Stelios Kavadias

 

Faculty Speaker Professor Stelios Kavadias [University of Cambridge, Judge Business School]
Title Focused or Flexible Targets? How Organizational Design Influences the Definition of Success for Strategic Initiatives
Date & Time Friday, November 7, 2014 at 3:00pm
Place UCLA Anderson School of Management 
Room D-307 

 

Abstract
Stakeholder metrics translate strategic objectives into actionable targets. We analyze this dual role of performance metrics: they communicate the target outcomes (i.e., which project outcomes are considered \successful"), and they incentivize the organizational impetus (i.e., stakeholder effort commitment). Through an agency framework, we find that the same initiative might admit different definitions of success in different organizational structures. High-risk initiatives benefit from flexibility in what is considered successful, whereas the definition of success for low-risk initiatives depends on the organizational design; functional organizations should utilize flexible targets, whereas project-based organizations should utilize focused targets. Flexible targets provide a tolerance for failure to the organizational stakeholders and reduce the incentives required to ensure impetus in functional organizations; yet, such tolerance for failure encourages shirking in project-based organizations. Lastly, as the costs of execution increase, functional organizations benefit from flexible targets, whereas project-based organizations benefit from focus.

Stelios Kavadias