By Ria Roy
The landscape within which organizations compete today has undergone a drastic change and continues to do so. The environment dictates that an organization be agile and resilient to nimbly transmogrify and respond to business priorities to sustain its competitive advantage. Faced with the volatile temperaments of the marketplace necessitates those leaders at the helm of the decision-making process design organizations to maximize their core capabilities (Wyman, 1998).
Disregarding organizational design can result in increased costs, process inefficiencies, decline in market share, reduced coordination among functions, slow decision making, increased complexity, inappropriate teams, and failure to collaborate. Spanning across various industries, redesign initiatives are no longer a 10-year organizational event, where 81% of organizations were found to be undergoing a major redesign initiative in 2010 with 56% anticipating a major design initiative (Corporate Leadership Council, 2010). Design is regarded as a powerful pervasive tool that shapes performance at every level within an organization by reallocating resources and redirecting focus to new areas offering increased growth potential (Nadler & Tushman, 1997). Organization design is regarded as one of the criteria that promotes business success in the 21st century (Nikolenko & Kleiner, 1996).
Stanford (2007) describes organization design as a “sequence of work” that results in an alignment of vision, mission, strategies, objectives, systems, structure, people, processes, culture, and performance measures to achieve the desired results within the operating context (p. 8). Liedtka and Mintzberg (2006) explain that the process of organization design is synthetic, future oriented, driven by hypothesis and opportunity seeking, and similar to other design initiatives–as in product design, it too involves the use of observation, prototyping, and the use of frameworks. Irrespective of business maturity, good design decisions include the entire organization along with its operating context not only to achieve its competitive edge but also to minimize risk and raise performance levels (Stanford, 2007).
Organization design is of importance because of its positive impact on business performance through improved financial performance, improved competitive advantage, and significant returns on investment (Cichocki & Irwin, 2011). Instances such as outsourcing, introduction of new technologies, restructuring, significant growth or contraction of work, pressures to reduce cost or improve performance, and so on are areas when an organization design or redesign initiative needs to be considered (Cichocki & Irwin, 2011). An organization that is well-designed is flexible to adapt to the challenges of the future and fit for the requirements of the present (Goold & Campbell, 2002).
Corporate Leadership Council. (2010). Maximizing employee performance outcomes from organization redesign initiatives. Washington, DC. Harvard Business Publishing
Cichocki, P., & Irwin, C. (2011). Organization design: A guide to building effective organizations. Philadelphia, PA: Kogan Page Limited.
Goold, M., & Campbell, A. (2002). Do you have a well-designed organization? Harvard Business Review, 80 (3):117-24, 134
Liedtka, J., & Mintzberg, H. (2006). Time for design. Design Management Review, 17(2), 10-18.
Nadler, D. A., & Tushman, M. L. (1997). Competing by design: The power of organizational architecture. New York, NY: Oxford University Press.
Nikolenko, A., & Kleiner, B. H. (1996). Global trends in organization design. Work Study, 45(7), 23-26.
Stanford, N. (2007). Guide to organization design: Creating high-performing and adaptable enterprises. London, England: Profile Books Ltd.
Wyman, O. (1998). Strategic organization design: An integrated approach. Atlanta, GA: Delta Organization and Leadership LLC.
About the Author
The creator and monthly contributor of the Performance Xpress column on Rethinking, Revisiting, and Reimagining Performance Improvement, Ria Roy is currently a doctoral student in instructional technology at Indiana University Bloomington with a minor in business with an emphasis on strategy. Her experiences have been in areas of strategic development, setting up business units, commercial analytics and decision support, new product planning, and consulting, primarily in industries such as IT/ITES and pharmaceuticals. She holds an MBA in management information system, an MS in human factors in information design, and an MS in training and development. Her research interests lie in performance technology, development of the field of performance technology and performance improvement, organization design, innovation, and the study of customer centricity as a performance enabler.