1 Exploring an Innovation Project as a Source of Change in Organization Design, Jacob Brix, Lois S. Peters
This study builds new empirically based theory on how the processing of an innovation project with a high degree of uncertainty induces change in key components in organization design. By using an embedded case study as our research strategy and organization design theory as our analytical lens, we construct ten propositions that determine how the organization design of our case organization was influenced because of their innovation project. These changes represent: a) improved competencies for exploration activities, b) improved competencies for exploiting new knowledge, and c) increased readiness for change.
2 Resume of Interview with Professors Richard Burton and Børge Obel, Dorthe Døjbak Håkonsson
This interview is with Professors Richard Burton and Børge Obel. Professor Burton is Professor Emeritus at The Fuqua School of Business, Duke University. Previously, he was senior editor at Organization Science. Currently, he is an associate editor of the Strategic Management Journal and associate editor of the Journal of Organization Design. Professor Obel is Professor at Aarhus University and Director of the Interdisciplinary Center for Organizational Architecture (ICOA) which he founded in 2011. He is co-editor of the Journal of Organization Design. He is the former Dean of the Aarhus School of Business. The interview was conducted in 2013 when Professor Burton was a visiting Professor at ICOA.
3 The Challenge of Being Outstanding: A Look Back and Ahead After 25 Years of Guiding Business Excellence, Harry S. Hertz
The management of organizational performance is a challenge faced by every business, nonprofit, and government organization. The attributes of an outstanding organization have evolved over time as complexity has increased and change has become constant. The Baldrige Performance Excellence Program has closely tracked these attributes and changes to always reflect the leading edge of management practice. What these attributes and changes are, the challenges CEOs and organizations face today, and performance management areas that will need attention in the future are explored.
4 Resume of Interview with Professor Charles Snow, Dorthe Døjbak Håkonsson
This interview is with Professor Charles Snow. Snow is Professor Emeritus of Strategy and Organization at Penn State University. He was a professor at Penn State from 1974 to 2012. The interview was conducted in 2013 while he was visiting professor at ICOA (Interdisciplinary Center for Organizational Architecture) at Aarhus University. Professor Snow is a founding member of the Organizational Design Community and co-editor of the Journal of Organization Design. He is a Fellow of the Academy of Management and is listed in Who’s Who in the Management Sciences and Great Writers on Organizations.
5 Towards Alliance Performance Management in Service Logistics, Bianca Keers, Paul C. van Fenema
This study explores the management of stakeholder values for alliance success. A multiple-case study method is used to analyze – within six organizations attempting to form alliances – how the management of inter-organizational dimensions of stakeholder value adds to the success of an alliance business strategy. Our study focuses on the establishment of vertical service alliances within the Dutch maritime sector, including private-private as well as public-private initiatives. The findings point toward the usefulness of developing an inter-organizational success map. Because of its comprehensive multi-stakeholder orientation, a success map can be used by alliance managers to understand management’s considerations, including the trade-offs among an alliance’s various performance drivers. This new conceptual thinking can enhance research and best practices on inter-organizational design.
6 The Role of Performance Management in Creating and Maintaining a High-Performance Organization, André A. de Waal, Béatrice I.J.M. van der Heijden
There is still a good deal of confusion in the literature about how the use of a performance management system affects overall organizational performance. Some researchers find that performance management enhances both the financial and non-financial results of an organization, while others do not find any positive effects or, at most, ambiguous effects. An important step toward getting more clarity in this relationship is to investigate the role performance management plays in creating and maintaining a high-performance organization (HPO). The purpose of this study is to integrate performance management analysis (PMA) and high-performance organization (HPO). A questionnaire combining questions on PMA dimensions and HPO factors was administered to two European-based multinational firms. Based on 468 valid questionnaires, a correlation analysis was performed on the PMA dimensions and the HPO factors in order to test the impact of performance management on the factors of high organizational performance. The results show strong and significant correlations between all the PMA dimensions and all the HPO factors, indicating that a performance management system that fosters performance-driven behavior in the organization is of critical importance to strengthen overall financial and non-financial performance.
7 Editorial, Børge Obel, Charles C. Snow
Periodically, leading scholars in the organization sciences have paused to reflect on the status of organization and management theory (e.g., Perrow, 1973; Hambrick, 1993; Huber, 2010). Their overall conclusions have been strikingly similar: organization and management theories may matter a great deal to the scholars who produce them, but they matter very little to managers. As an applied discipline, the field of organization design offers a true opportunity to bridge the worlds of scholarly research and management practice. Problems of organization design exist at the nexus of theory and practice, demanding rich understanding, robust theorizing, strong empirical analysis, and futuristic thinking. Further, with rapid technological evolution, new forms of organizing, and dynamic economic and social environments within and across countries, problems of organization design in the private, public, and nonprofit sectors are ever more complex and challenging, for both researchers and managers.
8 The Future of Organization Design, Jay R. Galbraith
The type of organization design that I practice is strategic organization design. It has roots in Chandler's (1962) work which states, "Structure follows strategy." It applies to organizing at the enterprise, business unit, region, or functional levels. It is a top-down design methodology. The alternative is a bottom-up design approach such as the socio-technical systems approach. Bottom-up design methodologies build and design an organization around the technology being utilized and are most applicable at lower levels of the organization.
9 A Practitioner’s View of the Future of Organization Design: Future Trends and Implications for Royal Dutch Shell, Jan Steinmetz, Chuck Bennett, Dorthe Døjbak Håkonsson
Humanity is facing an increasingly challenging outlook for energy needs and the planet. Royal Dutch Shell is a global group of energy and petrochemicals companies with approximately 100,000 employees in more than 80 countries that is committed to help meet the challenges of the new energy environment in a sustainable and responsible manner. My statement will present some of the future trends and possible implications which can be seen for organization design within Royal Dutch Shell (Shell) and which are applicable to other large, complex enterprises. It largely represents the personal views and reflections of a practitioner both inside and outside of Shell’s human resources (HR) function in the United States. Using the lens of organization design, we will review the themes that emerged from the Shell Energy 2025 and Shell Energy 2050 global scenarios. Next, we will discuss Shell’s previous experience, challenges, and issues related to organization design, and how the recent redesign of the HR function has provided wider space and crisper focus to meet the challenges of the future. Finally, we will review the design challenges that the future trends impose upon the organization design practice. Although these challenges and implications are derived from experience working in Shell and its joint ventures, they are not confined solely to Shell. Because many of the challenges discussed below would benefit from scholarly research, the statement represents a practitioner’s view on how the future of organization design may play out.
10 The Centrality of Organization Design, Raymond E. Miles
I am excited about this new journal focused on the subject of organization design. In my view, organization design is a central issue in the field of management. Designing an organization requires an understanding of strategy, as we pointed out some time ago (Miles & Snow, 1978). For example, if you want to be a prospector (a first-mover strategy), you have to design your firm to move quickly in new directions, which is likely to require that it be arranged so that various kinds of teams can interact across organizational units and levels. Designing an organization to follow a first-mover strategy also requires both an understanding of leadership and a commitment to the free flow of information throughout the organization. Leaders must understand how cross-functional teams pursue ideas and opportunities, and they must facilitate collaborative knowledge sharing to drive innovations that help the firm operate entrepreneurially. Because an organization is a complex, dynamic system, perhaps no other single topic is so deeply implanted at the core of management, organization theory, and organizational behavior as organization design. Moreover, organization design once was, and could be again, the topic of an ongoing dialogue between managers and academics focused on business organizations.
11 Rethinking Organizational Design for Complex Endeavors, David S. Alberts
The future of Organizational Design (OD) will be shaped by the extent to which the field can address the fundamental organizational design challenges we face in this Age of Interactions (Alberts, 2011). Will we prefer to take the well-paved path directly ahead, perfecting the design processes currently employed to increase the probability that a particular organization is successful in a particular environment? Or will we blaze a new trail, re-conceptualizing the fundamental elements of organizational design in response to a world that is changing the nature of organizations and the capabilities they need to survive? Reinventing OD partly involves going back to basics to reconsider what we mean by an "organization" and the defining characteristics of its operating environment, the measures of merit or fitness by which the quality of a given design is determined, and the meaning of design itself. While this may be a formidable challenge for the field of OD, only by venturing down this alternate path will we be able to create the agile complex enterprises needed to tackle the pressing security, societal, economic, and environmental challenges we face.
12 Organization Design for Business Ecosystems, Carliss Y. Baldwin
The modern corporation has long been the central focus of the field of organization design. Such firms can be likened to nation-states: they have boundaries that circumscribe citizen-employees, and they engage in production and trade. But individual corporations are no longer adequate to serve as the primary unit of analysis. Over the years, systems of distributed innovation – so-called business ecosystems – have become increasingly prevalent in many industries (Adner & Kapoor, 2010; Iansiti & Levien, 2004; von Hippel, 1988). Ecosystems generally encompass numerous corporations, individuals, and communities that might be individually autonomous but related through their connection with an underlying, evolving technical system. In the future, I believe the key problem for organization design will be the management of distributed innovation in such dynamic ecosystems. Specifically, how should diverse entities be integrated into a coherent network that generates goods in the present and new designs for the future? To answer that question, organization designers must think about how to distribute property rights, people, and activities across numerous self-governing enterprises in ways that are advantageous for the group (ecosystem) as well as for the designer’s own firm or community.
13 Open Innovation and Organization Design, Michael Tushman, Karim R. Lakhani, Hila Lifshitz-Assaf
Abernathy's (1978) empirical work on the automotive industry investigated relationships among an organization’s boundary (all manufacturing plants), its organizational design (fluid vs. specific), and its ability to execute product and/or process innovations. Abernathy's ideas of dominant designs and the locus of innovation have been central to scholars of innovation, R&D, and strategic management. Similarly, building on March and Simon's (1958) concept of organizations as decision making systems, Woodward (1965), Burns and Stalker (1966), and Lawrence and Lorsch (1967) examined relationships among organizational boundaries, organization structure, and innovation in a set of industries that varied by technology and environmental uncertainty. These and other early empirical works have led a diverse group of scholars to develop theories about firm boundaries, organization design, and the ability to innovate.
14 The Evolution of Enterprise Organization Designs, Jay R. Galbraith
This article extends Alfred Chandler's seminal ideas about strategy and organizational structure, and it predicts the next stage of organizational evolution. Chandler described the evolution of vertical integration and diversification strategies for which the functional and multidivisional structures are appropriate. He also explained how the dominant structure at any point in time is a concatenation or accumulation of all previous strategies and structures. I extend Chandler's ideas by describing how early "structures" became "organizations" (people, rewards, management processes, etc.) and by discussing the more recent strategies of international expansion and customer focus. International expansion leads to organizations of three dimensions: functions, business units, and countries. Customer-focused strategies lead to four-dimensional organizations currently found in global firms such as IBM, Nike, and Procter & Gamble. I argue that the next major dimension along which organizations will evolve is emerging in firms which are experimenting with the use of "Big Data."
15 The Virtual Design Team: Designing Project Organizations as Engineers Design Bridges, Raymond E. Levitt
This paper reports on a 20-year program of research intended to advance the theory and practice of organization design for projects from its current status as an art practiced by a handful of consultants worldwide, based on their intuition and tacit knowledge, to: (1) an “organizational engineering” craft, practiced by a new generation of organizational designers; and (2) an attractive and complementary platform for new modes of “virtual synthetic organization theory research.” The paper begins with a real-life scenario that provided the motivation for developing the Virtual Design Team (VDT), an agent-based project organizational simulation tool to help managers design the work processes and organization of project teams engaged in large, semi-routine but complex and fast-paced projects. The paper sets out the underlying philosophy, representation, reasoning, and validation of VDT, and it concludes with suggestions for future research on computational modeling for organization design to extend the frontiers of organizational micro-contingency theory and expand the range of applicability and usefulness of design tools for project organizations and supply-chain networks based on this theory.
16 Design of Industrial and Supra-Firm Architectures: Growth and Sustainability, John A. Mathews
The scope of organization design has expanded steadily from work-flow issues and job specifications to firm-level considerations and now to supra-firm industrial structures, where such issues as modularity and clustering loom large. Economic analysis has made little headway in analyzing how increasing returns may be generated through supra-firm structures such as networks and clusters, nor in the question of how their industrial architecture (modular vs. integral, open vs. closed) affects economic performance. The focus here is on the supra-firm industrial architectures that have arisen, either spontaneously through the evolution of capitalism or through purposeful design, involving both state and private actors. Striking cases such as the Chinese automotive industry, which started with the production of conventional automobiles and motorcycles, and now encompasses both two-wheeled and four-wheeled electric vehicles, provide testimony to the power of some industrial configurations to outperform others. My analyses and arguments are placed in the global context of the urgent need to find ways to accelerate the uptake of green technologies (such as electric vehicles) in order to reduce emissions of greenhouse gases and at the same time promote the industrialization of countries still at lower levels of income and wealth.
17 Designing Organizations for Exploration and Exploitation, Timothy N. Carroll
All organizations face the core challenge of deciding on investments in two very different types of activities: exploration and exploitation. Exploration activities are future-oriented, such as developing new capabilities, experimenting with new technologies, and pursuing new customers and markets. Exploitation activities, in contrast, focus on the refinement of existing competencies, processes, and products. Because an organization’s design should reflect its goals, it is difficult to accommodate exploration and exploitation activities within a single organization. This article discusses four major approaches used to tackle this problem, and notes the strengths and limitations of each approach.
18 Designing Firms to Fit the Future, Raymond E. Miles, Laurent Scaringella
Most firms identify market opportunities for their new technologies after they have been developed. This article discusses the design of a “futures group” which can help to synchronize a firm’s technology and market development. A futures group designed to span more than one organization could lead to simultaneous market development for multiple technologies.
19 Disobeying Power Laws: Perils for Theory and Method, G. Christopher Crawford
The “norm of normality” is a myth that organization design scholars should believe only at their peril. In contrast to the normal (bell-shaped) distribution with independent observations and linear relationships assumed by Gaussian statistics, research shows that nearly every input and outcome in organizational domains is power-law (Pareto) distributed. These highly skewed distributions exhibit unstable means, unlimited variance, underlying interdependence, and extreme outcomes that disproportionally influence the entire system, making Gaussian methods and assumptions largely invalid. By developing more focused research designs and using methods that assume interdependence and potentially nonlinear relationships, organization design scholars can develop theories that more closely depict empirical reality and provide more useful insights to practitioners and other stakeholders.
20 Design Guidelines to Address Global Challenges: Lessons from Global Action Networks, Steve Waddell
Traditional organizations appear to be incapable of adequately addressing critical global issues such as war, climate change, and economic inequality. Addressing these issues suggests the need for organizational innovation to develop global social contracts. Successful innovation must address four integration imperatives: (1) integrate effort and resources across organizational sectors (business, government, civil society) and sense-making, (2) create successful individual to global aggregations, (3) integrate the short and long term, and (4) integrate major issue areas. A new type of organization, Global Action Networks, aims for this integration. Based upon analysis of this new type of organization, five design principles for global social contract organizations are proposed.
21 Designing the Organization for User Innovation, Peter Keinz, Christoph Hienerth, Christopher Lettl
There is increasing consensus among practitioners and academics alike that we are in the midst of a paradigm shift from producer-centered and internal innovation processes toward user-centered and open innovation processes. This paradigm shift induces significant changes to the design of organizations. Even though the research field of user innovation has been developing over a period of more than four decades, there have been only occasional intersections with the research field of organizational design. In this paper we aim to provide an integrated perspective of the two fields. We first identify major user innovation strategies. We then derive the implications of each user innovation strategy on key dimensions of organizational design. We conclude with an outlook on symbiotic producer-user ecosystems and the corresponding implications for organizational design.
22 Sequencing Organizational Change For Post-Shock Adaptation: A Simulation Model, Peter Jack Gallo, Richard Burton
What should an organization do after an environmental shock? What is the best sequence for changing organizational features or activities in response to a shock? In this study, a simulation methodology is used to examine how different sequences in changes to strategy, structure, and resource allocation affect the success of the adaptation process. Results show that the choice of change sequence leads to varying outcomes in organizational maneuverability, competence, and effectiveness. However, no one sequence is optimal for all scenarios; the best sequence choice depends on the goals of the change process as well as the content and direction of change. After an environmental shock, an organization should analyze and determine which sequence of change to follow. However, if there is little time for analysis, a reasonable heuristic is to implement a change in strategy first.
23 Moving Design from Metaphor to Management Practice, Jeanne Liedtka, Bidhan Parmar
Despite the centrality of “design” to the field of organizational science, we argue that its use has remained at the level of metaphor rather than practice. Donald Schon’s concept of “reflection in action” addresses this gap by describing how managers can practice designing by generating problem frames as hypotheses, and then testing and refining those hypotheses in the situation. Much of management theory has focused on stable and predictable situations where problem framing is less important. As practitioners and scholars alike increasingly embrace the complexity and ambiguity of the global business environment, Schon’s ideas are starting to take hold. In this article, we explore Schon’s concept of the “reflective practitioner” and show how it can move beyond theory to implementation.
24 Using Simulation to Study, Design and Invent Organizations, Raymond Elliot Levitt
Over the past 50 years, computational modeling and simulation have had enormous impact on the advancement of knowledge in fields such as physics, chemistry, and subsequently, biology. After simulation models had been validated in these fields, they were rapidly adopted as powerful new tools to enhance and extend engineering practice. Might social science and management practice be following a similar trajectory? This article argues that progressively validated, calibrated, and refined computational simulation models of organizations are rapidly evolving into: (a) powerful new kinds of organizational analysis tools to support organization design by predicting the performance of specific organizational configurations for a given task and environment; (b) flexible new kinds of organizational theorem provers for validating extant organization theory and developing new theory; and (c) organizational test benches that can be used to explore the efficacy of hypothetical organizational configurations that can address the unprecedented demands of new and emerging work processes in the presence of high levels of uncertainty and ambiguity.
25 Improving Supply Chain Performance Through Organizational Design: Insights from key suppliers to the United States Air Force, David J. Ketchen, Jr., T. Russell Crook, James G. Combs, J. David Patterson
Creating organizational designs that maximize performance is a key goal for many executives. We sought to uncover ways that a giant organization – the United States Department of Defense (DoD) – could improve its performance via organazational design changes. Based on input from 80 executives who collectively represent over 60 defense contractors, we found that the DoD could become more efficient and effective by (1) relying on relational contracting within its supply chains, (2) designing better reward systems, (3) focusing on results rather than processes when managing its suppliers, (4) moving its supply chains toward a best value approach, and (5) investing strategically in its workforce. In drawing implications from our findings for organizations in general, we highlight companies that have reaped rewards from making these five moves in the past.
26 Editorial, Børge Obel, Charles C. Snow
In our editorial accompanying the launch of Journal of Organization Design (Vol. 1, Issue 1, 2012), we said that the field of organization design offers a true opportunity to bridge the worlds of scholarly research and management practice. We were pleased to announce the establishment of an open access journal dedicated entirely to advancing the theory and practice of organization design. Special features of JOD include a dual emphasis on theory and practice, an orientation toward the future, openness to methodologies that allow for organizational prototyping, and a forum for the discussion of new organizational forms. JOD introduced four different article formats which enable authors to find the proper voice for their work (research articles, translational articles, point of view articles, and urgent issue articles). Judging the various articles published in Vol. 1, we believe that JOD is headed in the right direction, and we are optimistic about its future.
27 Misfits in Organization Design: Information Processing as a Compensatory Mechanism, Ben Nanfeng Luo, Lex Donaldsen
We propose a compensatory misfits theory which holds that an “over-fitting” organization structure can compensate for an “under-fitting” structure, thereby reducing the total misfit. In organizations, over-fit occurs when structural features misfit the core contingencies because the structural level is too high to fit the contingencies. An under-fit occurs when structural features misfit the contingencies because the structural level is too low. When an under-fit is compensated by an over-fit, the combination can produce performance outcomes that approximate those from fit. The reason inheres in information processing being a higher level factor that cuts across different contingencies and structural features that are mis-fitted to each other, so that compensation is possible. We identify the specific conditions that must be fulfilled for compensation to occur, and we discuss implications for organization design theory and practice.
28 Employing Young Talent from Underserved Populations: Designing a Flexible Organizational Process for Assimilation and Productivity, Arthur Mark Langer
This article describes an ongoing 13-year-old program designed to improve the ability of organizations to assimilate young talent from underserved populations, mostly students who have recently graduated from high school. Although many firms have internship and orientation programs, few have well-tested organizational approaches for assimilating 17-20 year-olds into their organizations in an efficient and productive manner. The objective of this study is to describe and evaluate the solution introduced by Workforce Opportunity Services (WOS), a non-profit agency that provides organizations with well-trained talent from underserved local communities. The WOS model is a systemic design involving a lead agency (WOS), corporate clients, training partnerships with local colleges and universities, and underutilized human capital. Over 290 students have completed the WOS program and obtained long-term employment, mostly in IT jobs that normally are outsourced. The results of the study show that companies have success employing young talent when they follow the WOS organizational process. Companies need to have patience with WOS student employees, but within six months most members of the WOS program make positive contributions to their sponsoring firm and have a strong likelihood of becoming permanently employed. Implications of the WOS model for organization design are discussed.
29 The Strategic Fitness Process: A Collaborative Action Research Method for Developing and Understanding Organizational Prototypes and Dynamic Capabilities, Michael Beer
Organizations underperform and sometimes fail because their leaders are unable to learn the unvarnished truth from relevant stakeholders about how the design and behavior of the organization is misaligned with its goals and strategy. The Strategic Fitness Process (SFP) was designed to enable leaders to overcome organizational silence about the misalignment with the environment and chosen strategy. By enabling an honest, organization-wide and public conversation, senior management teams, working collaboratively with scholar-consultants and organizational members, have access to valid data (the unvarnished truth), can conduct a valid diagnosis, and can develop a valid plan to change the structure, processes, and behavior of an organization while at the same time developing commitment that ensures execution. SFP is also a research method. By applying SFP iteratively to new and challenging situations, scholar-consultants can invent new organizational prototypes as well as learn if a standardized and institutionalized organizational learning process like SFP can enhance dynamic capabilities. The SFP model is illustrated with an application to Hewlett-Packard’s Santa Rosa Systems Division.
30 The Underexplored Role of Managing Interdependencies Fit in Organization Design and Performance, Keren Caspin-Wagner, Arie Y. Lewin, Silvia Massini, Carine Peeters
We argue that research on interdependencies fit is an underexplored variable in strategy and organization research and is the missing variable that differentiates the performance of “built to last” organizations from the rest. Interdependencies fit relates to how well activities and processes within the organization or between the organization and its environment mutually reinforce one another. We suggest that the major reason underlying variation in firm performance may be rooted in differences of whether and how firms manage interdependencies within and across an organization’s strategic activities. Progress on researching interdependencies fit could be realized by focusing on strategically important activities, and the research challenge is to identify the unobservable processes and routines that underlie interdependencies fit.
31 The Future of Organization Design: An Interpretative Synthesis in Three Themes, Richard M. Burton
In the inaugural issue of the Journal of Organization Design (Vol. 1, #1, 2012), noted scholars and experienced practitioners presented their views on the future of organization design. The seven wise and provocative statements were subsequently discussed by members of the Organizational Design Community at a conference held at Harvard University on August 3, 2012. I was asked by JOD to monitor the discussion and identify the broad organization design themes that emerged. Although the discussion was wide ranging, three themes were noticeable. The first theme is that there are fundamentals of organization design, and all agreed that design involves creating a cohesive socio-technical system from a number of constituent elements. The second theme is that the boundaries of many newer organizational forms extend beyond that of the single firm, so the scope of organization design needs to expand to include ecosystems, collaborative communities, industries, and other supra-firm architectures. The third theme involves time and change, requiring a shift in focus from how organizations become stable and predictable to how they can become more agile.
32 Drivers of Organizational Responsiveness: Experiences of a Military Crisis Response Organization, Erik De Waard, Henk W Volberda, Joseph Soeters
The topic of organizational responsiveness – where organizations need to flexibly react to strategic and operational demands simultaneously – has been under-explored in strategic management research. Our study was initiated to shed more light on this topic, primarily by studying an organization specifically designed to handle crises. By definition, crisis response organizations have to be prepared to react to unpredictable events. Moreover, the volatility of the crisis situation itself requires a high degree of flexibility to get or keep the situation under control. The study hypothesizes modular organizing and organizational sensing to be key drivers of organizational responsiveness. Empirically, we examine the effect these two variables have on the responsiveness of the Netherlands armed forces for crisis response deployment. Findings indicate that modular organizing and organizational sensing are drivers of responsiveness. In addition, our study uncovered the importance of an organization’s level of system decomposition to responsiveness. A high degree of system granularity can lead to a predominantly inward focus whereas organizational responsiveness calls for a strong external orientation.
33 The Design Of Equity Ownership Structure In Inter-Firm Relationships: Do Managers Choose According To Theory?, Prasahant Kale, Phanish Puranam
Theories explaining the equity ownership structure of inter-firm relationships, such as the resource-based view or transaction cost economics, commonly assume a significant role for managerial choice, but this assumption is rarely assessed for its realism. In this study, we use the policy capture methodology to directly assess whether managers choose according to theory (and which theory). In a sample of 66 experienced managers, we find that managerial choices of equity ownership are indeed influenced both by competitive advantage and transaction hazards, though to a greater extent by competitive advantage. Further, only competitive advantage influences managers’ choices about the extent of equity ownership in their partner; transaction hazards motivate the choice of some equity over none. We discuss implications for how inter-firm relationships are and ought to be designed.
34 The Contingent Value of Organizational Integration, Virpi Turkulainen, Mikko Ketokivi
We elaborate the link between organizational design and effectiveness by examining organizational integration and performance in the context of modern manufacturing. Through careful contextualization and empirical analysis of 266 manufacturing organizations in three industries and nine countries, we uncover a joint effect of integration and complexity on organizational effectiveness. The results extend structural contingency theory, in particular the mechanisms that link organizational integration to organizational effectiveness. We conclude by discussing the continuing relevance of structural contingency theory.
35 How to Design for Strategic Resilience: A Case Study in Retailing, Liisa Välikangas, Georges Romme
Few firms can be said to be truly resilient by sustaining high performance for a long time. We draw on a case study of a large U.S.-based retailer to explore how an organization develops resilience – the ability to recover quickly from environmental jolts or misfortunes. The company’s CEO, concerned about the company’s ability to maintain its industry leadership and excellent performance, sought to engage the organization in a broad quest for developing resilience capabilities. Our analysis of this case suggests that generative doubt, organizational slack, and mindful engagement throughout the organization are key conditions for resilience. These three conditions need to co-exist to develop and sustain strategic resilience.
36 A Model of the Platform-Ecosystem Organizational Form, Moshe Yonatany
Technological advancements are driving the evolution of a form of organizing economic activity – the platform-ecosystem – particularly in a variety of ICT-enabled industries. This article builds on calls to more adequately describe and explain this form of organizing (Alberts, 2012; Baldwin, 2012; Tushman, Lakhani, & Lifshitz-Assaf, 2012). I propose a preliminary model that highlights the fundamental economic variables in the platform-ecosystem organizational form: knowledge substitution and powerful incentives. The model emphasizes knowledge-based considerations, suggesting the view that the main purpose of ICT-enabled platforms, such as smartphones, game consoles, and Internet services, is the development of complementary products, services, and technologies.
37 Introduction, Amy Kates, Charles C. Snow, Børge Obel
Organization design is a field that is concerned with both theory and practice. The theme of the Organizational Design Community’s 2013 annual conference – Making Organization Design Knowledge Actionable – was chosen, however, to recognize that theory and practice do not always come together successfully. The researcher-practitioner “gap” is still a problem in our field, and organization design will not be able to realize its full potential until this gap is closed. ODC viewed its 2013 conference as an opportunity to bring together a group of individuals who are interested in making organization design knowledge actionable and to engage in a focused dialogue. The results of the annual conference are the articles published in this Special Issue.
38 Organizing Healthcare For Changing Markets: The Case of Ascension Health, Eric S. Engler, Stephen L. Jones, Andrew H. Van de Ven
This case describes a Ministry Positioning process that will enable the management of Ascension Health to enact designs suitable for the rapidly changing healthcare industry. Ascension Health is the largest not-for-profit healthcare system in the United States with $21 billion in annual revenues and a presence in 24 states and the District of Columbia. Because the design of a large organization for a fast-moving environment is too complex and ambiguous to be fully planned in advance, the focus of the case is on the processes of learning while designing—that is, learning how to learn from designing organizations. The main lessons drawn from the Ministry Positioning process are discussed.
39 Viewing Ascension Health From A Design Thinking Perspective, Natalie W. Nixon
In this commentary, I discuss how the design thinking concepts of empathy, related worlds, prototyping, ethnography, and story could enhance Ascension Health’s organizational design and ultimately its delivery of healthcare services. When organization design integrates a design thinking lens, more meaningful and innovative processes are developed both internally among organizational actors and externally with end users.
40 Making Knowledge Actionable: Three Key Translation Moments, John R. Austin
Leaders regularly experience pressure to move innovation and change initiatives through their organizations. They face the challenge of transforming organizational changes and innovations from ideas into sustained behavior. In this commentary, I argue that successful implementation requires leaders to engage in a translation process that contains three key translation “moments”. The challenges presented by these translation moments are magnified by the difficulty leaders often have in shifting from one moment to the next. Techniques for handling each translation moment are discussed.
41 How Can We Create Collaborative Design Knowledge in Politicized Contexts?, Jone L. Pearce
This commentary notes that the authors of the Special Issue propose that organization design knowledge will be more actionable if it is created in collaboration with the organization’s members. I draw attention to a risk in the co-creation of design knowledge: increasing the politicization of the already politically fraught process of organizational design. The reasons why collaborative design-knowledge creation may increase politicking are described, and ideas for managing it are suggested.
42 How Decisions Can Be Organized - and Why It Matters, Michael Christensen, Thorbjørn Knudsen
Recent theoretical advances allow organizational designers and managers to better understand how decision processes can be improved. These advances allow managers to address a number of critical questions about the structure and process of decision making, issues that are relevant for any kind of organization be it social, political, or economic. Can we add another employee somewhere in the decision process to increase economic performance? Can we add or eliminate a channel of communication to raise the quality of decisions? What level of skill is worth paying for when we hire a decision maker? Is it a good idea to push decision makers beyond their current capacity if doing so increases their error rate by five percent? Where does the injection of inexperienced decision makers hurt the least? We describe an organizational design approach that provides answers to such questions, and we offer specific guidelines that managers can use to improve decision making in their organizations.
43 Navigating The Possible Legal Pitfalls Of Virtual Teams, Carolyn M. Plump, David J. Ketchen, Jr.
Virtual teams are an increasingly popular element of organizational designs. While virtual teams offer important advantages – including increased collaboration, greater flexibility, and cost savings – they may also create legal issues. Specifically, using virtual teams may lead executives to unwittingly violate labor and personnel laws. The results can be costly, including the loss of key personnel, damage to a company’s reputation, and financial harm. Viewing virtual teams from a legal point of view, we identify pitfalls that virtual teams may encounter and offer ways to avoid them.
44 Introduction, Richard M. Burton, Dolly Mastrangelo, Fabrizio Salvador
The Special Issue on Big Data and Organization Design addresses the challenge of big data for the design of organizations. Big data refers to the availability to organizations of massive amounts of heterogeneous and continuously updated information. Practitioners agree that the availability of such information creates challenges and opportunities for organizations that have never been seen before. The articles presented here take up this challenge and discuss avenues for future research and practice on organization design in the era of big data.
45 Organizational Design Challenges Resulting From Big Data, Jay R. Galbraith
Business firms and other types of organizations are feverishly exploring ways of taking advantage of the big data phenomenon. This article discusses firms that are at the leading edge of developing a big data analytics capability. Firms that are currently enjoying the most success in this area are able to use big data not only to improve their existing businesses but to create new businesses as well. Putting a strategic emphasis on big data requires adding an analytics capability to the existing organization. This transformation process results in power shifting to analytics experts and in decisions being made in real time.
46 The Information Panopticon in the Big Data Era, Martin Berner, Enrico Graupner, Alexander Maedche
Taking advantage of big data opportunities is challenging for traditional organizations. In this article, we take a panoptic view of big data – obtaining information from more sources and making it visible to all organizational levels. We suggest that big data requires the transformation from command and control hierarchies to post-bureaucratic organizational structures wherein employees at all levels can be empowered while simultaneously being controlled. We derive propositions that show how to best exploit big data technologies in organizations.
47 Organizational Models for Big Data and Analytics, Robert L. Grossman, Kevin P. Siegel
In this article, we introduce a framework for determining how analytics capability should be distributed within an organization. Our framework stresses the importance of building a critical mass of analytics staff, centralizing or decentralizing the analytics staff to support business processes, and establishing an analytics governance structure to ensure that analytics processes are supported by the organization as a whole.
48 Collaborative Approaches Needed to Close the Big Data Skills Gap, Steven Miller
The big data and analytics talent discussion has largely focused on a single role – the data scientist. However, the need is much broader than data scientists. Data has become a strategic business asset. Every professional occupation must adapt to this new mindset. Universities in partnership with industry must move quickly to ensure that the graduates they produce have the required skills for the age of big data. Existing curricula should be reviewed and adapted to ensure relevance. New curricula and degree programs are needed to meet the needs of industry.
49 Big Data – Big Deal for Organization Design?, Janne J. Korhonen
Analytics is an increasingly important source of competitive advantage. It has even been posited that big data will be the next strategic emphasis of organizations and that analytics capability will be manifested in organizational structure. In this article, I explore how analytics capability might be reflected in organizational structure using the notion of “requisite organization” developed by Jaques (1998). Requisite organization argues that a new strategic emphasis requires the addition of a new stratum in the organization, resulting in greater organizational complexity. Requisite organization could serve as an objective, verifiable criterion for what qualifies as a genuine new strategic emphasis. Such a criterion is necessary for research on the co-evolution of strategy and structure.
50 Big Data and Organizational Design: Key Challenges Await the Survey Research Firm, Tim J. Gabel, Cathy Tokarski
Digital data is everywhere, and its ubiquity is causing profound changes in our personal lives and in the functions of government, business, and academia. Organizations of all sizes and purposes are seeking to take advantage of the big data tsunami and the opportunities it presents. RTI International, a non-profit U.S. research organization, draws more than 80 percent of its $760 million in annual revenues from competitive grants and contracts funded by the U.S. government. The organization is rich in talent and expertise but not currently aligned in a way that meets big data’s challenges. To thrive in this rapidly changing environment, RTI must determine how to seize opportunities big data presents, survive the threats posed by big data, and offer its clients expanded services. How well RTI responds to these challenges will determine its role in the search for solutions to the major social and scientific problems of our day.
51 The Impact of Organizational Structure on Internal and External Integration: An empirical, cross-regional assessment, Xenophon Koufteros, Xiasong (David) Peng, Guanyi Lu, Richard Peters
We examine the effects of organizational structure on cross-functional integration, supplier integration, and customer integration and assess whether such effects vary by geographical region. Specifically, we investigate the impact of centralization, formalization, and complexity on both internal (cross-functional) and external (supplier, customer) integration. Relationships are examined across Western and East Asian environments using data collected from 238 manufacturing plants in eight countries. We find that structural features have differing impacts on cross-functional, supplier, and customer integration, and these effects vary across geographical regions.
52 Fit Between Organization Design and Organizational Routines, Constance E. Helfat, Samina Karim
Despite decades of research on both organization design and organizational routines, little research has analyzed the relationship between them. Here we propose a normative theory in which the effectiveness of organization design and redesign depends on the characteristics of routines. The analysis shows which types of organization designs may be useful as well as which design changes may or may not succeed depending on (a) the specificity of routines and (b) the dynamic versus static purposes of organizational routines.
53 Organization Design for Dynamic Fit: A Review and Projection, Mark Nissen
The concept of fit is central to organization design. In the organizational literature, fit historically has been portrayed as a static concept. Both organizations and their environments, however, are continually changing, so a valid concept of fit needs to reflect organizational dynamics. In this article, I analyze various theoretical perspectives and studies that relate to organizational fit, differentiating those that employ an equilibrating or a fluxing approach. Four substantive themes emerge from this analysis: design orientation, design tension, designer/manager roles, and measurement and validation. Implications of each of these themes for dynamic fit are derived, and promising future research directions are discussed.
54 Navigating New Legal Demands For Franchisor Accountability, Carolyn Plump, Esq., David J. Ketchen
Franchising is a relationship wherein one organization (i.e., the franchisor) allows other organizations (i.e., franchisees) to use its brand name, products, and processes in exchange for fees. Because franchising offers franchisors the opportunity to build their brands quickly, it is perhaps not surprising that many firms rely on franchising as a key tool for organization design. One caution about franchising is that its use brings a complex array of legal issues into play. As franchising increases in popularity, so too does the scrutiny paid to this organizational form by the legal system. Indeed, the courts appear to be demanding increased accountability from franchisors. The goal of this Point of View article is to explain how organizations can avoid problems associated with increased accountability and even benefit from it.
55 How To Design A Triple Bottom Line Organization: A Start-Up Case Study, Bernhard Schroeder, Alex DeNoble
In today’s business environment, where success for a start-up company is measured by early revenue and profit, it can be quite challenging to design a triple bottom line organization (people/planet/profit) from the very beginning. We present a case study of a U.S.-based start-up firm and discuss its early challenges, developmental processes, and current success as a triple bottom line firm. The company’s founder and CEO, with no initial product, distribution, or revenue strategy, sought to develop a company that could provide the marketplace with a valuable product while also staying true to a corporate vision of positively affecting less fortunate people. Our analysis of the case suggests that the founder’s vision, passion, transparent communication, and leveraging of partners’ resources were key elements in building the firm. We draw implications of our case study for the designers of future triple bottom line organizations.
56 Jay R. Galbraith Memorial Project, Børge Obel, Charles C. Snow
Jay R. Galbraith passed away on April 8, 2014. Jay was a leading authority on organization design, a founding member of the Organizational Design Community, and a valued contributor to the Journal of Organization Design. We invited Jay’s colleagues from around the world to offer their comments on his work. The specific question we asked was: What ideas or insights regarding organization design have you obtained from the work of Jay Galbraith? As you will see from the comments below, Jay provided many valuable contributions to the field of organization design, and he was a caring, generous colleague. He will be greatly missed.
57 Organization Theory and the Changing Nature of Science, Jonathon N. Cummings, Sara Kiesler
Dramatic changes in the practice of scientific research over the past half century, including trends towards working in teams and on large projects, as well as geographically distributed and interdisciplinary collaboration, have created opportunities and challenges for scientists. Some of the newer ways of doing science create opportunities and challenges for organization theory. We describe how applying organization theory to science can enhance our knowledge of research organizations and raise questions for theories of coordination, social identity, the knowledge-based view of the firm, social networks, organizational learning, and absorptive capacity. We argue that an organizational perspective on science is critical to understanding the sources of technological innovation, making national policy on R&D investment, and designing successful 21st-century research organizations.
58 Will Organization Design Be Affected By Big Data?, Giles Slinger, Rupert Morrison
Computing power and analytical methods allow us to create, collate, and analyze more data than ever before. When datasets are unusually large in volume, velocity, and variety, they are referred to as “big data.” Some observers have suggested that in order to cope with big data (a) organizational structures will need to change and (b) the processes used to design organizations will be different. In this article, we differentiate big data from relatively slow-moving, linked people data. We argue that big data will change organizational structures as organizations pursue the opportunities presented by big data. The processes by which organizations are designed, however, will be relatively unaffected by big data. Instead, organization design processes will be more affected by the complex links found in people data.
59 Untangling the Ambidexterity Dilemma through Big Data Analytics, Tor Bøe-Lillegraven
Ambidexterity theory suggests that the ability to simultaneously explore and exploit is linked to firm performance, but the empirical evidence to date is mixed. In this study, I review existing research on firm performance in the newspaper industry in order to identify the main causal factors in a single industrial context. Three broad categories emerge: media convergence, organizational ambidexterity, and business model innovation. By incorporating variables and arguments from these categories into a basic performance model, I develop a multi-dimensional conceptual framework of explore and exploit value chains. The article concludes with a discussion of how the explore/exploit framework can be operationalized using big data analytics, and recommendations for future research are offered.
60 Fit - The Key to Organizational Design, Lex Donaldson, Greg Joffe
The design of an organization needs to fit its situation. Designs that fit produce higher organizational performance than designs that do not. This article uses the concept of fit to show how to align organizational designs to three important situational factors: competitive strategy, organization size, and task uncertainty.
61 Competition-Based Innovation: The Case of the X Prize Foundation, Mokter Hossain, Ilkka Kauranen
The use of competition-based processes for the development of innovations is increasing. In parallel with the increasing use of competition-based innovation in business firms, this model of innovation is successfully being used by non-profit organizations for advancing the development of science and technology. One such non-profit organization is the X Prize Foundation, which designs and manages innovation competitions to encourage scientific and technological development. The objective of this article is to analyze the X Prize Foundation and three of the competitions it has organized in order to identify the challenges of competition-based innovation and how to overcome them.