Considerations and Caveats in Evaluating Organizational Structure Models for Change

You mentioned that “the informal organizational structure is proposed by Gulati & Puranam (2009) as the best model for coping with any changes in the market or the environment of a business”-  I would take this assumption about best model with more caution. Gulati and Puranam (2009) discuss how the inconsistencies between structure and culture might be seen as an opportunity to the emergence of what was termed a ‘compensatory fit’ which helped the company to get along two strategic dualities; Cost and differentiation. Yet, the authors warns against generalising the idea that all inconsistencies are necessarily good (or bad) in the sense described in Cisco’s case.

Gulati, R. and Puranam, P. (2009). Renewal through reorganization: The value of inconsistencies between formal and informal organization. Organization Science, 20(2), 422-440

I agree with your proposal of taking the assumption about any organizational structure model to be the best with caution. In the case of Cisco, Gulati & Puranam (2009) give a clear warning against any generalization of one structure’s inconsistencies or characteristics as being either good or bad. This is mostly because each design has its own strengths and weaknesses, which we look at in terms of advantages and disadvantages. For instance, one structure may be better suited for flexibility during changes in the external environment but lack proper communication flow. The other design may be slow to respond to external changes, but be better at communication efficiency. Gulati & Puranam (2009) propose the incorporation of both designs to complement each other and minimize challenges as much as possible. My statement ought to have been that the informal organizational structure seems better positioned to cope with any environmental and market changes.

References

Gulati, R., & Puranam, P. (2009). Renewal through reorganization: The value of inconsistencies between formal and informal organization. Organization science, 20(2), 422-440.