Design Your Organization around Stakeholder Relationships Leadership Advance Online – Issue XXIV

It was once argued that organizations arose in order to control the diverse range of individuals contained in every activity within an economic goal (Ouchi, 1980). While bureaucracies and hierarchical organizational structures may have succeeded in this control for a time, it was found to be an illusion, because control meant that organizations were closed systems. Since then, organizations have undergone rapid and significant change, not the least of those changes have been the variety of influences and the range of values that the organization affects and are affected by (Johansson, 2008). To survive in this volatile, often ambiguous, and always uncertain environment, the contemporary organization must satisfy a number of stakeholders whose wants and expectations are disparate, often in conflict and subject to change (Johansson, 2008). This article argues that the relationships developed between an organization’s leaders, employees, and various stakeholders are the key to its success even more than an organization’s strategy or structure. This is not to say that structure and strategy are not important, rather, it is possible to attain the same desired results (Nadler & Tushman, 1980) with different designs. The optimal structure depends on the firm’s mission and how it can best “fit ” the particular environment in which the organization operates (Lysonski, Levas, & Lavenka, 1995). This then must be integrated into th