In our last article, Organise for outcomes, structure for success, we covered the evolving need for organisation structure and the broad nature of different structures as well as outlining some principles for effective organisation design. Within this topic, we have noticed over the last few years that although the approach to and outcome of organisation design needs to be bespoke to your business context, there are four clear priorities that have emerged that need to be consciously addressed. This is not to suggest some universal truths in designing organisations but that there are some core topics within organisation design that need to be tackled head on.
Firstly, the backbone
Core to the premise of organising for outcomes is the substance of your strategic narrative – your business purpose, shared values and long-term ambitions. This is the foundation on which you build relevant organisational capabilities.
Clarity of purpose is not only key to organisational alignment but is a cornerstone of motivation and therefore performance. Purpose that can be clearly stated and consistently understood is the anchor for team performance as it gives everyone reference from which to make sense of their role. Being clear about purpose can be powerful in countering the ambiguity created by change. Our intrinsic desire to do something that has meaning and is important does not have to be met by a world-changing vision, but we do need to understand the reason for being. We have previously written about the impact of shared purpose and ways of developing it.
In specific application to organisation design, this is relevant for how individual roles are defined, how people are expected to work together to contribute to that shared purpose and how easy it is to access further clarity about the meaning of their work should they need it. Building in supervisory management layers is often an important evolution of growing organisations but carries the risk of diluting that meaning or distorting purpose if these additional levels of your organisation blur rather than embolden your shared purpose.
It is unrealistic to expect all employees to have the same personal values but if you lead a business that has stated values then it is important to convey how people are expected to align to these and demonstrate them. As is well covered elsewhere, many businesses have stated values that live in written word only and never in action – they are not shared values, they are value statements. Genuinely shared values can often get stifled, quickly, by organisation design that does not overtly align.
As an example, if the topics of creativity, innovation or learning feature somewhere in a company’s value statements but the functioning of the organisation directs people to predominantly work with people with the same or similar skills, perspectives or background (functionally or geographically aligned teams), then how much can you realistically expect new ideas to come to fruition or new capabilities to be developed?
We differentiate long-term ambitions from goal setting to allow for the fact that many organisations are strategically anchored to a particular set of over-arching outcomes, for example market-based adaptability or superior customer outcomes or product innovation. Long term ambitions should provide the starting point for time-based goal setting and should be relatively fixed, like your purpose and values. We may be creeping into mission territory here, but terminology is irrelevant; the key point is that if your organisation is intended to primarily be effective at delivering superior customer outcomes, then your organisation needs to be set up to achieve those outcomes. Similarly, if there are several long–term ambitions that have the potential to ‘compete for attention’ then your organisation needs to be set up to cope with and address those tensions, not carry on regardless.
The agile plan
Strategy and tactics that plot your journey are essential ingredients of co-ordinated and aligned effort, but now more than ever you need to be adaptable to unfolding and often unpredictable circumstances. The ability for your organisation to collectively flex and effectively respond to these new opportunities or challenges should be of primary concern in how you design your organisation. Wholly effective for today without the agility to refocus for new circumstances makes your business appear sluggish and out of step with the world you operate in. On the flip side, free–flowing teams that are ready to pivot with ninja-like agility and speed appear less equipped to get things done. Too much focus on the possibilities around the corner causes distraction from very real priorities of today. There is a balance required but defining what this balance looks like for your business is an essential component of organisation design.
Your ability to form high–performing teams, at speed, to focus on specific strategic priorities is based on a structure that allows for the creation and disbanding of groups of people based on relevant capabilities, processes that are well managed and easily changed to meet the circumstances, and a culture that embraces change and is equipped to excel in ambiguous circumstances. An agile plan is important but planning and replanning gets you nowhere if your teams are set up in a rigid hierarchy with fixed and formal processes, living in fear of anything different.
The need for decision
Decision making is imperative, no mistake about that, but the basis for decision making, the manner in how decisions are made, and decision participation vary depending on the nature of your business and how you intend to operate. It is increasingly obscure to say ‘we didn’t have enough information to make a decision’ since information has never been so accessible but determining what information is useful, who needs it and how it should be used are increasingly complex matters. In some businesses, speed of decision making is critical – quick thinking, rapid response and being ‘fast to fail’ are hallmarks of business models that innovate first to satisfy ever-changing market demands or to stay at the forefront of highly dynamic industries.
However, timeliness is relative, and it is important to consciously determine what kind of decisions within your business need to be made on what time horizons. You then have the basis for determining who needs what information to make those decisions and can start to organise effort and communication flows around achieving that. If timeliness is less critical than quality of decisions, then the sourcing of accurate information and quality of data analysis/interpretation is likely to be a more defining feature of your organisation design than the pace of communication.
Still learning…and changing
We are all still learning and changing the way we do things. This comes in all shapes and sizes from personalised operational changes to major organisational transformation. At an individual level we have a finite capacity for learning and this extends to our collective capacity. The extent to which your team is prepared and capable of learning and developing may be either limited or unleashed by the approach you take to organising effort in this regard. The scale and pace of change likely to be experienced by your business is important to analyse and be reflected in the way you design work to ensure people have the best opportunity to prepare for or react to change as it happens.
‘Change Management’ is a term we and others use daily in this context but often find that business leaders are expecting evolutionary change to happen because the facts suggest it should rather than setting their teams up to be able to learn – from sources internal and external to their business – and change from something they know very well to the uncertainty of the unknown. Identifying someone to take charge of ‘change’ does not make change happen and in some cases leads to abdication of responsibility for change from other parts of the organisation. The extent to which you need to organise for change should be considered as part of organisation design rather than waiting for the need for change to emerge and expecting your team to react effectively.
Some further thoughts
If you have been able to put some definition to the above, then an initial consideration for designing or redesigning your organisation might bring us full circle back to a conversation about structure, specifically the number and nature of layers within your organisation. By layers, we refer to the hierarchical definition through reporting lines – assuming the CEO or MD is one layer, the executive or leadership team a second layer, and so on.
This is different to levels of work, of which there are multiple models. Some refer to the spectrum of supervision of task to leading industries, some from strategic to operational (similar but different), and others base themselves on splits between internal and external innovation or leadership. These models help you analyse the nature of work happening in your business, the differentiation of levels and allow you to determine whether alignment between levels of work and layers of your organisation is effective. As we know, creating sufficient space for people to operate in their ‘level/s’ – appropriate autonomy – without leaving gaps that inevitably stretch people too far or leave them without direction or context is critical to high performance.
Whilst we know that each organisation is unique in the combination of its operating context, aspirations and the composition of people, there are a few key themes to designing an organisation that determine whether the outcome is effective or not. It’s the difference between an organisation that is designed to meet your goals and evolve with your business strategy or an organisation that meets some generic standards but is constantly one step behind your needs and at worst, the source of performance gaps.
At a time when every leader is looking for some improvements in future business performance, taking a good look at where your organisation is now or starting with some relevant principles around designing an organisation for the future is one area that you are in control of and can make some tangible gains.
Blackmore Four offer specialist advice and tailored solutions to businesses looking to sustain or improve the effectiveness of their organisation. Our approach is based on a deep understanding of human behaviour at work and an ability to identify and address the specific leadership and organisational development needs of your business. Contact us to find out more about our workshops on leadership needs analysis and assessment or to discuss how best to apply this to your business.