Organizational Design as “Virtual Adaptation”: Designing Project Organizations Based on Micro-Contingency Analysis

Using powerful and convenient analysis tools, engineers “adapt their product designs virtually”—i.e., they iteratively build models of potential product configurations virtually, in the computer; they analyze these models to predict their performance; they evaluate the predicted performance of each configuration against required or desired performance objectives; and they propose new configurations to address shortcomings of prior solutions. The critical distinction between systematic design vs. adaptation by trial and error is the availability of analysis tools that can make realistic enough predictions of performance to serve as "virtual experience" in an adaptive learning process. A “design” process thus depends on the availability of analysis tools that can model the behavior and interaction of micro-phenomena to predict specific macroperformance outcomes with acceptable accuracy. In a keynote talk to the NAACSOS 2003 conference, the author argued that computational modeling and simulation of organizations have "come of age” and can now be used as analysis tools for the design of organizations and larger social systems. This paper explains how analysis tools based on the 17-year Virtual Design Team (VDT) research project can now be used to support systematic organizational design for teams executing complex product development, software development and related knowledge work projects. We elaborate the micro-information-processing theory underlying VDT, describe how it was validated internally and externally, lay out the organization design methodology we developed to deploy it, and share the results of recent experience using this organization design approach to design real world project organizations.