Niko Matouschek

Firms succeed and fail on the strength of their internal organization. Drawing on both neoclassical and behavioral economics, this course explores the challenges that managers face when designing their organizations, and develops the MINDS framework to aid them in their organizational choices:

 

Motivation. The well-designed organization attracts the right people (the problems of selection and retention), induces them to work hard, and makes sure they work on the right things (so as to avoid the problems of multi-tasking and gaming, its evil twin.)

 

Integration. It does not suffice that employees perform well separately, they must also be willing to help each other and coordinate their efforts. After all, in all but the simplest organizations, production is a team endeavor.

 

Non-rationality. While many choices can be understood through the lens of rationality, others are the product of our flesh-and-blood human nature. Only by understanding non-rational behaviors can the organization achieve maximum efficiency and avoid large-scale failures.

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Decentralization. To act quickly and use the best information at its disposal, organizations must delegate a number of key decisions. But how can it trust that those in charge of these decisions act in the interest of the firm rather than pursue selfish goals? An important part of the answer is to rely on internal markets, which come in a surprising variety of flavors.

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Scope. What the organization does and how it does it pose interrelated challenges. When considering a major change in scope (such as a merger) the organizational strategist should have a plan that addresses the challenges of the four preceding factors. Critical as well is to anticipate the often predictable reaction of competitors and regulators to any major change.

 

Strategy and Organization is devoted to fleshing out this framework and exploring how to put it to use.