The Modern Firm: Organizational Design for Performance and Growth

by John Roberts

Business firms around the world are experimenting with new organizational designs, changing their formal architectures, their routines and processes, and their corporate cultures as they seek to improve their current performance and their growth prospects. In the process, they are changing the scope of their business operations, redrawing their organization charts, redefining the allocation of decision-making authority and responsibility, revamping the mechanisms for motivating and rewarding people, reconsidering which activities to conduct in-house and which to out-source, redesigning their information systems, and seeking to alter the shared beliefs, values and norms that their people hold. In this book, John Roberts argues that there are predictable, necessary relationships among these changes that will improve performance and growth. The organizations that are successful will establish patterns of fit among the elements of their organizational designs, their competitive
strategies and the external environment in which they operate and will go about this in a holistic manner. The Modern Firm develops powerful conceptual frameworks for analyzing the interrelations between organizational design features, competitive strategy and the business environment. Written in a non-technical language, the book is nevertheless based on rigorous modeling and draws on numerous examples from the eighteenth century fur trading companies to such modern firms such as BP and Nokia. Finally, the book explores why these developments are happening now, pointing to the increase in global competition and changes in technology. Written by one of the world's leading economists and experts on business strategy and organization, The Modern Firm provides new insights into the changes going on in business today and will be of interest to academics, students and managers alike.

Genres: Business, Management, Economics, Leadership, Nonfiction, Design

336 pages, Hardcover

First published January 1, 2004

Reviews

[Patrick · Rating 3 out of 5]

Firms are economic entities that exist because there is a transactional advantage to working within a firm rather than through a public market. This is the beginning premise of The Modern Firm. From there the author takes us through the economics of employee motivation, corporate performance, and finally he reveals two polar corporate strategies, Exploit and Explore, and how your organizational design will necessarily be very different depending on which one you value.

This book had some very good points to make about corporate strategy and organizational design. It was filled with examples from research on real companies like BP, Nokia, Toyota, and (oddly enough) the Hudson Bay Company. It covered the economics behind the decision to outsource or to acquire another company. The book was most illuminating when describing the Exploit/Explore duality and the organizational, managerial, and leadership choices those strategies force you to make.

On the whole, this book had lots of interesting information buried amongst the dry, dry, dry economics. The stories about the real life companies were informative, but the more economic sections about incentives and moral hazards were hard to struggle through. The information is good, but see if you can get someone to give you the CliffsNotes.

[Doug · Rating 4 out of 5]

A very good and easily accessible (for non business students such as myself) account of corporate culture. It was written by an economist (rather than a 'management guru'), which probably explains why the book is jargon free, readable, insightful and sensible.

[Lilli · Rating 1 out of 5]

The text outlines key concepts related to digital transformation across various domains, disruptive business models, and strategies for adaptation and innovation in the digital age. Here's a condensed list of the important concepts and tools introduced:

### Digital Transformation Domains
1. *Customers*
2. *Competition*
3. *Data*
4. *Innovation*
5. *Value*

### Strategies and Tools for Digital Transformation
- *Harness Customer Networks*
- Access Strategy
- Engage Strategy
- Customize Strategy
- Connect Strategy
- Collaborate Strategy
- Customer Network Strategy Generator

- *Build Platforms, Not Just Products*
- Platform Business Models
- Network Effects
- Platform Spectrum

- *Turn Data Into Assets*
- Data Strategy Principles
- Big Data
- Data Value Generated Tool

- *Innovate by Rapid Experimentation*
- Convergent and Divergent Experiments
- Seven Principles of Experimentation
- MVP (Minimum Viable Product)
- Four Paths to Scaling Up

- *Adapt Your Value Proposition*
- Value Proposition Roadmap

### Mastering Disruptive Business Models
- *Disruption Defined*
- *Theories of Disruption*
- Christensen's Theory of Disruptive Innovation
- Business Model Theory of Disruption

- *Tools for Analyzing and Responding to Disruption*
- Disruptive Business Model Map
- Disruptive Response Planner

### Key Components of Disruptive Innovation
- *Customer Trajectory*
- *Disruptive Scope*
- *Incumbents vs. Challengers*

### Strategies for Responding to Disruption
- *Become the Disruptor*
- Acquire the Disruptor
- Launch an Independent Disruptor
- Split the Disruptor’s Business Model
- *Mitigate Losses from the Disruptor*
- Refocus on Defensible Customers
- Diversify Portfolio
- Plan for a Fast Exit

[Nilan · Rating 3 out of 5]

economist book of the year

don't think it was that great

[Sebastian Schmidt · Rating 4 out of 5]

Solid book worth reading on strategy, incentives and corporate culture

[celine]

my dad made me read it, can’t rly rate it. i guess it taught me some stuff but definitely not romance or comedy lmaooo

[Sameer · Rating 2 out of 5]

It was a text book for class. Very dry.

[Jurgen Appelo · Rating 3 out of 5]

Interesting economic systems view combined with outdated Theory-X view on motivation and incentives.