There comes a time in the lifespan of every organization when the price to stay the same outweighs the price to change; when the old ways of working are no longer sufficient or get in the way of growth. It is at this time that organizations, no matter their size, must examine the best organizational design for continued success. Moving from startup to established business, pursuing new markets, or assimilating a newly acquired company all represent an opportunity and a challenge for leaders.
When organization design is mentioned to many leaders, minds quickly jump to the organization chart -- the “boxes and wires” of an organization. While this is one of the more tangible, visible parts of organization design, the process is about so much more than moving lines on paper, as simply changing reporting relationships rarely has a lasting impact on the way a company functions. In fact, you should leave the organization chart until the end of the design process.
Good organization design establishes new ways of operating, of relating to one another, of getting work done; it is fundamentally about using the architecture of the organization to translate business strategy into operational reality. And while this can feel daunting, creating a strong organization design does not require an army of consultants. An advisor with skills in this area can be useful, but is not required if leaders understand the basic components of organization design. Those components include:
- Strategy -- What is the business strategy you are trying to achieve? What are the main drivers for your company’s success?
- Design criteria -- What should the new operating model be capable of delivering? What criteria are needed to deliver on the strategy (capabilities, culture, etc.)? Finish the sentence: “The new operating model should…”
- Current state -- Define the “as-is” state of the company’s current customer experience, processes, decision-making flow, cost structure, state of technology, culture of the organization, structure of the organization, relationships among departments, current employee experience, existing strengths/skill gaps and behaviors being rewarded. One note: while the current state must always be a consideration when designing an organization, in some cases it is useful to approach the process as a “blank page” exercise, leaving the current state until the very end, as a starting point for design implementation.
- Key process flows -- What core processes are needed, either existing or yet to be designed, to drive the business strategy? If the processes already exist, where are the “pain points” you want to improve? While many small- to mid-sized companies pride themselves on being “process free” and not bureaucratic, it is important to recognize when that orientation is more a badge of honor than one that’s useful for the company’s continued growth.
- Governance structure – What decisions need to be made, where, when, and by whom to support the design criteria and the delivery of the strategy? How are decisions made currently? How do they need to be shifted?
- Organization structure – How should the organization be structured to drive the business strategy of the organization? What skills and capabilities are needed to deliver business value in the new operating model?
- Implementation plan – When and how will the new design be brought to life within the organization? Will it be implemented all at once or in phases? Who will be effected and how? Who will lead the implementation? How will the design be communicated to the organization?
Resist the temptation to design the organization around the people you have. Look at where you want the organization to go and the roles you’ll need to get you there, then look at whether your existing talent can succeed in those roles. You’ll be doing both your company and your organization a disservice if you try to force-fit your existing talent into roles that do not suit their interests or capabilities.
Related: 10 Qualities of Superior Leaders
Remember that people will nurture what they help create. If you’re going to change an organization, you have to change the way it operates and what better way to accomplish that than to ask the people inside the organization how it should operate to achieve its goals? Involve a team of people from throughout the company to help with the design. Include those closest to the work, not just the organization’s senior-most leaders. This approach respects what people inside your company bring to the table and fosters sustainability, as they’ll feel greater ownership and accountability when they’ve had a voice in building the future model.
In the end, it doesn’t matter how elegant, complex or simplistic the finished design is on paper; what makes the difference in whether the design is effective rests with what leaders model: how they engage people in the process, the culture of the effort and a clear, concise implementation plan. In short, it’s less about the structure you choose than about the integrity of the process you use to get there. Involve employees in shaping the future of the company, and you’ll unleash energy and investment that will bring your design to life.