Rethinking organization design to enforce organizational agility

Firms operate in increasingly competitive and multifaceted business landscapes, commonly referred to as VUCA (volatile, uncertain, complex and ambiguous) world. This environment and the accelerating pace of innovation require organizations to develop dynamic capabilities of an agile organization— sensing and assessing new opportunities of the local and global market; mobilizing resources rapidly and effectively to seize those opportunities and capture value from doing so; and integrating, transforming and reconfiguring to optimize continuous renewal and to address rapidly changing environments. Given the critical role of organizational agility in achieving sustained competitive advantage, firms need to build in-house capability to evaluate the effectiveness of their design and reorganize their organizations to do things differently. The purpose of this research is to examine the role of the organization design in enforcing organizational agility. The paper provides a preliminary theoretical framework that combines structural contingency theory, dynamic capabilities, Galbraith's Star Model and new paradigms governing organization design. The framework compromises eighteen core agile principles of organization design grouped into four categories (organizational structure and governance, culture and people, technology, and processes) to understand the effect of organization design on agility. It also contributes to practice through the framework’s analytical potential and improved understanding of the relationship between organization design and organizational agility.