Corporate strategy, according to the classic definition, consists of the actions a company takes to gain competitive advantage. Executives invest enormous energy in product designs and long-range strategic plans, though many of these initiatives become obsolete as markets and competitors adapt, social norms and regulations evolve, and technologies advance. Yet most corporate leaders overlook a golden opportunity to create a durable competitive advantage and generate high returns for less money and with less risk: making organizational design the heart of strategy. It’s time for executives to recognize the strategic need to develop organizational capabilities that help companies thrive no matter what conditions they meet.

Modern corporations are massive, complex, dynamic ecosystems. In many of them, organizational inertia is considerable. Organizational-design work is hard and time consuming, and any meaningful change usually involves difficult personality issues and corporate politics. No surprise, then, that rather than tackle internal organizational issues to boost the performance of companies, many CEOs typically opt for the ad hoc structural change, the big acquisition, or a focus on where and how to compete.

They would be better off focusing on organizational design. Our research convinces us that in the digital age, there is no better use of...