Introducing Organisation Design

IUI4226 - Organisation Design and Organisational Behaviour |

Sudiyanti, M.Sc.

Department of Industrial Engineering | Universitas Nahdlatul Ulama Kalimantan Timur

Organisation Design Definitions

• The Oxford English Dictionary de nes an organization as ‘The action or

process of organizing, ordering, or putting into systematic form; the
arrangement and coordination of parts into a systematic whole; frequently in
social organization’ and ‘an organized body of people with a particular
purpose, as a business, government department, charity, etc.’

• An organization is a community of people brought together for a purpose and

structured so that the underlying parts are arranged to be interdependent and
coordinated to form a systematic whole.

•
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 Organisation Design Definitions
Organization design is…

• de ning the organizational purpose and strategic intent;

• establishing the preliminary ideas and examining them (design concepts);

• producing the preliminary sketches of the future state organization or any part of it, which forms
the basis on which the organization can be built (the anticipated future state, design outlines);

• de ning the combination of details that will make up the organization and de ning their
arrangement (including the target capabilities and the characteristics of the organization);

• laying out the result being aimed at (the design blueprint);

• forming the implementation plan;

• realizing the idea (the future state organization as implemented).

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Why Designing?
Organisation design matters because…

• it powerfully delivers results: it positively impacts an organization’s business performance.

• it can lead to signi cant returns for any organization in any sector because resources are more e ectively used.

• it enables a culture of account- ability, as employees understand the organization’s goals, and how they support
these via their team’s and their own accountabilities and authorities.

• it translates strategy into action.

• it can allow organizations to ful l their strategic intent and be what they need to be; for instance, innovative, exible,
more responsive and attractive to talent.

• it helps organizations deal with change and change is becoming more frequent and signi cant

• it is more widely recognized as a suitable response to change and essential to good change, particularly by senior
leaders.

• organizations are more open to external scrutiny and at the rst signs of problems, commentary is available across
the globe via the internet.
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When to Design?
Always consider to design…

• when the organizational purpose is de ned or rede ned.

• when the organization’s strategy and strategic intent has been established or
re-established

• when faced with signi cant operational changes; for instance, moving to
shared services, outsourcing, signi cant reductions to costs, introducing new
technologies, changing the role of the corporate centre, changing the supply
chain, insourcing, merging departments and, through signi cant growth or
contraction of work, changing the role of a function, as happened with HR as
it has moved from an operational focus to a strategic business partner model.
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Aim of Organisation Design

• The aim of organization design is to nd the optimal form for an organization

to maximize its performance.

• Form is much more than structure; organizations need to be viewed

holistically with many more dimensions considered and kept in alignment.

• If not enough change is made across these dimensions the desired progress
will not be made.

•
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 Sources

Cichocki, P., & Irwin, C., 2011, Organization Design: A Guide to Building
E ective Organizations, London: Kogan Page.

Patel, N. V., 2006, Organization and Systems Design: Theory of Deferred Action,
NY: Palgrave Macmillan.

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Organisation Models,
Approaches and Designs
IUI4226 - Organisation Design and Organisational Behaviour |

Sudiyanti, M.Sc.

Department of Industrial Engineering | Universitas Nahdlatul Ulama Kalimantan Timur

Causal Powers & Generative Mechanism

Source: Patel (2006)

Models
One Systems Model

According to the Balanced Scorecard Institute, a model is:

• an image or framework that presents a template for guidance; or

• a representation of a set of components of a process, system, or subject

area, generally developed for understanding, analysis, improvement, and/
or replacement of the process (US Government Accountability O ce); or

• a representation of information, activities, relationships, and constraints

(Treasury Enterprise Architecture Framework).

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Models
One Systems Model

The value of using a model lies in its ability to:

• help structure approaches to problems, improvements, or events;

• provide a framework for communication of changes and transitions;

• give the design process a common language and vocabulary;

• illuminate and help resolve design issues;

• illustrate interactions, interdependencies and alignments;

• help write a “new story” of the organisation.

Systems Models for Use in Org-Design
Source: STANFORD P109-121

Systems models for organisation design in common use are those originated by
consulting rms such as:

• McKinsey,

• Deloitte and PricewaterhouseCoopers,

• Jay Galbraith

• Marvin Weisbord

• David Nadler and Michael Tushman

• Warner Burke and George Litwin (the Burke-Litwin model).

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Systems Models for use in Organisation Design
McKinsey 7-Model
Systems Models for use in Organisation Design
Galbraith Star Model
Systems Models for use in Organisation Design
Weisbord’s Six Box Model
Systems Models for use in Organisation Design
Nadler and Tushman’s Conruence Model
Systems Models for use in Organisation Design
Burke-Litwin Causal Model
Systems Models for use in Organisation Design
Leavitt’s Diamond
New Model
Ralph Kilmann’s Track Model
New Model
Ken Wilber’s AQAL Model
New Model
Nadler’s updated Congruence Model
New Model
Holonic Enterprise Model
Approaches

• Approaches - the methods for talking about, involving, developing and

implementing.

• Three approaches that work well for increasing participation and

involvement:

• Demonstrating that employees matter

• Using social media (Google “future search”, Amazon “open space”,

Starbucks “world cafe”)

• Storytelling (TED and TEDx)

Designs
• Louis Sullivan’s phrase “form follows function” is commonly used and it is as
useful and necessary a precept for organisation design as it is for architectural
or product design. (Sullivan, 1856–1924, is considered the father of modern
architecture.)

• However, the comparison between product design and organisation design

cannot be taken too literally.

• An organisation is in a constant state of ux and its form must be capable of

continuously exing to meet its purpose (function).

• The selection of a model and an approach (or approaches) must be a conscious

process because they form the infrastructure for the emerging design. In other
words, the model and approaches start to express the design as it emerges.
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Designs

The principle in the housing example is that form follows function, bearing in mind certain criteria.

The apartment block has all the constituents of many other buildings: metal, bricks or concrete, glass,
ducting, cables, and so on.

But the speci ed criteria ensure that what emerges is an apartment block for people over 60 and not for
upwardly mobile young people.

Similarly, organisation designs are circumscribed by criteria such as cost, quality, time to deliver, and so on.

As with an apartment block for people over 60, organisation design can be:

• an intentional construct;
• purposefully designed;
• successful if a thoughtful process is used to develop its design.”
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Source

• Stanford, N., 2015, Guide to Organization Design, 2nd Ed., The Economicst.