Organization Design: Creating Strategic and Agile Organizations
Donald L. Anderson
Chapter 5
Processes & Lateral Capability
Lateral Capability: The Horizontal Organization
Lateral capability: Information and decision processes that coordinate activities spread out across different organizational units, providing mechanisms for decentralizing general management decisions
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LO 5-1: Why lateral capability is important (and difficult_
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Lateral Capability: The Horizontal Organization
Lateral capability = horizontal organization
Formal structure = vertical organization
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Lateral Capability: The Horizontal Organization
Encourages coordination throughout the structure
Motivated by:
A variety and diversity of tasks
Rapidly changing environment
High degree of interdependence among functional units
Common technology platforms
Requirements for faster cycle time
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Anderson, Organization Design
SAGE Publishing, 2019
Why Developing Lateral Capability Is So Difficult
Internal competitive forces:
Turf wars
Stronger identification
Rewards
Mistrust
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Benefits and Costs of Lateral Capability
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Forms of Lateral Capability
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LO 5-2: The forms of lateral capability and their advantages and disadvantages
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Networks
Informal communication networks can circumvent regulated channels
Learning who to contact
How to get information
How to participate in the social fabric
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Networks
Cultivating Networks
Glue people
Physical spaces
Face-to-face collaboration
Job rotation programs
Training
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Anderson, Organization Design
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Networks
Communities of practice
Rapid problem solving
Sharing best practices
Developing professional skills
Electronic social networks
Shared file systems
Social media platforms
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Communities of practice: Groups of people informally bound together by shared expertise and passion for a joint enterprise
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Networks
Advantages:
Encourage innovation
Knowledge sharing
Broader organizational perspective
Not costly
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Shared Goals, Processes, and Systems
Shared or superordinate goals
Lateral processes:
Management practices
Planning
Budgeting
Information technology
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Anderson, Organization Design
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Shared goals: If employees in different departments have the same goal, they are more likely to coordinate in service of that goal
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Advantages:
Add another level of formality
Groups see the shared impact of their work
Mangers and employees can see how they are connected
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Shared Goals, Processes, and Systems
Disadvantages:
Time consuming and costly
Process or technology can direct work
Employees at mercy of required process
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Shared Goals, Processes, and Systems
Teams
Two or more people
Specific performance objective
Coordination among team member sis required to attainment of team objective
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Teams
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Teams
Cross-functional teams:
A small collection of individuals from diverse functional specializations within the organization
Members report to a project team leader
“Home” manager directs day-to-day work
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Teams
Eight characteristics of successful teams:
A clear, elevating goal
A results-driven structure
Competent members
Unified commitment
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Teams
A collaborative climate
Standards of excellence
External support and recognition
Principled leadership
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Teams
Advantages:
Empower individuals lower in the hierarchy
Can be formed quickly and flexibly
Disadvantages:
Require team skills
Need a clear purpose
Require defined decision authority
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Integrator Roles
Formal positions with the responsibility to share information and coordinate across the structure
Handle nonroutine, unprogrammed problems
Often do not have formal authority
Skilled at conflict resolution, negotiation, and persuasion
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Matrix Organizations
Two-Hat Matrix: Each manager has responsibility over two dimensions of the matrix
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Matrix Organizations
Three-Dimensional Matrix: The company maintains business/product units and geographic regions
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Matrix Organizations
To make the matrix successful:
Seeing that conflicts are resolved
Managing the top team
Balancing power
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Getting the Level of Lateral Capability Right
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How to Decide Which Form to Use
Considerations:
Degree of interdependence
Business strategy
Task uncertainty and complexity
Cost
Interpersonal skills
Trust and existing relationships
Changes over time
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LO 5-3: How to decide which form of lateral capability to implement in a design
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Governance Models and Decision Authority
Governance and planning processes
Direction
Oversight
Innovation
Strategic Intentiosn
Decision-making practices
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LO 5-4: How governance models and decision processes enhance collaboration
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Enablers for Successful Lateral Capability
Leadership and management skills
Shared values
Authentic empowerment
People practices
Reward systems
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