Article mintzberg

Topics: Organizational structure, Organization, Management Pages: 16 (8273 words) Published: September 9, 2014
Organizational Dynamics, Vol. 36, No. 4, pp. 329–344, 2007 ß 2007 Elsevier Inc. All rights reserved.

ISSN 0090-2616/$ – see frontmatter

What is the Right
Organization Design?

A start-up company in Florida, called World
Response Group (WRG), developed an unusual woven mat for the horticulture industry that was made from all-natural fibers. Horticulture growers in the U.S. produce
hundreds of millions of potted plants each
year. The product, called SmartGrow, dramatically reduced weed growth in potted plants and simultaneously provided important nutrients – all with no chemicals. SmartGrow raw materials and manufacturing expertise were available in China and India.

As the company grew, the managers and
board members talked frequently about
organization structure. Two schools of
thought emerged. One group wanted to
import raw materials into the U.S. for manufacturing by WRG and thereby have direct control over manufacturing, marketing, and
sales. These functions would be departments within WRG. The second group wanted to import already manufactured
and packaged products from overseas, outsource marketing to an agency, and hire a horticulture distribution company to handle
sales. The second group pushed the concept
that no one within the company would
ever touch the product. Nor would there
be functional departments for manufacturing, marketing, and sales. That discussion of structure within WRG
would not have occurred 30 years ago when
Robert Duncan published his seminal article,
‘‘What is the Right Organization Structure?’’
in Organization Dynamics in 1979. At that
time, organizations were thought to be selfcontained, and structure defined the reporting relationships among internal functional


departments. Duncan’s article provided
important insights about the conditions
under which different internal arrangements
would achieve a company’s mission. His
insights are still referenced in management
textbooks today.
The purpose of this article is to present
key developments in organization structure
and design that have occurred since Duncan’s article and describe when each can be used for greatest effect. We will briefly
review the important structural designs from
30 years ago and then describe key developments since that time. The concepts are organized into three eras, which reflect substantive changes in management thinking from vertical organization to horizontal organizing to open boundaries via outsourcing and partnering.

The first era of organizational design probably took hold in the mid-1800s, and was dominant until the late 1970s. In Era 1, the
ideal organization was self-contained. It had
clear boundaries between it and suppliers,
customers or competitors. Inputs arrived at
the organization’s gate, and after a transformation process, left as a completed product or service. Almost everything that was
required during the transformation process
was supplied internally. Design philosophies from this era emphasized the need to adapt to different environmental and internal contingencies and the ability to control the different parts of the organization


through reporting relationships in a vertical
chain of command.
The structure of self-contained organizations can be thought of as: (1) the grouping of people into functions or departments; (2) the
reporting relationships among people and
departments; and (3) the systems to ensure
coordination and integration of activities
both horizontally and vertically. The structures of this era, including functional, division, and matrix designs, rely largely on the vertical hierarchy and chain of command to
define departmental groupings and reporting relationships.

In a functional structure, activities are
grouped together by common function from
the bottom...

Bibliography: Tree Analysis Provides the Answer,’’ Organizational Dynamics, 1979 (winter), 59–80,
provides a brief overview of functional, divisional, and matrix structures
Clegg’s book Modern Organizations (Sage,
1990) traces the evolution from traditional
Strategy and Structure (MIT Press, 1962) by
Alfred Chandler
Galbraith’s Designing Complex Organizations
(Addison-Wesley, 1973) provides a brief yet
In their book Reengineering the Corporation (HarperBusiness, 1993) Michael Hammer and James Champy discuss how
reengineering horizontal processes can cut
Cherns in ‘‘The Principles of Sociotechnical
Designs,’’ Human Relations, 1976, 29, 783–792.
Press, 1999) is a comprehensive exposition
of that design option
Mary Walton’s Car (W.W. Norton, 1999).
growing trend in outsourcing. The key principles of the hollow form are summarized by
Simon Domberger in The Contracting Organization (Oxford University Press, 1998)
(MIT Press, 2000). Academic articles discussing the key features of the modular form
include the following: Ron Sanchez and
Organizational Design,’’ Strategic Management Journal, 1996, 17, 63–76; and Melissa
Use of Modular Organizational Forms: An
Industry Level Analysis,’’ Academy of Management Journal, 2001, 44, 1149–1168
their book Competing on the Edge (Harvard
Business School Press, 1998)
(Simon & Schuster, 1998); David Nadler and
Michael Tushman’s Competing by Design
(Oxford, 1997); Henk Volbreda’s Building
the Flexible Firm (Oxford, 1998); Jay Galbraith’s Designing Organizations (Jossey-Bass,
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