Suppose there was an ultimate organizational model? A model that would allow you to build a hyper-performant organization. A model that ensures
that employees take ownership, that everyone contributes to the success of the organization
and everyone is maximally engaged. A model that turns you into a market-magnet where turnover and margins continue to grow...
A model that ensures that your organization can reinvent itself time and again. A model that keeps you consistantly on top performers level in your
industry. Would you believe me?
Probably not, and that's just as well. Every context is different,
every reality requires a slightly different approach, and there is no single universal model.
And where do you start? Do you build an organization to realize your strategy?
Knowing that people always create their own strategies?
So if you hire people to realize the strategy, and people
create strategies, then where do you start?
With valuethrough, we start from the premise that organizational design is
an important driver for building strong organizations. In this article, we share a number of insights to get you going.
If you draw a classic hierarchical organizational chart, chances are your
challenges will be to break through silos and bureaucracy. You may be faced with
employees who don't take responsibility and blame each other. There will probably
be quite a bit of energy lost to poor information flow and not responding quickly to challenges.
You see that productivity can be substantially improved, yet you are not succeeding in doing so.
If you draw a network or circles, chances are that reducing chaos is
among the challenges. Despite an initial high level of enthusiasm and the
perception of a lot of initiative, passivity develops. There are lots of ideas,
and very animated meetings occur, but when all is said and done, what is
really needed does not get done. It is a recipe par excellence for a
'self fulfilling prophecy' - 'You see, self-direction doesn't work.' We've heard
it so many times, too bad, because the child is thrown out with the bathwater.
Maybe you draw the organization with RACI (or RASCI,DACI, ...)? Then
there is a risk that the structure of complexity, which we will come back
to further, is not sufficiently included in the model. People then end up
in a spread. A lot of attention goes to what is short term,
but what is strategically and long term important is left behind.
Above, of course, it is all rather black and white, perhaps you are one of
those organizations that manages to integrate 'the best of all worlds'
into its own model. Just know that 95% of the problems are created in the model.
If you have challenges that need to be solved, don't start with strategy or culture,
start with the model. In other words, start with the structure of your organization.
"Every good regulator of a system must be a model of that system"
A regulator (or in other words your organizational design) should be able to handle as
much variety as your environment produces.
Let's start from a simple metaphor.
Suppose you want to develop a regulator for your central heating system, you
can do that with a single on/off button. That would be 2 varieties that the system can handle,
heating or not heating. A smarter device, or one that can handle more variety,
will have a thermostat that responds to a lower limit and upper limit in temperature.
You then have a learning system that knows whether to jump on or off based on the external
temperature and therefore regulates the external temperature of the environment.
The even smarter systems also take into account the times of the week (e.g.whether it is day or night).
The more variety you put into the regulator, the more variety this regulator can regulate in its environment.
In this example, the regulator is controlling the environment.
In other words, we assume that there is less variety in the environment than the
regulator has to handle. In that case, put more variety in the regulator and you
get more variety in the environment. So you create possibilities and that is excellent.
The reverse is equally true, if the variety of your environment is greater than that of
the regulator, then you have to look for ways to reduce the variety of the environment.
Let us take the example of a cat. Admittedly, the model of a cat is a
bit more complex than that of a thermostat. But then suddenly we have an
example of a 'viable system', a viable system, just as organizations are.
Let us suppose for a moment that humanity is no more, and that some wildcat
breeds have survived the disappearance of humanity. Ditto for dogs, only the
dog breeds that could survive in the wild still exist today. In that environment,
the dog is the natural enemy of the cat. The dog is not nearly as skilled at
climbing trees as the cat. In an environment where the cat cannot protect itself,
and where dogs are numerous, the cat will not survive. The cat now has two options
if it wants to survive, increase it's capability to handle complexity.
This could e.g. be by learning to climb trees faster. The second option is to seek
an environment where there are fewer dogs, in other words choosing to lower the complexity of it's environment.
Organizations are no different. It comes down to this:
Too much autonomy will lead to silo's, too little to intertia.
Suppose you run a large organization with units that also each do their own purchasing.
You hire a consultant who tells you that it is actually best to aim for a centralized purchasing department.
After all, you will then save a lot on group purchases, have more purchasing power, have economies of scale, ...
and experience numerous other benefits. You install his advice, but a year later you find that it causes enormous inertia.
Units can no longer make agile and quick decisions. A new consultant comes and suggests decentralizing purchasing.
What do you do? A paradox sets in - how much autonomy vs. how much coherence ...
Quite the idea of centralizing vs. decentralizing doesn't really make much sense. Imagine that your autonomous functions
(such as your digestion, breathing, heartbeat ...) are suddenly no longer autonomous and you would forget to breathe for a moment?
It would make life a lot more exciting, but that's not what you want. On the other hand, you also don't want physical needs
(like thirst) to take over and force you to drop everything.
The crux is in making sure that each 'system' (from a role, to a team, to a department, ...) can exist on its own,
albeit in its context wich is framed. Autonomy is a computable function. E.g. you decide to organize a party on November the 17th, and you are
responsible for the catering. You agreed on a budget of € 100 per person. At this time you should be able to decide on the caterer you wish to work with,
but you can't change the date, nor the budget.
The basis rule of thumb for autonomy should always be, as much as possible, until it dangers the whole.
Let's further explore our earlier example of the purchasing department in a large organization. You could ask the question, does purchasing need
to be managed, or does it need to be coordinated? After all, purchasing power is an actual benefit. So yes, the company will benefit if it
installs a proper coordination mechanism.
Good coordination mechanisms secure the smooth overall organization.
Think of a school in which each teacher has their own learning objectives.
The coordination mechanism consists of a tight schedule (location, class, day and hour).
This schedule will never conform to the wishes or ideal of each teacher (we heard a lot of teachers complain about their schedule).
But drop the schedule, and you get chaos.
We all know the example of Kodak. Kodak invented digital photography but was not able to make the leap. Their organization was too
focussed on it's golden egg, the film roll. Too much run, and too little change in it's organizational design. With
flowbuilder, we have a methodological approach to deal with this challenge.
Regardless of what the airport bookstore shelves tell you, there is no single future of work.
There are multiple organizational futures stretching out in front of every company, and the
road best taken is dependent on the environment around you. As Dave E. Smalley once said:
"The survival of the fittest is the ageless law of nature, but the fittest are rarely the strong.
The fittest are those endowed with the qualifications for adaptation, the ability to accept the inevitable
and conform to the unavoidable, to harmonize with existing or changing conditions."
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