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So what is Organisation Design?
Management / 7 August 2015

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Nils Stieglitz teaches strategic management and organisation design. His research is mainly concerned with strategic decision-making, managerial risk-taking, and organisational learning. He has published in Strategic Management Journal, Advances in Strategic Management, Journal of Socio-Economics, and Journal of Development Studies and his research is forthcoming in the Organisation Science and Strategic Management Journal.

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In running a restaurant, for example, some people know how to cook, others understand how to treat guests, while a third group of people might be excellent at accounting and doing taxes. All these people know and are interested in different, often conflicting things, but they need to work together seamlessly to make a restaurant successful. This is where organisation design comes in.

Organisation design shapes how groups of people get the job done – how they work together to create, produce, and sell goods and services. Organisations are social systems of integrated action among individuals whose interests, information, and knowledge differ. Organisation design provides the framework for the delicate conversion of conflict into collaboration, the mobiliszation of resources and effort toward common goals, and coordination of action that facilitates the survival and success of an organisation and its members.

  1. First, organisation design establishes the jobs, roles, and responsibilities of its members. Who takes the order, who suggests the wine, who grills the fish, and who prepares the sauce? Having established these expert roles, organisation design needs to establish how they coordinate their actions so that the right meals show up at the right time at the right table with the right quality. And how to handle special requests – or situations in which things do not quite work out as intended?
  2. Second, organisation design needs to motivate its members to cooperate and to act in the collective interest and not to free ride on the effort of others. Often, this means that design must not just define what the job is – but also what it means to get the job done well and then how to reward good performance.
  3. Finally, organisation design helps organisation to maintain a balance between routine and innovation. A restaurant offering the same menu day in day out becomes very competent but might quickly find its customers (and cooks) getting tired of it. In contrast, a restaurant experimenting with new culinary creations, beverages, and ways of treating customers every day often finds itself without competence and customers.

Organisation Design Issues

These organisation design issues –

  • coordination
  • cooperation
  • competence

are often easy to resolve for small, low-tech restaurants – but even there large differences exist when you contrast a McDonald’s with a world class restaurant such as NOMA. Organisation design becomes more complex when you consider companies such as Volkswagen, with more than half a million employees worldwide.

And organisation design today becomes more challenging as digital technologies allow for new forms of collaboration that go beyond the traditional hierarchical firm.

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