In today’s blog we’re sharing some tips about organizational des
ign, extracted from a recent article entitled “10 Principles of Organization Design” which you can read here.
The article was published recently by Strategy& (the former Booz & Company organization acquired last year by global services organization PWC).f
Formed in 1914, and one of the earliest management consulting companies Booz was described by Time magazine in the 1950s as “the world’s largest, most prestigious management consulting firm”; known, among other things, for coining the concepts of and doing pioneering advisory work in such areas as supply chain management, product lifecycles, and organizational DNA.
We’re also going to close off by sharing a neat trick with users working in any organization with an alumni association or alumni network. You can use Organimi to create an alumni network org chart (regions, chapters, local associations) and also create an “influence diagram” for your organization’s alumni network. We’ve done the example using some notable alumni of Strategy&.found online.
Avoiding The Illusion of Organizational Change
We have written a number of blogs dealing with org charts and organizational design issues, with topics ranging from changing structures (virtual teams), through changing needs (focus on diversity or innovation), to the application of new tools (behavioral techniques)
You might be familiar with the Penrose triangle
or a more common derivative – the Waterfall – from Dutch artist M.C. Escher – found in college dorm rooms of certain types of students of a certain era….
Both are “impossible objects” , two dimensional figures that we instantly and subconsciously interpret visually in three dimensions, creating a visual paradox.
Org charts and the process of organizational re-design can engender a similar illusion – of meaningful change in the three dimensional real world of operations, based on clever manipulation of the two dimensional view of people and roles and where they belong.
Strategy& describes the org chart as “the most seemingly powerful communications vehicle around” and an emotional lightning rod “because it defines reporting relationships that people might love or hate”. Illusions can be dangerous things.
The Strategy& team notes a current business climate where perpetual reorganization seems to be the order of the day, driven by fast paced technological change, competitor moves, and shifting distribution channels and customer expectations.
Unfortunately, for many organizations, these reorganizations never transcend a superficial exercise in moving boxes and lines on org charts — in some cases akin to shuffling the chairs on the deck of the Titanic, as the organization proceeds full speed ahead towards the iceberg.
The iceberg may be big (a competitive threat) or small (declining engagement, or a loss of key staff) but any way you slice it, you would be better off avoiding it.
Do your reorganizational efforts and new-organization-chart-every-week efforts have this effect? Do they present and represent this illusion of change?
How do your organizational charts measure up in effectively communicating organizational goals, structures and alignment, and in dealing with the intellectual and emotional needs of your team – the tribe, the hunt, the self drivers – for promoting employee engagement and accelerated team performance.
Creating Building Blocks For Better Org Charts
Since the average tenure of a CEO in a large organization is roughly five years, most CEOs basically have “one shot” to get it right according to Strategy&
And most CEOs move on to other roles based on their perceived success in “moving the dial” in the organization they left. As a result, getting organizational design right can have a lasting effect – on their own careers and those of their colleagues….As Eminem says in Lose Yourself organizational redesign is a once in a lifetime process for its proponents.
With all this in mind, the Strategy& team provides a few tips you can follow in thinking about your own organizational design initiatives before you embark on your next reorganization. We’ve summarized them below. And we encourage you to use Organimi once your done to experiment with the options, and see how your approach confirms with the methods described.
No harm, no foul; “declare amnesty for the past”. Organization design should start with corporate self-reflection. What will differentiate your organization from others in the future. Don’t be constrained by past designs, or any of the assumptions underlying them. As Strategy& suggests declare “amnesty for the past” – no harm, no foul. Call it organizational amnesia. This simple, clear, categorical departure from the past, without blame, creates opportunity for new insight and innovative approaches to organizing and harnessing your people assets.
Focus on framework; “Design with the “DNA.” Resist the temptation of making organization designs overly complex. Think elegant design. Think simple. Less is more. Analyze and prioritize the necessary structural and design elements that will make your organization a success in the future and make sure that your approach to organizing your people is built around that. The Strategy& team, consistent with its “organizational DNA” lineage, proposes a helix framework comprised of four complementary (formal + informal) pairs.
Their framework is described as follows:
“Decision rights are paired with norms (governing how people act), motivators with commitments (governing what they feel about their work), information with mind-sets (governing how they process knowledge and meaning), and structure with networks (governing how they connect). By using these elements and considering changes needed across each complementary pair, you can create a design that will integrate your whole enterprise, instead of pulling it apart.”
It’s not about the org chart; “fix the structure last, not first” Org charts for many organizations are at best a “vague approximation” of how things get done according to Strategy&. This is so true! Anyone who sees how stale dated their org charts are — how rapidly they become out of date – will recognize this.
Accepting this fact, they suggest that organizational architects pursue the underlying drivers that will transform he business. They see structural change as coming last — “as the capstone, not the cornerstone” to ensure change is enduring. Focus on getting the building block priorites right, like: eliminating non-productive meetings (information flows), clarifying accountabilities in the matrix structure (decisions and norms), and changing how people were rewarded (motivators).
And then get your org charts up, share them and easily keep them updated with Organimi! Not hard.
Know thyself…and your people. “Make the most of top talent.” Strategy& observes that talent is a critical but often overlooked factor when it comes to organization design. It seems like everyone is talking talent these days. Useful suggestions include “designing positions to make the most of the strengths of the people who will occupy them, and considering the technical skills and managerial acumen of key people, and making sure those leaders are equipped to foster the collaboration and empowerment needed from people below them”.
These suggestions sound so simple and common sensical, but when you look at your Organimi org chart as it sits today, and evaluate the people in the roles they are in, how well mapped are your talents to your requirements, and how well are you balancing strengths and offsetting weaknesses across your teams?
You also need to ensure that there is a connection between the capabilities you need and the leadership talent you have. But how do senior managers outside the HR organization get insight into and a sense of the strengths and talents of their team members; being able to effectively connect and communicate is part of the answer to that challenge, as is creating teams to enhance collaboration on specific activities, projects or other business initiatives.
We think Organimi adds some real value here already, and will add more in the future.
Make Managing Manageable; “Be Aware of the span of control”. The “flattening” of management structures in organizations over the past 20 years has had significant effects on how organizations operate and how individuals within them interact. Whether good or bad, there can be no doubt that internal, competitive and technological change have significantly expanded the reach of senior managers in recent years, while flattening much of the middle management hierarchy of their organizations. This applies all the way up the senior executive ladder. As Strategy& reports, a Harvard Business S, chool study conducted by associate professor Julie Wulf found that CEOs have doubled their span of control (ie their number of direct reports) over the past two decades.
Give me strength; “focus on what you can control” The Serenity prayer — often repeated in many different areas of our lives – neatly summarizes the relationship between acceptance of the unchangeable, demonstrating the courage to pursue the things that can be changed, and having the wisdom to know the difference.
In redesigning organizational structures, we need to think carefully and compassionately about people, while examining the scarcities (resource limitations) and constraints (things that slow you down) that are negatively impacting on organizational performance. Reimagine and redesign around the strengths of your teams, and supplement their weaknesses. Build, don’t break.
Strategy& suggests, for example, that if people / talent constraints in functional or operational areas are slowing down business lines, or preventing innovation, you should consider reorganizing your talent around “center of excellence” to accelerate skills development, team based learning, and knowledge transfer, while addressing the needs of the business to accelerate the pace of change.
Rearchitecting the business around the strengths of your people, and balancing their weaknesses, can yield significant positive personal and organizational benefits. Don’t get bogged down in trying to change something you can’t change; instead, focus on changing what you can.
Create space for autonomy; “Promote accountability”. Make it easier for people to clearly understand their work commitments and accept accountability for them, without being micromanaged. Make sure that decision rights are clear and that information flows rapidly and clearly from the executive committee to business units, functions, and departments. Is your org chart clear about this?
Among formal building blocks, information flows and decision rights had the strongest effect on improving the execution of strategy. They are about twice as powerful as an organization’s structure or its motivators. Identify decision makers and decision making processes you want to accelerate / promote and build decision rights and motivators aligned with them and with the organization’s desired goals.
Operationalize the execution of these designs by establishing the necessary budget authorities, decision-making forums, and communications. Make these transparent through your organizational processes and use your Organimi org charts to reinforce both accountability and transparency.
Don’t look elsewhere; to learn what you should know here; “Benchmark sparingly, if at all”. I found this particular comment interesting and authentic, given that consulting services organizations are typically in the business of selling their toolkits of industry best practises derived from cross-organization consulting engagements. Their advice on organizational design is not to follow “best practices” found elsewhere, but instead to create them. Identify your organization’s own unique capabilities — the strengths that only your organization has, producing results that others can’t match. Their primary concern? If you benchmark the wrong example, then the copied organizational model will only set you back. If you feel you must benchmark, choose peer companies and key metrics carefully that line up exactly with the capabilities you prioritized in setting your future course.
Let the “lines and boxes” fit your company’s purpose. Think through your purpose when designing the spans of control (how many people report directly to any given manager) and layers (how far removed a manager is from the CEO) in your org chart. These should be fairly consistent across the organization. Strategy& has determined that the optimal span of control depends on several factors explored in a helpful C-level span-of-control diagnostic tool you can use to help determine your target span, and get recommendations on optimizations for it. This is a great companion tool to Organimi for your own design efforts.
Getting Outside The Boxes & Harnessing Your Resources
The authorz of the Booz article are Gary L. Neilson is a senior partner with Strategy& based in Chicago. He focuses on operating models and organizational transformation. Jaime Estupiñán is a partner with Strategy& based in New York. He focuses on consumer strategic transformation and organization for the healthcare industry. Bhushan Sethi is a partner with PwC Advisory Services. Based in New York, he leads the PwC network’s financial-services people and change practice. Giving credit where credit is due we thought we should acknowledge them.
In doing the background research on Booz for the article we also noted that Booz / Strategy+ — like many blue chip organizations — has a long and distinguished history of professionals moving from the consulting side to industry, with staffers joining major organizations across all industries. An entire list of famous Booz / Strategy+ alumni can be found easily online. So we thought it would be fun to use Organimi to create an “influence network” showing the reach of these notable alumni.
First we added them to the Organimi roster.
Then we categorized their industry grouping – telecom and technology for example, or financial services, or manufacturing.
Then, instead of individual photos for the member profiles, we used the corporate logos of their organizations.
Any user with access to the org chart can now immediately see at a glance the depth and breadth of expertise and contacts across regions, industries, you name it….and access the contact information if you want it.
If we wanted to, we could share this chart with you, using Organimi’s org chart sharing tools.
Just another way to use and get value from Organimi.
A Few Words About Organimi Alpha 4
We want to thank everyone for their contribution to our alpha testing program.
So far we have had hundreds of users using Organimi 4 in alpha and it seems to have performed quite well.
We’ll be taking the next step, wrapping up some final features, and shifting to the beta release of Organimi 4 soon.
Which moves us a big step closer to the Organimi 4 release, and for those tracking the launch date to place your orders, our promotional contest, with 7% of the equity of Organimi being allocated to early adopting customers. If you haven’t done already, you can read about that here.
Thanks for reading.
The Organimi Team