Introduction to Organizational Design Terms

**Throwness**

= not a blank slate, designer is dropped into conditions and has to work his way out it

**Liquid crystal**

= iterations between leaving open and fixing

**Ideation**

= using creative tools to generate many possible ideas, push past obvious solutions

**Iterative approach**

= Learning from mistakes

**“Fit” approach**

= Organizations design consists of a number of components that should be considered in a coherent way

* Critique: often aspects of organizational design are implemented/changed independent of each other

**Sociotechnical System Design**

= (Dutch approach) Design influenced by 3 Q’s:

* Quality of organization
* Quality of work
* Quality of work relations

**Quality of organization**

= ability of organization to effectively & efficiently realize and adapt its goals

**Quality of work**

= meaningfulness of work and possibility to deal with stress

**Quality of work relations**

= effectiveness of communication in organization

**Lean management**

= how can organizations limit the negative effect of batches and queues in (line) organizations

* Toyota factory

**Human centered job design**

= quality of work as a goal in itself; using ethical/normative approach

**Information processing approach**

= the five aspects of organizational design influence information processing within the organization; organization should balance between information processing demands and abilities

**Information processing perspective (Galbraith)**

* An organization uses information to coordinate and control its activities
* By processing information, the organization sees what is happening, analyzes problems and makes choices on what to do
* The more uncertain the organization environment, the more information needs to be processed within the organization, but quicker a response that to be (paradox)

**Scope**

= the domain in which the organization aims to derive its “existence” from; influences the degree to which it encounters uncertainties to a great extent, hence also what demands for information processing the organization may have

**Efficiency dimensions**

= related to inputs, use of resources in the primary process and costs;

* First order learning, learn to produce the same product as cheap as possible, low information processing

**Effectivity dimensions**

= related to outputs, products or services and revenue (and hence relates to environmental demands)

* Change products according to demands, second order learning, high information processing needed

**Ambidextery**

= aimed at both exploration and exploitation & at integrating efficiency (internal) and effectiveness (external)

Strategic management as **Rational approach**

* Firms try to achieve strategic competitiveness and earn above-average returns
* I/O model takes external environmental as main input for strategy formulation, which is then implemented and produces performance outcomes
* Resource-based model looks at firm’s capabilities to define competitive advantage

**Behavioral theory of the firm**

* Look for what the firm actually does, assuming that what the firm does actually contributes to the firm’s success
* Critical of normative stance
* “Good managers don’t make policy decisions”
* All human decision making is affected by bounded rationality

**Reactor**

* Low exploitation, low exploration
* Adjusting to bad news:
* Decreased profits/earnings
* Loss of major customer
* Internal problems (e.g. after a merger)


* Focused neither on efficiency nor on effectiveness
* No (systematic effort to create) innovation:
* Executive do not systematically anticipate, plan and project into the future
* Technological developments come as surprises


* Often found in start-ups
* Problematic, in particular in the long run

**Defender**

* High on exploitation, low on exploration


* Optimized their ability to have a certain product and to make that efficiently, low in creating new solutions → don’t really explore.
* Aimed at keeping the organization’s position in the market:
* Maintaining competitive position
* Sales forecasting used as tool
* Competitive prices
* Focused on exploitation of resources rather than new ideas:
* Process innovation
* Aimed at efficiency → repeatedly doing the same thing efficiently
* Vulnerability comes from products no longer desired in the market:
* You cannot change much/quickly

**Prospector**

* High on exploration → focus on innovation
* Regularly creates new ideas to the detriment of being efficient
* Often found in start-ups
* First-mover advantage:
* Creator of change → others must adjust
* Change-oriented → preferring the new over the status quo
* Risky strategy:
* Can exhaust resources
* First-mover advantage might be lost if others are quicker

**Analyzer without innovation**

* Passive innovation/copy strategy:
* Strong focus on exploitation → moderate on exploration
* Look at what others do and imitate what works
* Avoids the risk of first mover
* Using defender strategies combined with an eye on trends:
* Must be organized to detect and imitate quickly
* Otherwise doing the same things efficiently
* Vulnerability can come from following the wrong trends

**Analyzer with innovation**

* Active innovation strategy → new product and services on a regular basis:
* Split exploration/exploitation
* Or ambidextrous strategy = combining exploration and exploitation
* Like prospector → going beyond what others do:
* Either market- or technology driven
* Dual focus is difficult to balance:
* Risk that firm cannot capitalize on innovation investments
* Steve Jobs on seeing Xerox mouse: “Why aren’t you doing anything with this? This is the greatest thing/ this is revolutionary!”

**Temporal dynamics**

= instability, turbulence, high-velocity environment

**Contingency theory**

= sees fit between strategy, environment and organization design as crucial

* “The greater the uncertainty of the task, the greater the amount of information that has to be processed between the decision makers”

**Law of Requisite Variety (Ashby)**

= “Variety absorbs variety, defines the minimum number of states necessary for a controller to control a system of a given number of states”

* If a system is to be stable, the number of states of its control mechanism must be greater than/equal to the number of states in the system being controlled
* About the ration between (variety of) disturbances and (variety of) regulatory options of any system
* “How can an organizational designer decrease disturbances and increase regulatory

**Complexity**

= the amount of different types of clients, regions, and products

**Unpredictability**

= the changing nature of clients, regions, and products

**Calm environment**

* Low complexity and low unpredictability
* Simple and known, few surprises
* Few products, predictable markets
* Globalization, deregulation, financial crisis, etc. have eroded calm environment
* Organization scholars have argued since 1950 that environments are dynamic and complex
* Dangerous to think your environment is calm when it is not!!

**Varied environment**

* Complex:
* Many factors to consider
* Factors can be interrelated
* Relatively predictable
* Many products, predictable markets
* Market forecasts, analysis of political trends used as tools

**Locally stormy environment**

* Highly unpredictable but not very complex:
* You know that a certain factor has an impact but you don’t know how the factor will turn out
* Initial access to funds/customer deals for start-ups
* Can be dealt with locally if you organize for flexibility → see Ashby’s law of requisite variety

**Turbulent environment**

* High complexity, high unpredictability
* Most difficult environment in which to operate:
* Forecasting does not work
* You need to be flexible and quick

**Internal fit**

= fit between elements of multi-contingency model themselves

**External fit**

= fit between elements and environmental conditions (through need for information processing)

**Organizational design**

= the way a big task (transformation process) is divided into smaller parts

* How these smaller parts are coordinated
* Organization’s configuration = the way that is done → influences information processing abilities

**Organizational complexity**

= width and height of the hierarchy

**Horizontal differentiation**

= width of units across hierarchy

**Vertical differentiation**

= height, how many “layers” of management exist?

**Span of control**

= how many subordinates fall under particular hierarchical responsibilities?

**Degree of product/service/customer orientation**

= are tasks divided based on output of the firm?

**Degree of functional specialization**

= to what degree is work divided into specialized functional tasks?

**Simple structure**

* Low on p/s/c/ orientation
* Low on functional specialization
* Low vertical differentiation
* Low horizontal differentiation
* Low organizational complexity > span of control
* Small amount of employees
* Mostly occur: family company, start-ups, small company

**Functional structure**

* Low on p/s/c orientation


* High on functional specialization
* Aimed at economies of specialization, reaching efficiency through specialization
* Examples: hospitals, Lego
* Looking at the primary process and putting all of the different activities that can be spotted in a primary process in a different department.
* The more an organization is functionally specialized, the more complexity an organization becomes internally

**Divisional structure**

* Orientation p/s/c high


* Low on functional specialization


* Large span of control


* High horizontal differentiation


* Low vertical differentiation 

**Matrix organization**

* High on both dimensions
* Organizational complexity high
* Suitable for dealing with uncertain environment
* Information can be shared quickly throughout the organization
* Very common organizational form

**Task design**

= choices about sub-tasks given that a particular configuration is chosen. Relationship with other aspects of organizational design and structural design in particular

* Woodward: 3 different types of technology (primary process): Process, Unit, Mass
* Thompson: relation between interdependence of activities and coordination mechanisms
* Reciprocal > mutual adjustment
* Sequential > plan (schedule)
* Pooled > standardization
* Scott and Davis: activities and information processing: Complexity, Uncertainty, Interdependence

**Variability**

= degree to which task can be well defined, standardization possible?

**Connectedness**

= how much coordination between workplaces is needed to perform a task?

**Orderly**

= coordination need low, each task assigned to separate persons (separate clients for individuals)

* Simple structure, stable environment

**Complicated**

= sub tasks done by separate unit but are interdependent, much coordination needed (e.g., sequential tasks)

* Functional structure, varied environment

**Fragmented**

= every sub unit can do work at its own pace, not much coordination needed (pooled tasks)

* Divisional structure, locally stormy environment

**Knotty**

= coordination need high between sub tasks and non repetitive

* Matrix structure, turbulent environment

**Coordination and control systems**

= computer/manual registration/information sharing systems to “govern” “how work is done”

**Formation**

= degree of specification of rules

**Centralization**

= degree to which control is hierarchical

**Family**

* Not much formalization needed
* Centralized control
* Simple structure

**Machine**

* A lot of formalization
* Centralization
* (Walmart)
* Functional structure

**Market**

* Low formalization
* High decentralization between business units
* Divisional structure

**Clan/Mosaic**

* Ikea (clan
* Unilever (mosaic)
* Matrix structure

**Knowledge and information systems**

= providing meaningful data to decision makers

* Groupware
* Workflow systems

**Groupware**

= facilitates information sharing within teams, document sharing

**Workflow systems**

= track and facilitate particular workflows

**Event driven**

= reactive, person to person, easily understandable (tacit low)

**Data driven**

= easily understandable, but high volume

**Agent driven**

= vital information difficult to codify and formalize, face-to-face

**Relationship driven**

= integrate hard and soft data

**Classic STSD perspective**

* Industrial democratization
* Worked closely together with emery and Trist (UK)
* Semi-autonomous work groups in which workers and managers self-regulated work
* Problems with existing aspects of design within organizations (e.g., role of management, reward systems)

**Participative design**

* Find solutions by means of workshops, action research and future search conference
* Create “design” for work problems solutions together (**Shared vision**) > integrate stakeholders & clients, workers, managers, unions
* Is able to improve Quality of work
* But often critiqued for weak theoretical basis > shared vision is not necessarily the best solution

**Integral organizational renewal** (Dutch/Belgian approach)

* Strong relation between theory and design strategies (sometimes too strong)
* Focus on integral redesign of the entire organization to influence the 3 Q’s
* Strong theoretical basis but often critiqued for lack of implementation/change perspective

**Democratic dialogue**

* Creating intra- and inter-organizational networks
* Democratic communication strategies
* Case studies conducted in a scientific way (ID experiments)
* But almost no “design” consequences, the way labor is divided remains roughly the same

**American consultancy approach**

* Aimed at “hearing the voice” of employees
* Getting multiple parties aligned
* Starting change in organizations, get organizations to move
* But weak on the level of design theory > how to change organization design difficult

**Structural complexity**

= the amount of disturbances > through the number of relationships

**Regulatory capacity**

= the way individual workstations can deal with disturbances

**Structure parameter**

= analyze the way activities are grouped and coupled over departments and relate it to consequences on the 3 Q’s

**Production structures**

= how the activities are divided in an organization

**Functional concentration**

* To what degree are performance activities all located in specific departments?
* To what degree do all ‘orders’ have to pass all departments?

**Differentiation of operational transformations**

* Are preparing, supporting and making activities separated?

**Level of specialization of performance activities**

* To what degree are performance activities further split up within departments?

**Macro level**

= Level of the organization

* Group (all types of) performance activities together on the basis of
* Orders or ‘family of products’
* Grouping together of making preparing and supporting activities within homogenous

**Meso level**

= level of departments

* Is there a need for creating segments?


* Many sub-orders, difficult or large product?


* Splitting products into (more or less) finished parts


* Group making, supporting and preparing activities per segment


* Need for interaction, dependence, between segments should be low

**Micro level**

= team level

* Steps:


1. What making, preparing and supporting activities have to be conducted per capacity within the team?


2. Design specifications for individual jobs/tasks (task variety, ability to learn and use capacity, recognizable contribution to the whole)

**Lean production**

= a catch-all term to describe a combination of techniques used to help companies attain low cost status (e.g., just-in-time and total quality management)

**Lean thinking**

= approach aimed at eliminating waste

* Through:


1. Designing better ways of working
2. Improving connections
3. Easing flows within supply chains

* In order to:


1. Reduce cost
2. Make better use of resources
3. Deliver better customer value

* By means of skills and shared means to systematically address waste

**Lean management**

* Involves all processes pertaining to acquisition, design development and manufacturing


* Strives to eliminate non-value added or wasteful resources (material, space, tooling, labor)


* Wast minimization, flexibility, responsiveness to change, optimizing flow of material & information


* Decision making responsibility at level closest to where work is performed

Muda 無駄

= waste; an activity that is wasteful and doesn’t add value or is unproductive

**Kano model**

= creating delight by building on latent customer needs

**Chaku-Chaku**

= load-load; operator takes part from one operation to next

**Heijunka**

= level schedule

* Creating a level schedule for sequencing orders for smooth day-to-day variations in total orders
* If fewer orders are required, ‘takt time’ is slowed down with fewer people working on the line

**Bureaucratic organizations**

* Huge triangle with high functional specialization


* High coordination needs


* High hierarchical specialization

**Modular organizations**

= cross trained teams with team ownership and delegated planning

**Vera level 1**

= Applying rules, sensu-motor regulation

* Carrying out this task requires regulation of bodily movements, but no planning
* Occasional change of tools
* E.g., repetitive tasks in an assembly line

**Vera level 2**

= action planning

* The sequence of steps needs to be planned ahead
* 2R: the sequence of steps is determined ahead but require mental rehearsal before getting started
* E.g., preparing a meal according to a recipe

**Vera level 3**

= decisions about sub-goals

* There is a rough overall planning; each activity requires its own detailed planning
* E.g., design tutorial with overall assignment but freedom to decide how to do it

**Vera level 4**

= co-ordination of several subtasks

* Several interdependent parts of the work process need to be coordinated and planned jointly
* E.g., event organization, operating theatre, coordinating several logistical operations

**Vera level 5**

= developing new tasks

* New, to be developed activities, their coordination and material conditions have to be planned
* E.g., new product development, course redesign, new type of synergy activity

**Hindrances**

= missing or inaccurate information, restricted movement, wrong tools, unreliable system

**The longwall method**

* Work broken into standard series of component operations in rigid succession
* Three shifts with interdependent tasks:
* Cutting (10 people): preparation, bring holes
* Ripping (10 people): firing shots and ripping coal away
* Filling (20 people): moving coal on conveyor
* Seven occupational roles
* Moving towards mass production like factory with multi-shift cycle

**Informal organization**

= private arrangement to help each other out among neighbors, but undependable, internal rows and colitions

**Reactive individualism**

= competition for the better places, bribing, mistrust