Reflecting on the evolution of organizational design, which theorist/theory has had the most significant impact on contemporary organizational design? Why?

Reflecting on the evolution of organizational design, which theorist/theory has had the most significant impact on contemporary organizational design? Why?

DQ 1

Reflecting on the evolution of organizational design, which theorist/theory has had the most significant impact on contemporary organizational design? Why?

There is extensive research on the evolution of organizational design. Dugan (2014) suggested the following steps to creating a strong structure would include:

Determining governance

Establishing rules on how informal or formal groups operate

Distribute work.

Evolve the organizational structure over time.

What has your experience been? Is this all there is to it or is the more?

Reference:

Dugan, T. (2014). How to Develop an Organization Structure. Houston Chronicle. Retrieved from http://smallbusiness.chron.com/develop-organization-structure-4902.html

DQ 2

Of the four effectiveness approaches discussed in the textbook, what is the best approach to evaluate an organization’s effectiveness? Why?

DQ 3

Debate whether an organizations strategic intent reflects managers’ systematic analysis of organizational and environmental factors or vice versa.

The Influence of Structure on Organizational Effectiveness

An organization is effective to the extent that it is able to achieve its goals and efficiencies to the extent that is able to achieve its desired production levels with limited resources. One of the most important decisions that leaders of an organization make is how to best balance the vertical and horizontal structure needed to achieve organizational goals. Vertical structures align with goals related to stability and efficiency. Horizontal structures align with goals related to innovation and flexibility. Large, stable organizations, such as IBM, have formal, hierarchical structures with formal policies, procedures, and controls; whereas small, young organizations, such as Quirky, which brings innovative products to market, have flatter, more informal, flexible structures. An alignment between the structure of the organization and its strategic purpose and goals, is important to position the organization for effectiveness and success.

An example of how strategic purpose influences an organization’s structure would be Wal-Mart. With the strategy of maintaining its low-cost market share position in a stable industry, Wal-Mart focuses on efficiency and benefits from a mechanistic structure characterized by centralized decision making, policies and procedures, and tight controls. Apple represents a more organic structure with a strategy of bringing new, differentiated products to market and focuses on creativity and innovation, collaboration, and open communication. An organic structure is characterized by shared decision-making, collaboration, and flexibility. Walmart would not function well with an organic structure and Apple would not function well with a mechanistic structure. Alignment between an organization’s strategic purpose and structure is essential to the organization’s effectiveness and success.

Beginning in the 1980s, with new competition, increased customer and employee demands, and emphasis on the quality movements, even large, mechanistic organizations sought increased flexibility. Louis Gerstner, Jr., Chairman and CEO of IBM from 1993-2002 wrote of teaching the “elephant to dance,” which became a focus of many CEOs. In “The Future of Management,” Hamel and Breen (2007) stated that the organizations of the past might no longer be effective with the ever-increasing rate of environmental change. With an increased focus on social responsibility and sustainability, organizations such as Whole Foods are innovating beyond traditional structures.

Whole Food’s cofounder and co-CE0, John Mackey, opened the first Whole Foods Market in 1980 in Austin, Texas, aspiring to offer a natural full service alternative to traditional groceries. Mackey believed that customers would pay a premium for healthy food that tastes good and is good for the environment. Whole Foods has adopted a team approach in which individual work groups are responsible and accountable for store departments, such as seafood, produce, and check-out. As one of its values, Whole Foods’ website espouses, “Our success in fulfilling our vision is measured by customer satisfaction, Team Member excellence and happiness, return on capital investment, improvement in the state of the environment and local and larger community support.” Whole Foods has adopted a Declaration of Interdependence among its stakeholders to measure its success.

Organizations are responsible to meet the needs of stakeholders, inside and outside of the organization, who are invested in some way in the success of the organization. These include employees, customers, owners, suppliers, creditors, the community, and governmental agencies. Organizations also need to embrace environmental stewardship and care for the communities in which they do business.

In addition to aligning an organization’s structure with its strategic purpose, leaders need to consider the environment and other contingency factors that affect the organization’s success. These include the size and life cycle of the organization, technology, human resources, diversity, organizational culture, and economic factors.

Organizations operate within environments that vary in complexity and in levels of certainty or uncertainty. A beer distributor, for example, operates in a predominantly simple and stable environment. Demand for beer changes slowly and the distributor has a customer base that changes slowly. A simple and stable environment aligns successfully with a simple organizational structure. A complex unstable environment creates uncertainty for an organization and requires a more complex structure to respond to its environment. In a stable environment, organizations can perform well using a traditional vertical, more mechanistic structure whereas organizations operating in a dynamic, changing environment require more organic, flexible structures to allow them to respond to changes in the environment.

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