Organizational Design and Culture Lecture Notes

Introduction

• Contrast of Environments
  • Apple Store: Modern, innovative, customer-focused.
  • Traditional Law Firm: Formal, prestigious, focused on expertise.
• Purpose
  • Explore organizational design and culture.
  • Understand how design choices shape environments and experiences.

Core Components

1. Organizational Design
2. Organizational Culture
3. Climate

Organizational Design

• Building Blocks
  • Formalization: Degree of job role standardization.
    • Pros: Easier training, consistency, clarity in roles.
    • Examples: Retail, aviation.
  • Centralization: Decision-making authority.
    • Centralized: Decisions at top (e.g., military, public service).
    • Decentralized: Distributed decision-making (e.g., tech startups).
  • Departmentalization: Role grouping.
    • Functional: By job function (e.g., HR, sales).
    • Product-based: By product/service.
    • Customer-based: By customer group.
    • Geographic: By location.
  • Span of Control: Managerial reach.
    • Wide span: Many report to one manager (e.g., tech startups).
    • Narrow span: Few report to one manager (e.g., banks).

Models of Organizational Design

• Mechanistic Model
  • High specialization, formality, centralized decision-making.
  • Example: Government, military.
• Organic Model
  • Fluid structure, wide spans of control, shared decision-making.
  • Example: Startups, tech companies.

Advantages and Challenges

• Organic Designs
  • Adaptability, innovation, higher job satisfaction.
  • Not always suitable (e.g., military context).
• Mechanistic Designs
  • Prone to counterproductive behaviors, dissatisfaction.

Influencing Factors

• Core Strategy
  • Innovation strategy (e.g., Apple).
  • Cost minimization (e.g., Bunnings Warehouse).
  • Imitation strategy (e.g., Aldi).
• Organization's Size
  • Smaller, newer companies tend to be organic.
  • Larger, established companies become more mechanistic.
• Technology
  • Routine tasks favor mechanistic designs.
  • Complex, evolving tasks favor organic designs.
• Environmental Factors
  • Complexity and unpredictability often lead to mechanistic designs.

Conclusion

• Organizational design is influenced by multiple factors including strategy, size, technology, and external environment.
• A balance of mechanistic and organic elements can be beneficial depending on the context.