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 a set of frameworks, tools, and practices to accelerate strategy execution and maintain a healthy organizational system. The work supports leaders to clarify strategy, assess misalignments, and make the right adjustments to its structure, processes, metrics, and people practices.
Operating model
An operating model describes how a business constructs and operates its capabilities to deliver on its strategy. Our operating model framework provides a holistic view of every component, guiding you through the specific sequence of decisions needed to design how the enterprise will run.
Organizational structure
Organizational structure is the formal arrangement of roles and reporting lines, usually drawn as an org chart. Structure is used to configure power in foundational architecture and identify where leadership accountability and management roles are needed.
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 are organizational muscles built through changes to the points on the Star Model to differentiate the company and provide a competitive advantage.
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.
Structure design options
Organizational structure design is based on four classic structure options: function, geography, product, and customer. At the enterprise level, one tends to dominate in alignment with the company strategy and distinctive capabilities.
Matrix organization
A matrix organization operates through shared power rather than command. While it often results in two reporting lines, a matrix organization should be treated less in terms of structure than a management capability. It 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 one role that is always held accountable for the quality of the decision. That role brings the right perspectives and data into the decision process and facilitates collaboration to make a good decision.
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 moving forward, agreed before structural design begins. They describe what we want every leader to know about how we will operate differently.
Organization diagnostic
An organization diagnostic is the structured assessment to understand where an organization is at today, the baseline, and the size of the gap between the current state and future state. It enables us to determine the root causes of why those gaps exist so that the highest impact changes can be made.
Participative design
Participative design is an approach that combines strong executive ownership with broad engagement to drive better design decisions and buy-in. The participative design process helps to build alignment across the leadership team and establish shared expectations around roles, accountabilities, decision-making, and ways of working across the organization.
Change management
Change management is the human-centered discipline of moving an organization from design to adopted reality. Change is a process, not an afterthought, and most effective when it’s purpose-driven, systematically developed, and integrated in the design process.
Reorganization
A reorganization, or restructuring, is any significant change to how a company operates. The term often refers narrowly to moving boxes on the org chart; effective reorganizations also redesign the other points of the Star Model: roles, processes, metrics, and people practices.
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.