Strategy-structure relationship in Kenya Power and Lighting company limited

Abstract

Major changes took place in both the strategy and structure in the Energy Sector in Kenva over the ten years from 1995 to end 2005. From the mid 1990s tile Government or Kenya commenced with a strategy to among others attract investors in to the electricity sub-sector and promote efficiency in the power sector as a whole by segregating the generation business from the transmission, distribution and customers service together with improving assets ownership and management that was to be achieved through the energy sector reform. The reforms or strategies were accompanied by sector structural changes. On the on-set one would have concluded that structure followed the strategy. However. macro-strategies were expressed and placed on tile drawing board and consultations continued to attest to what extent they would accommodate acceptable and workable structures. This study sought to determine the relationship between changes in the structure and strategies and the processes in Kenya Power and Lighting Company (KPLC), ami further to establish the factors and or agents that influenced the relationship. Two similar earlier studies were carried out in Kenya on the structure strategy relationship. Matscshc (1999) and Mwang! (200]) whose studies were ou nianulacturing industries ill the private sector concluded that strategy and structure were reciprocal. Mwangi (2003) further concl udcd that in multinational pharmaceutical manufacturing companies no change in one led to change in the other. This was a case study that involved in-depth interviews with the management team of KPI ,C, and the Ministry or Energy covering the processes that took place two in continuous consecutive periods: from late I<)<)5 to around 19<)<), and 2000 to 2005. The periods are separately significant ill that an organizational configuration that is composed of" processes, structures, and boundaries and relationships were very different in that the environmental demands from KPLC increased and crystallized progressively in the two periods as time .passed, including increased environmental complexities. During the earlier period the management struggled in maintaining the traditional KPLC structure intact with minimal incremental changes, ill spite or the major changes in strategy

that had taken place. It was the period that market-oriented strategy was intimated as opposed to the then existing public-utility-oriented strategy. Two clear phenomenons were observed that abated company structures lagging after strategy changes: considering KPLC is a monopoly. it was observed that organizational efficiency was not a priority. as there was not enough incentive to change because under zero-sum competition, performance inefficiencies are transferred to the customer. Thus the classical view that structure must follow strategy appears basically simplistic because other conditions like managerial control and cultures, monopolistic security and uninformed electricity customers contributed greatly towards the lag. As the KPLC number of transactions increased and as the complexity of internal relationships grew over time, the company was progressively adopting structures that facilitated better and acceptable interactions with the environment. This phenomenon was observed in the period from 2000 to 2005. The organizational structures started to gravitate towards relatively organic type or structure by being more flexible to customer and stakeholders needs through sharing responsibility and increased influence delegated at lower managerial levels through adopted business restructuring. This was evidenced in the structures and strategies that were implemented partly to resol vc uncertainties emanating from the new environment. Interlink between the strategy and structure was observed wi th lesser lags compared to earlier periods.