The Foundation of Organizational Design: A Strategic Approach for Success

Concept of building the brick wall

Good organizational design has the ability to transform an organization’s culture and accomplish business goals beyond anything imaginable.   As a result, many organizations allocate significant time and resources to this design process.  However, impactful organizational design can be done more efficiently and effectively if one goes about it in a strategic manner.

We will explore the overall definition and purpose of organizational design.  Understanding the scope of organizational design and knowing when and when not to tackle this endeavor are key prerequisites for success.

Definition and Scope of Organizational Design

Organizational design is:

The deliberate process of configuring:

  • Structures
  • Processes and policies
  • People practices
  • Culture

.       To create an effective organization capable of delivering on the Organization’s Vision/Strategy/Goals. [Adapted from jaygalbraith.com]

A key aspect of organizational design is determining where formal power and authority are located.  This is the traditional organizational chart with boxes representing grouping of work.  These structural components determine the hierarchy and resulting relationships within the organization. These formal components are important since they channel the energy of the organization and provide an identity for employees.

A key point of this definition is that in addition to the structure, one should also pay attention to processes and policies, people practices and culture.  Too often organizations craft the formal structure and never get around to the organizational mechanisms which are the underpinnings of the overall structure.  Only establishing boxes on an organization chart is akin building the foundation of a house without putting in electrical and plumbing.

The processes allow decision making and work to be carried out effectively and efficiently.  The policies help clarify how the organizational components are interrelated for an extra boost of productivity.  Finally, one cannot emphasize enough how people practices and culture impact the ability of the organization to accomplish valuable work in a manner which empowers employees.

When to Tackle Organizational Design

Another key aspect of organizational design is knowing when to dive into a redesign effort.  Many leaders believe that organizations need to be redesigned every few years regardless of what is happening in the organization and around it.  I have consulted for organizations which have successfully operated with the same organizational design for decades.  On the other hand, I have advised organizations to dive into redesign within a year of a previous design effort due to the below types of changes:

  • Growing/expanding/shrinking
  • Change in strategy
  • A crisis or significant events
  • Organization around you has changed
  • Change in external environment (such a regulation)
  • Lack of performance
  • New leadership

The following points emphasize how critical it is to be clear about why a redesign is being launched:

  • It is important for leadership to know the reasons why the redesign is needed. The rationale for the redesign helps define the outcome.
    • For example, I worked with a nonprofit organization which launched a redesign due to lack of delivery and a change in strategy. As a result, we measured the success of our effort via organizational performance moving forward.
  • The root cause of the redesign also helps shape the redesign strategy.
    • For example, a redesign in a government organization was launched due to changes in the external environment, including regulatory changes, which required an outward focus. We crafted a design process with mechanisms for measuring and monitoring the impact of external factors such as government policies and third party stakeholders.
  • Finally, articulating the rationale for the redesign will help employees embrace the effort and necessary changes.
    • For example, it was important for employees at a business to understand that a redesign effort was being launched due to a crisis.  These employees gave us the benefit of doubt knowing that the organization’s survival, and as a result their jobs, were predicated on the success of the redesign.

Next Steps

We have established the definition, scope and rationale of your redesign effort.  In future blogs we will explore how to carry out the actual redesign.

Key Questions:

  • Why is your organization tackling an organizational design? How will these reasons impact your design outcomes?  How will these reasons impact the design plan and processes?  How will these reasons impact how you will explain the rationale for the redesign to employees?
  • What is the scope of your organizational design? How will you ensure that you design not only the structure, but also processes and policies, people practices and culture?

Note: The views expressed in this blog are my opinions and do not reflect the views of my employer.

 

Applying Organizational Development Methods to Product Design for Better Outcomes

product design

Designers are incorporating human centered design into products for our common good.  Wendy De La Rosa, Lead Behavioral Strategist at Irrational Labs [@wdlrosa, #SXSW, #hackingbehavior] says that human centered design involving combining user centered design principles with behavioral science for the good of human kind.  Many of us have benefited from this discipline in form of the FitBit which is designed to help one stay motivated and improve health by tracking activity, exercise, food, weight and sleep.

Chris Risdon, Head of Design, Capital One Labs, Capital One [@ChrisRisdon, #SXSW, #humancentereddesign] makes the compelling case that designer have the potential to positively impact the behavior of hundreds and thousands of consumers through product design.  While products can influence many citizens in terms of volume, the extent to which products influence complex behavior is limited.  Most of the applications today, such as the FitBit, send a single data point to the user in the hope that they take a specific action.

This is where organizational development methods can make a significant contribution.  Organizational practitioners, like designers, leverage behavioral science.  However, instead of applying these principles in the design of product, we apply these learnings to the creation of workplaces.

What the theory and practice of influencing human behavior in the workplace lacks in volume, is made up in impact.  Organizational interventions transform human behavior on a regular basis in complex aspects of work including structure, processes and people practices.

Below are some organizational development tools and examples of their impacts:

  • Structure: Jay Galbraith’s emphasis on leveraging design principles in the creation of organizational structure helps ensure that the design accomplishes the desired outcomes. The principles are statements about what the design should provide.  These principles guide the design process, provide criteria for making trade off decisions and keep all parties focused on creating the same outcome.  This organizational design methodology has allowed me to take a dozen independent marketing groups within a Fortune 100 company and align them for quick response to customer demands and other unexpected challenges. [jaygalbraith.com]
  • Processes: Edward Deming’s Plan-Do-Check-Act [PCDA] continuous improvement circle has provided the framework for managing improvement projects.  The method helps employees stay focused on data collection and analysis driving them towards identifying and solving root cause.  Outcomes of leveraging this method includes savings millions of dollars, along with better quality products and services.  [http://asq.org/learn-about-quality/project-planning-tools/overview/pdca-cycle.html]
  • People: ‘Start/Stop/Continue’ is a straight-forward group exercise that can lead to increased effectiveness and efficiency. As the name suggests, the goal is to reflect on programs, activities and processes and come up with three distinct categories of future state action.  I have had employees report back that this simple exercise has been transformative in terms of getting groups of people more aligned and working in a more collaborative fashion towards their objectives. [https://www.mindtools.com/pages/article/SKS-process.htm]

Building organizational design methods into products and services may result in impacting complex human behavior in ways that are unimaginable today.  For example, prompting consumers to identify their design principles, follow the road map of Plan-Do-Check-Act and reflect on what they need to Start-Stop-Continue doing may provide practical approaches for better outcomes.

These tools, in addition, to the hundreds of similar methodologies leveraged by organizational designers can result in shaping consumer behavior for more impact.  Possible outcomes include people becoming more reflective about how they can create more success, carry out day-to-day activities more effectively and efficiently and collaborate with others in new and improved ways.

These outcomes would far outweigh the value provided from a simple stimulus and response such as our FitBit buzzing once we have reached out daily goal.  Organizational design approaches may allow us to accomplish Steve Selzer, AirBnB Experience Design Manager [@SteveSelzer, #SXSW, #frictionhumancentereddesign] vision of a world where products help shape positive social values and successfully navigate an increasing complex and changing world.

Reaching this utopian state will require that we dive much deeper into behavioral science and organizational development is a great first place to mine approaches.

Questions:

  • How can we communicate the value of organizational design methodologies to the product design world?
  • What organizations and people are well positioned for the challenging work of embedding these behavioral science approaches into products and services?

Note: The views expressed in this blog are my opinions and do not reflect the views of my employer.