8.2 Organisational design options
We noted in the section on organisational design that the framework of an organisation's structure is dependent upon the extent of both vertical and horizontal differentiation. We now look at a biological analogy to see what differentiation is about, using our own body as the exemplar.
At the moment of conception, we consist of two cells - one from each of our parents. The fused cells then proceed to multiply until eventually there are billions of cells. Along the way, the cells differentiate: some become nerve cells, others become muscle cells and organs such as the heart, liver, lungs, skin and so on evolve. When an organisation is conceived, it goes through a similar process and the organs of our body are analogous to the various departments we find in organisations.
The type of departments depend on the purpose of the organisation, so let's look at some of the possibilities for creating various departments. We can organise departments or divisions on the basis of function, product, customer or geography , as illustrated in the diagram below.
Figure 8.1 Basis for an organisation structure
Figure 8.2 A hybrid organisation
We can also create hybrid organisations, incorporating two or more of the above options. A common hybrid employs both the functional and the product options.
There is another option - the matrix - which we discuss in the next section.
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