Jay R. Galbraith, a renowned organizational theorist and consultant, left an indelible mark on the fields of strategy and organization design. His work provides a foundational understanding of how to create effective and adaptable organizations.

On the Fundamentals of Organization Design

  1. "Organization design is conceived to be a decision process to bring about a coherence between the goals or purposes for which the organization exists, the patterns of division of labor and interunit coordination and the people who will do the work."[1][2]
  2. "There is no one best way to organize... Any way of organizing is not equally effective."[2]
  3. "Structure follows strategy." This famous adage, originally coined by Alfred Chandler, was a cornerstone of Galbraith's work, emphasizing that the organizational structure should be designed to support the company's strategic objectives.
  4. "The thesis... is then that structure follows strategy and that the most complex type of structure is the result of the concatenation of several basic strategies."[3]
  5. "Organizational design is not simply about structure and the resulting organizational chart. It is about the relationships between people, work, formal structures and informal practices and behaviors."[2]
    • Learning: A holistic view is necessary, considering the interplay of various organizational elements.
  6. "Organizational design and the resulting capabilities are the last sustainable sources of competitive advantage."[2]
    • Learning: A well-designed organization can be a powerful and enduring competitive weapon.
  7. "Design is about creating organizations to provide better outcomes and serve the organization's purpose and strategy."[4]
  8. "Poor organizational design is a primary cause of failure when leaders attempt to translate strategy into results."[5]
    • Learning: The way a company is organized can be the biggest obstacle to achieving its strategic goals.
  9. "Every organizational structure has positives and negatives associated with it."
    • Learning: The key is to choose a structure whose strengths align with the strategy and to manage its inherent weaknesses.
  10. "If management can identify the negatives of its preferred option, the other policies around the star model can be designed to counter the negatives while achieving the positives."[2]

The Star Model™

Galbraith's most famous contribution is the Star Model™, a framework for organizational design that emphasizes the alignment of five key levers: Strategy, Structure, Processes, Rewards, and People.

  1. "The Star Model™ framework for organization design is the foundation on which a company bases its design choices."[6][7]
  2. Strategy: "Strategy is the company's formula for winning."[6]
    • Learning: It specifies goals, objectives, values, and the mission, setting the basic direction of the company.
  3. Structure: Determines "the location of decision-making power."[6][7]
    • Learning: This includes specialization, shape (span of control), and distribution of power.
  4. Processes: "If structure is thought of as the anatomy of the organization, processes are its physiology or functioning."[6]
    • Learning: Information and decision processes cut across the organization's structure.
  5. Rewards: The purpose of the reward system is to "align the goals of the employee with the goals of the organization."[7]
    • Learning: Reward systems motivate and provide incentives for desired behavior.
  6. People (Human Resource Policies): "Human resource policies – in the appropriate combinations – produce the talent required by the strategy and structure of the organization, generating the skills and mind-sets necessary to implement the chosen direction."[6]
    • Learning: This includes recruiting, selection, training, and development.
  7. "For an organization to be effective, all the policies must be aligned and interacting harmoniously with one another."[6]
    • Learning: Misalignment in any of the five areas will lead to suboptimal performance.
  8. "An alignment of all the policies will communicate a clear, consistent message to the company's employees."[6]
    • Learning: Consistency across the Star Model reinforces desired behaviors and priorities.
  9. "Different strategies lead to different organizations."[5][6]
    • Learning: There is no one-size-fits-all organizational design.
  10. "Structure is only one facet of an organization's design. This is important. Most design efforts invest far too much time drawing the organization chart and far too little on processes and rewards."[6]
    • Learning: A common pitfall is overemphasizing formal structure while neglecting other critical elements of the Star Model.

On Information Processing

Galbraith's early work viewed organizations as information processing systems. This perspective was foundational to his later development of the Star Model.

  1. "The basic proposition is that the greater the uncertainty of the task, the greater the amount of information that has to be processed between decision-makers during the execution of the task."[2]
  2. "[Task uncertainty is] the difference between the amount of information required to perform the task and the amount of information already possessed by the organisation."[2]
  3. "If the task is well understood prior to performing it, much of the activity can be preplanned. If it is not understood, then during the actual task execution more knowledge is acquired which leads to changes in resource allocations, schedules, and priorities."[8]
    • Learning: The level of uncertainty dictates the need for information processing during task execution.
  4. "The empirical research of the last fifteen years on the structure of large organizations seems to confirm the hypothesis of Herbert Simon that human cognitive limits are a basic limiting factor in determining organization structures."[2]
  5. Organizations can adopt four strategies to cope with increased information processing needs: reduce the need for information processing, increase the capacity to process information, create self-contained tasks, or invest in vertical information systems.
    • Source: Designing Complex Organizations (1973)
  6. The use of slack resources (e.g., longer lead times, larger budgets) is a strategy to reduce the amount of information processing required.[8]
    • Learning: While effective, this strategy comes at a cost.
  7. Investing in vertical information systems (e.g., computer-based systems) can increase an organization's capacity to process information.
    • Source: Organization Design (1977)
  8. Creation of lateral relations (e.g., direct contact, task forces, teams) allows the organization to make decisions at lower levels, increasing information processing capacity.
    • Source: Organization Design (1977)
  9. The greater the task uncertainty, the more an organization will rely on lateral relations.
    • Learning: As complexity increases, so does the need for cross-functional collaboration.
  10. Designing organizations to make better decisions in times of high uncertainty is a key focus of the information processing view.[4]
    • Learning: The structure and processes should facilitate effective decision-making in complex environments.

On Matrix and Reconfigurable Organizations

Galbraith was a leading thinker on complex organizational forms like the matrix structure.

  1. "Matrix organizations result when two or more activities must be accomplished without hindering the other. Rather than choosing the 'or,' matrix requires an embracing of the 'and.'"[6]
    • Learning: Matrix structures are designed to handle dual pressures, such as being both global and local.
  2. "Matrix organizations need people who can manage conflict and influence without authority."[6]
    • Learning: The human element is critical to the success of a matrix structure.
  3. "A static organizational structure rarely supports frequently changing organizational strategy, stagnating the organization's progress and ability to respond quickly to market trends and industry demand."[7]
    • Learning: In dynamic environments, organizations need to be adaptable.
  4. In a reconfigurable organization, the "structure has both stable and variable components."[7]
    • Learning: A stable "home base" for employees can be combined with dynamic, project-based teams.
  5. Reconfigurable organizations require "human resource policies and practices which support a reconfigurable culture."[7]
    • Learning: The people dimension of the Star Model is crucial for agility.
  6. "Reward and appraisal systems that foster cross-unit skills and interpersonal networks" are essential for reconfigurable organizations.[7]
    • Learning: Incentives must align with the need for collaboration and flexibility.
  7. "Flexible organizations require flexible people."[6]
    • Learning: The capabilities of the workforce must match the demands of the organizational design.
  8. "Cross-functional teams require people who are generalists and who can cooperate with each other."[6]
    • Learning: The effectiveness of teams depends on the skills and mindset of their members.
  9. The goal of a reconfigurable organization is to "create short-term temporary advantages which lead to customer value."[7]
    • Learning: Agility allows companies to capitalize on fleeting market opportunities.
  10. "An organization with flexibility in creating customer-valued capabilities will surpass competitors."[7]
    • Learning: The ability to adapt and reconfigure is a key competitive advantage.

On Leadership and Management

Galbraith's work also provides insights into the role of leaders in organizational design.

  1. "Three key levers are setting the business strategy and vision, choosing the players on the executive team, and designing the organization."[9]
    • Learning: Organizational design is a fundamental responsibility of leadership.
  2. Leaders become the "shapers of the organization's decision-making process."[2]
    • Learning: Through organizational design, leaders can influence how decisions are made.
  3. The role of leaders shifts from being "decision makers" to "decision shapers."[2]
    • Learning: Effective leaders create the context for good decisions to be made throughout the organization.
  4. "Managers can influence performance and culture, but only by acting through the design policies that affect behavior."[6]
    • Learning: The Star Model provides the levers for managers to shape the organization.
  5. "The policies are the tools with which management must become skilled in order to shape the decisions and behaviors of their organizations effectively."[6]
    • Learning: Organizational design is a managerial skill that can be developed.
  6. "Every publicly traded company wants to grow and drive its stock to trade at a premium."[3] This drive for growth is a key driver of organizational complexity.
  7. "Almost every leader is a champion of simplicity." Yet, the pursuit of growth and the need to respond to a complex environment lead to more complex organizations.[3]
  8. "Balancing the power and authority of functions, countries, and businesses is the challenge for leaders and management teams in the three-dimensional matrix."[3]
  9. "Top management must be committed to organizational flexibility and implement the infrastructure required to support the needs of the organization."[7]
    • Learning: Successful organizational change requires strong leadership commitment.
  10. "A problem well framed is a problem half-solved."
    • Learning: A clear understanding of the strategic challenges is the essential first step in effective organizational design.

Sources  

  1. libquotes.com
  2. wikiquote.org
  3. jaygalbraith.com
  4. talkingaboutorganizations.com
  5. strategicmanagementinsight.com
  6. jaygalbraith.com
  7. changeis.com
  8. jaygalbraith.com
  9. goodreads.com