The structure of the organization is a powerful component in aligning organization focus to the strategic vision and goals and creating effective communication and decision making channels.

Some of our offerings include:

·        Executive briefing on how to reorganize successfully

·        Working with the executive team and an expanded group of key stakeholders to identify potential options and make structural decisions

·        Working with the newly organized departments and team to assist them in organizing the work of the unit, including job designs and supporting the new team in developing clear roles, vision, plans and working relationships

Examples of restructuring work that we have done:

NASA:  Assisted in rethinking the structure of an Office at the Goddard Flight center.

Midwest Airlines:  Dramatically increased the efficiency of the operational area through rethinking how the work was organized.  The new design was developed in collaboration with over 100 mechanics and engineers.

National Education Association:  Supported the rethinking of the organization structure within many of the departments as well as supported the structural reconfiguration of headquarters.

NASDAQ:  After a major restructuring, supported the new departments in organizing the work, clarifying roles and developing good working relationships.

An executive overview of considerations and process for successful re- structuring.

 Overview of Organization Design

The structure of an organization is a means to an end, not the end in itself.  It is how the organization divides the work, and integrates it, and it defines the formal decision-making and communication channels.  It needs to be examined in the context of the entire system, because structure both impacts and is impacted by other parts of the system.  First the business context is considered: business mission, vision, strategies; organization culture; dominant leadership style; the organization relationship with external environment; level of uncertainty in the environment, and financial assets and economic prospects for the enterprise.  In addition, strategy needs to be aligned not only to structure, but also to the other elements in the system: measurement, reward, decision-making, communication, budget and financial accounting, training and recruiting.

Redesign initiatives are very disruptive to the organization and have a poor track record.  Common causes of unsuccessful redesign efforts: no clear objective, ignores critical parts of the organization, defines only reporting relationships, is only partially executed, and is sabotaged by resistance to the change.  Structural change initiatives should only be undertaken when the reason for change is clear and other less disruptive options to achieve that objective has been explored.

Global Trends

There are a number of forces, visible and invisible, that are shaping organizations today, both strategically and structurally.  The cognitive bias of the leaders is one critical force that influences what the organization pays attention to in the environment, the organization’s vision and strategies, and the choices it makes structurally.  Often to conceive of new options for structure requires a shift in the leader’s assumptions about power and control. In the past, organizations were focused on increasing productivity in a high growth, high demand environment. Organizations developed that were paternalistic, controlling and bureaucratic.  The deal with the employees was obedience for security.  The culture that developed was: avoid blame and responsibility, treat co-workers as competitors, feel entitled, low commitment, low risk-taking and innovation, little or not focus on the customer, and politics was the primary dynamic.  Today the supply is greater than demand and the customer is king.  Security, stability, continuity are out because no one can promise them.  The focus has shifted from process to results.  The new deal is initiative for opportunity.  Obedience and diligence are now irrelevant.  Following orders does not generate success.

Another shaping factor is the difference between the generations.  The silent generation, influenced by strong leaders in World War II and the great depression, had a high respect of formal authority and the effectiveness of the command model.  Baby boomers saw the vulnerability of authority during Vietnam and assassinations of the Kennedy brothers and Martin Luther King.  Authority looked unreliable and wrong.  They shunned the commander role and preferred to be managed and manage with an informal, team-based leadership style.  The Generation X’ers were children of dual-career couples whose marriages ended in divorce.  They witnessed huge downsizings when they graduated from college.  For them, loyalty rests with themselves, and their teammates, not the corporation. They also are seeking work life/personal balance and meaningful work.  As managers they call their subordinates teammates. The hierarchy of the structure reflects the management style for control.  To keep and attract the best talent will require understanding how people prefer to be managed and creating cultures and visions that attract and nourish spirit.

Implications for the organization of the future: work needs to be organized to meet rising customer demands, develop and keep a trusting relationship with the customer.  Jobs need to be designed that stress accountability for results, not effort, continuous learning and innovation.  People need to have decision-making authority, competencies, and adaptability to respond quickly to new situations, reduce non-value-added work, and reduce cycle times.  Organizations will need to break down the walls, vertically, horizontally, and externally.  In addition, organization will need to have the capacity to engage “outsourced” contractors and form new partnerships and alliances with suppliers and others in the “value chain.”

To lead an organization structured to achieve those objectives requires leaders to inspire understanding and commitment to a shared vision, mission, values and strategies.  This will be the “new glue” that holds the organization together and attracts and keeps the best talent.  They will need to lead with a “systems” perspective, model the way, lead through persuasion, not control and command, leverage learning, invite risk taking and innovation.  Develop organization core competencies, and support the workforce in meeting and exceeding customer expectations.  They will promote teamwork, and every employee thinking like the owner of the company.  Leaders will unencumber the high performer, set parameters for play, and create a culture that nourishes spirit and innovation.

Future Vision

The profile of the emerging, organic, thriving organization of the future: Lean, value added headquarters; operates like a small company; energizing, value-driven culture, superior employee capability, commitment and passion and structured with a capacity for rapid re-configuration.

Strategic Implications

Most strategies will be developed with high to low levels of uncertainty.  More than ever, it needs to be remembered that a strategy is a theory.  Instead of “implementing” a strategy as if it were a blueprint to the desired future, we need to treat it as a “strategic experiment” and put the focus on learning and adaptation.  Most strategies are out of date within 6 months.  Managers need to be able to monitor performance, learn quickly and adapt strategies rapidly for them to stay viable.  Structures need to support this rapid learning and adaptation cycle.

Structural Principles

No one structure is perfect; they all have advantages and challenges.  The functional structure is the predominant structure in use today, and the structure most organizations begin with.  It still remains appropriate for companies under 500, who have a limited product and market base.  The primary disadvantage is it can be too internally focused, rather than customer focused and the need for quick change overwhelms its capacity.  In addition, it can become unit focused (“silos”) rather than organization or customer focused.  As companies become more complex they usually evolve into product- based structures (manufacturing companies) or market based structures (service companies).  Many companies, embarking on the TQM or re- engineering initiatives, evolved into structures based on their core- processes.

Most organizations are actually a hybrid.  Often headquarters or support functions are organized functionally and the rest of the organization geographically, or by product, market or core processes.

Integration Structures and Strategies

No matter how work is divided, it still needs to be integrated, or made whole again. The need for greater flexibility, better communication, decision making and capacity for leveraging learning calls for better integration structures.  The new emerging organization designs are integration structures and cannot usually be seen by looking at the organization chart of reporting relationships.

However the organization has divided the work, the integration structure, an invisible overlay, would be based on a different organizing principle.  For example if the organization is structured functionally, then the units and cross- functional teams might be organized by core processes, products or markets.  In a process structure, cross-functional teams would be focused on functional integration—leveraging research, marketing, operations, finance, etc.

Predominant integration structures are the existing senior leadership and management teams, who often need to shift from unit focus to organization focus in their agendas.  The organization needs to create a “boundaryless” mindset in the culture that fosters individuals at any level of the organization organically networking with their peers to create products, solve problems or leverage learning and make more informed decisions.  Another coordinating mechanism is enterprise-related software.  This software becomes a database that anyone can assess to monitor performance, make better decisions as well as coordinate planning or projects effectively.  Intranets are also emerging as a way to quickly share information.

Structural Audit

Preceding a re-design initiative, it is important to understand the existing level of clarity of the leadership and employees related to the organization’s change drivers, vision, mission and strategy.  It is only within an understanding of this context that the objectives for the new design can be developed.

The next step is to flow-chart the strategic plan, identifying dependencies and the focus for each year of the plan. Next an understanding of the current structure and workflow needs to be completed to identify the areas that are working and possible targets for intervention.

Only when current problems cannot be addressed in any other way should a redesign initiative be launched.

Design Process

To increase understanding and commitment to the final structure, it is well documented that high participation processes are the key to rapid, successful implementation.  When leadership is not comfortable with that approach, less democratic processes can be employed.

After re-designing at the organization level, the next step is aligning the business units.

Rapid redesign for the business unit might use 3 events, 2-3 days each, with a high participation from all levels of the organization.  The first event aligns the business unit vision, goals, and plans to the organization vision, goals, plans.  The second event aligns the structure and strategy and the third event aligns the structural systems: reward, training, recruiting, communication, and measurement.  In addition it identifies the most valuable role for managers.

Conclusion

Redesign can be a powerful lever to align the organization focus to the strategic vision and goals.  It is successful when there are clear objectives (what the new design will achieve that is different from the present situation) and when people impacted by the design are either involved or have a high level of understanding and support.  Since the structure reflects the need for power and control by management, new structures call for new leadership styles to be successful.  All other parts of the system also need to be in alignment to have true strategic focus.