#64—Peter G. Klein: Organizational Design as a Competitive Advantage

Peter G. Klein is a Professor of Entrepreneurship at the Baylor University’s business school, and Faculty Director of Baylor's Baugh Center for Entrepreneurship and Free Enterprise. He is also Adjunct Professor of Strategy and Management at the Norwegian School of Economics and Carl Menger Research Fellow at the Mises Institute.

Peter’s research focuses on the links between entrepreneurship, strategy, and organization, with application to innovation, diversification, vertical coordination, health care, and public policy. His work has appeared in numerous top journals from Academy of Management Review, to the Sloan Management Review.

Peter’s 2012 book Organizing Entrepreneurial Judgment, received the 2014 Best Book Award from the Foundation for Economic Education. His upcoming book Why Managers Matter, being published in October 2022, focuses on how even though the decentralized, “startup” culture has been increasingly popular the last few decades, the creative use of authority and hierarchy helps companies to be more agile and flexible, enabling educated, motivated people and teams to thrive.

Peter has also held faculty positions at the University of Missouri's Division of Applied Social Science and Truman School of Public Affairs, the Copenhagen Business School, among other academic posts. He was formerly a Senior Economist at the Council of Economic Advisers. He holds a PhD in economics from the University of California, Berkeley and a BA from the University of North Carolina, Chapel Hill.

In this podcast, he shares:

• Argues why this movement we are seeing toward decentralized organizations—flat hierarchies or no hierarchies—actually are not really flat
• Gives us a very clear answer to a critical question for anyone designing an organization: when and where is manager authority or centralized authority the better option to more open models
• What organizations need to do to unlock greater levels of intrapreneurship
• Why making profits depends on embracing uncertainty

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Episode Timeline:

00:00—Introducing Peter + The topic of today’s episode

2:22—What is your definition of strategy?

3:41—What got you interested in strategy?

5:04—Could you elaborate on your idea of "without uncertainty there would be no profits"?

7:15—Do you think some companies are more equipped to take on risk than others?

10:25—Are organizational structures becoming "flatter" or more layered, and why now?

14:54—If the role of the manager changes to org design and directing, does strategy change and does leadership in essence change?

17:50—Where do we expect to see hierarchy vs. non-hierarchy structures?

23:18—How can people connect with you and follow your work?

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"The role of the manager is to design, implement, and force the organizational rules of the game. In other words, you're not playing the game for people, you're not making everyone's decision for him or for her, but rather you're putting people in the right places where they can use their abilities, and their human capital if you like."

-Peter G. Klein

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Thank you to our guest, our executive producer Zach Ness, our editor James Pearce, and the Outthinker team. If you enjoyed this episode, please follow, download, and subscribe. I’m your host, Kaihan Krippendorff—thank you for listening.

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