What is the Right Organization Design? By- N. ANAND & RICHARD L. DAFT

ERA 1 • Self Contained Organization

ERA 2 • Horizontal Organization

ERA 3• Hollow,

Virtual & Modular Organization

Objective is to present Key

Developments in

Organization Structure & Design for

greatest effect

ERA 1: Self Contained Organization

Inbound Logistics

ProductionOutboardLogistics

Between1970 to 1980

Rules:1. Grouping of people into

functions/departments2. Reporting Relationships between people

and departments3. Proper co-ordination & Integration of

activities

Functional

Common Functional Grouping

E.g.: Large Govt Orgn

Divisional

Departmental or Divisional

Grouping

E.g.: Aircraft Manufacturer

Matrix Design

Vertical + Horizontal

Combination

E.g.: Nike

Various Forms of Organization Structure

ERA 2: Horizontal Organization After 1980

DESIGN RULES

ORGANIZE

Diminish Differences

Appoint Leaders to

manage

Interaction With

Customers

Outside Expertise

ERA 3 (A): Hollow Organization After 1990

Outsourcing of Various Organizational Processes/work to outside partners

Design Rules:1. Determine all Non –Core

Business Processes2. Get Market Forces to do

them3. Align Process with

Incentive

ERA 3 (B): Modular Organization After 1990

Less Hierarchical (or more "flat"), more decentralized, and more flexible

Outsourcing only product processes

Design Rules:1. Break Products into stand

alone basis2. Design Interface for

Coordination of work3. Outsource to External

Parties for efficiency4. Assembling and Distribution of Product

ERA 3 (C): Virtual Organization After 1990

Competitor 1

Competitor 2

Form New Company to respond to

market opportunities

Design Rules:1. Create Boundaries for each

partner2. Use Technology

3. Each Partner has to use his excellence fully

4. Disband once the opportunity is over

Explore a fleeting market opportunity by partnering with other complementary organizations

ROLE RESPONSIBILITY

Operations

Collaborative

Demands v/s MANAGER1. Get the Right

Partner on the Bus

2. Select Right People for

Organization3. Seek Clarity

not control4. Design Coordination Mechanisms

Managers have to be astute and realistic which leads to competitive advantage and customers with greatest value