The Role of Organizational Design in 21st Century Organizations

How we understand organizational design is in the midst of radical change. Just as the industrial revolution in England and the Unites States changed predominantly agricultural societies to urban societies forever, so is the availability of knowledge markets changing the industrial landscape.

Defined, design blends plan with a proposal for a look or function. Design is also the art or action resulting in conception of a plan or idea. Design, in light of this definition, presumes structure in a physical sense. However, design is not a word that means specifically structure. One origin of design comes from Latin that means designate. A designation includes such meanings as an appointment to a position, an assignment of status, or an ascribed meaning. If we ascribe meaning using ascribe as a transitive verb, we enter the realm of cause and effect.

History supports the lure of industry pulling large population groups away from farming. Industry made the growth of cities possible. Industry provided job security over the long term that farming did not. Industry relied on physical structure, command and control over generally uneducated workers. Industry supported the wealth of nations. These multiple causes had their multiple effects on what we know as organizational design. Industrial age organizational design employed strict hierarchy, workers delivered only product and the boss ruled supreme.

To search for the spark that caused the radical shift away from industry, one may find it with a small group of professors and students at Stanford University who sent the first binary message from one computer to another over a wire. Now we know that they created not only a spark but a firestorm that has not subsided and continues to burn on a global level. As a consequence, not only do we now have virtually instantaneous connections to people everywhere, but work no longer dependents on structural design. Therefore, this paper looks at organizational design in 21st century business operations with a focus on design function and its role in the changing structure.

This discussion, while acknowledging that physical infrastructure is important, suggests that traditional brick and mortar structure does not necessarily provide the best environment for accomplishing work. In addition, this discussion accepts an operational design including leadership and management hierarchies but in roles that do not stifle innovation or idea generation.

21st Century Organization

Gates (1995) observed that business now exists in an information age. Bryan and Joyce (2005) cite Peter Drucker as coining the phrase “knowledge worker” about 50 years ago. Gates and Drucker share a common vision for contemporary business and of 21st century workers. Their shared vision is of professional employees who are knowledge generators rather than commodity or capital generators.

Already, healthcare, pharmaceuticals, and media and entertainment industries find over 25 percent of their workforce engaged in knowledge generation, idea generation, and innovation. Professional knowledge workers share in the responsibility of generating the competitive edge of big enterprise.

Bryan and Joyce (2005) report several statistics reinforcing how professionals experience interconnection. They cite that many large national and global organizations may employ as many as 10,000 professional knowledge generators within their corporations. These people may have as many as 50 million bilateral relationships. From these numbers, one can make out that 21st century workers do not perform in a traditional vertical or linear organizational design.

Regard also another measure of professional interconnectivity. In 1998, the volume of corporate email was about 1.8 billion messages a day. While it is hard to imagine 1.8 billion emails a day, by 2004, the volume was up to and beyond 17 billion corporate email messages a day. That is about a 944 percent increase in six years. Measure the email volume increase with the number of bilateral relationships among professional workers and it becomes clearer that information age knowledge workers are able to share large amounts of information over time and space with aplomb.

The new organizational design recognizes the value of people and their capacity to generate ideas. Nadler and Tushman (1997) make a very succinct point about organizational design and capacity for workers to interconnect internally and externally.

Uncontrolled by geography, physical plants, travel times, and interminable delays in getting the right information to the right people, organizations have been freed to forge new relationships with customers, supplier, and partners (pg. 213).

The role of organizational design in contemporary 21st century corporations is to streamline and simplify vertical and linear structure. Traditional lines of supervision tend to create walls or silos, which block free movement of knowledge and block bilateral relationships. General Electric Corporation pre Jack Welch is an example of silo structures preventing communication between business units. During and post the Welch era GE has become leaner, more competitive, and shallower in vertical structure.

The role of 21st century organizational design is to stimulate the intangibles of knowledge generation. Business acknowledges talent markets and formal networks that create and exchange knowledge. Within that design, business leaders have the role of both developing intellectual property and developing the individuals who have those assets. In this view, leaders facilitate knowledge generation rather than supervise a work force.

In the 21st century organization, the role of design allows operational overlays. Within organizational knowledge markets, workers have networks among other knowledge markets that facilitate free exchange of information and collaboration among professionals. However, these overlays and networks do not exist naturally; organizations must take action to put them into place.

In 21st century organizations, leaders have a responsibility toward knowledge networks; granting them resources necessary to develop common capabilities, develop incentives for membership, as well as standards and protocols for sharing information. These networks provide workers with an opportunity to inspire, self-direct, and support the common interest of the group.

Discussion

Design of the 21st century organization expands beyond physical infrastructure into a network-based knowledge generating professional work force. They do not resemble post World War II organizations of neatly aligned desks and workers supplying their specific piece of the product. Workers in this century may not have an office or desk. In the age of information in which knowledge is the product, working professionals use technology that facilitates working where they are not where an office is.

The paradox, according to Handy (1995), is that big organizations need to think small even when operating globally. Small autonomous units are more agile and mobile. They are better able to understand their strengths, weaknesses, opportunities and threats (SWOT). Small units of knowledge professionals reach customers faster and more personably.

Nadler and Tushman (1997) share insight the small subunits of have more control over their resources. Because of size, the subunit has a better reward system, better work environments, and individualized job design. Camprass and Farncombe (2004) go deeper by calling small units “agile atoms, which are innovation and relationship driven” (pgs. 61-62).

The organization of the 21st century does not resemble organizations with vertical and linear design. Rather, their appearance is of fluid and dynamic work groups similar to cross-functional work teams. Each group will have assigned membership; however, groups will have the ability to draw temporary members into the group for special projects and share their resources with other groups in a fluid environment. Having the ability to interact and overlap across operational lines, results in leaner less vertically and linearly oriented design.

In this century, organizations still operate by creating and sharing vision, having a mission and set goals. However, they must understand how to maintain energy within dispersed work groups and among separate group members. To achieve goals, 21st century organizations need focus on goals using mental energy, physical energy, and spiritual energy (LaFasto and Larson, 2001).

  • Mental energy – having creative people who join their ideas for goal achievement.
  • Physical energy – assuring everyone on the team performs.
  • Spiritual energy – having collective esprit, encourage everyone to have a voice, eliminate fear of failure, have members willing to rock the boat, establish an atmosphere of cooperation and collaboration.

Therefore, as organizations evolve, so does the role of design. The role of design in 21st century organizations places value of the system as though it is an organism. Moorman and Kreitman (1997) explain this role as a “…wise body [that] does not put its parts in opposition or competition with each other. … Nor does it require that every body part meet the same standards.” It is interesting to note that their depiction of the role of organization as an organism flows smoothly from the Apostle Paul’s 1st Corinthians 12:8-26 explaining how the Church is made up of many parts of the whole body.

The role of organizational design as an organism, therefore, suggests adaptivity rather than adaptation. This design allows for collective access to knowledge and memory, but, even more importantly, ability to tap into knowledge and memory to facilitate thinking, coordinate knowledge and memory, and share an ability to evaluate results of new behavior.

Conclusion

The paradox of design in 21st century organizations combines big operations with small agile subunits. Organizational design is not one of static buildings and rows or desks with people acting upon only one part of a product. The new role for organizational design incorporates skilled knowledge workers whose product is information and information sharing across broad spans.

The design role is one that recognizes the value of each part as a contributor. Like in the natural world of each plant and animal contributing to the environment, small subunits take from and provide to each other for the greater organizational good and the greater global good.

Organizations capable of surrendering old design roles for new design roles release their hold on workers. New professional information age workers generate knowledge products in free flowing networks unimpeded by work center silos. Statistics presented in this paper only scratch the surface of scientific evidence supporting boundaryless work places. The role of organizational design in the 21st century turns loose the reigns of control allowing professional knowledge workers to generate networks of sharing across time and space. In this century, a worker enjoying the sun in Luxemburg City Park may have a work partner in Tokyo. Instant global communications means they can work seamlessly, together, a world apart.