This document discusses organization design and factors for successful design. It notes that a successful design will control business processes, assign accountability, enable rapid responses, deliver on promises, and empower employees. Key factors include having a value-adding corporate center, effective shared services, strong collaboration support, agile ways of working, a flat management structure with frontline focus, and clearly delineated profit and loss responsibilities. Common mistakes in design are not changing structure when strategy changes, having efficiency-focused functions oversee effectiveness-focused ones, and having short-term functions oversee long-term ones. Signs of a successful design include resources moving quickly as needed, ability to adapt to changes, efficient work, the right information reaching the right people

1. SUCCESS AND FAILURES IN
ORGANIZATION DESIGN
BY
S.NITIN PAUL WILLIAMS
M.B.A. FIRST YEAR ; SECTION –A
REG NO: RA1952001020003

2. An Effective Organization Design
SUCCESSFUL ORGANIZATION DESIGN WILL
Control business processes
Assign accountability
Enable rapid responses to opportunities and
threats
Deliver on promises
Empower employees to make decisions
Beat out the competition.

3. When you have a complex business, create an
organizational structure divided into multiple departments
or functions.
If your industry requires a great deal of formality, design
your organization with a clear hierarchy.
If your employees have extensive experience, enable them
to participate in influencing decisions.
To establish successful communication, allow personnel at
every level to flow information through the organization.
Create a functional, divisional or other reporting structure
based on your type of environment.
To have success in Organization Design

4. 6 CRITICAL SUCCESS FACTORS OF ORGANIZATIONAL DESIGN
Organizations which employed 6 Key Factors had significant growth and higher profits
 A Value adding Corporate Center
Effective use of shared services
Strong support for people and collaboration
Agile ways of Working
A flat Management structure with a strong frontline focus
Clearly Delineated profit and Loss (P& L) responsibilities

6. Success - Functional Structure
 In a functional structure, each separate department is led by an executive who reports to the
chief executive officer.
 If you operate in a stable business environment that won’t change quickly, this model works
well.
 Additionally, if your company produces a small number of similar products, this division
makes work more efficient.
 To be most successful, leaders in this type of structure need to balance the needs of each
function. Otherwise, one function may dominate the other functions, causing conflict.
Success - Divisional Structure
 Companies using a divisional organization consist of multiple divisions, each led by a
manager who reports to the chief executive officer.
 Each division is accountable for its own performance.
 Within each division, business is structured into functional units. This may result in
redundant departments and result in inefficiency.
 Small businesses may start with a simple structure but adopt a divisional structure to
be more successful.

8. Fundamental principles point the way for leaders whose strategies require a
different kind of organization
1. Declare amnesty for the past: Organization design should start with corporate self-reflection.
 What is your sense of purpose?
 How will you make a difference for your clients, employees, and investors?
 What will set you apart from others, now and in the future?
 What differentiating capabilities will allow you to deliver your value proposition over the next two to five years?
2. Design with “DNA”: Organization design can seem unnecessarily complex; the right framework, however, can help
you decode and prioritize the necessary elements.
We have identified eight universal building blocks that are relevant to any company, regardless of industry, geography, or
business model.
These building blocks will be the elements you put together for your design (see Exhibit 1).
3. Fix the structure last, not first: Company leaders know that their current org chart doesn’t necessarily capture the way
things get done — it’s at best a vague approximation.
Yet they still may fall into a common trap: thinking that changing their organization’s structure will address their business’s
problems.
A company hierarchy, particularly when changes in the org chart are made in isolation from other changes, tends to revert to
its earlier equilibrium.

10. 4. Make the most of top talent: Talent is a critical but often overlooked factor when it comes to org design.
You might assume that the personalities and capabilities of existing executive team members won’t affect the
design much.
But in reality, you need to design positions to make the most of the strengths of the people who will occupy them.
In other words, consider the technical skills and managerial acumen of key people
Make sure those leaders are equipped to foster the collaboration and empowerment needed from people below
them.
5. Focus on what you can control: Make a list of the things that hold your organization back: the scarcities (things
you consistently find in short supply) and constraints (things that consistently slow you down). Taking stock of
real-world limitations helps ensure that you can execute and sustain the new organization design.
6. Benchmark sparingly, if at all: One common misstep is looking for best practices. In theory, it can be helpful to
track what competitors are doing, if only to help you optimize your own design or uncover issues requiring
attention. But in practice, this approach has a couple of problems.
First, it ignores your organization’s unique capabilities system — the strengths that only your organization has,
which produces results that others can’t match.
Second, even if you share the same strategy as a competitor, who’s to say that its organization is a good fit with its
strategy? If your competitor has a different value proposition or capabilities system than you do, using it as a
comparison for your own performance will be a mistake.

11. 7.Promote accountability. Design your organization so that it’s
easy for people to be accountable for their part of the work
without being micromanaged. Make sure that decision rights are
clear and that information flows rapidly and clearly from the
executive committee to business units, functions, and
departments. They are about twice as powerful as an
organization’s structure or its motivators (see Exhibit 2).
8. Let the “lines and boxes” fit your company’s purpose: For
every company, there is an optimal pattern of hierarchical
relationship — a golden mean.
9. Accentuate the informal: Formal elements like structure and
information are attractive to companies because they’re
tangible. Many companies reassign decision rights, rework the
org chart, or set up knowledge-sharing systems.
10. Build on your strengths: Overhauling the organization is one
of the hardest things ; there are always strengths to build on in
existing practices and in the culture.

12. In structure, the central component of organization design with the
most effective structures are those that:
 Eliminate bureaucracy
 Simplify the environment, making it easy to work in
 Promote cooperation and exchange of ideas and information
 Put the best talent where the action is
 Establish systems for the seamless sharing of knowledge.

13. The 5 Classic Mistakes/Failures in Organization Design
Mistake #1: The strategy changes but the structure does not
Every time the strategy changes — including when there’s a shift to a new stage of the execution lifecycle — you’ll need to
re-evaluate and change to the structure. The classic mistake made in restructuring is that the new form of the organization
follows the old one to a large degree.
Mistake #2: Functions focused on effectiveness report to functions focused on efficiency
Efficiency will always tend to overpower effectiveness. Because of this, you’ll never want to have functions focused on
effectiveness (sales, marketing, people development, account management, and strategy) reporting to functions focused on
efficiency (operations, quality control, administration, and customer service).
Mistake #3: Functions focused on long-range development report to functions focused on short-range results
Just as efficiency overpowers effectiveness, the demands of today always overpower the needs of tomorrow. That’s why the
pressure you feel to do the daily work keeps you from spending as much time with your family as you want to. It’s why the
pressure to hit this quarter’s numbers makes it so hard to maintain your exercise regime. And it’s why you never want to
have functions that are focused on long-range development (branding, strategy, R&D, people development, etc.) reporting
to functions focused on driving daily results (sales, running current marketing campaigns, administration, operations, etc.).

14. Mistake #4: Not balancing the need for autonomy vs. the need for control
The autonomy to sell and meet customer needs should always take precedence in the structure — for without
sales and repeat sales the organization will quickly cease to exist. At the same time, the organization must exercise
certain controls to protect itself from systemic harm (the kind of harm that can destroy the entire organization).
Notice that there is an inherent and natural conflict between autonomy and control. One needs freedom to
produce results, the other needs to regulate for greater efficiencies. The design principle here is that as much
autonomy as possible should be given to those closest to the customer (functions like sales and account
management) while the ability to control for systemic risk (functions like accounting, legal, and HR) should be as
centralized as possible.
Mistake #5: Having the wrong people in the right functions
Your structure is only as good as the people operating within it and how well they’re matched to their jobs. Every
function has a group of activities it must perform. At their core, these activities can be understood as expressing
PSIU requirements. Every person has a natural style. It’s self-evident that when there’s close alignment between
job requirements and an individual’s style and experience, and assuming they’re a #1 Team Leader in the Vision
and Values matrix, then they’ll perform at a high level.

15. Typical warning signs that call for an organizational redesign include:
• Slowdown/difficulty in meeting business plan targets
• Disconnects in key processes as they flow across different departments
or work groups
• High levels of conflict within and between organizational units
• Difficulty obtaining and sharing resources across the organization
• Lengthy, cumbersome decision-making processes
• Metrics are hard to define or overly complex & Productivity declines

16. Three organization design tips
1.Develop a statement of strategic intent: The organization needs to understand
what the key strategic foci are, both internally and externally. The statement
needs to be involved in the leadership team and others in the organization, and
then it must develop a process to ensure that this statement is communicated
throughout the organization and is clearly understood.
2.Create the right integration mechanisms to align the product structure with
overall business objectives
3.Don’t expect perfection…no design is perfect…provide some latitude for
adapting to changes that emerge during the design process. Over time, there will
be more changes, creating a healthy organization that remains agile and flexible.
After all, organizations are dynamic systems.

18. How do you know an organization design is successful?
There are clear indicators for measuring success of organization design
efforts. Here are a few of the results-based indicators that may be
found as early as three months after a major redesign:
 The company’s resources move quickly when needed.
 Your business is able to adapt to changes in market conditions
quickly,
 without creating a feeling of chaos to employees and suppliers.
 Work is getting done efficiently – without rework, excessive reviews.
 The right information is getting to the right people.
 True bottom-line results indicators – achievement of revenue, and
finally profit targets - may appear a year or more after the redesign.

19. Summary of Organization Design
To recap, design controls behavior. When an organization’s design is misaligned, its
resistance to change will be great and its execution will be slow. The most basic of
these is inertia, through which companies get stuck in old ways of doing things.
When restructuring your organization, there are some classic mistakes to avoid.
First, always redesign the structure whenever you change the strategy or shift to a
new lifecycle stage (do this even if there are no personnel changes).
Second, avoid placing efficiency-based functions such as operations or quality
control over effectiveness-based functions such as R&D, strategy, and training.
Third, avoid giving short-range functions like Sales, Operations, and Engineering
power over long-range functions like Marketing, R&D, and People Development.
Fourth, distinguish between the need to decentralize autonomy and centralize
control and structure the organization accordingly.
Finally, avoid placing the wrong style of manager within the new structural role
simply because that’s the past precedent. Changing structures can be really hard
because there’s so much past precedent.

20. Thanks & Regards
BY
S.NITIN PAUL WILLIAMS
M.B.A. FIRST YEAR ; SECTION –A
REG NO: RA1952001020003