How to Renew Your Organization

death desert.jpeg

Whipping down the streets of Washington D.C. in a taxi, I was dreading my arrival at a recent business acquisition.  I mistakenly believed that my organizational design role was to break the hearts of these leaders.  Twenty years earlier, they had founded a company in their garage and now they had made it big, having been purchased by a Fortune 100 company.  I erroneously thought that my role was to deliver the news that their small company ways of doing things would now have to completely change.  They would need to assimilate to the mother ship!

I glanced down at the final piece of research I had gathered in preparation for this meeting.  It was the Ichak Adizes model of an organizational life cycle (Ichak Adizes, www.adizes.com, 2017).  This holistic and intuitive approach fundamentally changed how I approach recently merged companies, as well as how I engage with all smaller entities within larger organizations.

The Adizes model of an organizational life cycles provides a metaphor for viewing the stages of organizations.  Adizes wisely observed that the basic principles for managing organizations as they mature are similar to living organisms.  We have all exclaimed in frustration at some point that managing our staff is like trying to deal with a bunch of unruly kids.  Adizes took this statement usually made in jest to a whole new level!

Adizes pointed out that the predictable and repetitive patterns of behavior that humans experience as they grow and develop are similar to what organizations experience. As a result, just as you develop ways to help your teenager move from adolescence into adulthood, you can leverage similar strategies at an organizational level.  One can reflect on the characteristics of the organization at each stage and, more importantly, identify prescriptions that will assist the organization to move to the next stage.  This model, metaphorically, allow long standing bureaucratic organizations to detour and in some cases even avoid death.

The organizational implications and lessons that fall out of Adizes model are wide and deep.  However, my main concern was that I was about to be dropped off at the door step of the founders of the small company that we had recently acquired.  Wasn’t there a more positive message that these leaders should hear as we become the same company, working towards the same goals?  This is where Adizes learnings about why large mature companies buy small growing companies is invaluable.

Adizes maintains that the large bureaucratic companies desperately need the small innovative companies in order to grow and stay alive.  While established companies often times have a great deal of cash and strong financial statements, they have many factors working against them.  Adizes points out that they tend to:

  • Be interested in reducing risks
  • Reward employees who follow directions versus innovate
  • Value uniformity and consistency

This push towards maintaining the status quo is exactly what brings down many of these organizations.

Enter the newly acquired kid on the block…  These small nimble organizations typically offer growing technology in new markets.  And most important, they have flexible ways of thinking and working, quickly embracing new strategy.  This provides an agility injection into the staid bureaucratic organization.

Based on this line of thinking, you can probably guess the end of the story.  I did inform the founders, who it turned out still acted more like teenage rebels than leaders, that I would be helping them introduce more structure and control.  They understood that this was an important part of their growth and development.

However, the larger, more amplified message was that our now combined companies needed their innovative products and new markets.  And most importantly, we needed to tap into their agile approach of doing business and infuse some of that bias for action into our increasingly unadventurous culture.

I had falsely believed in a compliance focus in working with newly acquired companies.  I was all about sticking pins into them for their own good.  Adizes helped me realize that the actual opportunity lay in bottling up the innovative thinking and approaches that the smaller companies offer and infusing them into the larger bureaucratic culture.  This strategy offers big wins as the ripple effect positively impact a hundred times more employees than are housed at the acquisitions.

In the years following my mergers and acquisition role, I have applied the Adizes approach in working with all types of small, innovative departments and teams within larger organizations.  As I help these groups grow and accomplish their larger objectives, I make sure to avoid squashing their agile thinking and approaches.  In fact, I help them find ways to capture these innovative approaches and embed them into the larger organization.

With mixed results Americans spend millions of dollars a year on products which claim to help us stay young.  The Adizes approach offers a tonic that really does allow old dying organizations to reclaim youth!

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

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.