​Organisational Design: Keeping Your Eye on the Ball

by External11 Jun 2014
When designing your organisation, your eyes must be kept firmly on the strategy, the whole strategy, and nothing but the strategy, or you could end up with a ‘disorganisation’ full of ‘busy fools’, argue Melvin Jay and Simon Collinson

Highly effective organisations follow a design. All activities, projects and processes are purposefully designed to deliver their strategy, and thus to create value for stakeholders. Each function, department and individual understands the company’s strategy and how their daily work contributes to its delivery. People are diligent and focused; everything they do adds value to the business. This is because all decisions about the way teams are assembled and activities assigned have been made with the company’s stated goals in mind.

Unfortunately, these companies are in the minority.

In overly complex organisation designs, the opposite is true. Despite having equally intelligent and hard-working people, a high percentage of their activities will create no value and play no significant part in helping the company achieve its strategic purpose. We call these companies ‘disorganisations’. They are often populated by large numbers of ‘busy fools’: people running fast but in the wrong direction! There is plenty of activity, but very little of it creates value.

Lean Six Sigma studies of office workers suggest that in many organisations 97% of activity is wasted because so much of what people do will create no measurable value for the company. Just imagine: staying at home in bed would have almost the same impact on the success of your company as turning up.

For the purpose of this discussion, let’s assume that you have a good strategy in place. Companies have become very effective in the creation of strategy, yet we often find the strategy in significant dissonance with their organisation design. This raises the obvious question: why this frequent misalignment between strategy and organisation design?

See the ‘Warning signs’ box below for the symptoms to be aware of:
Symptoms indicating that your organisation’s design and strategy are not aligned:
  • People are very busy, but you are not delivering against your goals.
  • Departmental in-fighting: different functions are at war, pulling in opposite directions to deliver your strategy.
  • Duplication: similar activities take place in different parts of the organisation.
  • External vs internal focus: high amounts of work are focused on internal discussions about the company itself; not enough is focused on external matters (like customer needs, competitors, and improving your products and services).
  • People can’t describe the role their department – or their own job – plays in delivering your strategy.
  • When you ask people how an activity/project/ process contributes to your strategy, they are unable to give a clear and simple answer.
  • Lots of information is produced, but little of it helps deliver your strategy.

Your organisation design covers the key elements of how you have organised your people to deliver a stated business strategy. These are:

The division of activities into logical groupings representing the responsibilities of different teams, lines of reporting and individual roles. (This is usually captured in an organisation chart or a structure chart.)

Who will need to collaborate effectively and how they will do this (both formally and informally).

The skills and capabilities required by your people.

This covers your culture, values and behaviours needed to succeed.

Structures you have chosen to underpin your organisation.

People will need these to perform effectively in their roles.

In other words, your organisation design is not just a structure chart but also the conscious and measured combination of all the elements above. A simple organisation design has the fewest number of these elements, joined together in the simplest and most logical way – or, to put it another way, only what is essential for your success.

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