Costing organization designs

One of the knottier issues around an organization design is estimating the costs of getting from the current to the future organization. Questions like

  • What are transitional costs?
  • What are opportunity costs?
  • Are we including qualitative costs as well as financial costs?

All start to come into play as the design process proceeds. What happens in many projects is that the design process proceeds without an ongoing cost estimation, and it is hard to get to actual costs before the design is completed.

I was intrigued to find a patent application (which is not a totally straightforward read) titled Organizational Design Approach To Transition Cost Assessment For Business Transformation filed by IBM. I couldn't locate the date of the filing and don't know if the patent has been granted yet so I submitted a query on these points and am awaiting a response – though whether I will get one or not remains to be seen. The abstract reads:

A method for facilitating in assessing transitional costs in business transformations using a computer-aided organizational design system is provided. The method comprises creating a first organization design model representative of the current organizational design state of an organization using a graphical tool. The method further comprises changing the first organization design model into a second organization design model representative of the organizational design state of the organization after the business transformation. The method further comprises generating a report identifying the transition cost factors and the transition cost of moving from the first organization design model to the second organization design model, wherein the transition cost is determined based on predetermined calculation algorithms or heuristics.

Reading through the application it looked as if it would be just the thing to satisfy the finance department or anyone else interested in getting some numbers behind the design. It appears not to cost out the human factors like the stress of potential redundancy, the disruption to social networks, the learning or career opportunities available in the new design, and so on – but maybe there are intelligent algorithms (are there?) that could cost out the qualitative elements of an organization design.

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