Business modifications take place every day in terms of rapid technological progress and globalization. In response, most of the companies need to pivot, develop, or revise their strategies. But it is impossible to reach expected effectiveness without knowing organizational theory perfectly. Two more components should be considered when carrying out a strategy: design and structure. Along with properly chosen strategy, these elements guarantee greater organizational effectiveness even in flexible environment.
Structure stands for personnel allocation and distribution of responsibilities between all employees. Organization strategy cannot be implemented with different teams working as a whole. It means that despite HR, IT, content, accounting, and other departments may have various secondary goals, their main purpose is the same. And this is achieving organizational effectiveness. Matching structure, design, and strategy is a crucial step on a way to improved overall performance. That is why all departments should function as a single mechanism. In its turn, organizational structure has a direct impact on its design. Design is also managed and controlled by organizational authorities who make sure the activities taken by each employee contribute to the general goals. So, wrong structure can lead to the design failure. Only correctly chosen leaders can assign duties and set valuable goals.
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“The most powerful lever of organization is leadership.” (Burke and Litwin, 1992:524). It’s up to the leaders to cause modifications in other levers that involve all three elements discussed in this paper. After handling strategy and structure, it is important to decide on the organizational design based on the reward systems. Design can show whether strategy and structure were selected wisely. In addition, a lot depends on the type of selected design. Researches show that companies with “ambidextrous design usually perform at a higher level than organizations with functional, cross-functional, and spinout designs” (Tushman et al., 2010: 1331).
To realize the importance of matching all three elements together, it is important to take a look at how one element affects another. First, design influences structure. Organization can fix or completely redesign the structure to reply to the progressing environment. Then, structure monitors organizational behavior, culture; this system makes it possible for the staff to train and develop in order to correspond to the shaping environment. At last, design has to be selected with respect to the chosen strategy as well as vision, mission, and goals. It has to adapt organization to all new external or internal changes. As a rule, these changes are associated with globalization and technological progress. Correctly chosen strategy, design, and organizational structure help to establish competitive advantage. Design and structure cannot exist without strategy as this element stands for the decisions and actions required for the increased effectiveness. To come up with the proper strategy, it is necessary to know how to “utilize a diverse workforce to reach better decision making and effectiveness” (Jones, 2013:1-21). This explains the connection between structure and strategy.
Another way to prove the importance of matching strategy, structure, and design is through providing examples of what can happen in case even one of the elements fails to meet the expectations. While wrong design slows down the process of value creation and limits resources, poor structure may harm the culture, and failing strategy will not result into organizational effectiveness.
At the same time, the question may arise why any changes are required at all. Without obeying the rules of all-time shaping market, it would be impossible for organizations to remain profitable. Changes are necessary in order to catch up with the latest industry trends and stay on the wave. That is why it is important to reassign responsibilities and choose new leaders from time to time. For instance, while management skills were enough to lead the corporation years ago, now IT and financial skills are crucial for most of the leaders. Besides, when one’s plan does not work, another’s strategy should be tested. That is how the structure changes.
Efficiency, speed, and innovation are three basic components of organizational success. Effectiveness can be measured by profitability and product or service demand as well. Thus, strategy, design, and structure have to focus on achieving these success factors.
To conclude, it is impossible to have properly distributed roles (structure) without correct template for increased productivity and communication (design), which is influenced by the mission and goals (strategy). Moreover, this match is important for the balance between centralization and decentralization, differentiation and integration, etc. In terms of global business model, all three elements are also needed to adapt the organization to rapidly changing environment.
References
Burke, W., and Litwin, G. (1992). A Causal Model of Organizational Performance and Change . Journal of Management 18(3): 523–545.
Jones, G. (2013). Organizational Theory, Design, and Change . Pearson Education, Inc., 7th Ed.
Tushman, M., Smith, W., Wood, R., Westerman, G., and O’Reilly, C. (2010). Organizational Designs and Innovation Streams . Industrial and Corporate Change 19(5): 1331–1366.
