Designing the Organization: From Strategy to Organizational Structure

Start Date: 11/12/2018

Course Type: Common Course

Course Link: https://www.coursera.org/learn/designing-organization

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About Course

In this course you will understand how firms are organized, what factors must be taken into account in making critical design decisions, and what role managers play in making these choices. In order to answer these questions, we will first develop a conceptual process model that links business models, external and internal contingencies, and organizational design. Second, we will focus on the fundamental principles of organization design and what alternative design choices are available for managers. Finally, we will apply these concepts and ideas to organizational situations to develop the critical insights and decision making skills to build effective organizations. Learners: • Will understand how managers create value through their organizations • Will have a good understanding of the fundamental principles and factors important to organizational design • Will be able to design the coordination, control, and performance measurement systems to manage an organization. This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

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Course Introduction

In this course you will understand how firms are organized, what factors must be taken into account

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Organizational structure A functional organizational structure is a structure that consists of activities such as coordination, supervision and task allocation. The organizational structure determines how the organization performs or operates. The term organizational structure refers to how the people in an organization are grouped and to whom they report. One traditional way of organizing people is by function. Some common functions within an organization include production, marketing, human resources, and accounting.
Organizational architecture Conventionally organizational architecture consists of the formal organization (organizational structure), informal organization (organizational culture), business processes, strategy and the most important human resources because what is an organization if not a system of people. The table shows some approaches to organizational architecture.
Organizational structure One of the newest organizational structures developed in the 20th century is "team" and the related concept of team development or team building. In small businesses, the team structure can define the entire organization. Teams can be both horizontal and vertical. While an organization is constituted as a set of people who synergize individual competencies to achieve newer dimensions, the quality of organizational structure revolves around the competencies of teams in totality. For example, every one of the Whole Foods Market stores, the largest natural-foods grocer in the US developing a focused strategy, is an autonomous profit centre composed of an average of 10 self-managed teams, while team leaders in each store and each region are also a team. Larger bureaucratic organizations can benefit from the flexibility of teams as well. Xerox, Motorola, and DaimlerChrysler are all among the companies that actively use teams to perform tasks.
Organizational structure The set organizational structure may not coincide with facts, evolving in operational action. Such divergence decreases performance, when growing. E.g., a wrong organizational structure may hamper cooperation and thus hinder the completion of orders in due time and within limits of resources and budgets. Organizational structures should be adaptive to process requirements, aiming to optimize the ratio of effort and input to output.
Organizational structure Lim, Griffiths, and Sambrook (2010) developed the Hierarchy-Community Phenotype Model of Organizational Structure borrowing from the concept of Phenotype from genetics. "A phenotype refers to the observable characteristics of an organism. It results from the expression of an organism’s genes and the influence of the environment. The expression of an organism’s genes is usually determined by pairs of alleles. Alleles are different forms of a gene. In our model, each employee’s formal, hierarchical participation and informal, community participation within the organization, as influenced by his or her environment, contributes to the overall observable characteristics (phenotype) of the organization. In other words, just as all the pair of alleles within the genetic material of an organism determines the physical characteristics of the organism, the combined expressions of all the employees’ formal hierarchical and informal community participation within an organization give rise to the organizational structure. Due to the vast potentially different combination of the employees’ formal hierarchical and informal community participation, each organization is therefore a unique phenotype along a spectrum between a pure hierarchy and a pure community (flat) organizational structure."
Organizational structure Organizational structure affects organizational action in two big ways:
Organizational structure An organizational structure defines how activities such as task allocation, coordination and supervision are directed toward the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment.
Structure follows strategy He described corporate strategy as the determination of long-term goals and objectives, the adoption of courses of action and associated allocation of resources required to achieve goals; he defined structure as the design of the organization through which strategy is administered. Changes in an organization's strategy led to new administrative problems which, in turn, required a new or refashioned structure for the successful implementation of the new strategy.
Organizational storytelling Organizational storytelling is a concept in the study of management, strategy and organization studies
Organizational structure Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual.
Organizational structure This organizing of specialization leads to operational efficiency where employees become specialists within their own realm of expertise. The most typical problem with a functional organizational structure is however that communication within the company can be rather rigid, making the organization slow and inflexible. Therefore, lateral communication between functions become very important, so that information is disseminated, not only vertically, but also horizontally within the organization. Communication in organizations with functional organizational structures can be rigid because of the standardized ways of operation and the high degree of formalization.
Organizational structure As pointed out by Lawrence B. Mohr, the early theorists of organizational structure, Taylor, Fayol, and Weber "saw the importance of structure for effectiveness and efficiency and assumed without the slightest question that whatever structure was needed, people could fashion accordingly. Organizational structure was considered a matter of choice... When in the 1930s, the rebellion began that came to be known as human relations theory, there was still not a denial of the idea of structure as an artifact, but rather an advocacy of the creation of a different sort of structure, one in which the needs, knowledge, and opinions of employees might be given greater recognition." However, a different view arose in the 1960s, suggesting that the organizational structure is "an externally caused phenomenon, an outcome rather than an artifact."
Organizational structure Bureaucratic structures have many levels of management ranging from senior executives to regional managers, all the way to department store managers. Since there are many levels, decision-making authority has to pass through more layers than flatter organizations. A bureaucratic organization has rigid and tight procedures, policies and constraints. This kind of structure is reluctant to adapt or change what they have been doing since the company started. Organizational charts exist for every department, and everyone understands who is in charge and what their responsibilities are for every situation. Decisions are made through an organized process, and a strict command and control structure is present at all times.In bureaucratic structures, the authority is at the top and information is then flowed from top to bottom. This causes for more rules and standards for the company which operational process is watched with close supervision. Some advantages for bureaucratic structures for top-level managers are they have a tremendous control over organizational structure decisions. This works best for managers who have a command and control style of managing. Strategic decision-making is also faster because there are fewer people it has to go through to approve. Some disadvantages in bureaucratic structures are it can discourage creativity and innovation in the organization. This can make it hard for a company to adapt to changing conditions in the marketplace.
Organizational identification Also important is the link between company policies and rules and communicated mission, values and strategy to organization members' attitudes and the strength of an employee's identification with the company (Cheney, 1983). This notion opened the field of organizational identification to studies and questions about organizational control of employees through efforts to increase or improve organizational identification.
Organizational analysis Evaluating or crafting an organizational strategy requires analysis of the relationship between mission, value and resources. Strategy allows managers to focus on an organization's long-term plan and ensure that mission objectives are met. Organizational strategy explores the relationship between unit and the environment. It involves action—matching skills and resources with opportunities and threats. According to Michael Porter, a professor from Harvard Business School and leading expert in organizational strategy, the basics of a competitive model have Five Forces:
Organization In the social sciences, organizations are the object of analysis for a number of disciplines, such as sociology, economics, political science, psychology, management, and organizational communication. The broader analysis of organizations is commonly referred to as organizational structure, organizational studies, organizational behavior, or organization analysis. A number of different perspectives exist, some of which are compatible:
Organizational structure The term of post bureaucratic is used in two senses in the organizational literature: one generic and one much more specific. In the generic sense the term post bureaucratic is often used to describe a range of ideas developed since the 1980s that specifically contrast themselves with Weber's ideal type bureaucracy. This may include total quality management, culture management and matrix management, amongst others. None of these however has left behind the core tenets of Bureaucracy. Hierarchies still exist, authority is still Weber's rational, legal type, and the organization is still rule bound. Heckscher, arguing along these lines, describes them as cleaned up bureaucracies, rather than a fundamental shift away from bureaucracy. Gideon Kunda, in his classic study of culture management at 'Tech' argued that 'the essence of bureaucratic control - the formalization, codification and enforcement of rules and regulations - does not change in principle...it shifts focus from organizational structure to the organization's culture'.
Organizational structure Still other theorists are developing a resurgence of interest in complexity theory and organizations, and have focused on how simple structures can be used to engender organizational adaptations. For instance, Miner "et al." (2000) studied how simple structures could be used to generate improvisational outcomes in product development. Their study makes links to simple structures and improviser learning. Other scholars such as Jan Rivkin and Sigglekow, and Nelson Repenning revive an older interest in how structure and strategy relate in dynamic environments.
Organizational structure of the Central Intelligence Agency There are references to earlier structures in various historical documents. For example, in a CIA paper on the internal probe into the Bay of Pigs Invasion, there are several comments on the Directorate of Plans organizational structure in 1962. Even though any large organization will constantly reorganize, the basic functions will stay and can be a clue to future organization.
Organizational structure The divisional structure or product structure consists of self-contained divisions. A division is a collection of functions which produce a product. It also utilizes a plan to compete and operate as a separate business or profit center. According to Zainbooks.com, divisional structure in America is seen as the second most common structure for organization today.