The True Purpose of Organizational Design
Today’s organizations face a dizzying array of complex global, technological, and strategy implementation obstacles often associated with dynamic increases in the pace of change.[i] Thus, many experts suggest that the role of organizational design is to facilitate the implementation of a strategy designed to cope with current operational dilemmas while simultaneously seeking ways to develop new capabilities. On the surface, this approach makes perfect sense and would most likely be regarded as a solid approach to organizational design. I offer an alternate approach, one that argues the primary role of organizational design is to release the creative energies of workforces who facilitate strategy implementation by anticipating the needs of internal and external stakeholders.[ii] This approach suggests that organization designers are indeed leaders who are tasked with the goal of improving the performance of the organization by enhancing its predictive knowledge capability.[iii] In other words, organization design might be envisioned as the interplay between the designer’s knowledge of how to divide, allocate, and measure tasks (architectural knowledge or system knowledge) and the employees’ knowledge of how to coordinate their effort (predictive knowledge.[iv]) These types of designs create synergy by integrating compelling visions with the leadership philosophy that people build the identity of the organization and therefore are its greatest value creator. Remarkably, structural designs of organizations rarely come to the forefront of leader discussions regarding business strategy or ways to increase staff productivity. Organizational design is a critical success factor for any business entity as proper design enables the focus and creative energies of leaders and staff to be released on the work at hand.[v] Since there is no perfect design, the creation of a proper design is a matter of fit and depends on the strategic focus of the organization, whether it is exploitation, exploration, or differentiation or a balance between these approaches. Regardless of strategy, organization design, from the simplest challenges to the most complex, requires a holistic view with a clear vision of the firm’s purpose and its chosen market strategies and an understanding of the resources needed to pursue objectives and the optimal approach for employing those resources.[vi] Additionally, a proper design must be equipped to adapt to the continuing move away from an industrial-oriented society toward one centered on knowledge and service industries. In this regard, the type of work itself becomes a critical design factor as the specific types of energies released are significantly different in these two industries. Based upon the evidence that I have provided, an alternative organizational design must be considered, one that is better equipped to ensure that the vitality of employees is enhanced and will facilitate the release of employees’ energy into productive outcomes toward strategy and growth. There are two main approaches in which an organization might accomplish this: an emphasis on design itself, wherein new forms that are modular, flexible, and fluid are sought, and an emphasis on cooperation, wherein the design is focused on stakeholder relationships. Either of these approaches will incorporate aspects of the other; however, it is how the organization seeks to balance its primary effort that indicates the approach.
[i] Dannar, Paul R. “Using Organizational Design to Move Beyond the Explore/Exploit Conundrum.” Journal of Strategic Leadership 5, no. 1 (2014): 1-–9.
[ii] Dannar, Paul R. (2014).
[iii] Puranam, Phanish, Marlo Raveendran, and Thorbj?rn Knudsen. “Organization design: The epistemic interdependence perspective.” Academy of Management Review 37, no. 3 (2012): 419-–440.
[iv]Puranam, Phanish, Marlo Raveendran, and Thorbj?rn Knudsen. (2012).
[v] Harmon, Frederick G. Business 2010: five forces that will reshape business--and how to make them work for you. Kiplinger Books, (2001).
[vi] Miles, Raymond E. “The Centrality of Organization Design.” Journal of Organization Design 1, no. 1 (2012): 12-–13.