Organizations today face increasing pressure from multiple stakeholders and relentless global competition, forcing them to become more innovative in everything they do and produce (Latham, 2013).
What is needed is nothing short of a renaissance of organization thinking and design. The organization architect of the future will need to master both the technical AND human aspects of design and change. Effective organization design builds bridges between theory and practice to create new and innovative management approaches and organizations that facilitate humans achieving their full potential. Redesign our organizations to create value for multiple stakeholders requires that we align six key design dimensions including stakeholders, strategy, systems, scorecard, culture, and context.
When many people hear the words “design” and “designer” they often think of fashion, interior design, or the design of everyday items such as glasses, salt shakers, and so forth. However, everything that is not created by nature is designed by humans (consciously or unconsciously). Thus, our human-created organizations can be purposefully designed or redesigned to produce even greater value for the multiple stakeholders. For our purposes,
Organization design is a stakeholder-centered approach to aligning and integrating the systems, strategy, and scorecard with the organization’s culture and the unique context.
Elements of Organization Design
Organization designs consist of artifacts that convey information about the systems, culture, and context. Artifacts take many forms from diagrams and descriptions of systems to visual displays of data to organizational symbols. Organization design is composed of three key elements including corners stones (stakeholders, strategy, systems, scorecard), culture (symbols, rituals, heroes), and context (purpose, industry, geography, facilities, technology).
The four cornerstones of organization design are the stakeholders, strategy, systems, and scorecard. All four are manifested in artifacts including documents, speeches, etc.
Stakeholders – Organization design begins with the identification of key stakeholders and their needs, wants and desires, and it ends with the deployment of systems that create value for those stakeholders. Stakeholders are the “WHY” of organization design. Of course, the process of continuous iteration and improvement of organization design never ends.
Strategy – A comprehensive strategy includes two key components – the external products and services and the internal operations, people, and culture that produce the products and services. Strategy is the “WHAT” of organization design. What do we produce?
Systems – The organization system of systems brings together the internal and external stakeholders and provides the structure necessary to facilitate the production of the products and service. This is the “HOW” of organization design.
Scorecard – A comprehensive scorecard measures how well the organization is meeting the needs of the multiple stakeholders including the product and services and operations. The scorecard is the “HOW WELL” of organization design and is necessary for the evaluation of design changes.
Service – The first four components are “inert” without people serving people to bring them alive. The values of a culture are not directly visible. The values are inferred from how people act (practices) and the symbols, rituals, and heroes of the organization which are visible and audible. A culture of service is the “GLUE” that holds the other components together.
Situation – One of the main reasons to go through the trouble of developing a “custom” design is so the design “fits” the unique characteristics of the organization and situation “like a glove.” The context contains information including the facilities, the technology, type of work (e.g., nuclear power vs. education), and the purpose and mission of the organization.
Why Organization Design?
We focus on organization design because it influences the behavior of those who work in and with the organization. Stakeholder experience the organization’s many processes and practices, interactions, and artifacts.
While interacting with the organization, stakeholders hear and see many manifestations of the organization design. What they hear and see influences what they think and how they feel. What they think and feel influence what they say and do – their behavior.
Enjoy the journey,