The Role of Organizational Design in 21st Century Organizations

The Role of Organizational Design in 21st Century Organizations

6.6 min read

William McClain

Introduction

Organizations around the world have experienced far-reaching and powerful transformation in the last decade, including ups and downs that present challenges for the modern leader. These include the constant change in information technology, global competition, and the demand for flexibility and speed at the point of need for a sustainable advantage.[1] Regardless of the degree of change that an organization must react to, the ability to think successfully in the future tense requires a common framework within the organization. What does this mean to organizations in the future? It means that the successful 21st century organization must be designed for success at all levels: individual, group, and organization. This article will examine how the components of individual, group, and organization can empower organizations to successfully configure structures, processes, reward systems, and people practices and policies.[2]

The Individual

It has been estimated that 80% of the jobs available in the USA within 20 years will be based on one’s intellectual capabilities.[3] Therefore, the days of societies turning primarily to CEOs, generals, bishops, and other senior leaders for knowledge will shift across the entire organizational structure. James identifies a number of intellectual competences, certain skills that everyone must have, to know what the future will look like. Not in any specific order, these are the skills you will need: new lens view, strategic foresight, harnessing the power of myths, speed, knowledge of the past to predict the future, and doing more with less[4]

An example of the nature of intelligence in relation to certain skills required in 21st century organizations is seen in the organizational design of Hewlett Packard in France and IBM in London. Both organizations created clubs that compensate you to join, but to maintain your membership you have to keep your skills current and continue producing revenue.[5]

Higher education is a critical indicator of one’s intellectual capabilities. In fact, never before has the role of organizational design depended so profoundly on the acquisition of higher education. From a global viewpoint, in China and Japan over half the undergraduates receive their degrees in engineering and science. That compares to 32% in America.[6] A weak education system equates to weak innovations, solutions, and intellectual capabilities required to create an effective organization capable of achieving the business strategy. In view of the global importance of higher education to organizational design, this educational imbalance stands as a clear message to 21st century American organizations: the ability to obtain and employ intelligence will be the new source of wealth.[7]

The Group

Currently, there is a great interest in the study of organizational teams. This attention is in response to the competitive challenges and organizational needs of a flexible and adaptable organizational design for today, tomorrow, and the future. Groups, not individuals, are the ideal building blocks around which 21st century organizations should strategize.[8] According to Jenewein and Morhart, there are three principles for properly shaping organizational design around groups: (1) personnel management: finding the right team members (2) leadership: putting the team first (3) team culture: courage to do the unconventional.[9]

American society was built on the value of individual achievement. Today, for example, we have generation X that has been raised in an environment of individual achievement with such things as most valuable player in sports, competitive video gaming, television game show winners, and other ways of recognizing individual achievement. People do not relish channeling their individual identity to that of the group.[10]

However, in the context of 21st century organizations’ desire for a team-oriented organizational design, collaboration is valued over competition. Organizations welcome a smooth process in a team setting.[11] For example, when Boeing’s organizational design was at a crossroads, management decided that they would focus on transforming to a team-based organization. These changes included the creation of self-managing work teams based on their function and not their individual titles. As a result, the Boeing 717 project was a major success, and a new team-based culture was established.[12]

The Organization

The ability of an organization to see the entire landscape for a strategic advantage is the principle of a good organizational design. From this strategic viewpoint, the organization recognizes important patterns in its design for success. The span of organizational design has evolved, but no other design activity is more important to 21st century organizations than the element of continuous flexibility.[13]

 Flexibility is the organization’s ability to react to the constantly changing business world. One approach that Snull used to explain the art and science of applying flexibility in a constantly changing business world emerged directly out of the context of structure. He suggests that as organizations achieve success, their winning structure becomes embedded into the process, and the only way to stay clear of ad hoc changes is a flexible design.[14] This is achieved by being leaner, closer to the action, staying focused, allowing equality of power, and holding a portfolio of options for an uncertain future. For instance, when Chevron issued a “best practices resource map” to their employees detailing innovations and contact information for the responsible people, new groups developed sparking learning, innovation, and flexibility.[15] The key to a sustainable advantage in 21st century organizations is to include flexibility, but not to the extent that the design is not stable.

Conclusion

Certainly there are differences among individuals, groups, and organizations. Placed in similar situations, each will act differently. However, there are certain fundamental consistencies that are applicable to 21st century organizations. These fundamental consistencies (individuals, groups, and organizations) are extremely important to the organizational design because they generate predictability. The ideal situation is a balanced methodology between individuals, groups, and organizations within the organizational design. Organizations that do not continually develop their skills with flexibility will be threatened by agile competition willing to do so with no hesitation. The role of organizational design in the 21st century is being transformed, and everyone must be prepared to support it.

Bibliography

Englehardt, Charles, and Peter Simmons. “Organizational Flexibility for a Changing World.” Leadership & Organization Development Journal 23, no. 3 (2002): 113-21.

Galbraith, Jay, Diane Downey, and Amy Kates. Designing Dynamic Organizations. New York, NY: American Management Association, 2002.

Handy, Charles. The Age of Paradox. Boston, MA: Harvard Business School Press, 1995.

James, Jennifer. “Thinking in the Future Tense.” Industrial and Commercial Training 30, no. 7 (1996): 28-32.

Jenewein, Wolfgang, and Felicitas Morhart. “Navigating Toward Team Success.” Team Performance Management 14, no. 1/2 (2008): 102-8.

Lewis, Pamela, Stephen Goodman, and Patricia Fandt. Management: Challenges for Tomorrow’s Leaders. 4th ed. Mason, OH: Thomson South-Western, 2004.

Pina, Mary, Ana Martinez, and Luis Martinez. “Teams in Organizations: A Review on Team Effectiveness.” Team Performance Management 14, no. 1/2 (2008): 7-21.

Robbins, Stephen. Organizational Behavior. 10th ed. Upper Saddle River, NJ: Prentice Hall, 2003.

Sirias, Danilo, H.B. Karp, and Timothy Brotherton. “Comparing the Levels of Individualism/Collectivism between Baby Boomers and Generation X: Implications for Teamwork.” Management Research News 30, no. 10 (2007): 749-61.

Yankelovich, Daniel. “Ferment and Change: Higher Education in 2015.” The Chronicle of Higher Education 52, no. 14 (2005).


[1] Pamela Lewis, Stephen Goodman, and Patricia Fandt, Management: Challenges for Tomorrow’s Leaders, 4th ed. (Mason, OH: Thomson South-Western, 2004), 3.

[2] Jay Galbraith, Diane Downey, and Amy Kates, Designing Dynamic Organizations (New York, NY: American Management Association, 2002), 2.

[3] Jennifer James, “Thinking in the Future Tense,” Industrial and Commercial Training 28, no. 7 (1996): 29.

[4] Ibid., 30.

[5] Charles Handy, The Age of Paradox (Boston, MA: Harvard Business School Press, 1995), 219.

[6] Daniel Yankelovich, “Ferment and Change: Higher Education in 2015,” The Chronicle of Higher Education 52, no. 14 (2005).

[7] Handy, The Age of Paradox, 18-19.

[8] Mary Pina, Ana Martinez, and Luis Martinez, “Teams in Organizations: A Review on Team Effectiveness,” Team Performance Management 14, no. 1/2 (2008): 7.

[9] Wolfgang Jenewein and Felicitas Morhart, “Navigating Toward Team Success,” Team Performance Management 14, no. 1/2 (2008): 103.

[10] Danilo Sirias, H.B. Karp, and Timothy Brotherton, “Comparing the Levels of Individualism/Collectivism between Baby Boomers and Generation X: Implications for Teamwork,” Management Research News 30, no. 10 (2007): 750.

[11] Ibid., 753.

[12] Stephen Robbins, Organizational Behavior, 10th ed. (Upper Saddle River, NJ: Prentice Hall, 2003), 261.

[13] Galbraith, Downey, and Kates, Designing Dynamic Organizations, 2.

[14] Charles Englehardt and Peter Simmons, “Organizational Flexibility for a Changing World,” Leadership & Organization Development Journal 23, no. 3 (2002): 115.

[15] Ibid., 119.

 

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