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We can see this most clearly when magazines publish lists of high-demand
jobs. When employees have skills that are in high demand by employers, the price of
those skills in the form of paycheck, is usually bid up in the market. For
organizations, economic logic is typically viewed in terms of financial performance.

However, increasingly, firms target social and environmental performance as well—
similarly, the economic logic of your strategy can have implications for what you do
to improve social and environmental conditions. This can happen directly through
your volunteer hours or indirectly through your financial support of causes you
believe in.
KEY TAKEAWAY
In this section, we discussed how to put together a strategy diamond. The first
step involves identifying the organization’s arenas, differentiators, and economic
logic. This step involves a basic understanding of strategy and summarizes many of
the traditional views in strategic management. The second step involves
contemplating how the organization would compete or grow in existing or new
arenas, and this is where the vehicles came into play. Finally, you considered the
sequencing and speed of strategic initiatives by learning about the strategy diamond
facet of staging and pacing. Together, these five facets (i.e., arenas, differentiators,
economic logic, vehicles, staging, and pacing) constitute the strategy diamond. We
concluded the chapter with an application of the strategy diamond to your personal
situation.
EXERCISES
1. What are the five facets of the Hambrick and Fredrickson strategy
diamond?
2. What is the relationship between arenas and differentiators if the strategy
yields a positive economic logic?
3. If a firm is performing poorly financially, what might this say about the
differentiators, arenas, or both?
4. Why is it important to consider vehicles as part of an organization’s
strategy?
5. What is the difference between staging and pacing in terms of the
strategy diamond?
6. What are some ways that you might apply staging and pacing to an
organization’s strategy?

Chapter 4
Organizational Structure and Change

WHAT’S IN IT FOR ME?
Reading this chapter will help you do the following:
1. Define organizational structure and its basic elements.
2. Describe matrix, boundaryless, and learning organizations.
3. Describe why and how organizations change.

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