What is the Right Organization Design? N. ANAND

A start-up company in Florida, called World Response Group (WRG), developed an unusual woven mat for the horticulture industry that was made from all-natural fibers. Horticulture growers in the U.S. produce hundreds of millions of potted plants each year. The product, called SmartGrow, dramatically reduced weed growth in potted plants and simultaneously provided important nutrients – all with no chemicals. SmartGrow raw materials and manufacturing expertise were available in China and India. As the company grew, the managers and board members talked frequently about organization structure. Two schools of thought emerged. One group wanted to import raw materials into the U.S. for manufacturing by WRG and thereby have direct control over manufacturing, marketing, and sales. These functions would be departments within WRG. The second group wanted to import already manufactured and packaged products from overseas, outsource marketing to an agency, and hire a horticulture distribution company to handle sales. The second group pushed the concept that no one within the company would ever touch the product. Nor would there be functional departments for manufacturing, marketing, and sales. That discussion of structure within WRG would not have occurred 30 years ago when Robert Duncan published his seminal article, ‘‘What is the Right Organization Structure?’’ in Organization Dynamics in 1979. At that time, organizations were thought to be selfcontained, and structure defined the reporting relationships among internal functional departments. Duncan’s article provided important insights about the conditions under which different internal arrangements would achieve a company’s mission. His insights are still referenced in management textbooks today. The purpose of this article is to present key developments in organization structure and design that have occurred since Duncan’s article and describe when each can be used for greatest effect. We will briefly review the important structural designs from 30 years ago and then describe key developments since that time. The concepts are organized into three eras, which reflect substantive changes in management thinking from vertical organization to horizontal organizing to open boundaries via outsourcing and partnering.