Designing Your Organization

The Authors AMY KATES is principal partner with Downey Kates Associates, an organization design and development consulting firm located in New York City. JAY R. GALBRAITH is professor emeritus at the International Institute for Management Development in Lausanne, Switzerland.

• Decision Tools Included on the CD-ROM ixIntroduction xiThe Authors xv1 Fundamentals of Organization Design 1The Star ModelTM: A Framework for Decision Making 2Strategy 5Organizational Capabilities: Translating Strategy into Design Criteria 6Structure 8Processes 16Rewards 21People 22Design Principles 23Requisite Complexity 23Complementary Sets of Choices 23Coherence, Not Uniformity 24Active Leadership 24Reconfigurability 24Evolve, Do Not Install 24Start with the Lightest Coordinating Mechanism 25Make Interfaces Clear 25Organize Rather Than Reorganize 252 Designing Around the Customer 27Customer-Centric Strategies 28What Is Customer-Centric? 28Strategy 29Structure 29Process 30Rewards 30People 30The Drive Toward Customer-Centricity 31Customer-Centric Strategies 33Customer Profitability and Segmentation 36Customer-Centric Organizations 38Strategy Locator: How Customer-Centric Do You Need to Be? 38Customer-Centric Capabilities 41Customer-Centric Light 42Customer-Centric Medium 49Customer-Centric Intensive 573 Organizing Across Borders 69Levels of International Strategy 71Level 1: Export 71Level 2: Partner 72Level 3: Geographic 73Level 4: Multidimensional Network 73Level 5: Transnational 73Design Considerations: Geographic 74Geographic Example: Cemex 76Structure 76Processes 83Rewards 87People 87Design Considerations: Multidimensional Network 89Strategy 90Structure 91Processes 95Rewards 100People 101Design Considerations: Transnational 103Strategy 104Structure 104Processes 105Rewards 107People 1074 Making a Matrix Work 109What Is a Matrix? 110Strategic Reasons to Use a Matrix 112Challenges of a Matrix 113Matrix Design 116Structure 116Processes 126Rewards 134People 1375 Solving the Centralization—Decentralization Dilemma 141Corporate Center Strategy 143Understanding the Business Portfolio 144Portfolio Diversity 145Organizational Implications of the Business Portfolio Strategy 147Role of the Corporate Center 149Size of Corporate Staff 151Centralization and Decentralization 152Definitions 152Strategic Reasons for Centralization 154Strategic Reasons for Decentralization 156Predictable Problems of Centralization 158Predictable Problems of Decentralization 160Making an Explicit Choice 161Getting the Best of Both: A Balancing Act 163Structure 165Processes 167Rewards 171People 1716 Organizing for Innovation 173Innovation Strategies 175Sustaining Innovation 176Breakthrough Innovation 176Innovation Capabilities 178Innovation Process 178Portfolio Management 180Balancing Separation and Linkage 180Designing for Breakthrough Innovation 181MeadWestvaco Specialty Chemicals Division 182Structure 184Processes 190Rewards 196People 1997 Conclusion 203Appendix: Decision Tools 207Bibliography 245Index 249How to Use the CD-ROM 255