashions”. Are we smart enough to tell fads from good advice? Examples of fads and fashions over the last few decades include: The portfolio approach (exit “bad” businesses) and unrelated diversification craze of the 1960s and 1970s; search for “synergies” of the 1980s, More recently we saw talk of “globalization” in the early 1990s, strategic alliances, core competencies, reengineering, the learning organization, the networked corporation, benchmarking, best practices, TQM, ISO-9-gazillion, lean this-that-and-the-other, anything-e or internet, and so on, ad nauseum. The meteoric rise and subsequent fall of management fads and fashions is not accidental. Just as one peaks, another starts, most often positioning itself as the antidote to the excesses of its predecessor.

Assumptions drive actions. This case highlights the fact that the organizational design a firm has is a result of choices it that makes and assumptions that it holds. Suchard did not have to alter its organization structure: it only believed that it did. That belief was prefaced on the assumption or the guess that “as people began to travel more freely across Europe and to live and work as they chose, (the tastes of each country’s consumers) were likely to become more uniform.” Nowhere in the case do we see this assumption being challenged. This is somewhat surprising given that there was a plausible counter-argument to be made, i.e. that as EU political structures and policies changed, European tastes would remain just as localized as they had been. If this were the assumption, the re-organization might have looked much different, probably less extreme.