What is the Dominant Force of Our Lives Today? Organizations! (Why, What, and How)

What is the underlying factor in these components of our lives: the food we eat, the cars we drive, the houses we live in, the clothes we wear, the water we drink, the roads on which we drive, the schools where we learn, the churches where we worship, the television we watch, the books we read, the computers we rely on, the furniture we sit on, and so forth?

Answer: Organizations—settings where individuals work together to accomplish a task.

Why Organizations Matter

Organizations shape nearly every aspect of our lives (work, health, learning, social, and spiritual). Organizations turn personal beliefs into value created for others, , individual aspirations into shared agendas through relationships, , disjointed actions into progress through growing opportunities, private thoughts into collective outcomes through a shared community, and discrete actions into sustained patterns.”

An organization turns personal values into value created for others. Disneyland’s value of being the “happiest place on earth” becomes real to me as our granddaughters chortle with delight upon meeting Cinderella; they then look at me and say with glee: “Grandpa, she’s real . . . and she’s beautiful. Thank you!” My happiness is multiplied by delighting our granddaughters. Disney’s organization values create value for me.

An organization creates enduring relationships. C.S. Lewis’s portrait of hell depicts individuals moving away from each other whenever they disagree. Soon, this centrifugal individuation force means that people live in their isolated houses with moats around them, not connecting with anyone. Organizations require centripetal forces bringing people together and working through differences, disagreeing without running away, and turning diversity into a strength.

An organization helps individuals grow by moving people into different assignments that stretch them. I grew up in a church organization where I was invited to publicly speak in worship services. I was always frightened but learned to expand my skills and today frequently give talks (although still nervous).

An organization creates a shared community where each person feels a sense of belonging. Having been a professor at the University of Michigan for over 30 years, I feel an instant bond with someone with a “Michigan” logo on their hat or shirt and can quietly say to them “Go Blue!” so that a stranger is now a friend.

An organization sustains ideas. I have had the privilege of working with brilliant entrepreneurs who turned their ideas into sustainable impact through transitioning leadership and creating repeatable organization processes.

Organizations are an underlying source of all industrial revolutions (from agrarian to industrialization to mass production to digital age to disruptive technology), and when operated well, have the potential to be one of the greatest sources of personal, economic, and societal progress. But when operated poorly, they can be a limitation on progress and cause of grief. So how can we structure and operate them well to effect the most good?

What Does an Organization Look Like?

Just as industrial revolutions happened in stages, how organizations operate has moved through stages. Arthur Yeung and I, in the book Reinventing the Organization, have characterized organization evolution into four phases: 1) hierarchy or bureaucracy, 2) aligned systems, 3) capability, and 4) what we call market-oriented ecosystem (MOE) (see figure 1). The current phase of organization design, the market-oriented ecosystem, enables organizations to meet today’s demanding digital world of incredible change. Organizations need to reinvent themselves to become ever-more responsive to dynamic market opportunities. We named this reinvented organization a market-oriented ecosystem (MOE)—though it’s a bit of a “clunky” phrase—to capture the essence of the emerging organization logic: taking advantage of market-oriented opportunities brings people together, and then ecosystem refers to how resources and people are organized to win in the marketplace beyond obtaining mere market share. 

Figure 1: Evolution of Organizational Form

How to Build the Right Organization

Since organizations shape so many facets of our lives and have continued to evolve, we propose an audit to guide both how to design an effective organization and how to make sure they enable an individual to prosper in the organization. The following audit (figure 2) identifies twelve characteristics or dimensions around context and strategy, capability, governance, and leadership. These twelve items may not be a complete organization and personal audit, but they capture many of the dimensions of building the right organization with the right people who fulfill their potential through active participation in their organization. 

---Figure 2: 12 Dimensions of an Organization Audit

Organizations matter as they impact nearly all areas of our lives. The logic of what an organization looks like and how it operates has and will continue to evolve. An organization audit reveals how business and HR leaders can build a better organization and how an individual may act within the organization to be effective.

Dave Ulrich is the Rensis Likert Professor at the Ross School of Business, University of Michigan and a partner at The RBL Group, a consulting firm focused on helping organizations and leaders deliver value.