Organization Design: Simplifying Complex Systems is a textbook on organization design.
Organization design is the process is creating an organization capable of achieving its intended purpose and nurturing its competitive advantage.
As the author, Nicolay Worren, states in the preface, there are few books on the topic and even fewer written in recent years. For the initiated, it is filled with relevant knowledge, proposed approaches offered as design propositions, and many citations to support credibility and further inquiry into the topic. Even so, the author writes in a straightforward, accessible way.
If you’re interested in organization design, you can find much value in this book. The value may be intrinsic in the form of exposure to new concepts. It may also create extrinsic value in the form of application tools or topics and questions you can ask of the organization designers in your professional life. This book isn’t, however, a set of step-by-step activities that can turn a layperson into an effective organization designer. This distinction may be important for you to know.
What follows are what I consider a few key ideas pulled from many others in which a reader might find interesting.
A Process for Organizational Design
Chapter eight is a nice overview of an organization design process. The key, interrelated challenges involve the alignment of strategy and design, the internal coherence of design elements, and the process used to engage the broader organization. A good methodology helps focus the design process on the right issues and incorporates useful tools for the collection, analysis, and validation of ideas. The text mentions large group methods as a way to activate the design process while deferring further exploration to well-written books on the topic, such as that by Sylvia James and Paul Tolchinsky (2007).
The reader will also find several questions useful to ask leaders in the contracting phase before project initiation. Many design projects are positioned for success or for failure based on attitudes and conditions in the top leadership team. These questions include, are there key stakeholders or members of the leadership team who do not believe design work is the best path forward? Whom do you have in mind for internal project support and how do you envision their continued involvement? What do you think about involving members of the broader organization in a re-design project?
The value of open and direct dialogue cannot be overstated. The answers will begin to paint a forecast of leadership cohesiveness, commitment, and confidence needed for successful design work.
Chapter two is a look at organizational complexity. The author supports the importance of the topic by referring to economists who include complexity as a “managerial dis economy” that inhibits control and efficient operation. It is a key factor limiting the growth and profitability of large firms.
Complexity is defined in terms of interdependencies within an organization. Or, more specifically, how elements of a system are related to one another where actions and decisions taken by one actor influence the performance of other actors. Businesses of equal size and competing in the same industry are not necessarily equally complex. The difference is organization design.
One solution, broadly speaking, is to look for coupling. This is the situation where two or more organization elements are both responsible for the same functional requirement (i.e., the function(s) an organization must deliver in order to be successful). Another solution is to look at coordinating efforts as having associated costs, which leaders and designers must strive to minimize. Little else focuses on leadership attention like framing an organizational issue in terms of impact to the P&L.
The Architecture Metaphor
The collection of ideas in chapter three, that subsequently run as a thread throughout the entire book, is organized around the architecture metaphor.
A good architecture balances the ability for autonomous action and system coherence in a design that is purposeful and fit for the demands placed on it by its operating environment. A good architecture starts with strategy and then explicitly identifies the functional requirements of an organization and the design parameters and coordinating mechanisms needed to satisfy those requirements. The necessary relationship is called the Axiomatic design theory.
This self-evident nature supports broad utility throughout the book. For example, in chapter nine, the reader will see Axiomatic design theory applied to the dilemmas that introduce complexity into five different organizations. It is used to analyze and simplify the structure of a system to deliver functional requirements and thus avoid undesirable changes/simplifications to organizational outcomes.
The author also introduces the concept of contingency theory.
This proposes that high-performing organizations have a good quality of fit between an organization’s design, its capabilities, and the demands placed on it by the operating environment. It is consistent with systems models of organization performance. It also makes it very clear that design choices must follow strategy choices.
This collection of ideas is offered as an alternative to the common and narrow view that design equals structure. The benefit of this refrain is that it brings a wider number of design considerations into view. It also adds the important element of context into design work.
The language of structure can have a limiting effect because it suggests that organization redesign is accomplished through changes in an organization chart. We’ve all heard the metaphor about rearranging the deck chairs on the Titanic. Changing the accountability structure of an organization can shake things up but will not, by itself, accomplish significant system-wide change.
A Good Review of Organization Design
I like this book. I’m also interested in this topic and willing to invest time in it.
Be clear – this is a textbook. Also, understand that this book alone will not alone turn a reader into an organization designer. Read the entire book if you’re broadly interested in Org Design concepts and practices. If you’re a leader who wants an overview of an Org Design process, focus on chapter eight.
The author proposes that organization design is part of every managers job. A design attitude and system thinking are helpful in this regard. Reading this book can help develop both mindsets.