Success Criteria for Organization Design

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Organization designs both institutionalize and enable positive aspects of culure
and frustrate other aspects of culture. If the underlying culture is at odds
with a new design, it is likely that the culture will win out, with new practices
sabotaged before they become fully embedded. The challenge is to identify
broad criteria for redesign efforts which appear conducive to creating contexts
where high performance is more likely to occur. For example, drawing some
organizational design criteria from complexity theory, it would seem that an
organization’s ability to remain at the ‘edge of chaos,’ characterized by enough
standard procedures and systems that people know what is meant to happen
but also enough flexibility and space for people to operate autonomously  so    empowerment can result, depends on having an appropriate balance of the following:
Information flow – there should be enough information, of the right quality
and timeliness, to ensure that people know what is happening, but not so
much that people feel bombarded and stop paying attention to messages
Diversity – there should be enough difference in ideas, approaches and people
that fresh perspectives can be incorporated, but not so little coherence that
fragmentation results due to lack of common purpose
Power – there should be enough freedom from direct control that people can
use their initiative, but not so much freedom that chaos ensues.
Design success criteria are changing. According to the book Boundaryless Organization (Ashkenas et al., 1998),   four critical factors influenced organizational success:
1. Size. The larger a company became, the more it was able to attain production
or service efficiencies, leverage its capital and put pressure on customers
and suppliers.
2. Role clarity. In a larger organization tasks were divided, clear distinctions
made between manager and worker, and levels of authority clearly spelt out.
This had the advantage that everyone knew his or her place and performed
to specification.
3. Specialization. As tasks were subdivided, specialisms were created and
expertise developed. Disciplines such as human resources, finance, infor-
mation technology etc. came into being.
4. Control. Large organizations created controls to ensure that all parts of
the organization performed as needed to produce the products or services.
The manager’s role was to ensure that others were doing the right things at the
right time.
Organizational structure was seen as the primary vehicle for achieving
effectiveness. Typical questions relating to structures included:
– How many layers of management do we need?
– What signing authority will different levels have?
– What is the proper span of control?
– What is the best balance between centralization and decentralization?
– How do we describe and classify each job and set pay levels?
– How do we organize field locations and international operations?
The aim was to create a structure which came as close as possible to meeting
the four success factors.
The rapid pace of change due to technology and the arrival of the global
economy have caused a radical shift in the basis of competitive success. To a
large extent, the old success factors have become liabilities. Sustainable success
in the medium to longer term comes from an organization’s ability to leverage
its resources in a changing economic context.  In The Boundaryless Organization  , the authors suggest that there are four key themes that are critical to such leverage. These are:
1. Speed (not size). This is the ability to reduce bureaucracy, speed up cycle
times and create increased capabilities for change. It is the ability to bring
new products to market faster, and change strategies more rapidly than ever
before. Speed implies that there is enough pace that people are stimulated to
respond and increase their output year-on-year, but not so much unremitting
pace that people become ‘burned out’. Smaller firms tend to have advan-
tages over larger firms in the time they take to change direction because
there are fewer people to mobilize towards change. Large companies need
to act like small companies, while retaining access to the large company’s
resources. The US company Gore, manufacturers of Goretex, restricts the
size of any business unit to a maximum of 150 employees. As units grow
larger, they are subdivided into other units. Gore recognizes that size can
inhibit speed, ownership and innovation.
2. Flexibility (not rigidity). Role clarity constrains flexibility. People in flex-
ible organizations do multiple jobs, and constantly learn new skills while the
organization pursues multiple paths, experiments and makes shifts. Flexible
organizations thrive on ambiguity, throw out job descriptions, and encour-
age ad hoc teams which form and reform as tasks shift.
3. Integration (not specialization). Integrated organizations create mechan-
isms to pull task activities together as they are needed rather than assigning
specialists to tasks. Specialists are still needed, but it is often the ability of
specialists to collaborate with others to create an integrated whole that is
more valuable than having management pull tasks together. Concepts of
change are built into processes, enabling the rapid dissemination of new
initiatives and mobilizing the right resources to make things happen.
4. Innovation (not control). Boundaryless organizations create innovative
processes and environments that encourage and reward creativity, rather
than allowing a focus on control to stifle innovation. Innovative organiza-
tions are more likely to take one of the new organizational forms, such as a
network organization. Internal and external networks enrich the knowledge
flow. Human resource management is sophisticated, and team processes are
integrated into the business process.