Two Organization Design

Approaches

1
 Mechanistic and Organic Forms
• Tasks are specialized. • Employees contribute to
the common task of the
• Tasks are rigidly defined. department.
• Strict hierarchy of • Tasks are adjusted and
authority and control. redefined through
teamwork.
• Knowledge and control of
tasks are centralized. • Less hierarchy of authority
and control.
• Communication is vertical. • Knowledge and control of
tasks are located anywhere
in the organization.
• Communication is
horizontal.
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Framework for Assessing Environmental Uncertainty

© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Contingency Framework for Uncertainty and Organizational
Responses

© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Strategy: Low-cost Leadership

Organization Design:
• Efficiency orientation; strong central authority; tight cost
control, with frequent, detailed control reports
• Standard operating procedures
• Highly efficient procurement and distribution systems
• Close supervision; routine tasks; limited employee
empowerment

Example: any established mass-selling product of a firm

Strategy: Differentiation

Organization Design:
• Learning orientation; acts in a flexible, loosely knit way, with strong
horizontal coordination
• Strong capacity in research
• Values and builds in mechanisms for customer intimacy
• Rewards employee creativity, risk taking, and innovation

Example: a range of products at different prices and features

(automobile)
Strategy: Prospector

Organization Design:
• Learning orientation; flexible, fluid, decentralized structure
• Strong capability in research

Example: Start-up firms in early stages

Strategy: Defender

Organizational Design:
• Efficiency orientation; centralized authority; tight cost
control
• Emphasis on production efficiency; low overhead
• Close supervision; little employee empowerment

Example: Large firms with established stable products/offers

(Maruti-Suzuki / Large Departmental Stores)
Strategy: Analyzer

Organization Design:
• Balances efficiency and learning; tight cost control with flexibility and
adaptability
• Efficient production for stable product lines; emphasis on creativity;
risk-taking for innovation

Example: Pharma firm (with OTC and life-saving products)

Strategy: Reactor

Organizational Design:
• No clear organizational approach; design
characteristics may shift abruptly, depending on
current needs

Example: a struggling start-up venture / a large

organization / unit in chronic financial distress
 Takeaway Points…
• Mechanistic organizations : efficiency (simple-stable)
• Organismic organizations: innovation (complex-unstable)
• Different types of players are found in an industry
• Apple, Samsung, Lenovo, Motorola, Xiaomi
• Different industries develop unique organizations
• Tesla, Ikea, Uber, Salesforce

• Zeta shouldn’t become Vega

• Identify niche / premium segment
• Operate at a premium price as a unique service provider
• Multiple teams should develop on different innovation projects

• Zeta and Vega can complement each other within the same organization
• R&D unit vs production unit
• NPD vs established product divisions
• Gmail/ Google search engine vs Google earbuds/doorbell/smart-lock/security camera