Organizational design

Beyond boxes and hierachies

According to Axholmen, organizational design is about organizing the people in the best way to achieve the company’s goal. Our experience shows that a successful organizational design helps companies to become successful.

Author: Anna Nordberg




It is not unusual that a company redesigns their organizational structure occasionally. Sometimes, it is fully justified and necessary to reach synergy effects during an acquisition or to support a new strategic focus. In other cases, there seems to be overconfidence in the ability of new organizational boxes to solve problems, and many studies show that most of all reorganizations fail to create value for the company.

According to Axholmen, organizational design is about organizing the people in the best way to achieve the company’s goal. Our experience shows that a successful organizational design helps companies to become successful in two ways:

  1. Enables the company’s long-term strategic goal to be reached, e.g. increasing innovation, gaining synergy effects from acquisition, responding to a change in technology
  2. Leads to concrete financial results short-term and long-term, e.g. cost savings.

In this article, we will share our insights into creating a successful organizational design.

Five tips for succeeding with an organizational design


Reorganizations are often used as a kind of universal solution. Given that the majority fails, it is important to think beforehand. To begin with, as with any change, there should be a clear goal with a new organizational design (see the chapter above). However, there should also be indications that the current organizational design contributes to the goal not being achievable. For example, a decentralized purchasing organization that achieves widely differing results in price negotiations.


A reorganization always causes increased costs and uncertainty in the organization. Therefore, ask yourself which type of change creates the most value in relation to effort. Figure 1 illustrates different parts of an organizational design, where each part is not necessarily relevant in every situation. In some cases, desired goals can be achieved by clarifying areas of responsibility and having good metrics in place, rather than introducing a matrix organization.

However, focusing on value is not the same as being overly cautious. The experience of, for example, cost efficiency is that doing small adjustments can create as much concern as a real organizational change, without leading to desired results.


In the last 20 years, the companies’ environment has changed towards being characterized by rapid technology development and global competition. Life cycles have been compressed, the map for intellectual property rights has been redrawn and ownership requirements have become multidimensional. Organizational design has thus begun to move beyond traditional vertical hierarchies, towards mobile workgroup structures, and networks outside the company’s boundaries. A clear indicator is that project organizations are beginning to integrate as a natural part of otherwise hierarchical organizations. The companies that dare to design towards a network organization, ready to face an ever-changing world, will have a competitive advantage.


The more loose the organizational structure needs to be, to meet constant change, the more focus needs to be placed on the corporate culture as a complementary control mechanism. Corporate culture does not exclude structure but is based on underlying values ​​and attitudes (see Figure 2).

A good and well-known example of a successful journey towards value-driven culture is Netflix. Search for “How Netflix Reinvented HR” on YouTube for an interesting reading.


Finally, it must be mentioned that if the implementation fails it does not matter how good the organizational design is. A change in people’s place of residence and place at work is one of the most difficult types of changes. This subject should be an article itself, but we emphasize the importance of taking this into account already during the design phase. For example:

  • Is it clear that the current organization is not sustainable/desirable?
  • How should we measure success and progress with the reorganization?
  • How do we create early ownership and mandate for key personnel?


An organizational design with a clear goal, where the change is value-driven without being too cautious, and the implementation is taken into account from the beginning – has a significantly higher chance than the average of succeeding. The companies that also dare to design towards the network organizations of the future, and a value-driven corporate culture, have a golden opportunity to gain an edge in the market today, which is characterized by relaxed intellectual property rights, fast technical life cycles and owners who require both revenue increase and cost reduction.

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