Designing Your Organization

This is no joke. If you’re going to assemble an organization that is
specifically oriented towards accomplishing a specific goal, you need
to give some consideration to what sort of structure will best get you
there. You don’t drive your Jeep in a drag race, and you don’t take
your Masserati off-roading!

Amy Kates and Jay R. Galbraith present a surprisingly lucid view into exactly how complex this process can become in Designing Your Organization.

Now,
truth be told, I did not read the entire book – it’s too in depth for
where I’m at right now and also very corporate-oriented. However, the
introductory chapter gives a solid overview of the model that they are
advancing for organizational design (and it took a while to get through
frankly – new terms, new concepts, etc…). This combined with a little
dipping into the other chapters has really helped me to understand what
I’m doing and to give me clarity about some of the choices that I’ve
already made. Here’s my take-away:

• It’s called the Star Model, and here’s the diagram (from Amazon):
  
• Strategy is your plan of how you will be successful at
  what you are doing. It is how you will interact with the real world in
  order to accomplish your goals.
• Capabilities are the internal abilities that you need in order to implement your strategy. Determining
  your necessary capabilities gives you a list against which the
  decisions for the other four components can be measured. Maximum of
  five capabilities – this is important. You may do other things, but you
  have to choose the five (max) critical ones that your organization will
  be designed around.
• Structure is the organizational chart for your
  organization. The most common structural form is by function, eg sales,
  customer service, accounting units are established to simplify
  management and coordination. This is most likely all you need to know
  for a small business. However, for larger organizations, it may make
  sense to organize by product or by geographic area, where each product
  or region has separate control over its own sub-units. Even more
  interesting, an organization may be organized specifically for customer
  service. For instance, the IRS has four autonomous branches within it:
  Wage Earner, Small Business and Self-Employed, Large and Medium
  Business, and Nonprofit and Government. This is based around their
  analysis of who their customers are and how best to serve them.
• Processes are the activities by which information moves
  within the organization. This may be up and down the reporting
  hierarchy or horizontally between units (lateral connections).
  Processes may break the silos established by the structure, or they may
  solidify them. There are many ways to encourage cross-unit
  collaboration, from the most basic where individuals are responsible
  for reporting to one another, to the very complex where one or more
  departments report to two or more managers. This requires the managers
  to work together to allocate the resources of the departments that dual report to them, and thus deeply integrates the workings of the multiple departments.
• Rewards are the encouragements that align individual
  behaviours and performance with organizational goals. Determining
  metrics is key to implementing this properly and can be quite
  complicated. One continuum that complicates the setting of these is the
  balance between rewarding individuals for their specific input and
  rewarding teams or the whole organization for successful collaboration.
  Both are important portions of organizational success, and people need
  to be able to feel that they are being rewarded for what they have
  contributed, not just for what the group has accomplished.
• People make up any organization. If the employees do not
  understand what is required of them, or are not able to fulfill their
  duties within the organizational design, the system will fall apart.
  This is about proper selection and training of employees, but also
  about upper management setting the proper tone and establishing the culture of the organization so that everything works together and makes sense.

In addition, the writers of the book offer the following “Design Principles” as advice on proceeding through the process.

• Requisite Complexity: Do not oversimplify for the sake of simplicity. Neither make it any more complex than it needs to be.
• Coherence, Not Uniformity: Large and complex organizations should expect different units to operate differently where appropriate, while still being linked with the rest of the organization as necessary.
• Active Leadership: The more complex the organization, the
  more clarity a leader must convey about the direction that the
  organization is headed. This combined with decision frameworks in which
  employees operate keeps the organization nimble and moving in the same
  direction.
• Reconfigurability: An organization’s internal rate of change has to be as fast as the rate of change in its external environment.
• Evolve, Do Not Install: In building lateral connections -
  processes that connect units – begin with basic connections and move to
  the next stage of integration as people in the organization gain the
  necessary skills and behaviours to do so. Rapid change is less
  effective and more often results in failure.
• Start with the Lightest Coordinating Mechanism: Use the
  simplest form of lateral connection possible. These are expensive to
  maintain in terms of management time and attention, so they need to pay
  off if you are going to put the effort into developing them.
• Make Interfaces Clear: Interfaces are the mechanisms that
  enable communication between units. If the people who actually work at
  the interfaces understand the design intentions and implications, the
  system will be more successful.
• Organize Rather Than Reorganize: The best organizations
  are continually looking to improve their design by constant tweaking.
  Just as the external factors continue to change, so must the internal.
  Waiting until there is pressure to change and then attempting to make significant changes in a short period of time is less effective.

Fun, huh? So much to learn…

Blog Posts
Wayne Moses Burke
March 22nd, 2009 11:39 pm
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