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The Organization as a Strategic Design.doc

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York University
Organization Studies
ORGS 2010

1THE ORGANIZATION AS STRATEGIC DESIGNThe Strategic Design perspective on organizations is the first of the three lensesways of looking at and understanding organizationsthat you will learn about in this courseEach provides invaluable insights for those who are trying to take more effective action in organizations butthe strategic design perspective is probably the one with which managers are most comfortableIt sees an organization as a system that has been deliberately constructed to achieve strategic goals Its fundamental assumption that the appropriate design given an organizations strategy and environment can maximize organizational efficiency and effectivenessOrganization design is a fundamental task of organizational lifeIt operates at all levels from the design of the organization as a whole to the design of teams and work groups right down to the design of individual tasks and jobsYou yourself areor should beengaged in designing an organization when you decide how to operate in a project team in your classesUnderstanding and working with the basic design principles introduced here can not only help you understand how organizations work it can also have immediate application in your current activitiesThe dominant perspective on organizations in the management literature and the business press views them as strategic designs that is as systems deliberately constructed to achieve certain strategic goals This perspective asserts that by understanding basic principles of organization design by aligning the organizations design with its strategy and by making sure that both strategy and design fit the environment in which the organization is operating managers can make their organizations successful The strategic design perspective emphasizes the efficiency and effectiveness of the organizationEfficiency involves accomplishing strategic goals with the least possible expenditure of resources effectiveness involves ensuring that goals are accomplished to the standard necessary for the organization to succeedAs the term strategic design implies this perspective on organization is built on the assumption that the organization has a strategy for creating value that provides the test for generating and assessing the organizations designThis value proposition or distinctive competitive advantage establishes what activities the organization must carry out to achieve success in its strategies for example providing speedy and reliable servicing of products to customers getting products from RD to the market quickly continuously driving down production costs through continuous improvementBut the activities at which the organization excels can and should influence the strategyFor example an organization with an extensive marketing organization might be better off using 1 These materials are the copyright of Professor D Eleanor Westney and she has granted permission for their use in ORGS 2010 at the Schulich School of Business1that organization to get fast and detailed information on customer needs in order to adopt a strategy of providing premiumpriced products and aftersales service rather than adopting a lowcost strategy that involves cutting back on its fulltime marketing personnelOne of the key strategic questions whose answers shape organization design is Which activities should be inside the boundaries of the organization and which outsideFor example should a company make its own components or purchase them from outside vendorsShould a government Ministry have its own Information Technology specialists or should it contract out IT to an external supplierMuch of the strategy literature of the past decade has focused on this make or buy issueIn this discussion however we are consigning this question to the realm of strategy and addressing the question of how to organize the activities that the chosen strategy includes inside the organizationLater in the course we shall address the challenges of organizing across the boundaries of the organizationPeople working with this perspective often use metaphors of the organization as a mechanism or system of engineering or reengineering the organization of organizationbuilding and organizational architecture of the organization as a complex organism that can be diagnosed like a medical patientLike engineering architecture or medicine management is seen as a matter of understanding and applying basic principles and processes and adapting them to the context in which one is operatingKEY ELEMENTS OF ORGANIZATION DESIGNThe Strategic Design perspective sees information as the key resource of the organizationTo achieve the organizations strategic goals people need to share information create it through cooperation and direct it to those who can use itIn this perspective the organization is fundamentally an information processing and enhancing system that guides the valuecreating activities of its members so that the organization is both efficient and effective in meeting its strategic goalsThe basic element of organization design is often seen as the task the smallest unit of the activities that need to be performed if the organization is to realize its strategic goalsTasks vary in complexity from the relatively simple like inserting circuit boards into the CPU of a personal computer on an assembly line to more complex such as reprogramming an industrial robot on an assembly line to the extremely complex like setting up a new business division to develop produce and sell industrial robotsTasks also vary in the level of routinization that is the extent to which the activity can be specified and programmedUsually simple tasks are more routine but even complex tasks can also be routinized for example the analysis of how software is designed and the breaking of what had been seen as a complex art or task into discrete 2
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