Flexible organizations: by coordination & control or structure?

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The core business of enterprise architects is to define structures based on requirements which are commonly referred to as principles. Flexibility is principle number one in organizational design, these days. A tacit assumption is that a modular structure will support flexibility. On the other hand, coordination by management which can be flexible or rigid also […]

The core business of enterprise architects is to define structures based on requirements which are commonly referred to as principles. Flexibility is principle number one in organizational design, these days. A tacit assumption is that a modular structure will support flexibility. On the other hand, coordination by management which can be flexible or rigid also determine the level of organizational flexibility. I have seen many architect, including myself, struggling with the unclear relation between both aspects. Therefore, the following view on this topic may help.

We all know that the environment in which the organization operates is changing constantly. We also understand that we have to deal with these changes in order to survive. The main question is: How should you do that?
In practice I noticed two types of activities, performed by businesses in order to be flexible. The first one is very obvious: a business reacts on a particular change that occurs (or probably will occur) in the environment by adjusting their operations. This is a very reactive way although it can also be more pro-active in case the change in the environment is expected. Nevertheless, the modification of the business is always related to a specific change in the environment.
The second type of activities related to flexibility is strategically. The firm organizes and structures itself in such a way that the firm can change more easily as a response to environmental changes, whatever that may be. This is not as easy as pie. Businesses are struggling in defining the right structural solution for their organization and in the field of organizational sciences this is one of the important research topics.
Defining how to structure and organize is often described as “the form” of a business. Different types of forms are widely described in the literature and are still being investigated in scientific research programs. These forms are often classified by flexibility. Morgan described a number of organizational forms by using metaphors in order to make clear the difference between these types. Two utmost types regarding to flexibility are the mechanistic organization and the organic organization.
The mechanistic organization has characteristics that are parallel to a machine. Max Weber firstly defined it as bureaucracy where precision, speed, clarity, regularity, reliability, efficiency is achieved through a fixed division of tasks, hierarchy, supervision, detailed rules and regulations. Organizational engineers conceive these organizations as a network of parts and design the organizational structure to operate as precise as possible. Management seeks to codify the process of planning, organization, command, coordination, and control. Taylor worked this out extensively resulting in very rigid firms.
The organic organizations on the other hand, can be seen as an organism, seeking to adapt and survive in a changing environment. These organizations are characterized by open systems which emphasizes the importance of the environment in which the organization exists, careful management that satisfy and balance internal needs and adapt to environmental circumstances, and consist of a set of interrelated sub-systems. One of the additional characteristics is that employees are seen as people with complex needs that must be satisfied to lead full and healthy lives and perform in the workplace. It’s obvious that these organizations are flexible.
Descriptions of these organizational forms belong to the classical management literature. However, pondering these organizational forms results to my conclusion that two aspects are mixed up, which I currently also noticed in discussions with business architects and even in scientific articles. The aspects are 1) coordination & control and 2) structure. Coordination & control is the way that tasks, executed in an organization, are coordinated and controlled. A bureaucratic organization, for example, is highly controlled by top management and there are many rules (training and indoctrination) to coordinate the way of working. Structure defines how the scope of the tasks is defined and how these tasks are grouped together. A task can be fine or coarse grained and can have specific or generic elements. Grouping can be based on various criteria, e.g.: all customer related tasks together or tasks with the same function together. Discussions about granularity pop up regularly in the context of SOA and virtual organizations.
In the forms described above, flexibility of a specific form is related to the way that coordination & control is performed. A mechanistic form is not flexible due to the strict and rigid coordination & control. An organic form is flexible due to coordination of different subsystems and control of employees. The structure of the firm seems not to be a causal factor for flexibility. How is structure related to flexibility? It is a tacit assumption that modularity leads to flexibility. One can imagine that a firm divided in 3 big chunks is less flexible that a highly modular firm. Two major characteristics of modularity is what I call re-configurability and mutual independency. Re-configurability means that the individual parts can be combined in the maximum number of ways. Mutual independency means that changes within a specific module doesn’t affect other modules.
It seems obvious that firms which are organized in a modular way and where the workers have the freedom to do their job in the best way, are most flexible. This seems quite easy, however, implementation is not straightforward. Management should define the right structure and implement the right way of coordination & control. An (business) architectural study can help to find the right structure. The Integrated Architectural Framework (IAF) clearly separates defining the structure of a firm from defining the coordination & control mechanisms. The approach helps to design a highly modular structure independent of the coordination & control mechanisms. However, in various architectural studies I encountered that many business architects mix up these aspects during architectural design. Especially under the pressure of management who try to pull the architect down to the(ir) real world. In these situations, a capable architect distinguish oneself by easily switching between the conceptual and physical level of analysis.
At the end of the day, flexibility will only be achieved if both conditions i.e. appropriate structure and coordination & control mechanism, are implemented. Unfortunately, in practice I notice often that only one is achieved for various reasons. Enterprise architects, therefore should focus on both aspects. I know this is easy to say but I encountered some difficulties myself dealing with this topic. More about this in coming posts…..

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