- Sheet
- S03 of 12
- Part
- Leading organizations
Leading through design
There is no best structure, only a fit between structure, strategy, people and culture.
Readings
Michael Goold and Andrew Campbell · Harvard Business Review, 2002
Do You Have a Well-Designed Organization?
Run any design through nine tests: four on fit, five on good design.
- Fit tests: market advantage, parenting advantage, people, and feasibility.
- Good design tests: specialist cultures, difficult links, redundant hierarchy, accountability, and flexibility.
- Most structures grow by politics and accident. The tests make design a deliberate choice.
Nadler and Tushman, via Mercer Delta · Course file, background
The congruence model
Performance comes from fit between the work, the people, the formal organization and the informal culture.
- Inputs (environment, resources, history) feed a strategy.
- Four parts turn strategy into output: work, people, formal organization, informal organization.
- The fit between parts matters more than any one part. A great engine in the wrong car still fails.
See it
Four structures, one company
Lab 03.AGrouped by expertise. Deep skill, efficient, but slow when work crosses functions.
Bars are an illustrative comparison to support discussion, not measured data.
Congruence model: tap a pair to test the fit
Lab 03.BFit questions from the Mercer Delta congruence model paper, Figure 5.
Run your own team through the nine tests
Lab 03.CEach failed test is a design problem worth naming.
Frameworks
Nine tests of organization design
Goold and Campbell
Four fit tests, five good design tests.
| Market advantage | Does the design put enough attention on the sources of advantage in each market? |
| Parenting advantage | Does it help the corporate center add value? |
| People | Does it fit the strengths and limits of the people you have? |
| Feasibility | Does it work within your real constraints, like law, IT and stakeholders? |
| Specialist cultures | Does it protect units that need a culture different from the rest? |
| Difficult links | Does it give a clear answer for coordination that will not happen on its own? |
| Redundant hierarchy | Does every layer add value? |
| Accountability | Can each unit be held to clear measures? |
| Flexibility | Can it adapt and allow new strategies to emerge? |
Congruence model
Nadler and Tushman
Performance comes from fit between work, people, formal and informal organization.
| Inputs | Environment, resources, history |
| Strategy | Where and how to compete |
| Work | The tasks that must get done |
| People | Skills, needs, expectations |
| Formal organization | Structure, systems, processes |
| Informal organization | Culture, norms, relationships |
| Output | System, unit and individual performance |
Four basic structures
Course videos
Each structure optimizes one thing and pays for it somewhere else.
| Functional | Grouped by expertise. Deep skill and efficiency. Slow across functions. |
| Divisional | Grouped by product, region or customer. Focus and speed per market. Duplicated work. |
| Matrix | Two bosses: function and product. Balances two priorities. Confusing, slow, political. |
| Flat or network | Few layers, teams form around work. Fast and adaptive. Unclear authority as it grows. |
Check yourself
Think it through
- P1If you designed your team from scratch tomorrow, what would you change first, and which test does it fail today?
- P2Where is the informal organization doing work the formal one cannot?