Jay Galbraith (1939 – 2014) was a leading scholar and consultant in the field of organization design.
In several of his books, he mentioned the possibility of implementing a “mirror image organizational structure.”
He argued that a mirror image structure would facilitate effective coordination across units. But he also cautioned that it could be inefficient in some situations.
In this blog post, I will summarize what we are doing.
But let’s first clarify what the term means:
A mirror-image structure is established when a unit (e.g., department) organizes its sub-units (e.g., teams) in such a way as to correspond to the structure of another unit that it needs to collaborate with.
For example, consider an IT department with several teams responsible for developing and deploying new IT system components.*
Traditionally, it has been organized in a functional manner, as indicated below.
But after considering the need for coordination with its internal clients, the IT director decides to create a team structure that mirrors the business units that the IT department serves:
In our research project, we use a more complex case, but it’s basically this problem that we look at.
We have a built a data set that represents an international firm with three subsidiaries. The question we ask is how the three subsidiaries should be organized.
One alternative is to let the subsidiaries select the appropriate structure, given their particular local requirements (their work processes, products, customers, culture, etc.). This may result in three different organizing principles being used, as indicated below.
So how can we determine which alternative is the best one?
We wanted to develop an analytical method to find the answer.
We used a coordination cost approach, similar to that used in Reconfig, the organization design software tool.
So we built an Excel model that represents the two alternatives described above (mirror image versus hybrid) in different scenarios.
Our decision rule is: Choose the alternative that minimizes coordination costs. This is likely to be the alternative with the lowest number of interfaces between units (but we also take into account the size of the units).
For simplicity, let’s use the Sales & Marketing unit as an example.
Let us assume that the three divisions manufacture different types of components, but sometimes combine their efforts to deliver integrated solutions. Hence the Sales & Marketing departments need to collaborate to create client proposals, agree on pricing and delivery schedules, and so on.
With a consistent, mirror image structure, there will be three interfaces between them:
This increases to 10 (!) if the divisions choose different organizing principles. The reason is that ii implies that the Sales & Marketing department is split in Division 2 and 3 when they choose to depart from the functional structure in Division 1.
However, we also have to take into consideration the benefits that Division 2 and 3 obtain by selecting a model that reflects their particular requirements.
If these benefits are significant, it could make it worthwhile to adopt a model that is unique for each division, resulting in a hybrid and inconsistent structure for the organization as a whole.
For example, for Division 2, it may be the case that adopting a geographical (instead of a functional) model will reduce internal coordination costs. This will be the case if the geographical model is better aligned with the work processes in this division, as indicated below (for simplicity, the figure only shows two departments, with four employees each):
In other words, this problem is actually a particular instance of a more general conundrum: A decision to adopt a mirror image structure implies a trade-off between organization-wide versus local (unit-specific) performance.
We have calculated the results for various scenarios for a test data set that we created.
The scenarios differ in terms of the degree of collaboration that is required across the three divisions and how much local adaptation that is required by each division.
What we find is that the mirror image structure is superior in most situations.
However, the hybrid model – where divisions select a unique structure – is better in situations where there is a strong need for local adaptation, combined with little need for collaboration across divisions.
If the results are confirmed by others, one implication is the following: Leaders should think twice before they delegate organization design decisions in firms that rely on a lot of cross-unit collaboration. Such firms need a fairly consistent structure across sub-units.
Feel free to leave a comment below if you have questions or comments.
*This example is inspired by: Vlietland, J. & van Vliet, H. (2015). Towards a governance framework for chains of Scrum teams, Journal of Information and Software Technology, 57, 52-65.