A modular organizational structure refers to a business that can be separated and recombined to work more efficiently. Automotive, computer and appliance manufacturers have been on the cutting edge of modular study, but the principle can be applied to any business, large or small. The key lies in the ability to remove emotion from the equation as you determine which modules, or departments, of your business are effective and which can be outsourced to create a tighter organization.
Larger System
The first basic tenet of the modular organization structure is that each part of your business is part of the business as a whole. No matter what that module consists of, from accounting to manufacturing, it fits together with all of the other modules to create the whole of your business. Like modular furniture, each piece has a place and distinct purpose.
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Independence
For any particular module, or department, to be effective it must stand strong its own. If you were to pull it apart from all the other modules in your company, you would want to know that it does its job as well as can possibly be done. Once each department is as strong as it can be, it can better support the business as a whole.
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Fit
The theory of the modular organization structure is that properly executed, the modules work together seamlessly. Each department completes its own tasks, but all departments work toward the same outcome.
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Releasing Loose Parts
One important piece of the modular organization structure is the belief that there is nothing sacred about holding onto tasks that can be better completed externally. To remain flexible and streamlined, a business must know when it is time to remove a module and allow the job to be done outside the company. For example, a small bicycle shop may recognize that its manufacturing, repair and customer service modules are at peak form and working well together, but that its accounting services are slowing it down. The shop may externalize that module and send the work to an outside business.
Weighing the Benefits
Before externalizing any module, your business must assess what it will gain by doing so. You'll have to weigh whether letting someone else perform accounting duties, for example, will free the business up to focus on what it does best and to provide the consumer with a leaner, more efficient business to deal with.
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