Organizational Design, Diagnosis, and Development Session 2 Basic Concepts, Models & Effectiveness

Basic Concepts, Models & Effectiveness Objectives 1. To further consider the role of organizational design in strategic management 2. To compare three approaches to organizational design 3. To examine criteria for organizational effectiveness

Organizational Design in Strategic Management Strategy Formulation Assess environment Assess internal strengths & weaknesses Formulate Plan Strategy Implementation - Restructuring of Design, Finances, Human Resources, Work, Technology

Approaches to Organizational Design The emergent process The rational approach The constrained approach

The Emergent Process of Design Partial control Multiple participants Dynamic process

The Emergent Process External Constraints Changes in Constraints Initial Constraints Changes in Constraints Subsequent Constraints Emergent Design Emergent Design Initial Plan The designer Initial Participants Change in Participants/ Interests Subsequent Participants Participants T-0 T-1

The Rational Approach External constraints effect design Strategy specifies goals & objectives Objectives effect design

Michael Hammer’s 7 Principles Organize around outcomes, (not tasks) Those who use the process should perform it Include information processing in the work that produces the information Treat geographically dispersed areas as if the were centralized Link parallel activities instead of integrating results Put the decision point where the work is performed, build control into the process Capture information once and at the source

The Constrained Approach External constraints effect the initial design Design should match environmental demands The design effects stakeholders Changes in constraints effect subsequent designs.

A Comparison

Organizational Effectiveness Output goal approach: profit, quality Internal process approach: communication, decision making Systems resource approach: materials and knowledge Stakeholder approach: External & internal stakeholders. Managing stakeholders

Backwards & Forwards Summing up: We considered the emergent, rational, & constrained approaches to organizational design. And looked at 4 models for measuring effectiveness of the organization Looking ahead: Next time we dissect the environment of the organization and consider the differences between mechanistic and organic structures.