Understanding the Dynamics of the Value Chain

The Dysfunctions of the Bureaucratic Form

While the rules of the bureaucratic form of organization may have been useful in managing the emerging large and dominant businesses of the late 19th and early 20th centuries, they are impediments to managing the value chains in the 21st century. Today, speed and flexibility, two of the generally recognized dimensions of competitiveness presented in Chapter 2, are absolutely essential for success in the global marketplace. Unfortunately, the bureaucratic form allows for neither. Instead, it creates dysfunctions that preclude even a modicum of effectiveness in value chain management, limiting a firm’s ability to compete on the dimensions of speed and flexibility.

The dysfunctions are so common that they ...