An effective organization has three main functions, as described by the book: complexity, formalization, and centralization. I will describe these more in detail later when I use an overall example to demonstrate these functions. Complexityis defined as being the different levels of a hierarchy(or non-hierarchy) system in an organization. The three different types of differentiation: horizontal, vertical, and spatial. Formalization is the extent to which the organization has specific rules and regulations encircling its structure. Centralization is the more complex of the three functions as it involves who makes the main decisions in the organization. I agree with Hage and Aiken's definition saying, to sum up, an organization is more centralized when the employees at the highest levels make the decisions.
It's easier to understand the concepts when they are seen in a real-life scenario such as the Boston Red Sox MLB organization. I would say the Red Sox have a vertical differentiation with a tall structure but also departmentalized by function within that structure. They have the different departments including: Front Office, Baseball Operations, Marketing, Legal, and Public Relations to name a few. However, these departments report to the Officers who include the CEO, Director, and Owner. The Red Sox are also very formalized since they are a branch of the Major League Baseball organization. They follow the rules set forth by the MLB which are specific to each department. It's hard to measure the centralization of the Red Sox because of it's many levels and departments but I would say that all-in-all it is more of a group effort to create an effective organization meaning it is less centralized.
I said in my last post that communication is the overall key to having an effective organization however now I would add to that and say that the organizational structure is also very important. We had a lot of examples in class and in the book of successful organizations that have very strong structures that prove how important that is. Brunswick, for example, increased their revenue by $2 billion in only five years after they were restructured to better fit their goals.
Red Sox information found at http://boston.redsox.mlb.com/team/front_office.jsp?c_id=bos