Wharton Chapter 17 - The Design of New Organizations Forms

Chapter 17 discusses the changes in business forms as new technologies emerge in the marketplace. As new technology and ways to deliver goods and services transform, businesses must create new means and methods to manage and exploit these new forms. The author mentioned 6 elements that can be reconfigured to create distinctive organization forms which include the goals of the organization, the strategies, authority relations, technologies, markets, and processes.

From these element, six new organizational forms are now present:

• Virtual Organization - suppliers, employees, and customers are dispersed geographically but are all connected by technology. Dell's connection with customers can be categorized as a virtual organization. Virtual companies have boundless opportunities to connect with customers but the flexibility can also create a new set of challenges such as the lack of face to face time with customers.
• Network Organization - set of relationships between autonomous or semi-autonomous work units for delivering products or services to customers. There are both internal and external - external: organization that creates ties among independent entities to combine skills (ie. partnerships, joint ventures). Internal: much like and external but ties together entities on the inside of the organization
• Spin-Out - organizations that are developed inside and organization that are unique and different and are then spun out to external entities and are usually partially owned by the parent company.
• Ambidextrous Organizations - organizations that continue with their established environment while creating and promoting emerging business environments (sustain and innovate). This gives structure to the new environment while sustaining the current business environment.
• Front-Back Organizations - Customers are served in the front with the backend of the organization supporting the front end. This is typically in service industries that are customer driven.
• Sense and respond organization - Identifying the emerging needs of the customer and responding intensely to those needs. This is important to meet the ever changing demands of the customer which allows the customer to adapt to the changing conditions

Organizations may go through a series of iterations of organizational forms depending on the stage of the business and the industry. For new businesses, their focus is typically on the customer and the strcuture is built in such a way that the business relationships will help grow the business (Front-Back). As the company grows, it has the ability to adapt to the changing needs of the customer (sense and respond) because of additional capital or because the business has reached a point where they can sustain their business and also grow through innovative environments (ambidextrous). When the company hits a point of maturity, internal innovations can become spin out organizations and new companies can be launched as a result. This can be illustrated through the spin off of palm from a very successful 3com. (http://www.news.com/2100-1033-236997.html)