Organi

zati
onaldesigni sasmuchanar tasitisascience.Thepr ocessofcreati
ngasy st
em i
n
whichpeoplecanwor ktogethertoachievecommongoal sishighl
ycompl exandthereisnoone
waytodoi tr
ight.I
nt hisarti
cle,
wewi ll
explai
nwhator ganizat
ionaldesignis,whatdr
ives
or
ganizat
ionaldesign,howt odesi gnanorganizat
ion,andhowanef fect
ivedesi
gncanbe
measuredintermsofor ganizat
ionalef
fecti
veness.Let’
sdivein!

Tostartwi t
hat echnicaldef i
niti
on:Organizati
onal designi stheadmi ni
st rat
ionandexecut
ionof
anorganization’
sstrategicplan.Thismeanst hatt heor ganizati
on’sstrategydetermi
nesthe
opti
mal organizati
onal design.Inadditi
on, i
talsomeanst hattherearen’treall
yany
organi
zationaldesignbestpr acti
ces.Organizationaldesigni smor eaboutcr eati
ngthebestfi
t
betweenthest rat
egicchoi cesoft heorganizationandt heor gani
zati
onal setti
ng.

*
The5or
gani
zat
ional
desi
gnpr
inci
ples

1.
Special
i
zat
ionpri
ncipl
e.Thi
spr i
nci
plest
at esthatboundar
iesshouldexistt
oencouragethe
devel
opmentofspeci
ali
stski
l
ls.Thetesther eisi
fanyspeci
alistcul
tur
es,whichareenti
ti
esthat
havetobedi
ffer
entfr
om therestoft
heor ganizat
ion,hav
esuffici
entprot
ecti
onfrom t
he
i
nfl
uenceofthedominantcul
ture.

2.Co-ordinationpri
ncipl
e.Thispr incipl
est at
esthatactivi
ti
esthatar edoneshouldbe
coordinatedi nasingleunit.Thisuni tcanbeabusi nessunit,businessfuncti
on,(
hori
zontall
y
coordinating)overlayunit
,sub-busi ness,corer
esour ceunit
,sharedserviceunit
,proj
ectunit,
or
parentuni t.Thetesthereisifther eneedst obecoor di
nati
onbet weendepar t
mentsthatishar d
todo.These‘ dif
fi
cultli
nks’arelinkswher enormal networki
ngwi llnotprovi
decoordi
nation
benefits.Inthatcase,coordinati
onshoul dbemadeeasi er
,orresponsibil
it
yshouldbeputi n
withi
nasi ngleunit
.Therear emanydi ffer
entunit
st hatcanbeusedi norgani
zati
onaldesign,as
wewi llshowbel ow.

3.
Knowledgeandcompet enceprinci
ple.Thi
sprinci
plestatesthatresponsibi
l
iti
esshouldbe
al
locat
edt ot
heper sonorteam bestfittodothem.Thi smeanst hattasksareretai
nedbyhigher
l
evelsbasedont hei
rknowledgeandcompet i
ti
veadv antage.I
fthisisnotthecase,theyshoul
d
beposit
ionedlowerintheorganizati
on.

Thi
smeansthattheCEOshouldnotbeinvol
vedinever
ydeci si
on–especi
all
ynotdecisi
onst
hat
i
nvolv
especi
ali
stswit
hmuchmor esubject
-matt
erknowledge.TheCEOistherefort
hebig
pi
ctur
eandtobalancecompl
exdecisi
onsthati
mpacttheor gani
zat
ionandstr
ategy.

4.Controlandcommitmentprinci
ple.Thispr
inci
plei
sabouthavi
ngeffecti
vecont
rolontheone
handwhi l
emaint
aini
ngengagementandcommi tmentontheotherhand.Thi
sisalwaysa
balance.Thetesther
eistohav eacont r
olpr
ocessthati
sali
gnedwi t
htheunit
’sr
esponsibi
l
ity
,
cost-ef
fici
entt
oimplement,andmot ivat
ingf
orthepeopl
eintheunit.

Thismeanst
hattheCEOisnotgiv
ingt
he‘go’
ont hepur
chasedecisi
onfora$30key
boar
d–
thi
swouldbehi
ghlydemoti
vat
ingandcont
rolonsuchsmallexpendi
tur
esshoul
dbeputl
oweri
n
t
heor
gani
zat
iont
obeadapt
iveany
way
.

5.I
nnovati
onandadapt ati
onpr i
ncipl
e.Thispr i
nci
plestatesthatorganizat
ionalstruct
uresshoul
d
besuffi
cientl
yflexi
blet
oadaptt oanev er-changi
ngwor l
d.Thet esthereisthatthe
organi
zationaldesi
gnwillhel
pthedev elopmentofnewst r
ategiesandt oadaptt ofut
ure
changes.Laterinthi
sarti
cle,
wewi l
lgi
veacasest udyofanor ganizat
ionthatwasunabl eto
adapttoar api
dlychangi
ngenv ir
onment ,hurti
ngit
si nt
ernalprocessesandbot tom li
ne.

*
Fiv
efact
orsi
nfl
uenci
ngor
gani
zat
ional
desi
gnpr
inci
ples

Whenanor ganizati
onisst ructuredanddesi gnedinawayt hatfitsi
tspur
pose, itwil
lresulti
n
organizat
ionaleffect
iveness.Or ganizat
ional ef
fect
ivenessincludesobtai
ningr esourcesthatthe
companycompet eson( i
.e.thecompanyhast hecapabili
ti
estobecompet it
ive),ef
fi
ciency(i.
e.
opti
mi zat
ionoft heresourcesr equir
edt or eachgoals,meaningt her
eisasmoot hoper at
ional
processwi t
hlit
tlewast age),andef f
ecti
v eness(i.
e.str
ategicgoal at
tai
nment )
.

I
nthefol
l
owingsecti
on,wewi
l
lgoov
ereachoft
hesef
ivef
act
ors,
expl
aini
nghowt
hesei
mpact
or
gani
zati
onal
design.

1.St
rat
egy

Theorganizati
onalst
rategyi
sthemostimportantst
art
ingpoi
ntfort
heorgani
zat
ionalst
ruct
ure
anddesign.Itgoesbeyondthescopeofthi
sarti
clet
oexplai
nhowast r
ategyi
screated–we
haveagr eatart
icl
eonHRst rat
egyincaseyouwanttocheckthi
sout.

2.Env
ironment

Theenvi
ronmental soimpact
sorgani
zat
ionalst
ruct
ureanddesign.Thei
ndust
ry,r
awmat er
ials,
(l
abor
)mar ket,
(int
ernat
ional
)gov
ernmental
,andsociocul
tur
ali
nfl
uencesal
lshapether
equired
desi
gntodiffer
entdegrees.

Themostimport
antf
actori
senv
ironment
alst
abi
l
ity
.Ther
ear
etwodi
mensi
onst
hati
nfl
uence
envi
ronment
alst
abi
li
ty:

A.Simple-complexdimensi
on.Thisrefer
stothedegreetowhichext
ernalf
actor
sinf
luencet
he
organizati
onandcompet it
ion.Thesearemult
ipl
eforlar
gecompaniessuchasAT&TandBr it
ish
Telecom, whereall
previ
ouslyment i
onedfact
orsacton.I
ncompar i
son,afamil
y-
owned
hardwar estor
einasuburbf aceslowenvir
onmentalcomplexi
ty.

B.St
able-unstabledimensi on.Thisreferstotheel ementsintheenvi
ronmentt hataredy namic.
Bigconsumerbr andslikeMcDonal d’sareinfl
uencedbyonl i
nemedia.Theyar ehighlyvisi
bleon
pl
atformsl i
keTwi tter
,Instagram,andTi kTok, andasingletweetorblogpostcangr eatly
damageabr and.Ont heot herhand, publicuti
lit
ycompani eshavebeenstableforalongt ime.
Takepubl i
clibrari
esint heUSbet weent he1970sand2000s.Thesewer efundedbyt helocal
ci
ty,county,state,andfederal government .
Ahighlystableandsimil
arenvi
ronmentjusti
fi
esstandardizedandnon-
dynamicorgani
zati
onal
processes.Examplesincl
udesoapproducersorcontainermanufact
urer
s.Ontheotherhand,a
hi
ghlyunstableandcompl exenvi
ronmentrequir
estheor gani
zati
ontoconst
antl
yadapt.
Examplesincludechipmakersandaerospacefirms.

3.Technol
ogy

Technol
ogygr
eat
lyi
nfl
uencesorgani
zati
onaldesign.Wesawthi
st hr
oughtheCOVID-
cri
sis
wheremanycompani
eseffor
tl
esslywentdi
gitalandsomeevenclosedthei
rof
fi
ces.

Informati
onTechnologyal soenablesor ganizat
ionstobecomemor edecentral
i
zed,i
mpr ove
hor i
zont
alcoordi
nationthroughintranets,andexternalcoll
aborati
onbecomespossi blethr
ough
extranet
s.Infact
,Slack,oneoft hemost -usedcollabor
ationtoolsall
owsi nt
ernalandexter
nal
collabor
atorstoj
oint hesamet eam throughdi f
ferenti
nternalandexternalchannel
s,enabl
ing
fastcommuni cat
ion.

4.Si
ze&l
i
fecy
cle

Sizeisanotherfactorthatimpactsorgani
zati
onaldesign.Smal lor
ganizati
onsar eusual
l
y
responsive,f
lexi
ble,f
lat,or
ganic,
andent r
epreneur
ial
.Largeor ganizat
ionscreatevaluet
hrough
effi
cienci
es,haveagl obalreachandbrand,amor establemar ket,
andputmor eemphasison
manager s.Thisl
eadst odiffer
entorgani
zati
onaldesi
gnchoi ces.

Asorgani
zati
onsgrow, t
heygothroughdif
fer
entstagesofdevelopment.Knowi
ngwhichstage
anorgani
zati
onisinhelpstospotmisal
i
gnmentbet weentheorganizat
ional
goal
sandstrategy
andtheorgani
zat
ionalstr
uctur
e.Inaddi
ti
on,i
thelpstoident
if
ywhi chcri
sist
heorgani
zat
ionis
l
ikel
ytoface.

5.Cul
tur
e

Everyor
ganizati
onhasitsownuni quecult
urebasedonthei
rval
ues,assumpti
ons,bel
i
efs,
att
it
udes,feel
ings,st
ori
es,
heroes,symbols,l
anguage,
andhabit
s.Thesecult
uresarebest
summar i
zedint hecompet
ingvaluesframework.

Thisfr
amewor kpr
oposesthatt
hereareanumberofcompet i
ngv aluesinanorgani
zat
ion:
fl
exibi
l
ityvs.stabi
l
ity
,andanint
ernalv
s.exter
nalf
ocus.Thevaluescompet e,meani
ngthatiti
s
notpossibl
et obebothstabl
eandflex
ibl
e,orbot
hinter
nalandext ernal
focused.