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The Role of Organizational Design in 21st Century Organizations: Capitalizing on Intellectual Property


What is the role of organizational design in 21st century organizations? More appealing than the question is the answer: the role of the 21st century organization is to design organizations capable of capitalizing on the intellectual property of its employees, resulting in an enduring competitive advantage for the organization, leadership and the employee.
What does this mean to leadership? It means that executives must understand their roles, must create a conducive environment, which allow them to capitalize on the intellectual property of its employees, realize the importance of their employees, and be ready to embrace the benefits. Their willingness to pursue this course will provide their organizations loyal employees and a competitive advantage in the market place.
Importance of executives
Organizations exist because they are created to realize the purpose of achieving a competitive advantage. Notable author Richard Daft asserts: “It is this purpose and direction that shapes how the organization is designed and managed.”[1] Executives must appreciate that they should be intimately involved in the design of their organizations “because they see the decisions as high-leverage, and see effective organizational design as a source of competitive advantage in a world of temporary advantage.”[2] Nadler and Tushman further suggest that leadership must comprehend the concepts and have the qualifications to design organizations, providing them with a competitive advantage and should concede that organizational design is a fluid process.[3] Thus, executives are important because it is their responsibility to create an environment which impels employees to share intellectual property.

Designing the organization
How is this done? First, leadership must design organizations which make employees feel more like a family member in a clan than a bottom line. According to Chan,
“A clan organization, as the term is being used here, is a business oriented social enclave consisting of companies and individuals who are bound by strong, non-contractual bonds…It is suggested that companies which have created social enclaves often are the best performers in a turbulent market or industrial environment where uncertainty prevails.”[4]
Cameron and Quinn would agree that the combination of a clan and adhocracy culture could create that type of organization.[5] A clan culture is a: “very friendly place to work where people share a lot of themselves; long-term benefit of human resource development and attaches great importance to cohesion and morale”[6] and the adhocracy culture would be a: “dynamic, entrepreneurial, and creative place to work; long-term focus is on growth and acquiring new resources.” [7]
The next task leadership must undertake is to put in place a framework which Galbraith states is a “series of design policies that is controllable by management and can influence employee behavior.”[8] Galbraith’s framework is called a ‘star model’ and the 5 categories include strategy, structure, processes, rewards, and people and are summarized below:

  1. Leadership must develop a strategy, which are goals, objectives, values and mission which guides the organization in a winning direction;
  2. Leadership must establish appropriate structure which is proper placement of power and authority;
  3. Leadership must establish processes which direct the flow of information;
  4. Leadership must put in place the proper reward systems which provoke people to perform and complete organizational goals;
  5. Leadership must develop human resource policies which address employees’ skills and mindset.[9]

Lastly, leadership is responsible for reinforcing “the cultural ideals through their actions and behavior… it is pivotal that the firm's top management not only agree on the goals, values, and vision of the firm but also reinforce them consistently through their actions and behavior."[10] As an example of consistency, the author of Hebrews 13:8 reminds people of the consistent life of Christ: “Jesus Christ is the same yesterday and today and forever.”
By implementing the appropriate culture, establishing an influential foundational framework, and exhibiting consistent behavior, leadership should be able to persuade employees to actively share intellectual property.

The one-sidedness of pursuing intellectual property
Once employees feel like they belong to the organization and are a part of the family, it should be easier to harvest their knowledge. 21st century organizations must deploy a unique way to capture and manage knowledge in order to remain competitive and relevant in the 21st century. This knowledge is known as intellectual property. One company defines it as “what walks out the door at the end of the business day…companies in the ICM Gathering state that it is the sum of a firm’s ideas, inventions, technologies, general knowledge, computer programs, designs, data skills, processes, creativity, and publications.”[11] When you put these two definitions together, you get intellectual property which consists of human capital which is the employee with the skills, abilities and ideas and intellectual assets, which is their knowledge written on paper.[12]
One of the most critical issues for organizations according to Desouza, et al is determining how to get people: “to share their most valuable insights and know-how. Without knowledge sharing by employees, there will be nothing to store in a knowledge repository…Many employees will be glad to share what they know on a superficial level. However,probes into questions such as how they know what they now or why they know what they know, i.e. getting to the details of the mater, is difficult, if not impossible. The crucial reason is that their knowledge is a source of power, and power, to a certain degree, uarantees them a paycheck and a job…if you want employees to share their valuable know-how, reward them, pay them and provide incentives. If not, they will only share what they feel is customary or polite.”[13]
A company I once worked for had a database that they wanted employees to input their ideas in exchange for access to other employee’s intellectual property. Because I realized that the exchange was one-sided, I opted not to place my own ideas in it and forego access. Had there been a tangible benefit, I would have happily shared my intellectual knowledge.
When employees create work, whether it is software, written material or an invention during duty hours, their employer usually owns it. Employers are very aware of the value of this knowledge so they make it clear in their employment contract that what is created by employees belongs to them. The employer is protected by patent laws which states that “an invention made by an employee shall, as between him and his employer, be taken to belong to his employer for the purposes of this Act…if it was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties...”[14]
Organizations do not own its employees; however, they do own the intellectual property written by the employees. The current method used to exploit this intellectual property is legally written to monetarily benefit the organization. They do this to protect their market share and profits.[15] Companies have employees sign “confidentiality agreements and convenants not to compete and are conditions sine qua non for many employment contracts for they secure: that all intellectual products created by the employee during the employment relationship will be the property of the firm; and that no firm specific knowledge will be transferred to another firm within a reasonable period of time after the termination of the employment agreement.”[16]

Another example of what I will term one-sidedness is when employers pay their employees for referrals. The employee receives a $1,000.00 to $10,000.00 bonus if their referral accepts a position with the company and remains for a specified number of months. The employee receives a taxed, one-time check while the company gets paid monthly for as long as the employee remains with them. How equitable is that?
I contend that the role of the 21st century organization is to design organizations capable of capitalizing on the intellectual property of its employees and sharing the profits in an equitable manner, resulting in a greater competitive advantage than deemed possible. Sullivan states that “it is in the firm’s best interest to encourage employees to codify their knowledge so that the firm may have more opportunities to leverage it into profits.”[17]
To fully demonstrate to the employees that the organization cares for them like a family member, leadership would write a contract, which places both the inventor and the organization on the patent application, sharing in the royalties if the intellectual property is commercialized. By pursing this method, leaders and the company gain loyal employees that feel that they can trust them to take care of their needs. Consequently, employees will be more willing to share their intellectual property.
Benefits to leadership and 21st century organizations
There are a variety of benefits that will be achieved if leadership considers the concepts in this article. However, before benefits are derived, leadership must accept the fact that they are at the forefront of change and without their active participation and correct mindset, effective change will not occur. The mindset I am referring to is transformational leadership. It is a “process that changes and transforms individuals…and is concerned with emotions, values, ethics, standards, and long-term goals, and includes assessing follower’s motives, satisfying their needs, and treating them as full human beings.”[18] When leadership exhibits the proper mindset and consideration, they are able to “create a connection that raises the level of motivation and morality in both the leader and the follower,”[19] increasing the chances that the employee will deposit intellectual property with the company.
Increased levels of motivation and a friendly and creative work environment set the stage for creating an organizational design, which propels employees to want to share intellectual property. In addition, Galbraith’s star model, which includes strategy, structure, processes, rewards, and people, provides additional empowerment to collect intellectual property.
Now that the proper attitude, mindset and organizational design are in place, leadership is in position to gain a continuous enduring competitive advantage for himself, the organization as well as the employee. By co-owning commercialized intellectual property, all parties would share in the profits, resulting in a win-win situation for all.

About The Author:
Bridget has over 21 years of technical experience in the computer industry in support of federal and commercial customers. She aspires to lead her own company and return to the days of character, honesty, integrity, and loyalty. Businesses seem to have lost the incentive to have those qualities, but she wants to restore them for the generations to come.
Bridget Gilmore is pursuing her Doctorate of Strategic Leadership with Regent University, Virginia Beach, VA, and anticipates receiving it in the Fall of 2009. Bridget received a Bachelor of Arts degree in Computer Information Systems from Saint Leo University and her Master of Arts degree in Computer Information Systems, Resource Management from Webster University. 
She can be reached at [email protected].

[1] Richard Daft, Organization Theory and Design (Mason: OH. Thomson South-Western, 2007), 56.
[2] Jay R. Galbraith, Designing Organizations: An Executive Guide to Strategy, Structure, and Process (San Francisco: CA. Jossey-Bass, 2002), 6.
[3] David Nadler and Michael L. Tushman, Competing by Design: The Power of Organizational Architecture (New York: NY. Oxford University Press, Inc., 1997).
[4] Andrew Chan, “Corporate Culture of a Clan Organization,” Management Decision 35(2), (1997).
[5] K. S, Cameron and R.E. Quinn, Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework (Rev. ed.), (San Francisco, CA: Jossey-Bass, 2006).
[6] Ibid., 66.
[7] Ibid.
[8] Jay R. Galbraith, Designing Organizations: An Executive Guide to Strategy, Structure, and Process (San Francisco: CA. Jossey-Bass, 2002), 9.
[9] Ibid.
[10] Michael Zmugg, A Culture of Performance, Oct. 5, 2007, Retrieved from
http://www.cenews.com/print.asp?id=2413 on October 22, 2007.
[11] Patrick H. Sullivan, “Profiting from Intellectual Capital,” Journal of Knowledge Management 3(2), (1999).
[12] Ibid.
[13] Kevin C Desouza, ShigetakaYamakawa and Yukika Awazu, Pricing Organizational Knowledge: An Imperative. Ivey Business Journal, (2003).
[14] The Patent Act of 1977 (As Amended) (April 2007), Retrieved from http://www.ipo.gov.uk/patentsact1977.pdf on October 30, 2007.
[15] Radoslav P. Kotorov, “The Rights of Employees/Inventors to Claim Back their Patents from Corporations. European Journal of Innovation Management 5(2), (2002).
[16] Ibid.
[17] Patrick H. Sullivan, Profiting from Intellectual Capital, Journal of Knowledge
Management 3(2), (1999).
[18] Peter Northouse, Leadership Theory and Practice, (Thousand Oaks, CA: Sage
Publications. 2004), 169.
[19] Ibid., 170.

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