In today’s fast paced world, organization design is an essential competency. As leaders strive to become more efficient, customer focused, and/or innovative, organizational forms must necessarily adapt in support. Paraphrasing Gary Hamel and Bill Breen in The Future of Management (2007), expecting a traditional bureaucracy to be speedy and flexible is like asking a dog to dance the tango – it simply is not in the dog’s, or the organization’s, DNA. Good design, therefore, defines more than the structural boxes and lines found on an organization chart. While those lines and boxes describe an organization’s basic frame, they reveal very little about the nature of the core work, protocols for how work gets done, and the social expectations for how units are meant to relate. What are the performance drivers? What capabilities need to be developed and honed? How do resources need to be shared? Who needs to link with whom? What mindsets and protocols are required? Who decides? Good design incorporates these relational, procedural, and social elements – the DNA so to speak – to ensure that people are grouped and linked, as well as led and supported, to focus on the core work.
With global, technological, and social trends dramatically altering customer expectations for quality, service, timeliness, and innovation, new organizational forms are evolving to enable greater innovation, speed, and flexibility. Designs with steep hierarchies, centralized authority, and narrowly defined jobs are hopelessly out of date. From Lars Kolind’s (2006) spaghetti organization to Gareth Morgan’s (1989) organic network, the DNA of these new forms is dramatically different from that of the traditional bureaucracy – they are entirely different entities.
If good design rests on a set of core principles for defining the organization’s DNA, then a foundational question becomes “what does our organization need to be designed to do?” To address this big question, I adopt the Blueprint for Organizational Effectiveness, a contingency model developed from our research and practice at Queen’s IRC. The Blueprint suggests that an organization’s design should evolve from a set of interrelated and mutually supportive design tests (Gould and Campbell), that together provide the structural, relational, and social foundations of good design.
Just like a building is comprised of many design elements that must fit together – from the plumbing, to the electrical, to eventually the curtains – so too do the design tests combine to create a holistic foundation for design. With the strategic goals as the base foundation, the tests combine to support the right types of work, capability development, flexibility, coordination, accountability, leadership, and motivation. The nature and relative importance of each design element is, in turn, shaped by contextual factors in an organization’s environment, including its legislative boundaries, customer profiles, technology system, competitive system, and environmental complexity. Together, these environmental forces create a tension, which pulls an organization toward distinct, but useful configurations. Because there is a natural coherence for how the organizational design elements fit together in relation to the environment, changes to an organization’s internal or external environment will necessarily lead to adjustments amongst the inter-related design elements (Mintzberg, 1981).
Blueprint for Organizational Effectiveness
The design tests are each based on a foundational principle for good design. These principles are not new, but derived from the wisdom of noted academics and practitioners including, but not limited to, Jay Galbraith (2002), Gould and Campbell (2002), and Nadler and Tushman (1997). The tests and associated principles will not provide targeted answers, for the process of organizational design is one of surfacing design choices, wrestling with the tensions associated with complimentary options and selecting preferred options. Given the multitude of factors, the design tests provide a container for the critical conversations that leaders must engage in to create robust, holistic and fit for purpose design choices. The following section provides an overview of the eight good design tests: Fit for Strategy, Flexibility, Capabilities and Resources Relationships, Accountability, People, Leadership, and Feasibility.
Fit for Strategy Test Does your design enable members to focus on and achieve your strategy – the core, value-added work?
The fundamental principle underpinning this test is that form follows function and consequently that the organization must be designed to enable the development and implementation of strategy. The fit for strategy test is a simple one. It asks leaders to first specify the primary sources of value the organization delivers to key customers (products, services, expertise, etc.), and then to consider whether the design enables members to focus on the core work associated with delivering that value. While Cirque de Soleil may require resources focused on innovation, development and safety, Wal-Mart will necessarily be focused on efficiency, cost reduction, and quality. If your design does not focus the attention of individuals and units to play their part in strategy execution, then your design does not pass the strategy fit test. Often, when organizations renew their strategies and redefine the value-added core work, leaders discover that the design needs to be adjusted or reimaged to suit.
To reflect on the fit for strategy test, consider the following:
- Do we understand our core work?
- How we create value?
- For who?
- Are we able to focus on the core value-added work? Why or why not?
The Flexibility Test Does your design enable people to adapt to day to day irregularities, developing strategies, and future challenges?
Here the underlying principle is that good design enables people to notice, interpret, and respond to challenges and opportunities as environments change. Highly complex environments, with ever shifting urgencies given customer, competitive, social, technological, or legislative contingencies, need to be more agile and innovative than organizations in less complex environments (Burns & Stalker, 1964). Begin by listing the major sources of known change, followed by emerging opportunities. For each source of change, explore how organizational design elements (how units are grouped, relationships, protocols, processes, mindsets, etc.) serve to enable or block likely change. If change is imminent or likely, and employees cannot adapt and innovate, your design fails the flexibility test.
To reflect on the flexibility test, consider:
- What are the major sources of change? What are the major sources of opportunity?
- Are they competently monitored and interpreted?
- How often do they shift and re-shuffle?
- How able are we to:
- Shift, reassign, or expand our resources to suit?
- Incorporate new ideas and practices into our methodologies?
- Why or why not?
Capabilities and Resources Test Does your design focus resources on and enable the execution of required capabilities?
The principle behind the capabilities and resources test is that, given one’s strategic goals, the organizational context must enable people and units to develop a set of core capabilities to expertly execute the associated work. A capability is simply the ability to apply knowledge (both know what or know how). An example of a capability is the ability to innovate or to bring a product to market faster than competitors. In addition, people must be supported with the necessary resources – be they physical, technological, social or emotional – to develop, hone and use those capabilities to the full. Examples of resources include budget allocation, access to expertise, technology, space, and reputation. In actuality, capabilities and resources are bundled together to enable the strategic goals. For example, to develop the capability of “innovation,” it will most likely require a bundling of experts, financial resources, time and space, a mindset supporting innovation, and a technological infrastructure. Over time, capabilities become embedded in the organization via strategies, processes, techniques, protocols, roles, and so on.
To employ the capabilities and resources test ask:
- Have we identified our core capabilities – what we, as a unit, need to excel at?
- Does our design enable us to develop and hone these capabilities?
- Do we have the right resources (technology, space, access to data, budget, etc.) to leverage these capabilities?
Relationships Test Do we have seamless/easy interactivity with the areas we need to cooperate and collaborate with?
The underlying principle behind the relationships test is that birds of a feather flock together – people who need to work closely, given their expertise, work focus, and role, should be grouped via a unit, or team or a process. In that no unit in today’s connected world can operate in isolation, linkages should also be specified for essential unit-to-unit links. Moreover, those unit-to-unit links should be enabled through a multitude of mechanisms, including a well-defined purpose, goals, roles and protocols. Unit-to-unit relationships must also be bound by a joint appreciation for how the units are meant to relate to each other. Some relationships may be directive, for example an auditing relationship. Other relationships will be more collaborative, for example, a research unit working with a product development unit. Still others will be service oriented, whereby one unit such as IT or HR provides a service for another. All types of relationships pose challenges associated with pace, priority, perspective, and authority that, if not surfaced and mitigated, can create difficult links.
To employ the relationships test ask:
- Do we have seamless/easy interactivity with the people and units we need to collaborate with?
- Are people who need to collaborate frequently linked together by unit, team, or process?
- Have essential unit-to-unit linkages been specified?
- Do we have joint goals, roles, protocols, and approaches specified and are they working?
- Do we have any difficult or unworkable links?
Accountability Test: Do people know who has accountability for what?
The fundamental principle behind the accountability test is that, to the extent possible, accountability for performance should be specified and enabled. Accountability for performance is aided when people: 1) have a clear understanding of their roles and responsibilities, with performance metrics defined and monitored, 2) are enabled to take responsibility; they have been granted authority, and have access to the necessary resources such as information, tools and technologies, and expertise, and 3) receive feedback with respect to the performance metrics so that they can self correct.
Defining accountability becomes messy when units share responsibility for a joint task, when there are jurisdictional issues associated with who “owns” what work, and when the performance metrics associated with the work are difficult to define, as in the case of a strategy unit whose work depends on the inputs, agreements and cooperation of many players. Despite the many challenges, units should be designed to facilitate accountability and high commitment to goals. If accountability issues arise, the more they are understood, the more likely a workable – yet imperfect – solution can be generated.
To employ the accountability test ask:
- Have we specified the critical deliverables and performance measures for the units in question? Are they easily measured?
- Are people enabled to take responsibility – they have the authority and the resources (access to data, expertise, tools and technologies) to make good decisions?
- Do people receive direct feedback and are they empowered to self-correct?
People Test Do we understand the job roles that are critical to organizational success (pivotal roles for now and in the near future)?
The fundamental principle behind the people test is that, for good or bad, people make organizations stop and go. Accordingly, design must reflect the organization’s ability to attract, motivate, develop, and retain the requisite people talent.
To employ the people test ask:
- Do we have the people capacity to fill key roles?
- Are people motivated to fulfill the roles as designed?
Leadership Test Do we understand the value proposition of leadership? What’s the core purpose of leadership?
If I collected a dollar from every design team that complained that their new design was meaningless without renewed, enlightened leadership, I would be a rich woman. The principle behind the leadership test is that leaders carry the performance spirit of the organization – they direct the focus of people’s work, enable the development of capabilities and access to resources, and influence how work is accomplished through the sanctioning of formal and use of informal processes, protocols and norms. Therefore, no design work is complete until the roles, competencies, and expectations of leaders are defined, enabled, and supported.
To employ the leadership test ask:
- Do we have a common understanding of the role of leaders?
- Are our leaders, guided by a core platform of values, mindsets and skills?
- Does our platform enable alignment, learning, capacity building, etc.?
- Do we have mechanisms in place to enable leaders to learn and work together?
Feasibility Test: Do we understand the constraints bounding our design?
The feasibility test is a reality check. In every organization’s environment, constraints exist. They may be external, such as access to talent or governing legislation, or internal such as culture, technology gaps, or limited financial resources. For the design to be workable, the constraints must be surfaced and mitigated. Otherwise, the constraints will eventually become roadblocks.
To employ the feasibility test ask:
- What are the firm boundaries in which we must operate?
- Are we operating within these defined parameters?
- How might we mitigate against these boundaries?
- Are there any roadblocks?
Summary
When it comes to designing organizations, there is no single design solution that will optimize all elements. Moreover, changes adopted in one part of your organization will necessarily impact other parts of your organization. To expand your view of the strengths, weakness, and opportunities inherent in your organizational design, employ the good design tests: Fit for Strategy, Flexibility, Capabilities and Resources, Relationships, Accountability, People, Leadership, and Feasibility. The conversations that result from execution of these design tests will subsequently enable your team to have a whole-systems, holistic perspective of your design. The result? You will be better equipped to make realistic and useful organizational design choices.
References
Burns, Tom and G.M. Stalker. The Management of Innovations, United Kingdom: Tavistock Publications, 1964.
Galbraith, Jay. Organizational Design, Massachusetts: Addison Wesley, 1977.
Galbraith, Jay. “Organizing to Deliver Solution”, Organizational Dynamics 31, no 2 (2002):194-207.
Gould, Michael and Andrew Campbell. Designing Effective Organizations:How to Create Structured Networks, SanFrancisco: John Wiley and Sons, 2002.
Hamel, Gary and Bill Breen. The Future of Management, US: Harvard Business School Press, 2007.
Lars, Kolind. The Second Cycle: Winning the War Against Bureaucracy, New Jersey: Wharton School Publishing, 2006.
Mintzberg, Henry. “Organizational Design: Fit or Fashion?” Harvard Business Review 59, no. 1 (1981): 103-116.
Morgan, Gareth. Creative Organization Theory, California: Sage, 1989.
Nadler, David and Micheal Tushman. Competing by Design: The Power of Organizational Architecture, USA: Oxford University Press, 1997.
