Modern Enterprise Organization Design: New Edition of the 21st Century Business Administration MBA Series Textbooks

Author: Ren Jie
Publisher:
Publish Date: 2005-06-01
Features: "Wu Wei Er Zhi" (Non-Action Governance) is a Chinese management philosophy that advocates a state of inaction yet complete control over all things, which seems to align with the goals of modern corporate organizational design. The task of corporate organizational design is to build such a platform where the people, resources, materials, and information within the organization operate in a pre-designed order with the highest efficiency. Modern corporate organization is a necessary means for the rational allocation of productive forces and the smooth conduct of production and business activities, as well as a vital tool for maintaining and developing production relations. It is also a crucial guarantee for achieving corporate missions and goals and improving economic efficiency. The significant role of organizational design has attracted numerous modern management scholars and organizational practitioners to focus on its research and development. Since Taylor, many renowned scholars throughout history have conducted in-depth studies on corporate organizational design. They found that for a company to achieve its goals of survival and development, it must first build an organization that suits its own characteristics. Only with a well-structured organization can employees be effectively evaluated and motivated; only with a well-structured organization can the division of labor and collaboration between different departments maintain high-frequency operations; and only with a well-structured organization can information exchange between different levels during business operations proceed smoothly. For this reason, corporate managers have always attached great importance to organizational design. Corporate organizational structures have evolved from initial linear structures to later functional structures, divisional structures, matrix structures, and more. These structures have well-adapted to the needs of corporate organizations at the time and have greatly stimulated further corporate development. It can be imagined that without the evolution of organizational forms, there would not have been the achievements of a large number of enterprises in mixed operations and scale expansion. Meanwhile, corporate organizational design theory has also made significant progress over the past few decades, becoming an indispensable branch of management. In recent years, modern social changes driven by technological revolutions have been reshaping the survival and development models that human society has long been accustomed to. The main of modern social and economic development is that the social production system is rapidly shifting from large-scale social production to a flexible, market-demand-oriented system. Global markets are becoming increasingly integrated spatially, and the cycles of demand changes are shortening temporally. All this has significantly altered the technical, informational, and environmental foundations on which enterprises rely, forcing them to continuously adjust their business strategies and goals, as well as their operational processes and methods. This has also led to more frequent conflicts between the large-scale centralized control of corporate organizations and the decentralized, ever-changing market demands, promoting reforms and innovations in corporate business strategies and organizational behavior. It has inevitably driven the development and evolution of organizational theory and methods. Against this backdrop, the significance of now focusing on and researching modern corporate organizational design theory and methods is particularly pronounced. In China, there is an urgent need to thoroughly study the theory and methods of corporate organizational design. In addition to the general pressures mentioned above, there are also specific requirements for the development of corporate organizational design theory and methods in China. Under the former planned economy system, Chinese enterprises lacked operational autonomy, and attention was primarily focused on production management rather than on analyzing and researching organizational issues. Even during the process of economic system reform, the focus was more on rationalizing the system and enabling enterprises to break free from government constraints, thereby enhancing their autonomy and vitality. Subsequently, in the process of establishing a socialist market economy, both the theoretical community and practical management practitioners prioritized the establishment of modern corporate systems due to institutional bottlenecks, and marketing was considered the key focus of corporate management due to market realization issues. In summary, the theory and methods of corporate organizational design have never received the attention they deserve from China's management theory community. Today, as China moves forward with the development of a socialist market economy system and modern corporate systems, the possibility of Chinese enterprises gaining competitive advantages through the differences in their corporate systems is becoming increasingly slim. The success or failure of Chinese enterprises, as well as the speed of their development, will increasingly depend on their own organizational and management capabilities. To enhance competitiveness, modern enterprises must not only rely on traditional efficiency gains from positions and departments (functional organizational theory) but also from interdepartmental efficiency (process organizational theory) and even from inter-enterprise efficiency (virtual organizational theory). Of these, particularly the latter two, reflect the organizational-level reasons for the efficiency gap between Chinese and foreign enterprises. Given these considerations, organizational design is essential for enhancing the competitiveness of Chinese enterprises, but its theoretical framework remains unclear and requires further integration and research. For this purpose, the author initiated the establishment of the "China Enterprise Reengineering Research Center" in 1996, comprising 16 units including government departments from Shanghai and Qingdao, universities such as Fudan University and Shanghai University of Finance and Economics, and representative enterprises. The author also formed a research team with relevant experts, scholars, and graduate students to conduct continuous research on the theoretical framework of organizational design over a decade. This book is a of these studies. The book is divided into six parts, 16 chapters. Part I covers the basics of organizational design, including introduction and theory (Chapters 1 and 2). Part II focuses on the principles and process of organizational design, including design principles and process (Chapters 3 and 4). Part III examines the environmental analysis of organizational design, including external and internal environmental analysis (Chapters 5 and 6). Part IV explores the modular construction of organizational design, including the design of structure, process, authority, performance evaluation, and incentive mechanisms (Chapters 7, 8, 9, 10, and 11). Part V covers the integration of organizational design, primarily focusing on the integration of modules and their alignment with strategy, commercial ecological environment, and enterprise types (Chapters 12, 13, and 14). Part VI discusses the implementation and development of organizational design, including the implementation and development of design proposals (Chapters 15 and 16). In the design principles, the book proposes the CHORT principle. Modern corporate organizational design should follow general principles while also considering the unique characteristics of each enterprise, including the personalities of managers and employees (), the vertical and horizontal principles of centralization and decentralization (), the regional scale of enterprises (), and the time-related principles of different corporate life cycles (). The acronym CHORT, derived from the initials of these elements, has a homophone in Chinese: "" (qiao), meaning a bridge that spans water or air to facilitate the passage of pedestrians and vehicles. This metaphor can be extended to refer to a person or thing that serves as a communication link. In essence, corporate organizational design acts as a communication platform between internal and external elements of the enterprise. Some experts refer to the CHORT principle as the "Bridge Theory," and the author considers this analogy highly appropriate. It not only reflects the essence of corporate organizational design as communication but also highlights the rare linguistic resonance between Chinese and English. Therefore, the author's goal is to establish a modern corporate organizational design theory that integrates Eastern and Western management philosophies. The book advocates that the organizational design system can be constructed from multiple perspectives, but a process-oriented approach is more feasible, as it facilitates systematic construction and gradual progress. Accordingly, the author proposes that the theoretical framework of modern corporate organizational design can be composed of four stages: analysis, construction, integration, and implementation. In the analysis stage of organizational design, the focus is on the analysis of internal and external environments and the determination of design goals. The purpose of this analysis is to clarify the preconditions and current situations of organizational design, both internally and externally, and to define specific design goals accordingly. In the construction stage of organizational design, the focus is on the design of five modules: organizational structure, organizational authority, organizational process, organizational performance evaluation, and organizational incentive systems. These five modules are not only the main content of organizational design but also interconnected. For example, the design of organizational structure and authority primarily addresses the "what to do" and "who is responsible" issues; process design primarily addresses the "how to do" methodological issues; and the design of performance evaluation systems and incentive mechanisms primarily addresses the transformation of "what needs to be done" into "what I want to do," addressing the motivation for action. "What to do," "how to do," and "what I want to do" are the three fundamental issues that must be resolved to enhance corporate competitiveness, and their resolution at the organizational design level undoubtedly contributes to improving management efficiency. In the integration stage of organizational design, the focus is on the matching of organizational design modules with each other, as well as with the internal type characteristics, strategic positioning, and external commercial ecological environment of the organization. For a specific organizational design, in addition to the construction of individual modules, it is necessary to address the compatibility between modules, align it with the enterprise's strategic goals, adapt it to the external commercial ecological environment, and match it with the enterprise's own type. The essence of integration thinking in organizational design is systems thinking. In the implementation stage of organizational design, the focus is on the implementation and development of organizational design proposals. After studying the theories and methods of organizational change from many experts, the author, combining the characteristics of organizational adjustment, restructuring, and transformation in China's current stage, proposes the 3P4S implementation model for organizational design. The elements of this model primarily consist of seven dimensions: leadership commitment, upper-level support, and subordinate participation (3P), as well as strategic decision-making, institutional transformation, institutional execution, and mechanism incentives (4S). The direct foundation for writing this book is the specialized discussion course offered by the author for Ph.D. and master's students, as well as the "Corporate Organizational Design" course for senior undergraduate students in business management. It is also based on the author's teaching and research at Fudan University four years ago, when the author led a team of postdoctoral researchers and Ph.D. students to undertake numerous projects on the effective operation design of corporate organizations commissioned by enterprises. Examples include Fujian Foray Shareholding Company's "Effective Operation Design," Hunan Tangrenshen Group's "Effective Operation During High-Growth Periods," and related projects commissioned by Baosteel Group and SAIC Motor Group. Additionally, it is based on the compilation of the "Corporate Organizational Design in the Era of Change" series. Since 1999, the author has brought together theoretical researchers from Fudan University, Shanghai Jiao Tong University, Tongji University, and managers from enterprises such as Baosteel, Industrial Securities, Alcatel, and Shanghai Deyida to form a research team of over 30 people to conduct specialized research on corporate organizational design. They have completed four books: "Theories and Methods of Corporate Organizational Design," "Organizational Design of Enterprise Groups," "Organizational Design of Listed Companies," and "Organizational Design of Small and Medium Enterprises." The accumulation of teaching and project outcomes has culminated in the book "Modern Corporate Organizational Design" presented to the readers. However, despite the fact that many ideas in this book originate from the aforementioned activities and outcomes, there have been significant changes, especially in the refinement of the theoretical framework, the novelty of viewpoints, and the citation of materials, compared to previous achievements. The changes and gains achieved in this book are inseparable from the strong support, active participation, and selfless assistance of many individuals. First and foremost, the author would like to thank many colleagues and students at Fudan University during the author's tenure there, including professors and doctoral students such as Zhang Guozhou, Li Xinmin, Xiang Wei, Zhang Zhou, Li Jianhua, Su Jiangming, Li Shuang, Wu Huajia, He Taiping, Zhao Bin, and Wang Shuangjin. The author would also like to thank companies such as Fujian Foray Shareholding, Hunan Tangrenshen Group, Baosteel Group, China Aerospace Technology, Shanghai Deyida, and Alcatel, whose long-term practices in organizational design have provided the book with rich and high-quality empirical data. The author would also like to thank Ms. Qian Min from Jiutai Investment and Mr. Zhang Bing and Ms. Lu Huili from Jiuhua Consulting, who have undertaken a significant amount of work in support, liaison, layout, and proofreading for the completion of the book. Special thanks are due to Ms. Wu Yinghua, the planner of the series from Tsinghua University Press, whose creative ideas, enthusiastic invitations, and dedicated spirit have made an irreplaceable contribution to the timely publication and enhancement of the book. This book aims to combine advanced Western organizational design theory with the corporate organizational culture with Chinese characteristics and integrate it into corporate organizational design practice. The book systematically introduces the basic knowledge of modern corporate organizational design, including its meaning, principles, design process, and more. It elaborates on the issues to be noted in modern corporate organizational design, the methods and techniques of organizational design, and in-depth discussions on major issues currently of concern to managers, such as the structure design, process design, authority design, performance evaluation design, and incentive design of corporate organizations. It also discusses the integration, implementation, and development of organizational design. The book is rich in content, cases, and insightful analysis, emphasizing practicality. It is suitable as a textbook for the "Corporate Organizational Design" course for Master of Business Administration (MBA) students, as a textbook for upper-level undergraduate students in management-related courses, and as a reference for middle and senior managers in enterprises, as well as for individuals who wish to learn about the latest and most applicable knowledge in corporate organizational design.