Discuss several implications for design challenges in todays organizations. Gathering data useful in design assessment may
Covering topics from Chapters 1-5.
Please read each question, then choose four (4) of the five (5) questions to write a detailed response. Be sure to include examples and full discussion, if asked.
- Discuss several implications for design challenges in today’s organizations.
- Gathering data useful in design assessment may be obtained in several ways. Identify two of these and discuss their implications to the design process.
- Discuss the distinctions between a corporate strategy and a business strategy and provide an example of each.
- Identify and discuss at least three (3) of the forces by which an organization would choose to adopt a front-back structure
- Internal competitive forces may work against the organization’s design for lateral capability. Identify and discuss at least two of these challenges.
Submission Instructions:
- Please provide citations from any outside sources including your text and internet sources.
- Be sure to include a reference page. Follow current APA format for citations and reference page.
- Be sure to double space your work, indent first line of each paragraph.
- Complete and submit the assignment by 9:00 PM ET Sunday.
Organization Design: Creating Strategic and Agile Organizations
Donald L. Anderson
Chapter 1
Introduction to Organization Design
Organization Design Defined
Several definitions:
Galbraith, 1977
Nadler & Tushman, 1988
Galbraith, Downey & Kates, 2002
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LO 1-1: What organization is and how it is defined
Galbraith, 1977: “Organization design is conceived to be a decision process to bring about a coherence between the goals or purposes for which the organization exists, the patterns of division of labor and interunit coordination and the people who will do the work.”
Nadler & Tushman, 1988: “Organization design is the making of decisions about the formal organizational arrangements, including the formal structures and the formal processes that make up an organization.”
Galbraith, Downey, & Kates, 2002: “Organization design is the deliberate process of configuring structures, processes, reward systems, and people practices and policies to create an effective organization capable of achieving the business strategy.”
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Organization Design Is a Set of Deliberate Decisions
All organizations have a design
The design changes as the organization evolves
Organizations might evolve haphazardly
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Organization Design Is a Set of Deliberate Decisions
Organization design approach:
Decisions are intentional
Decision science
Evaluates how and why an organization is designed
Conscious attention to design
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Organization Design Is a Process
Company changes have design implications
Entering into new markets
Discontinuing product lines
Enhancing services
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“A well designed organization is not a stable solution to achieve, but a developmental process to keep active” (Starbuck & Nystrom, 1981)
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Organization Design Is a Process
Not an activity or event
Design is continuous and fluid
Process is an ongoing activity
“A developmental process to keep active”
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Organization Design Assumes a System Approach to Organization
Organizations are a combination of intersecting parts that work together to achieve a goal:
Behavior patterns
Department configurations
Arrangements
Open vs. closed systems
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Organization Design Is Based on the Organization’s Strategy
Strategic organization design:
Design is based on the business strategy
Organization should be designed strategically
Design drives the way strategies are formed
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Organization Design Encompasses Multiple Levels of Analysis
Macro
Micro
Multiple levels of analysis
Individual group
Organization
Industry
Macrosocial movements
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LO 1-1: What organization is and how it is defined
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Organization Design Is More Than Organizational Structure
Restructure vs. Redesign
Restructuring may result in:
Unclear priorities
Slow decision making
Inadequate training for new responsibilities
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Organization Design Is More Than Organizational Structure
Redesign considers other aspects:
Processes
People
Rewards
Measures
Structure
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Organization Design Is an Interdisciplinary Field of Research and Practice
Organization design draws from :
Psychology
Economics
Logistics
Sociology
Organization Theory
Organization design is a scientific art
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LO 1-1: What organization is and how it is defined
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History of Organization Design
1850s to Early 20th Century:
Pennsylvania Railroad
New and expanded markets
Growth for mining companies and factories
Carnegie Steel
Functional structures
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LO 1-2: The history and development of the field of organization design
Functional structures: “Contributions of specialized departments coordinated and controlled by centrally determined plans, budgets, and schedules”
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1910s to World War II
Labor divided into subspecialties
Foreman concept
Companies expanding into new product areas
Challenge to functional structure
Managing multiple and diverse types of products
Divisional structure
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Functional foremanship concept: Leadership of the workforce should be broken into specialties
Each worker should have a method boss, a schedule boss, an administrative boss, and so on (8 different specialties of “foreman”)
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Post-World War II to 1960s
Burns and Stalker (1961)
Mechanistic vs. Organic
Both designs were effective
Beginning of contingency theory of organization design
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Post-World War II to 1960s
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LO 1-2: The history and development of the field of organization design
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Post-World War II to 1960s
Chandler (1962)
Decentralized structure
Pattern among companies:
Company expanded in volume
Geographic growth
National expansion into new product lines
Structure follows strategy
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LO 1-2: The history and development of the field of organization design
The four companies that Chandler studied (du Point, General Motors, Jersey Standard, and Sears) created a new division for a product line as the company expanded its capabilities.
Differentiation describes the separation of the organization into different subunits or departments, based on the needs of the environment.
Integration refers to the degree of interdependence and the need for coordination among the different units.
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Post-World War II to 1960s
Lawrence and Lorsch (1967):
Differentiation
Integration
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1970s and 1980s
Move toward multidivisional structures
Matrix organizations
Configurational approach
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LO 1-2: The history and development of the field of organization design
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1970s and 1980s
Dynamic network organization:
Vertical disaggregation
Brokers
Market mechanisms
Full-disclosure information systems
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1990s and 2000s
Global competition drove business
Service economies affected operations
Structural questions:
Centralization vs. decentralization
Organic vs. mechanistic design
Design choices were increasingly relevant to business leaders
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LO 1-2: The history and development of the field of organization design
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The Case for Organization Design Today
Design affects performance
Facilitating goals
Role confusion
Poorly defined processes
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LO 1-3: Why organization design is relevant as a subject of study and practice today.
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The Case for Organization Design Today
Design is a leadership competency
Recognizing consequences of design decisions
Some managers may implement designs
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Today’s Organizations Experience Significant Design Challenges
Changing nature of work
Part time, flexible hours, and telecommuting
Global and virtual teams
Globalization
Collaboration within and between companies
Diverse workforces
Technology
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Organization Designs Today
Passmore’s 9 “design ills”:
Overspecialization of most jobs
Overreliance on supervisor’s ability to control employee behavior
Too great an investment in maintaining the status quo
Breakdown of interdependent systems and activities
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Organizations Designs Today
Overcentralization of information and authority
Overreliance on individual monetary rewards
Undervaluing of human resources
Overreliance on technology as a solution to organizational problems
Underattention to external environment
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Today’s Focus on Agility Is a Design Issue
Episodic change: Distinct periods of change, usually infrequent and explicitly defined.
Continue change: The organization is never truly out of a state of change and change is always occurring.
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Organization Design: Creating Strategic and Agile Organizations
Donald L. Anderson
Chapter 5
Processes & Lateral Capability
Lateral Capability: The Horizontal Organization
Lateral capability: Information and decision processes that coordinate activities spread out across different organizational units, providing mechanisms for decentralizing general management decisions
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LO 5-1: Why lateral capability is important (and difficult_
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Lateral Capability: The Horizontal Organization
Lateral capability = horizontal organization
Formal structure = vertical organization
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Lateral Capability: The Horizontal Organization
Encourages coordination throughout the structure
Motivated by:
A variety and diversity of tasks
Rapidly changing environment
High degree of interdependence among functional units
Common technology platforms
Requirements for faster cycle time
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Why Developing Lateral Capability Is So Difficult
Internal competitive forces:
Turf wars
Stronger identification
Rewards
Mistrust
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Benefits and Costs of Lateral Capability
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Forms of Lateral Capability
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LO 5-2: The forms of lateral capability and their advantages and disadvantages
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Networks
Informal communication networks can circumvent regulated channels
Learning who to contact
How to get information
How to participate in the social fabric
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Networks
Cultivating Networks
Glue people
Physical spaces
Face-to-face collaboration
Job rotation programs
Training
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Networks
Communities of practice
Rapid problem solving
Sharing best practices
Developing professional skills
Electronic social networks
Shared file systems
Social media platforms
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Communities of practice: Groups of people informally bound together by shared expertise and passion for a joint enterprise
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Networks
Advantages:
Encourage innovation
Knowledge sharing
Broader organizational perspective
Not costly
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Shared Goals, Processes, and Systems
Shared or superordinate goals
Lateral processes:
Management practices
Planning
Budgeting
Information technology
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Shared goals: If employees in different departments have the same goal, they are more likely to coordinate in service of that goal
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Advantages:
Add another level of formality
Groups see the shared impact of their work
Mangers and employees can see how they are connected
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Shared Goals, Processes, and Systems
Disadvantages:
Time consuming and costly
Process or technology can direct work
Employees at mercy of required process
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Shared Goals, Processes, and Systems
Teams
Two or more people
Specific performance objective
Coordination among team member sis required to attainment of team objective
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Teams
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Teams
Cross-functional teams:
A small collection of individuals from diverse functional specializations within the organization
Members report to a project team leader
“Home” manager directs day-to-day work
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Teams
Eight characteristics of successful teams:
A clear, elevating goal
A results-driven structure
Competent members
Unified commitment
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Teams
A collaborative climate
Standards of excellence
External support and recognition
Principled leadership
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Teams
Advantages:
Empower individuals lower in the hierarchy
Can be formed quickly and flexibly
Disadvantages:
Require team skills
Need a clear purpose
Require defined decision authority
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Integrator Roles
Formal positions with the responsibility to share information and coordinate across the structure
Handle nonroutine, unprogrammed problems
Often do not have formal authority
Skilled at conflict resolution, negotiation, and persuasion
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Matrix Organizations
Two-Hat Matrix: Each manager has responsibility over two dimensions of the matrix
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Matrix Organizations
Three-Dimensional Matrix: The company maintains business/product units and geographic regions
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Matrix Organizations
To make the matrix successful:
Seeing that conflicts are resolved
Managing the top team
Balancing power
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Getting the Level of Lateral Capability Right
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How to Decide Which Form to Use
Considerations:
Degree of interdependence
Business strategy
Task uncertainty and complexity
Cost
Interpersonal skills
Trust and existing relationships
Changes over time
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LO 5-3: How to decide which form of lateral capability to implement in a design
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Governance Models and Decision Authority
Governance and planning processes
Direction
Oversight
Innovation
Strategic Intentiosn
Decision-making practices
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LO 5-4: How governance models and decision processes enhance collaboration
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Enablers for Successful Lateral Capability
Leadership and management skills
Shared values
Authentic empowerment
People practices
Reward systems
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Organization Design: Creating Strategic and Agile Organizations
Donald L. Anderson
Chapter 2
Key Concepts and the Organization Design Process
Key Concepts of Organizational Design
The STAR Model of Organization Design:
Strategy
Structure
Processes and Lateral Capability
Rewards
People
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LO 2-1: Key concepts of organization design
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The STAR Model of Organization Design
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Strategy
Organization’s direction and long-term vision
Startnigpoint for the design
“Company’s formula for winning”
Products and services to create
Markets and customers to pursue
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Structure
Distribution of resources, power, and authority
Role definition
Responsibilities
Relationships among departments
Span of control
Centralization vs. decentralization
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Processes and Lateral Capability
Flow of information
Decision-making processes
Cross-functional collaboration mechanisms
Shared processes and goals
Networks and teams
Integrative Roles
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Rewards
Motivation and incentives
Compensation
Recognition
Promotions
Goals and measurement systems
Scorecards
Dashboards
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People
Human resource practices
Hiring
Managing
Learning and development
Rotations
Succession Plans
Identifying Core Competencies
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Alignment, Congruence, and Fit
Alignment:
All components of the STAR must be in alignment
Each point is connected to four other points
Organization may suffer otherwise
Congruence & Fit:
The more congruence, the more effective the organization
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Three important factors in fit:
Competitive strategy
Organization’s size
Task uncertainty
Principles of congruence
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Alignment, Congruence, and Fit
Snow, Miles, and Miles (2006, pp. 6-7) summarize these central principles of congruence:
The broad framework is that of strategy-structure-environment fit or congruence
The organization is conceptualized as a system or configuration whose major components include strategy, people, structure, and management processes.
Overall organizational performance is heavily dependent on the quality of the internal alignment of the organizations components as well as the external fit between the organization and its environment.
The process of achieving fit is dynamic, and both the organization’s internal and external alignment must be continually monitored and adjusted.
All of the basic organizational configurations, from the older hierarchical forms to the modern multi-firm network organization, have particular strengths and limitations; there is no all-purpose organization design.
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Contingency Theory and Complementarity
Contingency theory suggests that design choices are contingent on the strategy and the environment:
There is no one best way to organize
Not all the ways to organize are equally effective
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Tradeoffs and Competing Choices
Design decisions are trade offs
No “one size fits all”
All design choices have advantages and disadvantages
Unintended negative consequences may arise
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Reasons to Begin a Design Project
Performance is suffering because of misalignment
Strategy changes
Shift in environment or external context
Internal changes to structures, functions, or jobs
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LO 2-2: What situations prompt an organization design change
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Reasons to Begin a Design Project
Organization has made an acquisition
Organization expands globally
Cost pressures
Leadership change
Communicating a shift in priorities
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The Design Process
Conduct a design assessment and scope the project
Generate design criteria and determine required organizational capabilities
Develop a design overview, then text and refine the details
Transition and implement, evaluate and adapt
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LO 2-3: Why following a design process is beneficial and what activities a design process consists of
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The Design Process
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Scope, Approach and Involvement
Two approaches to design effort:
Top down
Bottom Up
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Scope, Approach and Involvement
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Deciding Who Is Involved
“Mafia” approach
Pointing blame
Advocating for conservative choices
Participative approach
Expanded design team
Increase input below senior team
High engagement in organization design
More likely to commit to implementation
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Choosing the Right Participants
Considerations:
Level of agreement among key stakeholders
Scope of design effort
Quality of current relationships in organization
Employee involvement in design process
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Choosing the Right Participants
Amount of control management will exercise
Resources required and available
Organization’s past experiences with organization design
Readiness of the senior leaders to meet requirements
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Choosing the Right Participants
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Design Assessments and Environmental Scanning
Benefits:
Scope the problem and boundaries of design decisions
Spark interest in change
Communicate and ensure a common understanding of the design effort’s purpose
Give insight into difficulty of change process
Generate alternative solutions early one
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LO 2-4: How to conduct a design assessment and environmental scan, and then to evaluate the current design
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Design Assessments: Gathering Data
Interviews
Focus Groups
Surveys
Observations
Unobtrusive measures
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Design Assessments: Gathering Data
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Environmental Scanning: STEEP and SWOT
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Environmental Scanning: STEEP and SWOT
SWOT:
Strengths
Weakenesses
Opportunities
Threats
Scenario planning
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Evaluating the Current Design
Evaluating alignment in the design
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Evaluating Strategy in the Design
Strategic factors include a design that:
Supports the implementation of strategy
Facilitates the flow of work
Permits effective managerial control
Creates doable, measurable jobs
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Evaluating Social/Cultural Factors in the Design
Social and cultural factors examine :
Existing peoples’ fit into the design
Power relationships among different groups
People’s values and beliefs
Tone and operating style of the organization
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Goold and Campbell’s Nine Design Tests
Fit Tests:
The Market Advantage Test
The Parenting Advantage Test
The People Test
The Feasibility Test
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Goold and Campbell’s Nine Design Tests
“Good Design” Tests:
The Specialist Cultures Test
The Difficult-Links Test
The Redundant-Hierarchy Test
The Accountability Test
The Flexibility Test
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Design Criteria and Organizational Capabilities
Objective design criteria are a benefit
Usually synonymous with organization capabilities
Unique, integrated combinations of skills, processes, and human abilities
Created by and housed within an organization
Differentiate the organization
Provide competitive advantage
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LO 2-5: How and why to begin the design process by creating design criteria
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Design Criteria and Organizational Capabilities
Sample design criteria:
Create new products faster than competitors
Offer diverse product line
Encourage innovation
Deliver high levels of customer satisfaction
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Organization Design: Creating Strategic and Agile Organizations
Donald L. Anderson
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