This upper-level textbook provides a practical guide to the field of organization design, grounded in academic literature. It is set apart from other books on the topic by its commitment to be relevant to Master’s students, as well as practitioners looking for evidence-based guidance.
The book provides a solid theoretical background for students, defining what organization design is, exploring the history of the field, and describing established frameworks and theories. It then investigates why organizations may seek to embark on a re-design, and what a well-designed organization looks like, referencing case studies and the author’s own research. From there, it takes students through how organization design occurs, examining various models for intervention, the core steps in designing an organization, and what challenges a practitioner may face, all illustrated by stories from the field. This book includes a wide range of didactic elements for students, including learning objectives, case study examples, review questions, and further reading. It examines the impact of new ways of organizing, and draws on the author’s years of experience as a consultant to ensure that academic theory is seamlessly melded with practical application.
PART 1: THE WHAT OF ORGANIZATION DESIGN
Chapter 1: What is organization design?
In this first chapter of the main text, we will give a brief overview of the history of organization design, both as a managerial activity and as a field of academic inquiry. At the outset, we will make the distinction between organization design and organization development. The chapter will then go on to define what it is we are talking about when we talk about organization design. Several frameworks will be introduced that aim to answer this question, chief among them Jay Galbraith’s Star model and Phanish Puranam’s ‘fundamental problems of organizing’. We will look at how the Star model has been used and adapted by academics and practitioners and we will compare and contrast the model with similar models such as the 7-S model and Nadler & Tushman’s congruence model. We will then look at how Puranam’s framework (with a foundation in scholarly work) relates to Galbraith’s model. Finally, we will pay attention to the terms Operating Model and Business Model – popular among consultants and practitioners - and relate those to organization design and to the frameworks covered in this chapter.
Chapter 2: What are the triggers for organization design?
In this chapter, we will cover the reasons and triggers for organizations to re-consider their design. The foundation for the rationale in this chapter lies with contingency theory (Lawrence & Lorsch, Donaldson), the idea that organizations adapt their design to fit their context. We will cover in some depth some of the main triggers for re-design that flow from contingency thinking, such as growth, a new strategy, a new competitive landscape, and technological change. In addition, we will look at some common symptoms of a design that no longer fits the context, such as poor decision making, miscommunication and demotivation. We will also cover some of the inertial forces (Hannan & Freeman) that tend to hold back organizations from going through the necessary re-design, such as sunk costs, organizational politics, and regulatory barriers. Finally, we will pay attention to the phenomenon of isomorphism (DiMaggio & Powell), which describes how firms not so much design their organization, but rather ‘borrow’ models/designs from other organizations. We will relate this behavior to how organizations deal with management fashions (Birkinshaw), such as Agile.
Chapter 3: What makes for a well-designed organization?
This chapter explores the question of whether there are any universal principles that should be applied to the design of any organization. We will start by covering the concept of design criteria (Worren, Nadler & Tushman, Stanford), which is generally considered to be an important starting point for an organization design: a translation of the corporate strategy and other contextual factors into a limited number of statements about what the design should achieve. Where design criteria are tied to a specific organization, we will go on to look at more general principles of good design. Among others, we will look at Goold & Campbell’s oft-quoted ‘9 tests of organization design’ as well as Cherns’ ‘principles of sociotechnical design’. With regards to the latter, we will look more broadly at the sociotechnical systems design school. Finally, we will briefly look at Stratified Systems Theory (Jacques), a somewhat controversial school of thought which covers specific prescriptions about how to design the hierarchical structure of organizations.
Chapter 4: What’s new about new forms of organizing?
In this final chapter of the first part of the book, we will use some of the frameworks covered in the previous chapters to look at current organizational trailblazers in an attempt to answer the question: is this a new form of organizing? Specifically, we will look at Hyperloop Transportation Technologies, GitHub, Zappos, Haier, ING and Vinci. We will close this chapter by identifying several common threads in the way these companies are organized/designed and we will relate these to models described in decades past, such as Galbraith’s reconfigurable organization (2010), ambidexterity (1991) and Mintzberg’s Adhocracy (1980).
PART 2: THE HOW OF ORGANIZATION DESIGN
Chapter 5: How do we approach an organization design?
In this opening chapter for the second part of the book, we will introduce a generic approach for organization design projects, based on the work of Nadler & Tushman, Stanford and Worren and incorporating the author’s own two decades of experience. After introducing this approach, we will look at the different stances available to the organization designer (interventionist/consultant), from an expert-based model to a more co-creative way of working (Schein). The advantages and disadvantages of the various models for intervention are reviewed. We then move on to look at the role that Large Group Interventions can play in an organization design project. In addition, we will discuss how a ‘design approach’ (Cross) borrowed from more traditional design disciplines such as architecture can benefit organization design efforts. To close this chapter, we will discuss some of the practical challenges that organization design practitioners face (based on the author’s original research) and avenues for how these can be addressed.
Chapter 6: How can we group the work of an organization?
In this chapter and the following, we will cover the core of organization design work: grouping and linking. We will make sure to relate these two core elements of the design to the frameworks covered in chapter 1. Starting with grouping, we will cover the concept of modularization (Simon, Baldwin & Clark, Puranam): decomposing a system of activities into subsystems, such that activities within a module are highly interdependent with one another, but there are few dependencies between activities that are part of different modules. This idea also forms one of the foundations for Socio-Technical Systems Design. The principle behind it is explained and illustrated based on a practical step-by-step approach, applied to a number of examples. These examples will also show the challenges involved in applying this principle in practical business situations. We will close this chapter by listing and illustrating the basic dimensions available to organizations for grouping work (Galbraith, Nadler & Tushman): by activity (functions), by output (service/product), by user (customer/market), by geography or by multiple foci.
Chapter 7: How can we link the efforts of an organization?
The companion chapter to chapter 6, this chapter discusses the various ways available to organizations to ‘link their efforts’. The concepts of coordination and cooperation are introduced and contrasted, with a justification for the emphasis this chapter/book places on the former. Based on an (in-press) literature review, a framework is presented that shows the spectrum of design strategies for achieving coordinated action, that is available to organizations. In addition, the concept of ‘interdependence’ is discussed, both from a theoretical perspective (Thompson, Puranam) as well as from a practical perspective, using examples from real-life business situations.
Chapter 8: How do we prepare for the transition?
In this final chapter, we discuss the work needed after the strategic design (grouping & linking, chapter 6 and 7) has been completed. This entails the detailed operational design and the transition plan. We discuss the elements of a typical operational design, chief among them the operating model and governance model. Based on a practical, step-by-step approach and real-world examples, we explain how the elements of an operational design are developed. We will also discuss different views about whether or not an organization design should reach this level of detail at all (Weick, Livijn). Finally, we touch upon planning for the transition. Seeing that this is not a work about change management, we will not go into too much depth here. Our discussion here will mainly serve to make the right links to other literature, such as that about rewards/incentives, HR practices & processes and infrastructural considerations (office and IT facilities). In addition, we will look at the overall transition strategies available to organizations (big bang or gradual), with their advantages and disadvantages, using practical examples. To close this chapter, the importance of ongoing evaluation and redesign is discussed. We end the book on a philosophical note, looking at how organizational systems may need to be incomplete by design.
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