Well-Designed Organization?

Contents [hide] 1 Basic Information of Do You Have a Well-Designed Organization? 2 Case Summary of Do You Have a Well-Designed Organization? 3 Case Analysis of Do You Have a Well-Designed Organization? 4 External Link of Do You Have a Well-Designed Organization? 5 Relevent File Cabinet of Do You Have a Well-Designed Organization? 6 Article Purchase Link of Do You Have a Well-Designed Organization?

Basic Information of Do You Have a Well-Designed Organization?

Author: Michael Goold, Andrew Campbell
Publisher: HBR
Case Number: R0203K
Publication Date: Mar 1, 2002
Course Category: Management

Case Summary of Do You Have a Well-Designed Organization?

Short summary
This article talks about nine tests you can use to analyze the effectiveness of your design/organization. It is an iterative process where you should look at all nine steps after each change. It doesn’t actually give you any solutions, just tells you which questions to ask. Written by Michael Goold and Andrew Campbell (just in case his test question asks what they did)
Strategic initiatives stall or go astray because responsibilities are fragmented or unclear
Most executives can sense when their organizations are not working well, but few know how to correct the situation.

Nine tests of organization design which can be used either to evaluate an existing structure or to create a new one
1. The Market Advantage test
  a. Does your design direct sufficient management attention to your sources of competitive advantage in each market?
  b. Many structures end up impeding market strategy rather than formulate it.
  c. First test of design is whether it fits in your company’s market strategy
    i. Define your target market segments
    ii. Should be no dispute about the relevant market segments
    iii. Determine whether the design directs enough attention to each market segment.
    iv. Determine whether the design supports your key sources of advantage and related operating initiatives
2. The parenting advantage test
  a. Does your design help the corporate parent add value to the organization?
  b. Make sure the organizational design is tailored to support these roles
  c. Determine whether the design gives sufficient attention to these value-adding tasks and initiatives
3. The People test
  a. Does your design reflect the strengths, weaknesses, and motivations of your people?
  b. If an organization is not suited to the skills and attitudes of its members, the problem lies with the design, not the people
  c. Look at key players and ask whether the design provides the appropriate responsibilities and reporting relationships and wins their commitment
  d. A design that cannot be staffed with competent managers should be abandoned.
  e. All designs create losers and losers can turn cynical and resistant, becoming road blocks to change.
4. The Feasibility test
  a. Have you taken account of all the constraints that may impede the implementation of your desing?
  b. All companies have constraints.
  c. Such constraints need to be identified and assessed early in any design effort.
  d. Four categories
    i. Government regulations
    ii. Interests of a companies stakeholders
    iii. Company’s information systems
    iv. Corporate cultures
5. The specialist culture test
  a. Does your design protect units that need distinct cultures?
  b. Certain units that should maintain distinct cultures
   i. New product development teams
   ii. E-business groups
   iii. Functional service units
  c. Ensure that specialist cultures are sufficiently insulated from the rest of the organization
6. The Difficult links test
  a. Does your design provide coordination solutions for the unit to unit links that are likely to be problematic?
  b. Large majority of collaboration links are best handled through self-managed networking among the units
  c. Design detailed coordination solutions
  d. Along with specialist cultures, difficult links should be used by top management about how narrowly or broadly to define unit responsibilities.
7. The Redundant-Hierarchy test
  a. Does your design have too many parent levels and units?
  b. Important to determine whether each parent level is needed and if so whether it has the resources necessary to do its job
  c. Ask yourself whether each level has a clear and distinct parent proposition
    i. If a level has the same as a level above or below it, remove one of the levels
8. The Accountability test
  a. Does your design support effective controls?
  b. In decentralized organizations, accountability for performance is important.
  c. Purpose of this test is to ensure that every unit has appropriate controls over its performance.
  d. Look for units with shared responsibilities. These may cause problems of one unit blaming another for bad performance.
  e. Parent managers need to have a deep operating knowledge of the units they oversee.
9. The Flexibility Test
  a. Well designed organization is flexible for the future as well as fit for the present.
  b. Test is not aimed at determining whether the company has all the capabilities required to innovate and adapt, but whether there will be any major organizational roadblocks along the path to the future.
  c. Does your design facilitate the development of new strategies and provide the flexibility required to adapt to change?