Balanced Structures: Designing Organizations for Profitable Growth

Companies strive for profitable growth in their quest to create superior returns for their shareholders. Profitable growth requires an organizational design that pursues seemingly contradictory demands: mechanistic structures to ensure the efficient exploitation of existing capabilities, and organic structures to enable the exploration of new growth opportunities. Researchers have suggested a range of ‘balanced' structural concepts to reconcile these conflicting requirements at the corporate level. The solutions include temporarily cycling through different structures (temporal separation), creating differentiated units (structural separation), and enabling employees to move back and forth between different structures (parallel structures). While theoretical concepts have been presented for balanced structures, much less is known about how organizations deploy and execute these solutions.

In this article, data from an inductive study of six leading Central European companies are used to explore the specific conditions under which different structural solutions were adopted, the strategies deployed to execute these solutions, and the learning outcomes that resulted from their implementation. The organizations observed in this study used the three balanced design options as complementary rather than mutually exclusive solutions. The solutions were deployed in different contexts and contributed to different learning outcomes. While the solutions all combined exploitation and exploration activities to some extent, each solution addressed different dimensions of these learning processes. The process model of balanced structural designs, presented in this article, provides insights into the structural solutions that may be most appropriate given the requirements of specific situations. Four general design rules are presented to support practitioners in the successful execution of balanced structures.