Designing Effective Organizations How To Create Structured Networks

Elsevier

Long Range Planning

Under a Creative Commons license

open access

Abstract

Many companies face market and competitive conditions that have led them to adopt multidimensional, matrix organisation structures. But these matrix structures have often proved difficult for the managers working within them. This article puts forward the concept of a "structured network" as a means of overcoming the problems typically associated with traditional matrix organisations.

In structured networks, the organisational units retain considerable autonomy, but collaborate extensively through voluntary networking between units. The organisation is largely self-managing, but has sufficient structure, process and hierarchy to achieve coordination and implement the corporate strategy. The objective is to obtain the benefits of interdependence that are designed into a typical matrix, but without sacrificing clear responsibilities, managerial initiative and accountability, speed of decision-making and lean hierarchy. To design a structured network, it is necessary to achieve clarity about each unit's role without hemming managers in with too much detail. It is also necessary to support mutual learning without compromising distinctive differences, to defend specialist culture units from domination by mainstream units, to promote cooperation without embarking on unnecessary synergy initiatives, to recognise shared responsibilities without diluting unit accountability, and to encourage the corporate hierarchy to add value without creating redundant overheads and interference. Organisations designed in this way will have enough, but not too much structure.

Michael Goold is a Director of the Ashridge Strategic Management Centre. Previously, he was a Fellow in the Centre for Business Strategy at London Business School, and a Vice President with the Boston Consulting Group. His research interests are concerned with corporate strategy and the management of multi-business companies, and he runs the Centre's programme on Group Level Strategy. His publications include: Designing Effective Organizations: How to create structured networks (Jossey-Bass, 2002), Synergy: Why links between business units often fail and how to make them work (Capstone, 1998), Corporate-Level Strategy: Creating value in the multibusiness company (John Wiley & Sons, 1994), Strategic Control: Milestones for long-term performance (Financial Times /Pitman, 1990) and Strategies and Styles (Blackwells, 1987). Email: [email protected]

Andrew Campbell is a Director of the Ashridge Strategic Management Centre and Visiting Professor at City University. Previously he was a Fellow in the Centre for Business Strategy at the London Business School, and a consultant at McKinsey & Co. He is the co-author of Strategies and Styles, A Sense of Mission, Strategic Synergy, Corporate-Level Strategy, Wake Up & Shake Up Your Company, Breakup!, Core Competency-Based Strategy and Synergy: Why links between business units often fail and how to make them work, and Designing Effective Organizations.