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Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges

ISBN: 978-0-7879-9494-5
272 pages
November 2007, Jossey-Bass
Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges (0787994944) cover image


Designing Your Organization is a hands-on guide that provides managers with a set of practical tools to use when making organization design decisions. Based on Jay Galbraith’s widely used Star Model, the book covers the fundamentals of organization design and offers frameworks and tools to help leaders execute their strategy. The authors address the five specific design challenges that confront most of today’s organizations:

·        Designing around the customer

·        Organizing across borders

·        Making a matrix work

·        Solving the centralization—and decentralization dilemma

·        Organizing for innovation



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Table of Contents

Decision Tools Included on the CD-ROM ix

Introduction xi

The Authors xv

1 Fundamentals of Organization Design 1

The Star ModelTM: A Framework for Decision Making 2

Strategy 5

Organizational Capabilities: Translating Strategy into Design Criteria 6

Structure 8

Processes 16

Rewards 21

People 22

Design Principles 23

Requisite Complexity 23

Complementary Sets of Choices 23

Coherence, Not Uniformity 24

Active Leadership 24

Reconfigurability 24

Evolve, Do Not Install 24

Start with the Lightest Coordinating Mechanism 25

Make Interfaces Clear 25

Organize Rather Than Reorganize 25

2 Designing Around the Customer 27

Customer-Centric Strategies 28

What Is Customer-Centric? 28

Strategy 29

Structure 29

Process 30

Rewards 30

People 30

The Drive Toward Customer-Centricity 31

Customer-Centric Strategies 33

Customer Profitability and Segmentation 36

Customer-Centric Organizations 38

Strategy Locator: How Customer-Centric Do You Need to Be? 38

Customer-Centric Capabilities 41

Customer-Centric Light 42

Customer-Centric Medium 49

Customer-Centric Intensive 57

3 Organizing Across Borders 69

Levels of International Strategy 71

Level 1: Export 71

Level 2: Partner 72

Level 3: Geographic 73

Level 4: Multidimensional Network 73

Level 5: Transnational 73

Design Considerations: Geographic 74

Geographic Example: Cemex 76

Structure 76

Processes 83

Rewards 87

People 87

Design Considerations: Multidimensional Network 89

Strategy 90

Structure 91

Processes 95

Rewards 100

People 101

Design Considerations: Transnational 103

Strategy 104

Structure 104

Processes 105

Rewards 107

People 107

P1: RPU/... P2: RPU

4 Making a MatrixWork 109

What Is a Matrix? 110

Strategic Reasons to Use a Matrix 112

Challenges of a Matrix 113

Matrix Design 116

Structure 116

Processes 126

Rewards 134

People 137

5 Solving the Centralization—Decentralization Dilemma 141

Corporate Center Strategy 143

Understanding the Business Portfolio 144

Portfolio Diversity 145

Organizational Implications of the Business Portfolio Strategy 147

Role of the Corporate Center 149

Size of Corporate Staff 151

Centralization and Decentralization 152

Definitions 152

Strategic Reasons for Centralization 154

Strategic Reasons for Decentralization 156

Predictable Problems of Centralization 158

Predictable Problems of Decentralization 160

Making an Explicit Choice 161

Getting the Best of Both: A Balancing Act 163

Structure 165

Processes 167

Rewards 171

People 171

6 Organizing for Innovation 173

Innovation Strategies 175

Sustaining Innovation 176

Breakthrough Innovation 176

Innovation Capabilities 178

Innovation Process 178

Portfolio Management 180

Balancing Separation and Linkage 180

Designing for Breakthrough Innovation 181

MeadWestvaco Specialty Chemicals Division 182

Structure 184

Processes 190

Rewards 196

People 199

7 Conclusion 203

Appendix: Decision Tools 207

Bibliography 245

Index 249

How to Use the CD-ROM 255

Customer-Centric Strategy 209

Strategy Locator 211

International Strategy 213

Business Portfolio Strategy 215

Capabilities Assessment

Developing Design Criteria 216

Customer-Centric Capabilities 219

Assessing Your Innovation Capabilities 221

Are You Ready for a Matrix? 223

Design Options

Structural Options 225

Selecting Lateral Connections 226

Country Autonomy 227

Region Configuration 228

Centralization—Decentralization 229

Multidimensional Structure 233

How Separate Does the New Venture Need to Be? 235


Responsibility Charting 236

Relationship Map 239

Relationship Health Check 242

Spreadsheet Planning 244


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Author Information

The Authors

AMY KATES is principal partner with Downey Kates Associates, an organization design and development consulting firm located in New York City.

JAY R. GALBRAITH is professor emeritus at the International Institute for Management Development in Lausanne, Switzerland.

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“Jay Galbraith and Amy Kates provide the compass, charts, essential tools and supplies for the journey to organization effectiveness in dynamic times. Designing Your Organization, brought forth at a time of major challenges to global business and national priorities, brings contemporary organization decisions into focus and provides clear advice to achieve business performance today and tomorrow.”--John D. Hofmeister, president and U.S. country chair, Shell Oil Company


“Should be used by every leader seeking to give their organization a competitive advantage. Galbraith offers a practical framework to align a corporation’s organizational structure with its business strategy.”--Thomas J. Falk, chairman and CEO, Kimberly-Clark Corporation


“Starting several decades ago, Jay Galbraith wrote a series of books that essentially defined the field of modern organization design. Now, with deceptive simplicity, compelling logic, and immense practicality, he and Amy Kates have summarized in a single place what every manager needs to know about this vitally important subject.”--Thomas W. Malone, Patrick J. McGovern Professor of Management; director, MIT Center for Collective Intelligence, MIT Sloan School of Management; and author, The Future of Work


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