(Each of my blogs in August is an edited extract from my book Organization Design: the Practitioner’s Guide. This is the second – from Chapter 4)
Organization design work starts in many different ways. Sometimes a practitioner is presented with a new organization chart and told to ‘make it like this’; sometimes it can be a casual conversation that results in a piece of work; at other times, it can be a feeling or statement that something needs addressing (an opportunity or a problem); and frequently it can be a planned piece of work developed out of a particular strategy – for example, a merger. Sometimes it is the practitioner who starts the conversation: ‘Does this need design work?’, and sometimes it is either the client or someone else in the situation who raises the question.
Almost without exception, behind the question ‘Does this need design work?’ is a changed, changing, or predicted-to-change organizational context. It is this context of change that is the trigger for design work. The question ‘Does this need design work?’ enters someone’s consciousness either as a reaction to a changed context or as a recognition of a current context in flux or as a prediction of an about-to-change context. In the example below, a consultant was approached by a board member of a multisite educational organization in the Middle East. The consultant summarized their discussion as follows:
‘You are clear that the Institute does need to change. It is federally funded and has a commitment to operate efficiently, offer a high-quality educational experience to students, and create ecosystems of innovation and entrepreneurship that help take the region into twenty-first-century growth and productivity. The government has stated that your emphasis now has to be on building future-facing capacity, capability, and hard and soft skills in the local workforce in order to reduce reliance on expats. What you are looking for, at this point, is support in:
- Taking the agreed strategy and, from it, developing an implementable operating model and OD
- Developing the detailed implementation plans with success metrics
- Executing the plans and measuring the benefits realized by the new operating model and OD
- Ensuring that Institute staff, students and stakeholders understand the need for change, how it is to be achieved, and their role in making the change successful. [/]
In this example, the conversation on design work was triggered by the recognition of a political and economic context currently in flux, resulting in the need to create ecosystems of innovation and to reduce reliance on expats by building local capability.’
In most cases, organization members are able to identify current and short-term context changes, but they have a harder time with long-term horizon scanning. However, this is what is most likely to sustain an organization’s existence and keep it thriving. Amazon’s CEO, Jeff Bezos, is well known for his rare skill in holding a long-term perspective, which has led to Amazon’s huge success. Amazon is continuously designed and redesigned with the long-term perspective in mind. Every year Bezos reissues his 1997 letter to shareholders stating his position on long-term thinking. The full letter is long, but its main point is that Amazon cannot realize the potential of its people or its companies unless it plans for the long term.
The desire to work to short-term around OD work is attributable to several factors, including the requirement to hit quarterly earnings targets, lack of management or leadership time to reflect and discuss a longer-term future, constant ‘firefighting’, being rewarded only for immediate results, and/or not caring about the future of the organization because current decision-makers will not be part of it.
Short-term design can be useful to help address an immediate problem – providing the problem is solved and is not just the symptom of the problem. Often, though, short-term decisions on design can compromise longer-term value and bring the risk of having to ‘unpick’ the work and redo it (See: Silverthorne, 2012).
One of the roles of an organization designer is to help clients and other stakeholders understand the risks of responding only to short-term triggers and to understand the value of taking a longer-term view. Ron Ashkenas, consultant and author, offers three points for developing and then optimizing designs that have a longer-term horizon (5–15 years).
‘1 First, make sure that you have a dynamic, constantly refreshed strategic ‘vision’ for what your organization (or unit) will look like and will achieve 3–5 years from now. I’m not talking about a strategic plan, but rather a compelling picture of market/product, financial, operational and organizational shifts over the next few years. Try to develop this with your direct reports (and other stakeholders) and put the key points on one page. This then serves as a ‘true north’ to help guide key decisions.
2 Second, make sure that your various projects and initiatives have a direct line of sight to your strategic vision. Challenge every potential investment of time and effort by asking whether it will help you get closer to your vision, or whether it will be a building block to help you get there. Doing this will force you to continually rebalance your portfolio of projects, weeding out those that probably won’t move you in the right direction.
3 Finally, be prepared to take some flack. There may be weeks, months or quarters where the results are not on the rise, or don’t match your (or analysts’) expectations. Long-term value, however, is not created in straight lines. As long as you’re moving iteratively towards the strategic vision on a reasonable timeline, you’re probably doing the right things. And, sure, you can always do more. But just make sure that you’re doing things for the right reasons.’
It’s important to keep communicating to stakeholders, as Bezos does, the reasons for taking a longer-term approach and to be continuously designing the organization. It helps to back up the communication with narrative and quantitative information that ‘provides a holistic picture of the business, describing the economic, environmental and social performance of the corporation as well as the governance structure that leads the organization. By embedding environmental, social and governance (ESG) data into financial reports, a company achieves an effective communication of its overall long-term performance’ (Silverthorne, 2012).
People in organizations weak at horizon scanning, future thinking and forecasting can look for help in various quarters. As Thomas Frey, World Future Society, points out: ‘Since no one has a totally clear vision of what lies ahead, we are all left with degrees of accuracy. Anyone with a higher degree of accuracy, even by only a few percentage points, can offer a significant competitive advantage’
Whether your perspective is short-term or long-term, the thing to bear in mind is that:
‘Any organizational structure should be temporary. Organizations have no separate existence; they function as tools of the business. When businesses change their priorities … then organizations must be changed, sometimes even discarded. That is why it is so wrong to encourage employees to identify with the organization – they need to identify with the business. If you are a Bedouin, it’s the difference between the tent and the tribe. As for building an organization, I think [Henry] Mintzberg got it right when he suggested that two things must be settled – the division of labor and co-ordination after that. But again, any division, any organization is always temporary.’ (Corkindale, 2011)
Do you think organization design is triggered by changes in the external context? Let me know.