BUS603: Managing People

Van de Ven et al. state that there is much more to learn about designing organizations and institutions. We have argued that experimentation is at the heart of the organizational design challenge. Experimentation permits us to investigate both what is and what might be - the latter being the fundamental for design. Design requires the specification of both the assignment of tasks to units and individuals and the coordination of these tasks through communications, IT, leadership, culture, incentives, and management. Coordination is necessary, as the tasks are interdependent and uncertain, and the organization exists in an uncertain environment. At a fundamental level, this is the organizational design problem. However, each organization must be designed to meet specific situations and goals.

Simulation has been used to investigate many organizational design issues in what-might-be situations. Rivkin and Siggelkow investigated the conventional wisdom that firm-wide incentives and capable subordinates make top-level oversight less valuable. They further identified circumstances in which vertical hierarchies can lead to inferior long-term performance.

Their results can be stated as design rules, and one of which is:

If the competitive landscape shifts, then decentralize temporarily.

Levinthal et al. model and simulate governance issues in multi-authority, single authority, and autonomous organizations. Lee et al. introduce computational designs and evaluations of alternative organizational structures for disaster responses to resolve the disconnections between resource demands and supplies.

Next, we outline a few challenges where we do not have well-established design rules. These challenges can be addressed through experimentation of what might be.

Collaborative communities do not have a strong hierarchy, but they do have agents or individuals who interact and follow protocols on a "commons" to achieve individual goals. Fjeldstad et al. develop an architecture of collaborative communities, but we do not have detailed design rules. Since collaborative communities are rare in the business world, we have more to learn about how to design them and make them work. We suggest that the collaborative community is a very important new organizational form for which what might be simulations hold great promise.

Platform and digital confederations of firms which are neither market nor hierarchy but use extensive contracts are becoming more common. Platform firms can be very small but have enormous reach beyond their own employees and resources. They are a nexus of formal and informal contracts - going beyond the make-buy problem. At the same time, platform-based firms can be very large, such as Amazon with some 500,000 employees. These firms are going forth as natural experiments exploring what might be and making what might have been yesterday into what is today.

How do we design temporary organizations that start up quickly and disband quickly? These are related to big construction projects such as building a bridge, making a movie, or organizing the Rolling Stones World Tour. Some are informal, without structure and coordination norms but with well-defined goals of success. How are the fundamentals of task assignment and coordination realized? Does opportunism enter, and if so, how?

Entrepreneurial ventures and start-ups are not well understood from an organizational design point of view. Are they different from traditional firms in allocation and coordination? Can they thrive without a hierarchy? What is fundamental; what is new?

There is a call for agile organization today. What does this mean - quick response or adjustment to variation in the environment or technology? These are old questions, but they take on new dimensions in the digital world of today. They may require organizational designs that are quite different from traditional ones, which could and did respond to variations in a slower world. Is time a critical difference here?