Companies change their organizations continually. When such a change follows a change in company strategy, employees understand why it happens. However, organization changes occur much more frequently than strategy changes. Their seemingly haphazard nature breeds cynicism, while it shouldn’t: organization changes are perfectly normal, usually necessary and often for the better. The reason is that an organization design is never perfect. Designing an organization is a delicate exercise that considers diverging requirements, but at some point, you’ve got to decide, and go for the “least bad” design. The article lays out how to explain why such changes and cycles occur.
The authors draw on their long advisory experience to propose three premises about organization design. They then describe the implications of these premises for managers who need to make and explain organization design changes.
Premise 1: There is no one-size-fits-all organization. Implication: Beware of adopting organizational hypes thoughtlessly; tailor the design to the specific situation, possibly on the basis of an “organizational health-check”. 10;Premise 2: There are usually good reasons why an organization is as it is. Implication: Beware of following a slash-and-burn approach; consider a gradual approach as the default, possibly on the basis of causal loop diagrams. 10;Premise 3: Organization is more than “structure”. Implication: Beware of isolated, simple-minded changes; include “processes”, “people”, “technology” and “culture”, as explained by various frameworks.
Alfred Chandler famously wrote that “structure follows strategy”. This article demonstrates that “structure begets structure”. Hence it is important for managers not to bungle an organization design change. To that purpose, they should be clear about the desired time to see the impact of the change and about the risk of change-induced organizational chaos.
The article contributes to good management practice by enabling managers to explain well why an organization change, even in the absence of a strategy change, does make sense. Managers’ ability to explain the benefits of change, and employees’ acceptance thereof, is a mark of organizational maturity.
Vantrappen, H. and Wirtz, F. (2020), "A smarter process for managing and explaining organization design change", Strategy & Leadership, Vol. 46 No. 5, pp. 36-43. https://doi.org/10.1108/SL-06-2018-0057
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