With this article I want to introduce the reader to the basic concepts of organizational design and discuss the importance of Rapid Application Developments platforms in the Network organization paradigm. This article uses organizational design theory to shed light on the importance of RAD platforms in a network structure. Organizational design professionals seek to most effectively achieve an organization’s vision. Examples of this are maximizing an R&D department’s innovative capacity, reducing production waste in a manufacturers assembly process, etc.
Organizational design models are usually described by the organization structure they impose and how individual work is defined. Organizational structures describe the chain of control, i.e. the relation between individuals in terms of cooperation and governance. The design of individual work concerns how individuals are motivated and how individual behavior is assessed.
Over the years, the nature of work has evolved from routine and repetitive work to team based and knowledge intensive work. As it seeks to maximize an organization’s potential, organizational design theory has evolved along side the nature of work. The figure below displays the most prevalent organizational design paradigms.
Figure 1, organizational design paradigms.
The paradigms are displayed as overlapping holons in order to emphasize the fact that a higher paradigm takes into account the principles of the underlying paradigms.
A functional organizational structure seeks to benefit from scale and direct control. Work is standardized and individual work is designed in terms of tasks. Individuals with the same tasks are grouped and report to a line manager. Secondary functions are mostly centralized and cross functional work is limited.
A divisional structure seeks to expand the functional paradigm with flexibility and focus by creating self contained divisions. Divisions are usually defined on the basis of geography or customer segments. Divisions strive meet performance targets as a team.
A matrix structure leverages the benefits reaped from functional clustering by defining cross-functional initiatives of which the members are end-to-end responsible for an initiative (see figure 2). Initiatives are guided by a ‘project’ manager and can be of permanent or long/medium term focus. Within a matrix organization, individuals are assessed on how they’ve fulfilled their responsibilities within the initiatives they are involved in. Functional clusters are often seen as a center of expertise.
Figure 2, Matrix structure
The relatively new paradigm of the network organization seeks to increase self-organization compared to a matrix structure. It does this by facilitating informal communication, exchange of knowledge, and by providing individuals the tools to operate independently. Within a network structure the organization’s purpose is the main driver for investments. Investments are usually structured as a short term cooperation driven by a purpose defined as a specification of the organizational purpose (see figure 3).
Figure 3, Network structure
The major difference between a matrix organization and a network organization is the lifespan and governance of initiative/investments. Within a matrix organization an initiative can be permanent or a long/medium term project. Permanent initiatives or projects are governed by predefined processes and requirements. Predictability is seen as something to strive for. In contrast, within a network structure an investment has a short lifespan and is guided by its purpose rather a set of requirements. It is therefore less rigid and increases an organization’s innovative capacity and flexibility.
When we plot the differences between matrix and network structures to IT project methodologies, the recently introduced agile development methodology seems to fit well with a network structure. Where the Waterfall methodology sees requirements gathering, development, and testing as separate phases, the agile methodology takes a more integrated approach. Agile advocates flexibility and cooperation over requirements. It seeks to translate an investment’s purpose to business value delivered as fast as possible, rather than ticking all the requirement boxes before implementation. The result is that agile investments have shown to deliver value faster, cheaper, and with significantly less unused features.
In order for a network structure or an agile development methodology to be effective in an organization there should be room to invent and discover new ways of doing things (and perhaps fail as a result of it). Rapid Application Development platforms provide software development teams the tools to quickly deliver a workable solution that will either be adopted by the organization or discarded. Traditionally discarding a solution was seen as the ultimate waste. RAD platforms have reduced the cost of failure to a point where trial and error development teams are profitable in the long term and lead to revolutionary change. In addition to the tools used, governance should facilitate rather than restrict. The investment’s purpose should be the main driver; requirements should be of secondary importance.