Organization design glossary.
The vocabulary of organization design, defined the way we use it with clients. For the frameworks these terms come from, see our core frameworks.
Organization design
Organization design is the discipline of deliberately shaping how a company organizes to execute its strategy: its structure, processes, metrics, and people practices. It goes beyond drawing an org chart to designing how work, decisions, and information actually flow.
Operating model
An operating model is the combination of structure, governance, processes, and ways of working through which a company delivers its strategy. It answers how the enterprise runs, not just who reports to whom.
Organizational structure
Organizational structure is the formal arrangement of roles and reporting lines, usually drawn as an org chart. Structure is one component of organization design, not a synonym for it; changing structure without redesigning processes, metrics, and roles rarely changes outcomes.
Star Model
The Star Model is Jay Galbraith’s organization design framework holding that five elements must align for strategy to produce results: strategy and capabilities, structure, processes, metrics and rewards, and people practices. Culture and performance are outputs of that alignment, not levers that can be pulled directly. See our interactive version on the Star Model framework page.
Distinctive capabilities
Distinctive capabilities are the few things an organization must do better than its competitors for its strategy to win. They anchor design choices: structures, processes, and talent decisions should all be tested against whether they strengthen the capabilities that matter.
Enterprise operating model
An enterprise operating model is the operating model of the whole company, spanning business units and functions. Designing one means sequencing decisions from strategic choices through structure, governance, and decision rights.
Operating framework
The operating framework defines how integrated or separate the units of a business portfolio should be, on a continuum from a fully integrated single business to a holding company. It is one of the most consequential and least discussed decisions in enterprise design.
Business unit
A business unit is a division of a company with accountability for a distinct product, market, or geography, often with its own profit and loss. How much autonomy business units get is set by the operating framework.
Functional structure
A functional structure groups the organization by expertise, such as engineering, marketing, finance, and operations. It maximizes depth and efficiency within disciplines at the cost of slower cross-functional coordination.
Market-based structure
A market-based structure groups the organization around customers, segments, geographies, or products rather than functions. It maximizes responsiveness to each market at the cost of duplicated capabilities.
Matrix organization
A matrix organization gives some roles two reporting lines, typically one functional and one market or product based. A matrix is the strongest and most expensive form of lateral connection, and it only works when built on shared processes, aligned metrics, and mature management practices.
Lateral connections
Lateral connections are the mechanisms that link work across organizational boundaries, ranging from informal networks and shared processes up to integrator roles and matrix reporting. Jay’s Ladder orders them by strength and cost.
Integrator role
An integrator role is a position created to coordinate work across units that must collaborate, such as a program leader, product manager, or account manager. Integrators carry accountability for outcomes that span boundaries without owning all the resources involved.
Center of excellence
A center of excellence is a small group that concentrates scarce expertise, sets standards, and supports the rest of the organization in a specific domain. It trades some local autonomy for consistency and depth.
Spans and layers
Spans and layers describe the shape of a hierarchy: how many people each manager oversees (span of control) and how many management levels sit between the top and the front line (layers). Wide spans and few layers speed decisions but demand more capable managers and clearer processes.
Decision rights
Decision rights specify who makes which decisions, who must be consulted, and who can veto. Ambiguous decision rights are among the most common sources of organizational friction, and clarifying them is often the highest-return part of a redesign.
Governance model
A governance model defines the forums, cadences, and authorities through which an organization steers itself: which bodies meet, what they decide, and how each layer of leadership adds distinct value. Good governance makes the matrix and lateral connections workable.
Operating principles
Operating principles are the explicit stakes in the ground for how leaders intend to run the business, agreed before structural design begins. They turn abstract values into designable constraints, such as where the company will standardize versus localize.
Organization diagnostic
An organization diagnostic is the structured assessment of how an organization currently works: how decisions flow, where friction sits, and how well the current design supports strategy. It is the first phase of a well-run redesign, and it separates evidence from anecdote.
Participative design
Participative design is an approach that puts the leaders and employees who will live in the new organization inside the design process, rather than receiving it as an announcement. It produces better designs and dramatically better adoption, because people do not resist changes they helped build.
Change management
Change management is the discipline of moving an organization from design to adopted reality: communication, role transitions, capability building, and the routines that make new ways of working stick. A redesign without change management is a document.
Reorganization
A reorganization, or restructuring, is any significant change to how a company is organized. The term often refers narrowly to moving boxes on the chart; effective reorganizations also redesign processes, decision rights, metrics, and roles.
Role clarity
Role clarity means every role has an understood purpose, accountabilities, and decision rights, and that adjacent roles know where one ends and the next begins. Most "people problems" surfaced in organizations are actually role clarity problems created by the design.