Organizational Design vs. Organizational Development: What's the difference?
Design ≠ development. Those who understand the difference make more conscious decisions and designs.
In my previous article, I addressed the question of whether organizational design is the most underestimated leadership task.
Organizational design and organizational development are
two sides of the same coin.
| Organizational design | Organizational development | |
|---|---|---|
| Goa | Designing an architecture of interaction | Designing social interaction |
| Focus | Creating enabling conditions | Behavior of people within the enabling conditions |
| Design levels | Formal & informal structures | Social dynamics & culture |
| Design object | Organization as a system | Organization as a social structure |
When combined, both approaches reach their full potential and lay the groundwork for sustainable change.
For a long time, these two approaches were seen as separate and unrelated.
Organizational design is shaped by management theory, and structural issues are regarded as a “management issue.” Organizational development is primarily based on psychology and behavioral sciences, and it is typically managed by HR in practice.
A shift in thinking is slowly taking place. There is a growing realization that a one-sided approach will not lead to the desired changes.
Organizational development: Effectively shaping collaboration and change
Organizational development is a systematic approach that encompasses conscious, behaviorally based work on individual and organizational processes. It is about developing effectiveness in the interaction between people and organizations.
It aims to develop the collaboration, communication, learning ability, and willingness to change of people, teams, and organizational units so that the organization as a whole can operate more effectively. This is particularly crucial when addressing change, conflict, and complexity.
This includes:
- The further development of leadership skills.
- Supporting learning and transformation processes at the individual, team, or organizational level.
- Reflecting on and changing behavioral patterns, attitudes, and role perceptions.
- Strengthening team dynamics.
- Working on the organizational culture, which describes how the company “ticks.”
In everyday business life, behaviors of members manifest in how leadership is perceived, decisions are made, and conflicts are resolved.
Organizational development makes these patterns visible and enables new forms of collaboration.
Organizational culture: How it shapes the company
The term organizational culture was coined by Edgar Schein. He defines it in the following way:
“A pattern of shared basic assumptions that a group has learned in coping with its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to think, feel, and act in the organization“
Core elements of organizational culture
1. Basic assumptions
- Deeply rooted, mostly unconscious beliefs and ways of thinking (mental models)
- Arise from shared experience and problem-solving
2. Learning through experience
- Culture arises from lived practice and proven behavior patterns
3. Passing on to new members
- New employees often unconsciously adopt the prevailing norms and practices of the workplace.
4. External and internal challenges
- Culture helps with adaptation to the environment (e.g., customers, market, suppliers) and with integration within the organization (e.g., cooperation, change)
Organizational culture is a broad field that encompasses both visible aspects, such as values and norms, and invisible, underlying assumptions, including mental models. This is what organizational development deals with.
The influence of culture is evident in practice. Structural changes are ineffective if the people do not support them. Conversely, even the best formulations of values have little effect if they are not lived out in everyday life and supported by appropriate enabling conditions.
Organizational culture: A central factor, but one that can only be designed to a limited extent
Organizational culture cannot be directly designed, but it can be influenced in specific ways.
It is an emergent characteristic of organizations arising from the interplay of various aspects, such as actual behavior, shared experiences, routines, and organizational conditions. These characteristics cannot be attributed to individual elements or members.
Projects that deal with culture, vision, mission, and values are important for the further development of the company. However, if they lack structural anchoring and managers and employees do not have the conditions that promote the desired behaviors, their impact quickly diminishes.
Many managers are unaware of this aspect.
Changing organizational culture requires a combination of:
- structural design (organizational design)
- leadership behavior
- and enabling new experiences in everyday life
Culture can gradually change only when conditions are created that promote and enable desired behavior.
How the company ultimately “ticks” is not decided in mission statements, but in everyday life.
Why the interplay between architecture and behavior is important
Organizations often concentrate on either the structural or cultural level, but they rarely connect the two systematically.
In practice, it has been shown time and again that organizations either focus on the structural level or the cultural level and rarely systematically link the two.
Leaders have a crucial role to play here. They are not only responsible for creating effective enabling conditions, but also have a significant influence on organizational culture through their behavior and decisions.
The effective interaction between architecture and behavior is crucial for the future viability of the organization.
- Working on the architecture of the company is of little use as long as people's behavior does not change.
- Working on people's behavior is of little use as long as the enabling conditions do not change.
Effective organizational design, therefore, takes into account not only the architecture—the “what” - but above all the behavior - the “how” of collaboration. It creates focus, clarity, and thus orientation for both people and the organization.
In this way, organizational design becomes a holistic approach that integrates organizational development.
Conclusion & Outlook
Holistic organizational design means creating a sustainable architecture in which people can take responsibility, develop, and work together effectively.
Are you reaching the limits of cultural initiatives in your company because behavior is not changing much? Or are structural changes fizzling out because people are not on board?
Then it is worth considering both dimensions together.
If you have any questions or need specific support, let's get in touch.
In the following article, you will learn why holistic organizational design is the key to your company's future fitness.
