On Friday I participated in a conference organized by the Organizational Design Community, a network of academics, consultants and executives.

The conference was hosted by Harvard Business School and several of its faculty members participated. It was led and facilitated by Borge Obel from the Aarhus Business School in Denmark.

A number of brief presentations were held with some time for discussion afterwards. All of the presentations were interesting and thought-provoking, but I’ll highlight three of them that I thought were particularly relevant for readers of this blog.

If you have followed this blog, you know that I have been interested in multidimensional organizations. In my book I write about alternative ways of structuring organizations with three dimensions. In his presentation, Jay Galbraith (author/consultant) went one step further in pointing out that some organizations (like Procter & Gamble) now have four dimensions (see picture above).

But he also noted the challenges that this implies in terms of coordinating an exponential increase in interdependencies. He mentioned that business process automation is a new coordination mechanism that may help address this challenge.

The goal for Ray Levitt – professor at the engineering school at Stanford University – is to enable managers to design organizations the way engineers build bridges. He and his team has built a simulation/modelling tool (Virtual Design Team, or VDT) that can be used to support the planning and execution of large engineering projects.

The starting point is an analysis of the individual project activities, their estimated time, and their interpendencies. Based on such data, the tool can be used to predict the probability of delays and breakdowns in the deliverables.

Initially they used this approach to model relatively routine activities in well defined projects but have now moved to more complex projects involving multiple stakeholders.

Moving to organizational change and implementation issues, Michael Beer (professor emeritus at Harvard) described an approach he calls the Strategic Fitness Process. The approach resembles many existing organization development and change interventions, but he combines them in a new way.

The key idea seemed to be to use mid-level managers as the “consultants”, in that mid-level managers would form a task force and diagnose organizational problems and opportunities.

The task force would present their findings in a “fishbowl” session where senior managers are only allowed to ask questions for clarification. The key idea is of course to ensure that senior managers get a good, unfiltered understanding of current situation inside the organization before making decisions about any changes.

These are all topics that I will return to in future articles on this blog. Stay tuned!

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Discussing the future of organization design

Naomi Stanford recently wrote a review of my book. You can find it on her blog. Naomi is a consultant, teacher and author (see this page for more about her background and the kind of work she does)

My son of 9 years took this photo during a family walk the other day, and I thought it might serve as a metaphor for the concept of Design Rules (or Design Propositions, as I call them in my book).

The organization design field – as most other management disciplines – is divided into two camps – the academic and the managerial, on each side of the fence.

Many of the books written for managers are of the “guru” type where a new and revolutionary solution is proposed, with little regard for evidence or data to support the claim.

Academics, on the other hand, mainly write articles for each other, often to resolve a theoretical problem instead of addressing a business challenge. How, then, are we to develop useful knowledge – knowledge that can help us improve organizations?

The concept of Design Rules was proposed by Dutch professor Georges Romme (building on the work of another professor in the Netherlands, Joan Ernst van Aken). Romme sees Design Rules as a device that can help bridge the division between theory and practice.

The key idea is to express research-based knowledge as practical action principles for addressing a given problem or challenge in an organization. Example: Imagine that academic research concludes that global firms that are decentralized are more profitable than those that are centralized. This can be turned into a design rule by stating that

“if you lead a global firm and is considering its structure, to maximize profitability, select a decentralized structure”.

A key element is that design rules should be both actionable and testable. “Actionable” means that a manager or employee in an organization should be able to implement it, and “Testable” means that it should be possible to find out whether the principle leads to the intended effects or not.

To be actionable, it has to be fairly specific. My example above is probably too vague – do we mean that all functions should be decentralized, or only some (e.g., marketing, sales)? Do we mean that this principles applies to all firms, or only firms in some industries (e.g., consumer goods)? Do we by “decentralization” mean to move people into regions, to transfer decision rights, or both?

Ideally a design principle should also be accompanied by a tool that a manager can use for assessment, in this case, for example, it could be a tool or framework to assess how centralized or decentralized a unit in the organization actually is, data comparing different firms in a given industry, or guidelines for implementing more decentralized structures.

To be testable, we have to have some system for following up the implementation. Design rules are a starting point for learning – if we manage to feed back information about the effects and then revise the design rule based on our experience.

In this manner, design rules are like the ladder in the picture above because they allow us to go from theory to action, and back to theory again.

In my book there are 72 design rules alltogether. I am considering how to make them available to more people. One possibility may be to create a wiki where the design rules could be described and where practitioners could suggest (or make themselves) edits and changes. Let me know if you have any thoughts about this.

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Developing a new applied science for organization design

I am writing this on my way back from Brussels, where I attended a workshop convened by Richard Burton (pictured above) and Børge Obel, two leading academics.

They are the initiators of a global community of scholars, consultants and executives who are interested in developing better approaches for designing more effective organizations.

One important driver is a growing dissatisfaction with current organizational theory, which has become an increasingly irrelevant discipline.

Few managers are active users of academic research, which is not surprising, since academics have few incentives to produce research that is viewed as relevant.

To give just one indicator of the gap between research and practice, take a look at the chart below. In one survey, only 1% of HR managers reported that they were frequent users of academic research.

This result can be compared with similar studies of research utilization in other professions. One study in Canada among physicians (both general practitioners and specialists) found that 82% had downloaded one or more scientific articles from an internet database during an 8-month study.

What Richard and Børge are talking about is the need to create a new field, a field that has an impact. Here’s how they formulated the purpose of the workshop that I attended:

Today’s complex, dynamic, and highly interconnected global economy has made the ability to design and redesign organizations critically important (…) the field of organization theory and behavior has failed to deliver insights that can inform practice and guide change for desired outcomes and performance.

Organizational theory is important for the design knowledge base, but it is incomplete in content and largely silent on the process of design and change.

Organizational architecture, on the other hand (…) can be thought of as an applied science – a “scientific art”  – similar to engineering in the physical sciences or medicine in the biological sciences.

To achieve this status, we need to develop a theory for application, going beyond the current research focus in organization theory and incorporating many other disciplines.

A key initial goal is to ensure that there is a critical mass of people – the community currently has around 80 members but Richard and Børge are intent on increasing this number. They plan an annual meeting where members will be invited to present and discuss contributions. Another important element is the establishment of a new journal. The editor is Charles Snow, a well known US academic.

If you are interested in following the development of the community there is a Linkedin group where news and announcements are posted.

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Why are there no laboratories in business schools?