Aligning Organizational Design, Structure, Culture, and Strategy

Running head: ORANIZATIONAL DESIGN, STRUCTURE, CULTURE, AND STRATEGY 1

Aligning Organizational Design, Structure, Culture, and Strategy

Alyson M. Klingensmith

Houston Baptist University

ORGANIZATIONAL DESIGN, STRUCTURE, CULTURE, AND STRATEGY 2

Abstract

Organizations use people and resources to coordinate actions and convert inputs into outputs

(Jones, 2013). Successful organizations are dynamic, adaptable, and efficient. Prosperous

companies continually transform and grow to meet the needs of their environment (Jones, 2013).

This paper examines the importance of striking a balance between organizational design,

structure, culture, and strategy to achieve stability and ensure success in a continually evolving

global environment.


Aligning Organizational Design, Structure, Culture, and Strategy

The brevity of technological changes in communications and product development

produces rapidly changing, turbulent, global markets. Turbulent global markets challenge

organizations to maintain their competitive advantage and create value for the stakeholder.

Relatively quick changes in consumer preferences and demand occur with world markets that are

easily accessed through the Internet, providing customers with a plethora of product choices.

Sophisticated buyers expect the best technology for the lowest price. Additionally, mindful

organizations must find ways to adapt to changes in the “way people do business,” since virtual

communication platforms and social media are now necessary to compete in the global

marketplace. Virtual communication platforms boost communication, improve operational

efficiencies, and expand market share. Productive organizations should recognize the need to

adapt their design, structure, culture, and strategies to succeed in rapidly changing, uncertain

business environments. Organizations that do not achieve harmonization within their

environment will eventually fail (Jones, 2013).

Organizational Design

Organizational design is the process a company goes through to balance external market

forces with internal organizational drivers (Jones, 2013). Effective organizations realize that

they cannot design their organization in a vacuum. Designs that balance structural components

with cultural values and corporate goals provide the foundation necessary to achieve value-

creation in rapidly changing markets. Moreover, companies must continually shift their design

and strategies to accommodate internal and external pressures exerted on the organization

(Oliver Wyman Group, 1998).


Organizational Structure

Organizational structure involves control over people’s actions and coordination of

resources (Jones, 2013). Most critical to an organization’s structure is optimization of functional

and authoritative relationships in a turbulent environment. Companies control the organizational

environment via delegation of authority (Jones, 2013). Additionally, companies divide

organizations by function to enable specialization, creativity, and product development. The

design of the organizational structure is key to an organization’s ability to adjust to changes in

competitive markets (Jones, 2013). An unbalanced organizational structure may lead to

organizational inefficiencies (The Bridgespan Group, 2009). A lack of coordination between

units and subunits is likely to result in a disjointed workflow, reduced responsiveness,

unproductive conflict, and a lack of motivation among team members (TBG, 2009). An

organization must, for example, balance vertical and horizontal differentiation in its hierarchical

structure to ensure its effectiveness as well as its ability to adapt to change (Jones, 2013). Jones

(2013) supports this notion through the assertion that, “managers designing an organization have

to make decisions about how much vertical [and horizontal] differentiation to have in the

organization.” (p. 97). A lack of balance between functions will have an impact on

organizational effectiveness. High vertical differentiation may reduce a company’s ability to

adjust quickly to market changes, stifle employee creativity, and reduce employee accountability.

Whereas, high horizontal differentiation may create communication barriers that result in silos

and sub-optimization within the company.

Organizational Culture

Organizational culture involves an organization’s vision of their product in the

marketplace. Therefore, one could argue that corporate culture lays the foundation for


organizational structure and design. Culture molds organizational behavior and defines business

strategies that create a competitive advantage. Jones (2013) asserts the idea that culture is central

to an organization, “a competitor can easily imitate another organization’s structure, but it is very

difficult for a competitor to imitate another organization’s culture, for culture is embedded in the

day to day interactions of functional personnel” (p. 216). Jones’s (2013) statement about

corporate culture is exemplified by Google. Embedded in the tech firm's culture, are innovation

and creativity. Google’s success with innovation and technology is well-known, and thus

attracts some of the highest-performing university graduates and experienced professionals with

a proven track record of creating value with innovative ideas. With a cutting-edge culture in

place, one of Google’s greatest successes is its internet search engine product. Google, is

thought to be the preferred search engine in the market due to its ease of use, presentation of

materials, and ability to search thoroughly and quickly. Google’s success in adapting its search

engines continuously to meet market demand, has enabled it to maintain its competitive edge in

the search engine market. Microsoft is another highly successful tech firm that competes with

Google. Although Microsoft has a similar organizational structure, it is unable to surpass Google

in the search engine market with its product, Bing (Sterling, 2010). Therefore, implying

Microsoft cannot duplicate Google’s innovative culture.

Starbucks Corporation is another organization that successfully uses a highly innovative

corporate culture to position itself as the top provider of coffeehouse restaurants. Starbucks’s

idea, to provide a personalized experience for its customers, meets the demands of a market that

desires superior quality coffee preparations and pastries in a warm, inviting space (Starbucks,

n.d). Additionally, Starbucks’s commitment to its customer base and product has resulted in

worldwide brand recognition. Starbuck’s mission statement supports the coffee chain’s promise


to deliver a personalized, high-quality product, “to inspire and nurture the human spirit – one

person, one cup and one neighborhood at a time” (Starbucks, n.d., p.1). Using a decentralized

approach, Starbucks developed partnerships to support its multi-domestic strategy. Partnerships

have enabled Starbucks to enjoy global success by tailoring its products to the specific needs and

cultures of world markets.

Organizational Strategy

Organizations can maintain stability in the turbulent environment through

implementation of well-developed strategies that align with the overarching values and goals of

the company (Jones, 2013). According to Leigh Richards (n.d.), “business leaders who take the

time to analyze and understand their market, industry, and the external environment can develop

strategies that are most likely to promote business success” (Richards, n.d., p. 1). Central to the

concept of strategy creation, is the idea that organizations must make use of their knowledge and

skill sets to generate value for a particular product or service (Raynor, 2007). For instance, an

organization that chooses to follow a focus strategy may use a core competence of R&D to create

a product or service specifically tailored toward a niche audience (Richards, 2016).

Alternatively, an organization may use a low-cost strategy employing its competencies in

achieving economies of scales, to produce a good or service that appeals to the masses. It is

important to note, companies develop and use core competencies to gain a competitive edge in

the global marketplace (Jones, 2013).

Conclusion

Companies that do not have organizational designs in place, that can quickly and

effectively adapt to rapidly changing global markets, are at risk of failure. Furthermore,


organizations that desire to maintain relevancy in the global marketplace must capitalize on their

core competencies (OWG, 1998). Constantly evolving technological advances, including the use

of virtual platforms for communication and market expansion, demand that an organization

balance its organizational design, structure, culture, and strategy to grow market share and

maintain their competitive edge. Close examination of all organizational elements is necessary

to cultivate business success and add value to the stakeholder. Furthermore, corporate culture

stands out as central to organizational success since culture lays the foundation for organizational

structure and design. Examples of successful organizations that maintain their competitive edge

through outstanding corporate cultures of innovation are Google and Starbucks. Both companies

have built brand recognition, and global success through the development of corporate cultures

that are highly embedded in the company and have not been duplicated by competitors.


References

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http://www.starbucks.com/about-

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Aligning Organizational Design, Structure, Culture, and Strategy