1. 1 Organizational Design & Development February 2, 2010 MGMT-4000 Linda Miklas, Christina Finegold Harvard University

2. 2 Understanding Design Are business units:  Structured around a clear and demonstrable value proposition?  Responsible, with authority, for developing and executing key components of strategy?  Authorized to make decisions affecting strategy?  In control of resources required to execute strategy?  Accountable for revenue, funding, profitability? Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design”

3. 3 Structural Imperatives Source: Reframing Organizations: Artistry, Choice, and Leadership. Bolman, Lee G. and Deal, Terrence E., 2008, Jossey-Bass. Dimension Structural Implications Size and age Complexity and formality increase with size and age. Core process Core processes or technologies must align with structure. Environment Stable environment reward simpler structure. Strategy and goals Variation in clarity and consistency of goals requires appropriate structural adaptations. Information technology Information technology permits flatter, more flexible, and more decentralized structures. Nature of the workforce More educated and professional workers need and want greater autonomy and discretion.

4. 4 Organization Design Characteristics (Boston Consulting Group) Interactions Hybrid Structures and Overlays Performance Rewards Open- Source Approaches Lean Corporate Center Change Readiness Design should facilitate people working together Interactions should occur across org boundaries. Design should reflect different business drivers across org:  differences in span of control  processes that can improve management practices Design should include performance measurement mechanisms and programs to reward performance; variable incentives. Design can integrate with customers and suppliers. Design should include a center that disseminates best practices, drives change initiatives. Design should institutionalize capacity to flex and respond to environmental changes. Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design”

5. 5 Galbraith’s Star Model Processes People Rewards Structure Strategy Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design”

6. 6 Execution: The Discipline of Getting Things Done People Operations Strategy Source: Execution: The Discipline of Getting Things Done. Bossidy, Larry and Charan, Ram, 2002, Crown Business.

7. 7 Five Basic Structure Options Functional GM R & DOperationsMarketing Product CEO Electronics Medical Instruments Computers Market GM Health ServiceFin. ServicesDistribution Geographical GM Northern Region Central Region Southern Region Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design” Process GM New Product Dev. Order Fulfillment Customer Acquisition

8. 8 Strategies for Five Structure Options Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design”

9. 9 Balanced Scorecard Assessing Tradeoffs from Four Structure Perspectives

10. 10 Source: 2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design” “Fit” and “Good Design” Tests Michael Goold and Andrew Campbell

11. 11 References  2009 Corporate Executive Board, Corporate Leadership Council’s “Frameworks for Organizational Design”; CLC6422289.  A Survivor’s Guide to Organization Redesign, Boston Consulting Group, 2003. www.hcg.com/impact_expertise/publications/files/Survivors_Guide_Organization_Re design_Jan2003.pdf www.hcg.com/impact_expertise/publications/files/Survivors_Guide_Organization_Re design_Jan2003.pdf www.hcg.com/impact_expertise/publications/files/Survivors_Guide_Organization_Re design_Jan2003.pdf  The Balanced Scorecard. Kaplan, Robert S. and Norton, David P., 1996.  Designing Your Organization: Using the STAR Model to Solve Five Critical Design Challenges. Kates, Amy and Galbraith, Jay.  Do You Have a Well-Designed Organization? (Goold and Campbell’s Fit and Good Design Tests), Harvard Business Review, 2002.  Execution: The Discipline of Getting Things Done. Bossidy, Larry and Charan, Ram, 2002, Crown Business.  Organizing for Agility: Creating Natural Business Units, Booz Allen Hamilton, 1999. www.boozallen.com/publications/article/658369. www.boozallen.com/publications/article/658369  Reframing Organizations: Artistry, Choice, and Leadership. Bolman, Lee G. and Deal, Terrence E., 2008, Jossey-Bass.