Design & Theory
Starasr
Anderson_PPT02.pptxOrganization 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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Anderson, Organization Design
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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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