Designing Organizations to Create Value : From Strategy to Structure

Rating:
Summary: Organization theory made understandable
Review: This book is a shorter and very readable version of the authors' well-known textbook. It provides a highly useful and straightforward framework for thinking about strategy and organizational issues, and describes how and why a company's organizational structure must dovetail with its strategic objectives in order to ensure long-term value creation. It identifies three key elements of any organizational structure--decision authority, performance evaluation, and compensation--and illustrates with numerous real-life examples how these elements must be coordinated for an effective organizational structure, and what happens when they are out of synch (e.g., Enron). Some of the examples are a little outdated (presumably from the textbook), but they make the point.

The book highlights the tradeoffs between centralization and decentralization and between incentive pay and straight compensation, and discusses how to evaluate those tradeoffs. It even shows how corporate ethics can be fostered through the three-element system. Each chapter starts with an executive summary, which aids the readability. Unlike other books on organizational approaches, there are not a lot of pat answers here, but there is a lot of food for thought at every level of management.