THE STAR MODEL™
JAY R. GALBRAITH
The Star Model™ framework for organization design is the foundation on which a company bases its design choices. The framework consists of a series of design policies that are controllable by management and can influence employee behavior. The policies are the tools with which management must become skilled in order to shape the decisions and behaviors of their organizations effectively.
What is the Star Model™?
The organization design framework portrayed in Figure 1 is called the “Star Model™.” In the Star Model™, design policies fall into five categories. The first is strategy, which determines direction. The second is structure, ...view middle of the document...
(See the book, Designing Dynamic Organizations by Galbraith, Downey and Kates, published by Jossey-Bass in 2002, for tools to help translate strategy into criteria.) Each organizational form enables some activities to be performed well, often at the expense of other activities. Choosing organizational alternatives inevitably involves making trade-offs. Strategy dictates which activities are most necessary, thereby providing the basis for making the best trade-offs in the organization design. Matrix organizations result when two or more activities must be accomplished without hindering the other. Rather than choosing the “or,” matrix requires an embracing of the “and.” Companies want to be global and local.
The structure of the organization determines the placement of power and authority in the organization. Structure policies fall into four areas:
* Distribution of power
Specialization refers to the type and numbers of job specialties used in performing the work. Shape refers to the number of people constituting the departments (that is, the span of control) at each level of the structure. Large numbers of people in each department create flat organization structures with few levels. Distribution of power, in its vertical dimension, refers to the classic issues of centralization or decentralization. In its lateral dimension, it refers to the movement of power to the department dealing directly with the issues critical to its mission. Departmentalization is the basis for forming departments at each level of the structure. The standard dimensions on which departments are formed are functions, products, workflow processes, markets, customers and geography. Matrix structures are ones where two or more dimensions report to the same leader at the same level.
Information and decision processes cut across the organization’s structure; if structure is thought of as the anatomy of the organization, processes are its physiology or functioning. Management processes are both vertical and horizontal.
Figure 2—Vertical processes
Vertical processes, as shown in Figure 2 allocate the scarce resources of funds and talent. Vertical processes are usually business planning and budgeting processes. The needs of different departments are centrally collected, and priorities are decided for the budgeting and allocation of the resources to capital, research and development, training, and so on. These management processes are central to the effective functioning of matrix organizations. They need to be supported by dual or multidimensional information systems.
Figure 3—Lateral Processes
Horizontal–also known as lateral–processes, as shown in Figure 3, are designed around the workflow, such as new product development or the entry and fulfillment of a customer order. These management processes are becoming the primary vehicle for managing in...