One night, many years ago while I was doing my MBA at the Stockholm School of Economics I was sitting beside the late Prof. Gunnar Hedlund in a pub. We were having a pub night and Gunnar had lectured for us during the day and tagged along to the pub that evening.
Gunnar had spent a large part of his life researching how international organizations organize themselves. Sitting there beside him I couldn’t help but ask him some questions that had been on my mind during his lecture. One of the questions I put to Gunnar was “have you seen in your research that some organizational form is better in some way than other organisations?” Looking back I suppose my question was a bit naïve but I couldn’t help but wonder if companies that use matrix organisations might be more profitable over time that strict hierarchical ones or vice versa. Gunnar smiled at me, probably thinking that here is just one more eager young man looking for simple answers to complicated problems. His answer to me was this: “There is no empirical evidence to indicate that any organizational structure is better or best” he continued “I can imagine that there may be certain organizational structures that are not suitable in certain situations but there are probably may that are equally suitable.”
Gunnar said: “Choose a simple organizational structure and keep it that way. Companies often re-organize in order to adapt to changes in the world around them but the market place changes much faster than organizations can re-organize. If you choose a simple organization you can then spend your effort on teaching the people in the organization to be flexible and adapt to changes in the market place.”
During my working life I have lived through many large and small organizational changes. I have even initiated some of them. More and more I begin to wonder if Gunnar wasn’t right. Organizational changes are time consuming and costly. In most cases the benefits of the re-organization are marginal if they exist at all!
At one point in my life the head of HR for a company I was working for asked me what I thought about the ongoing re-organization and I said “You can’t ruin a good company by re-organizing”! This VP of HR broke out in laughter.