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Designing Organizations that Design Environments: Lessons from Entrepreneurial Expertise

Darden Graduate School of Business Administration, Virginia, USA, sarasvathys{at}darden.edu

Nicholas Dew

Naval Postgraduate School, Monterey, California, USA, ndew{at}nps.edu

Stuart Read

IMD, Lausanne, Switzerland, Stuart.Read{at}imd.ch

Robert Wiltbank

Atkinson Graduate School of Management, Willamette University, Oregon, USA, Wiltbank{at}Willamette.edu

Human artifacts lie on the interface between their inner environments and their outer environments. Organizations, therefore, are apt subjects to be studied through a science of the artificial. Furthermore, organizational design happens at two interfaces: first, at the interface between organizational founder(s) and the firms they design, and second, between the firms and the environments in which they operate. We use recent developments in the study of entrepreneurial expertise to show why an effectual logic of design is necessary at the first interface, and what its consequences are for designing at the second. In particular, we use the exemplar case of Starbucks to codify three key characteristics of the design problem at the first interface — namely, Knightian uncertainty, goal ambiguity and environmental isotropy. We then use an `alternate histories' method to trace four strategic options — namely, planning, adaptation, vision and transformation — for designing at the second interface. In the final analysis, organizational design is important because effectuators using transformational approaches not only design organizations, but concurrently end up designing the environments we live in.

Key Words: science of the artificial • effectuation • isotropy • uncertainty • goal ambiguity • Starbucks

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