Organizational design and structure(1/2): Does it matter?

A formal structure is good – as long as employees are free to partially adhere to it. They should be allowed to interact with others in their own ways as well.

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That is the conclusion of the research paper Searching for Structure: Formal Organization Design as a Guide to Network Evolution, for which an agent-based computational model was created.

How networks of interaction evolve

If there is no formal structure, an agent who is searching for a partner to interact with may either not find an appropriate counterparty, or can end up collaborating with a person that doesn’t really help.

The other type of error is corrected by employees themselves, as soon as one of the agents realizes that the collaboration is useless. However, when an agent cannot find an appropriate counterparty, valuable interaction may not be realized. Coordination is needed here, according to an article on the website of business school INSEAD.

Without a formal structure, beneficial interactions decrease

Organizations don’t have to be large, and their employees may already struggle to discover valuable interactions. To ensure that there are benefits resulting from useful collaboration, a formal structure of some kind is needed.

Social networks inside an organization become more and more rigid as time goes by, and fewer and fewer new interactions are initiated. On the one hand, this leads to a low risk of starting an unproductive collaboration, but on the other hand, omission errors can be widespread.

A formal structure doesn’t have to be ideal. It can be random – because it still forces employees to interact with new people. That way, formal structures make us discover valuable interaction patterns.

It's necessary to only enforce the structure moderately. For best results, employees must be told to interact with others, but at the same time, they have to be free to stop collaborating if they don’t find the interaction valuable.

-jk-

Article source INSEAD Knowledge - INSEAD Business School knowledge portal
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