Star Model of Organization Design

Summary

J. Galbraith's *Star Model* offers a dynamic, holistic approach to organizational design, emphasizing the alignment of five key components: Strategy, Structure, Process, Rewards, and People. It highlights how organizations can create unique value through clear strategy, innovative structures, effective processes, performance metrics, and skilled teams. The model’s adaptability allows organizations to align their structure and operations as strategies evolve. In a practical example, a company pursuing disruptive innovation might redesign its structure, implement agile processes, and adjust metrics to foster risk-taking and rapid growth. Ultimately, the *Star Model* ensures an ongoing alignment between strategy and organizational execution.

Takeaways

• 😀 A clear strategy is essential to define organizational goals and how to achieve them.
• 😀 The primary question a strategy answers is how to create unique value for customers.
• 😀 Differentiators must be identified to determine what the organization needs to do better than competitors.
• 😀 The four key choices for leaders in an organization are structure, process, alignment of metrics and rewards, and skills/experiences.
• 😀 The best structure for a business depends on the primary strategic task and how roles and power are allocated.
• 😀 New organizational structures should be accompanied by effective workflows and decision-making processes.
• 😀 Alignment of metrics and rewards is crucial to shaping desired behaviors and reinforcing culture.
• 😀 The right people with the appropriate skills are essential to achieve effective performance and meet strategic goals.
• 😀 The star model offers a systemic view of organizational alignment and its components are interdependent.
• 😀 The organization should adapt dynamically to changing strategies, continuously aligning structure, processes, metrics, and people.
• 😀 An example of the star model in action: a strategy focused on disruptive product innovation requires agility, new processes, and the right metrics to support risk-taking.

Q & A

What is the STAR model and why is it important for organizational design?

The STAR model is a holistic approach to organizational design that emphasizes alignment across five key areas: Strategy, Structure, Process, Metrics & Rewards, and Skills & Experiences. It helps organizations align their structure and practices with their strategic goals to improve effectiveness and adaptability over time.

How does strategy drive the rest of the organizational design in the STAR model?

Strategy sets the direction for the organization by defining the goals and how the company will compete in the market. It answers crucial questions, such as how to create unique value for customers. Once strategy is clear, it drives decisions on structure, processes, and required capabilities within the organization.

What are the key questions to ask when determining the right structure in an organization?

The key questions include: What is the primary strategic task the structure must manage? What roles should report to senior leadership? How should power be distributed across roles to ensure optimal performance and decision-making?

What role does process play in organizational design according to the STAR model?

Process defines how work flows between groups and how decisions are made. Without efficient processes, a new organizational structure can become ineffective, leading to minimal change or necessitating more reorganizations in the future.

Why is it important to align metrics and rewards with organizational goals?

Aligning metrics and rewards ensures that employees' behaviors and outcomes are in line with the organization's strategic objectives. It prevents reinforcing outdated behaviors and encourages actions that support the desired culture and progress.

How do skills and experiences impact organizational effectiveness?

Skills and experiences are crucial as they determine how well individuals perform their tasks and contribute to the organization. The STAR model emphasizes measuring effective performance and setting clear objectives to ensure the right people are in place to achieve strategic goals.

What does it mean for an organization to be dynamic in the context of the STAR model?

Being dynamic means continuously realigning the organization in response to changes in strategy or external factors. The STAR model emphasizes that organizational effectiveness is not about creating a static structure, but about adjusting and optimizing each element (structure, processes, etc.) over time.

What is an example of applying the STAR model in an organization aiming for disruptive product innovation?

In the case of a company focusing on disruptive product innovation, the organization might create a separate business incubator, use agile development practices, establish new metrics that encourage risk-taking, and ensure they have people with the right skills to lead new product teams. This approach aligns the structure, processes, and rewards with the innovation strategy.

Why does Galbraith emphasize the importance of avoiding a rigid organizational structure?

Galbraith warns against rigid structures because they can stifle innovation and responsiveness. The STAR model encourages flexibility, ensuring that as strategies evolve, the organizational elements such as structure, processes, and metrics are continuously assessed and realigned.

How can the STAR model help in managing organizational change over time?

The STAR model helps manage organizational change by encouraging leaders to assess and adjust each of the five key areas—strategy, structure, processes, metrics & rewards, and skills & experiences—regularly. This ensures that the organization remains aligned with its evolving strategy, thus preventing stagnation and promoting continuous improvement.