What is Organizational Development? A Definition

Organizational development is a critical and science-based process that helps organizations build their capacity to change and achieve greater effectiveness by developing, improving, and reinforcing strategies, structures, and processes.

There are a few elements in this definition (adapted fromCummings & Worley, 2009) that stand out.

• Critical and science-based process. OD is an evidence-based and structured process. It is not about trying something out and seeing what happens. It is about using scientific findings as input and creating a structured and controlled process in which assumptions are tested. Lastly, it is about testing if the outcomes reflect the intention of the intervention.
• Build capacity to change and achieve greater effectiveness. Organizational development is aimed at organizational effectiveness. It, therefore, has a number of (business) outcomes. These can differ between organizations, but usually, they do include financial performance, customer satisfaction, organizational member engagement, and an increased capacity to adapt and renew the organization. These are not always clear-cut. Sometimes it is about building a competitive advantage, in whichever way we define that. We will explore these outcomes later in this article
• Developing, improving, and reinforcing strategies, structures, and processes. The last part of our definition states that organizational development applies to changes in strategy, structure, and/or processes. This implies a system-approach, where we focus on an entire organizational system. This can include the full organization, one or more locations, or a single department.

Organizational design has become more crucial over time. Today’s world is characterized by Volatility, Uncertainty, Complexity, and Ambiguity (VUCA). This VUCA world requires new agility from organizations, and organizational development is the means to that end.

In organizational development, the main stakeholders are both internal and external to the company. Management and employees are internal stakeholders. External stakeholders include customers, investors, suppliers, communities and governments.  

Globalization leads to a much greater interconnectedness and opens up organizations to world-wide opportunities and threats. 

On top of that, IT is redefining how traditional business models work, creating innovative companies with the ability to scale their services to a worldwide audience in the timespan of only a few years. Just a year after launching, Facebook hit one million registered users. A few years later, Snapchat hit 10 million active users in its first year. This exposes incumbents to disruption.

Finally, business systems become better at measuring relevant data, changing the way success is measured. On top of that, advanced people analytics can help to further drive organizational outcomes.