1 Designing Organizational Communication Structures

2 Major Functions in Satellite Production Product Design Process Design Fabrication Assembly Testing

3 Functional Design

4 Functional Structure works best for small- or medium-size organizations facing stable environments and producing only a few products Strengths Functional efficiency: economies of scale within functions Depth: in-depth skill development Focus: on functional goals Careers: long career paths Intrafunctional coordination Weaknesses Communication inefficiency: slow information sharing and decision-making across functions and up and down the hierarchy Information overload: communication moves vertically up the hierarchy Functional myopia: poor inter- function coordination; conflict across functions Inertia: low responsiveness and adaptability to change Low innovation

5 Horizontal communication solutions, in order of capacity Teams Integrators Integrating Departments Liaison roles Task forces

6 Integrated Functional Design

7 Divisional Design

8 Bonanza International: Functional Structure

9 Bonanza International: Divisional Structure

10 Some Divisional Organization Types Product line (e.g. Chevrolet vs. Pontiac) Product part (e.g. chassis vs. engine) Geography (e.g., East vs. West) Project (e.g., 8-bit vs. 16 bit computer design) Client (e.g., Client A vs. Client B) Market (e.g., government vs. consumer)

11 Client: Ad Agency Merchandising Media Research Copy Art Newspaper/Magazine Production TV/Radio Production Merchandising Media Research Copy Art Newspaper/Magazine Production TV/Radio Production Merchandising Media Research Copy Art Newspaper/Magazine Production TV/Radio Production

12 Geographic: Apple Computer

13 Divisional Structure works best for larger organizations facing dynamic environments and producing several products Strengths Communication efficiency because information must pass through fewer layers Adaptability and responsiveness to change Interfunctional coordination within each division Client satisfaction because product responsibility and contact points are clear Customization in that units can adapt to differences in products, regions, clients, etc. Decentralizes decision-making Weaknesses Divisional myopia: poor intrafunctional coordination across divisions; conflict and competition across product lines Functional inefficiency: no economies of scale within functions Generalism: less in-depth competence and technical specialization and shorter functional career paths Fragmentation: difficult to integrate and standardize across products Information islands: poor knowledge transfer across functions

14 Horizontal communication solutions, in order of capacity Teams Integrators Integrating Departments Liaison roles Task forces

15 Integrated Divisional Design

16 Simplified Matrix Design

17 Simplified Matrix Design

18 Matrix Organization works best for medium size organizations with multiple products in unstable environment Strengths Coordination across both functions and products Flexible use of human resources across products Integration within functions Skill development within functions Capacity to handle complex decisions and frequent changes Weaknesses Extremely high communication costs: frequent and time-consuming meetings and conflict resolution demands Communication intensive: people need good interpersonal communication skills and training; requires collegial rather than hierarchical relationships Who’s the real boss? Difficulties with dual reporting relationships Requires dual pressure from the business environment to maintain the power balance Very tricky to maintain effectively