03 March 2025
Erik van Vulpen has compiled five essential organizational design principles, drawing from Designing Effective Organizations: How to Create Structured Networks by Michael Goold and Andrew Campbell. These principles provide a clear framework for shaping effective, high-performing organizations. They emphasize the importance of aligning structure with strategy, clarifying accountability, and ensuring efficient coordination—all while balancing complexity and adaptability. Whether you're designing a startup or restructuring a global enterprise, these principles serve as a practical guide to creating organizations that work.
This principle states that boundaries should exist to encourage the development of specialist skills. The test here is if any specialist cultures, which are entities that have to be different from the rest of the organization, have sufficient protection from the influence of the dominant culture.
This principle states that activities that are done should be coordinated in a single unit. This unit can be a business unit, business function, (horizontally coordinating) overlay unit, sub-business, core resource unit, shared service unit, project unit, or parent unit. The test here is if there needs to be coordination between departments which is hard to do. These ‘difficult links’ are links where normal networking will not provide coordination benefits. In that case, coordination should be made easier, or responsibility should be put in within a single unit. There are many different units that can be used in organizational design, as we will show below.
This principle states that responsibilities should be allocated to the person or team best fit to do them. This means that tasks are retained by higher levels based on their knowledge and competitive advantage. If this is not the case, they should be positioned lower in the organization.
This means that the CEO should not be involved in every decision – especially not decisions that involve specialists with much more subject-matter knowledge. The CEO is there for the big picture and to balance complex decisions that impact the organization and strategy.
This principle is about having effective control on the one hand while maintaining engagement and commitment on the other hand. This is always a balance. The test here is to have a control process that is aligned with the unit’s responsibility, cost-efficient to implement, and motivating for the people in the unit.
This means that the CEO is not giving the ‘go’ on the purchase decision for a $30 keyboard – this would be highly demotivating, and control on such small expenditures should be put lower in the organization to be adaptive anyway.
This principle states that organizational structures should be sufficiently flexible to adapt to an ever-changing world. The test here is that the organizational design will help the development of new strategies and adaptation to future changes. Later in this article, we will give a case study of an organization that was unable to adapt to a rapidly changing environment, hurting its internal processes and bottom line.
This principle states that boundaries should exist to encourage the development of specialist skills. The test here is if any specialist cultures, which are entities that have to be different from the rest of the organization, have sufficient protection from the influence of the dominant culture.
This principle states that activities that are done should be coordinated in a single unit. This unit can be a business unit, business function, (horizontally coordinating) overlay unit, sub-business, core resource unit, shared service unit, project unit, or parent unit. The test here is if there needs to be coordination between departments which is hard to do. These ‘difficult links’ are links where normal networking will not provide coordination benefits. In that case, coordination should be made easier, or responsibility should be put in within a single unit. There are many different units that can be used in organizational design, as we will show below.
This principle states that responsibilities should be allocated to the person or team best fit to do them. This means that tasks are retained by higher levels based on their knowledge and competitive advantage. If this is not the case, they should be positioned lower in the organization.
This means that the CEO should not be involved in every decision – especially not decisions that involve specialists with much more subject-matter knowledge. The CEO is there for the big picture and to balance complex decisions that impact the organization and strategy.
This principle is about having effective control on the one hand while maintaining engagement and commitment on the other hand. This is always a balance. The test here is to have a control process that is aligned with the unit’s responsibility, cost-efficient to implement, and motivating for the people in the unit.
This means that the CEO is not giving the ‘go’ on the purchase decision for a $30 keyboard – this would be highly demotivating, and control on such small expenditures should be put lower in the organization to be adaptive anyway.
This principle states that organizational structures should be sufficiently flexible to adapt to an ever-changing world. The test here is that the organizational design will help the development of new strategies and adaptation to future changes. Later in this article, we will give a case study of an organization that was unable to adapt to a rapidly changing environment, hurting its internal processes and bottom line.
