Guide to Organisation Design

Citation

Stanford, Naomi. Guide to Organisation Design. Second Edition. New York, NY: PublicAffairs, 2015. 9781610395397.

Abstract

“Organisation design is how people and work are organised to carry out an organisation’s strategy and achieve its aims. It matters. Thousands of established businesses fail every year because of the way they are organised or reorganised. Quite simply, survival can depend on whether a business has structures and reporting lines that both meet the needs of the market and are able to adapt to a rapidly changing business environment. Yet managers seldom talk coherently about structuring or restructuring their operations, let alone take a systematic approach. Too often, organisations are restructured for the wrong reasons and without taking fully into account the implications of what they are attempting to achieve. This revised and updated Economist guide shows how leaders should think about and implement the design of a company, using six easy-to-use guiding principles for effective and reflective organisation design which is properly aligned with strategy and operating context.”

Annotations

Preface

“about the constant ‘reorganisations’ and ‘restructurings’ that they willingly or unwillingly participate in during the course of their working life” (xiv)

“concerns:

• How do I know that the reorganisation is really necessary?
• Is there any evidence suggesting that it is good to change things per se, or does it always depend on the specific change?
• How do you know if organisation redesign has worked?
• Is there any hard evidence about the absolute pros and cons of different structures?
• Is there a step-bystep guide I could follow?” (xiv)

“to think of organisations both in the more traditional way as whole systems that are inevitably shifting and responding as their context changes, and in the newer way as complex adaptive organisms evolving in order to survive” (xiv)

“there is a lot more to reorganisation than tinkering with the chart that represents the structure” (xv)

“organisational alignment is always temporary, because things change. The design has to be adaptable; it must evolve and it must take into account the interests and views of all those with a stake in the business” (xv)

1 Introducing organisation design

“Design is a plan for arranging elements in such a way as best to accomplish a particular purpose. —Charles Eames, 1969” (1)

“In the US, for example, a new business is unlikely to be running five years after being started, as Figure 1.1 illustrates” (1)

“Most businesses—established or start—up fail” (1)

“Risk of failure in these and other aspects can be minimised or even completely avoided by consciously designing a new organisation or redesigning an existing one in such a way that it performs well and adapts readily to changing circumstances” (2)

“Organisation design, as defined in this book, is how people and work are organised to carry out an organisation’s strategy and achieve its aims” (2)

“Peter Senge, in his book The Fifth Discipline” (3)

Senge: “Those who aspire to lead out of a desire to control, or gain fame, or simply to be “at the centre of the action” will find little to attract them in the quiet design work of leadership” (3)

“organisation design matters and that an organisation has a better chance of success if it is reflectively designed” (3)

“Six principles…

• Organisation design is driven by the business strategy and the operating context …
• Organisation design means holistic thinking about the organisation …
• Designing for the future is a better bet than designing for now.
• Organisation design happens as much through social interactions and conversations as through planning.”
• Organisation design is not to be undertaken lightly …
• Organisation design is a fundamental, continuing process, not a repair job” (3-4)

“‘organisation’ means a discrete unit of operation or whole enterprise” (4)

“Following the principles of hierarchy theory (levels of organisation), the formal elements—departments and divisions, systems and business processes—can be designed independently as long as interfaces and boundaries with the wider organisation form part of the design” (4)

“there are choices and decisions made around ‘arranging’ that keep the organisation adaptable to the operating context” (5)

“focus on the structure is both not enough and not the right start-point” (5)

“What doesn’t the organisation chart tell you?

• Goals, objectives, strategy, values, principles, protocols, outcomes of the organisation unit
• Workflows
• What the work is, how the work gets done, who does the work
• Who is accountable for the work, decisionmaking clarity, delegations
• Relationships
• Interactions, interdependencies, links between areas of the business
• Levels of influence, “real influence”, power
• Expectations
• Employee work styles, performance, areas of expertise, skill sets, skill gaps
• Employee photos—so I know what they look like when I go to meet them/have questions for them
• Does the structure work? Why does it work/not work?
• Processes and systems
• Workforce movement
• Criteria for matching employees to roles
• Succession planning, critical roles
• Work arrangements (part-time, full-time)” (9)

“Organisation design starts with the business vision/mission … and then involves consideration of all the elements of the organisation in its environment” (10)

“operating context … is constantly changing and is a critical variable in organisation design work” (10)

“Context factors do not come in neat single packets” (11)

“The context is not static” (12)

“Businesses must be designed to be adaptable to and accommodating of constant context changes” (12)

“Organisation design aims to keep organisational integrity and also organisational flexibility and adaptability to the context” (12)

“poor designs result in poor outcomes” (12)

“no blueprint for design” (14)

“Five rules of thumb for designing

1. Design when there is a compelling reason
2. Develop options before deciding on design
3. Choose the right time to design
4. Look for clues that things are out of alignment
5. Stay alert to the future” (14-16)

“form … a powerful ‘guiding coalition’” (15)

“create a picture of the redesigned organisation in vivid terms that people will recognise and want to be part of” (15)

“Clayton Christensen … What managers lack is a habit of thinking about their organisation’s capabilities” (17)

“Systematic organisation design involves creating a clear vision of the look and feel of a company in the not too distant future (the ‘to-be state’), assessing where it is now (the ‘as-is state’) and then determining how to close the gap between the two” (17-18)

“social aspects” (18)

“at heart organisations are social arrangements for achieving controlled performance in pursuit of collective goals” (18)

“There is now a view that organisations are designed solely through conversations” (18)

“As research published in 2006 on 320 companies on the relationship between structure, functioning and effectiveness found: No direct relationship between structure and effectiveness was found” (19)

“resource intensive” (19)

“Keeping the day-to-day operation going while simultaneously trying, for example, to design … is not easy” (19)

“Organisation design that aims to align all organisational elements may not be the right solution” (19)

“A large global company that has stumbled and lost some of its confidence can be led to new levels of performance through a more subtle form of leadership exercised by a long-term insider” (20)

“Lafley, who had been with P&G for 25 years when he became CEO:

• reduced growth goals;
• focused on core markets;
• communicated his strategy clearly and simply;
• affirmed the value of the culture;
• invested more in management and leadership development” (20)

“Lafley’s approach was one of substantial change accomplished not by discarding what was in place but by making it work more effectively” (20)

“Nadella’s tenure at Microsoft’s helm will be largely defined by how he balances the competing visions of Microsoft’s future and the strong personalities who will be pushing those visions in Microsoft’s’ boardroom” (21)

Commentator’s Note: Defined by enshittification…

“Once an organisation design programme is given the go-ahead, three things can help keep it on track without escalating disruption: strong governance; tight project or programme management; and the energy and willing participation of employees” (22)

“The first two involve finding people with the right skills, abilities and experience to manage and run the organisation design work and do so in a way that plays to the organisation’s existing strengths, and the third requires listening building trust, and using multiple channels for communication and feedback” (22)

“a fundamental process” (22)

“If the business results and the environment are signalling that the current design fundamentally does not work, it is time to change it” (24)

2 Models, approaches and designs

“All models are wrong but some are useful. —George Box” (26)

“Approaching the organisation as an open system is a good start-point for organisation design … based in either systems theory or complexity theory” (26)

“tendency is to think about only the structures (that is, the organisation chart)” (26)

“with this narrow focus they cannot visualise the interdependencies and interactions between all the elements that comprise a fully functioning organisation” (27)

“No one perspective is right; the one that makes sense depends on circumstances, culture, language and context, among other things” (27)

“six models … each was developed in an era of relative stability when organisations tended to have a single overarching business design” (29)

“an organisation might comprise a portfolio of companies that operate differently one from another, may be simultaneously competing and collaborating with each other, and have to predict and respond in a chameleon-like way to a changing business environment” (29)

New models: “Nadler’s Updated Congruence Model” (32)

“Dieter Rams … good design:

• is innovative;
• makes a product useful; *is aesthetic; *makes a product understandable; * is unobtrusive;
• is honest;
• is long-lasting;
• is thorough down to the last detail;
• is environmentally friendly;
• is as little design as possible” (34)

“If we are moving from thinking of organisations as systems with hierarchies and instead to thinking of them as complex networks that could be self-organising, why even consider any of the traditional systems models?” (34)

“a large majority of organisations still have traditional architectures” (34)

“The approach must match either the current organisational way of doing things or set the tone for doing things in future” (34)

“The more everyone in an organisation feels in some control of what is going on, and has input into it, the more likely it is that the end result will be one that they are motivated to work in; that is, they will be committed rather than simply compliant” (35)

“Louis Sullivan’s … ‘form follows function’” (38)

“The selection of a model and an approach (or approaches) must be a conscious process because they form the infrastructure for the emerging design. In other words, the model and approaches start to express the design as it emerges” (38)

“Initiating approaches … Future search … Open Space Technology … World Café” (39)

“organisation design can be:

• an intentional construct;
• purposefully designed;
• successful if a thoughtful process is used” (40)

“Michael Goold and Andrew Campbell … You should begin by defining your target market segments … There should be no dispute about the relevant market segments” (41)

“A leadership team can have as many different ideas about what the organisation exists to do or produce as there are team members” (42)

“to help choose the model … ask diagnostic questions…

• Does the model package the organisational elements in a way that stakeholders will recognise (are there enough, are they ones that are important in the organisation)?
• How will stakeholders react to the presented model (is it jargonfree, and simple to understand and communicate)?
• Will the model find favour across the organisation or will it compete with other organisation design models?
• Does the model harbour implicit assumptions that might help or hinder design work? For example, does it include or exclude factors such as local culture (both national and organisational) and human factors (such as personalities), or does it suggest ways that elements may relate to each other?
• How adaptable is the model to the specific context and circumstances in which it will be used? Does it enable any new perspectives or innovative thinking? Is it scalable to small work unit design and whole organisation design?
• Does the model work with other models in use in the organisation (for example, change management or project management models)?
• Are the costs to adopt the model acceptable (for example, training, communication and obtaining buy-in)?
• Does the model allow for new and unconventional organisation design that will help drive the business strategy?
• Does the model have a sponsor or champion who will help communicate it appropriately?
• Does the model allow for transformational design as well as transactional design? (Transformational means a design developed in response to environmental forces either internal or external to the organisation - for example, creation or closure of a business unit or a merger - that affects the mission, strategy and culture. Transactional means changes related to the business or work-unit structures, systems, processes, and so on that might be needed to carry out the mission and strategy but do not change them)” (42-43)

“choosing an approach … diagnostic questions …

• How will stakeholders react to the approach (is it pragmatic, not too fluffy)?
• Is it an approach that will work with other approaches in the organisation?
• Does the approach harbour implicit assumptions that might help or hinder design work? For example, does it include or exclude factors such as local culture (both national and organisational) and human factors (such as personalities), or does it suggest ways that elements may relate to each other?
• How adaptable is the approach for the specific context and circumstances in which it will be used? Does it enable perspectives or innovative thinking? Is it scalable to small work unit design and whole organisation design?
• Are the costs to adopt the approach acceptable (for example, training, communication and obtaining buy-in)?
• Does the approach facilitate new and unconventional organisation design that will help drive the business strategy?
• Does the approach have a sponsor or champion who will help communicate it appropriately?
• Does the approach allow for transformational design as well as transactional design?
• Do we need or want a jump-start approach?” (43-44)

“the model is applied at each business-unit level but within a single enterprise vision” (46)

“The outcome would be people using the same systems and processes to carry out the same work activities, but their ways of working could be different” (47)

“The managers had been bitten in the past by external consultants using a range of models, each with its own vocabulary and style. The result was confusion, lack of consistency and money wasted as implementations collided on competing paths” (49)

“If it is communicated effectively with requests for feedback, stakeholders will know that there is a base from which a plan and a process will be developed. Too often restructuring or reorganisation is felt by those on the receiving end to be arbitrary, haphazard and not thought through” (49)

Commentator’s Note: Almost ran into this with some hot headed team members…

“Being an inquiring leader means asking questions like: What’s the best thing to do? What are the choices? What’s possible? What’s the big picture? It also means listening carefully and not making assumptions, leaping to conclusions or closing down possibilities” (50)

“three communication activities which will confirm that leaders are ‘social’

• Microblogging
• Executive blogging
• Sponsoring online communities” (52)

Commentator’s Note: You can feel the 2015 in this list…

“Organisation designs work best when a full range of stakeholders is engaged in the design thinking and process” (52)

3 Organisational structures

“Structures are fine as long as they are controlled by the people who actually work within the structures, but they’re dicey even there. —George Woodcock, Canadian poet and literary critic” (53)

“Structural decisions usually loom larger in leaders’ minds than other decisions related to organisation design. But it is a mistake (often a costly one) to focus a design on changes in the structure. Structure is simply one of the elements to consider because, as pointed out in previous chapters, organisations should be viewed as complex and adaptive organisms rather than mechanistic and linear systems” (53)

“all design work requires at least an assessment of the current structure and its ability to support delivery of future results in a way that supports the other elements of the organisation” (53)

“determine whether the current structure:

• directs sufficient management attention to the sources of competitive advantage in each market;
• helps the corporate centre (if there is one) add value to the organisation;
• reflects the strengths, motivations and weaknesses of the people;
• protects units that need distinct cultures; Gameplay
• provides co-ordination for the unit-to-unit links that are likely to be problematic;
• has appropriate management levels and units; supports effective controls;
• facilitates the development of new strategies;
• provides the flexibility required to adapt to change;
• reflects complexity of markets and industry relationships while being sufficiently straightforward for stakeholders to work with” (53-54)

Commentator’s Note: On FC, Gameplay is a “distinct culture” and FUT has a “unit-to-unit” relationship with the rest of FC

“Organisational structures … have their roots mainly in classical organisation theory characterised by the principles of scientific management” (54)

“Many of the large organisations that are struggling today have had a hard time updating and renewing the legacy structure that has become entrenched” (54)

“traditional structures, largely stemming from the late 1800s and explained in Frederick W. Taylor’s 1911 book, The Principles of Scientific Management, are no longer valid. They are based on assumptions that no longer hold …

• management control and co-ordination are essential for maintaining productivity and performance;
• there is a ‘best’ structure for any organisation;
• specialisation and division of labour increase the quality and quantity of production;
• changing the structure is the best way of dealing with perceived problems” (54-55)

“Elton Mayo … Hawthorne Effect” (55)

“What is right depends on a number of variables and the way these interact to shape and be shaped by their operating environment” (55)

“Alongside contingency theory, organisation systems theorists suggest that change in one part of the organisational system will produce different effects in the system as a whole, and because the operating environment changes frequently, if not continuously, interactions within a system are inherently complex. This results in structures that emphasise horizontal tasks, collaboration across units, a focus on process and a commitment model of worker productivity” (55)

“managers as ‘integrators’” (56)

“Functional structure: A functional structure with functions/divisions such as sales, marketing, production, operations and finance all reporting to head office is highly traditional, deriving from the Taylorist view of organisations, and is often found in strong command-and-control organisations” (57)

“Functional structures are effective when: there are stable and undifferentiated markets with wellunderstood customer requirements” (57)

“Divisional/product structure: A divisional/product structure is the most appropriate in a business where there are low synergies between the buyers and the distribution channels of the different divisions”(58)

“Divisional/geographic or market structure: As organisations expand domestically and internationally, the tendency is to organise by geographic markets, enabling recognition of local cultures and operating conditions” (58)

“Divisional/process structure: In this structure the focus is on processes where core services such as customer and distribution services are operated across the enterprise” (59)

“Divisional/customer structure: Structures around customer segments are successful where there are obvious customer segments defined by need, economics, distribution and other key attributes” (60)

“Matrix structure: Matrix structures typically operate in two dimensions (for example, function and product) and are usually one of three types: functional matrix, balanced matrix or project matrix. The aim of the matrix structure is to provide customers with innovative options through effective teams of highly skilled individuals” (61)

“most effective in conditions where:

• core work is project-based or the work requires small groups of people;
• projects require highly specialised skills and knowledge;
• project skill requirements vary greatly;
• labour cost is a prime economic driver” (61)

Commentator’s Note: EA Sports is a matrixed org due to these prevailing conditions

“Network structure: Network structures are valuable for fast-moving organisations that are highly innovative and operating in an environment that requires speed, flexibility and high levels of customer focus” (62)

“Cluster structure: The cluster model provides another example of an organisational style ideal for conditions requiring flexibility, innovation and change” (62)

“Gareth Morgan … Imaginization: New Mindsets for Seeing, Organizing, and Managing” (62)

“‘Life-form’ structure … A different view of organisations comes from Arie de Geus, a business theorist, who talks of large institutions, particularly global corporations, as a new living species—at best, thoughtful evolutionary ‘beings’ collectively participating in the evolution of our universe” (63)

Commentator’s Note: cf. William Gibson’s zaibatsus; or cf. Thomas Nail on life, entropy, complexity. etc.

“Another example of a ‘life-form’ organisation is the spontaneous movements that are facilitated by social media. The Occupy movement and the Arab Spring are two prominent examples” (64)

“leaders … turn first to its structure, perhaps because this appears to be an easy thing to do (compared with, say, looking at the culture, or the way people learn and apply things in the organisation)” (65)

“Structure decisions …

• Speed
• Integration
• Flexibility
• Innovation
• Control” (65-66)

“Because the structure of an organisation is only one design element, there are no straightforward answers to these questions as each has to be answered in relation to the other organisational elements. However, comparing the structures starts to give some useful information on the relative capabilities” (67)

“within one organisation there may be no need for a single structural form across the whole organisation” (67)

“Layers in an organisation refer to the number of levels of staff there are from the most junior to the most senior” (67)

“A span of management is the number of employees that a single manager is responsible for” (67)

“five is the optimum” (68)

“wide spans of management are typical of organisations that have few layers” (68)

“Galbraith, J.R., Designing a Reconfigurable Organisation” (69)

“the ‘how many layers’ question, there are four rules of thumb (related to the four management activities of planning, co-ordinating, controlling and allocating” (71)

“Each layer should:

• be flexible and adaptable enough to enable managers to forward plan…
• facilitate co-ordination between business units…
• have appropriate control and accountability mechanisms…
• enable its managers to allocate effectively the range of resources” (71)

“If these four attributes are working well, it is likely that the layer is adding value to the organisation, in that it is facilitating speed of operation, innovation, integration, flexibility and control” (71)

Simons, R., “Designing High Performance Jobs”, Harvard Business Review, July-August 2005 (72)

“Thus the five elements of speed, integration, flexibility and innovation, with adequate control, which the CEO and president said they were aiming to achieve, were compromised by a design process that began (and ended) with a restructuring” (78)

“Structural flexibility: Invite a mixed group of managers (who represent each level of management) and staff (who represent each level of staff) to a workshop. Select participants not just for the organisation level that they come from but also for their depth of knowledge about the business (its internal and external operating environment) and their ability to discuss future business possibilities. Ask them to suggest at least ten issues or opportunities that are in the pipeline or that might arise within two years (or present them with some).

Now look at the current or planned structure and ask the group members to assess how they would flex and adapt to meet the new situation if it arose. They should focus particularly on aspects of planning, controlling, co-ordinating and allocating for each issue or opportunity, and should check that enough structural flexibility is in place to ensure that there is continued contribution to the mission, that the work is motivating, and that the social impacts and responsibilities of the organisation are not compromised

For each issue or opportunity, assess and, using the four rules of thumb, decide whether the current or proposed structure will help or hinder resolution of the issue or realisation of the opportunity. If there appears to be a lack of flexibility or adaptability, ask the group to develop a configuration that can cope with changes. This might be by modifying the existing structure, for example specifying roles and accountabilities, or clarifying decision points and co-ordination mechanisms. Or it might be by making more substantial structural changes, for example merging units. (If substantial changes are involved, the exercise is likely to become a full-scale design programme)” (80)

“changing the structure without due consideration of the other operational elements of an organisation is unwise” (81)

“examining the structure is an essential part of designing an organisation, and changing it may be critical to delivery of the business strategy” (81)

4 Planning and sequencing the organisation design

“Designs that are simple, sustainable and deliver business results do not just happen but are the outcome of careful planning and careful implementation” (82)

“involves:

• recognising that the time is right to design…
• being clear about the design objectives…
• getting support for the implementation…
• monitoring the new design with appropriate performance measures” (82)

“there may not be an arrival point at a new design, but rather another beginning” (83)

“taking a programme management approach provides a robust framework for planning and sequencing organisation design work at whatever scale is required” (84)

“in practice the process is much more iterative and messy” (85)

“following the map will often involve getting lost, doing U-turns, backtracking and going along dead-end streets” (85)

“following a systematic process for planning and sequencing the design provides the basis for a high degree of transparency and control and helps get things back on track as necessary, but it may not be an easy and sequential journey from start to finish” (85)

“The business case for change … Organisations usually have some kind of template for the making of a business case” (85)

“five aspects …

• Strategic fit
• Options
• Achievability”
• Value for money
• Affordability” (86)

“The organisation design programme” (86)

“The UK Department for Business, Innovation and Skills’ Guidelines for Managing Programmes presents nine themes” (86)

“nine themes for governance …

• Organisation
• Vision
• Leadership and stakeholder engagement
• Benefits realisation management
• Blueprint design and delivery
• Planning and control
• Business case
• Risk management and issue resolution
• Quality management” (86-87)

“A high level of leadership support is essential for organisation design work of any size” (92)

“Leadership support…

• make the change vision clear, inspiring and shared;
• communicate the compelling rationale for change that will motivate people to make it work;
• make resources available and clear blockages;
• demonstrate commitment and energy to the new design; ensure that the design work is given a clear priority in relation to the business plan;
• maintain the design as a high priority on the organisation’s agenda;
• enrol and develop their own management team, keeping them on side;
• model new behaviour and ways of working;
• increase visibility and availability in order to answer questions, tell a compelling story and keep stakeholders on board;
• celebrate and publicise the reaching of milestones and success points as the new design is implemented” (92)

“The goal of stakeholder engagement is to:

• identify individuals or groups affected by and capable of influencing the design;
• explain the initiative to the key stakeholders;
• assess their interests and areas of resistance, and how they might help or hinder progress;
• agree their roles and responsibilities within the programme” (94)

“it is important to have more than one person working on organisation designs. Whatever their size they have a degree of complexity, and it is useful to get a range of perspectives on progress towards objectives” (98)

“a design team should comprise a representative cross-section of the organisation under review” (98)

“inviting participation and involvement” (98)

“must have a clear picture of the processes managed at each level in the organisation” (98)

“Choosing the right people is crucial, as they must not only be capable but also be seen to be capable, they must have sufficient A experience of what they are there to do and, of course, they must be fully committed champions of the project” (99)

“The design phase task is to plan the alignment of processes, structures, systems and human resources” (99)

Commentator’s Note: Org design aligns pipelines, org, tools, team

“Early and adept communications stall the rumour mill and pave the way for building trust that people will be kept informed as the design is shaped” (100-101)

“In the early stages of a design project, communication has a strong change management purpose. As the project continues, communication provides more of a front-end to knowledge management” (103)

“Questions about culture usually centre on how to design to break down the silo mentality in the organisation” (103)

Commentator’s Note: Lol, incredible how pervasive this

“Nordstrom Rules: Rule 1. Use your good judgment in all situations. There will be no additional rules” (104)

“good judgment … When we talk about using good judgment, it’s really about how we treat our customers, how we treat each other and how we do business” (105)

“new skills (soft and hard) required for successful outcomes will be teased out. Obviously, training people in the right things and in good time is crucial” (105)

“The work of the business when it has been ‘re-engineered’. If the nature of employees’ activities and responsibilities changes, they are likely to have to acquire new expertise in the way they fulfil their role or do their jobs” (105)

“Tailoring the training related to change, new ways of working, new systems and processes, and new job roles requires careful thought and sensitivity” (105-106)

“Training … linked to the overall business strategy … collaborative relationships … variety of formats … Recognize that training related to a new design puts an added burden on staff … Build training content from employees’ current strengths” (106)

“must be monitored and measured … Powerful business intelligence and the use of analytics will help achieve this” (106)

“Big data changes not only technology and management processes, but also basic orientations and cultures within organisations. We simply can’t think about business in the same way with this new resource” (107)

“Failure to ‘take the temperature’ of the people constitutes a significant risk to organisation design success …

• transition to the new state is disrupting normal business operations;
• relationships are being fractured or broken;
• things are going (or not going) well” (107)

“Organisational change inevitably brings with it changes in job descriptions and the creation of new jobs. This is sensitive, and so requires the close involvement of the organisation’s HR managers, whose knowledge of the timing, content and impact of any suggested changes in job descriptions, career paths and succession planning should help ensure a smooth transition … job design” (108)

“It is as if all energy has been expended in assessing, designing and implementing, so actually living the new design becomes ‘Ho hum, we’re there now’, rather than an energetic exploration of what is working well what is not and how to keep continuously adjusting” (108)

“a thorough post-implementation review or reviews, listening attentively to feedback and making adjustments in the light of any areas found wanting” (108)

“five aspects of the organisation design process” (114)

“Leadership support … she had done a significant amount of due diligence before she joined and knew she would have to tread carefully through the minefield of politics in the organisation” (114)

“enlist support … an appreciative inquiry approach … developing commitment” (115)

“Carefully planned phase-in” (115)

“Focus on the details of implementation: Some people found Lamb’s insistence on detailed planning tiresome. They wanted to get on and do something and baulked at meetings to go over project plans that had hundreds of lines of sequenced and interdependent actions. However, when the point of implementation came people were aware that Alder Park was going to operate radically differently; they had no illusions that this was going to be old wine in new bottles. They also knew that a range of implementation activities would be going on simultaneously in different work streams and that life would feel chaotic and uncomfortable during the process” (115-116)

“the principle of ‘no surprises’ was one that was embraced by the design teams” (116)

“Working collaboratively to remove silos and instil customer focus … aspects of the design would not only get the design work done but also start to develop new, informal social networks that would help break down the silos” (116)

“Flexibility to make refinements” (116)

Anthony, W.P., Perrewe, PD. and Kacmar, K.M., Strategic Human Resource Management, Harcourt Brace 1996 (117)

“project board (steering group) … business change programmes … The project board is responsible for ensuring that the programme meets its overall objectives and delivers the benefits outlined in the business case” (118)

“accountabilities of the project board…

• Gatekeeper
• Monitor
• Support and coach
• Decision-maker
• Champion/communicator
• Problem solver
• Resource negotiator” (118-119)

“The organisation design process is not one that can be prescribed. Rather it is a sequenced process that emerges from information about a specific organisation in its operating context” (120)

5 Measurement

“Measurement of organisation design is a thorny topic. At different stages of the process, people want to know with a high degree of certainty the answers to four questions:

• What analysis and assessment need to be done to give a reliable diagnosis of whether or not to initiate a new design?
• Are the design choices being made the right choices? …
• Is the gap closing effectively and smoothly between the original state (old design) and the future state (new design)?
• Are the desired benefits and outcomes being realised” (121)

“People also want to be able to measure what they are losing as well as what they are gaining” (121)

“They were able to get a good outcome from a bad map because they had a purpose and an image of where they were, and they knew where they were going” (122)

“using measures as general indicators and sources of feedback to spur action is sensible. But believing that they will point to the right answer to any of the four questions listed above is a mistake” (122)

“measurement in this context means formalised activity (assessing, monitoring gauging, ascertaining, surveying, and so on) aimed at producing structured data. The data are then interpreted and, if appropriate, applied in the process of making judgments, decisions and choices” (123)

“Google’s HR department functions more like a rigorous science lab than the pesky hall monitor most of us picture when we think of HR” (127)

“Google has even hired social scientists to study the organization. The scientists—part of a group known as the PiLab, short for People & Innovation Lab—run dozens of experiments on employees in an effort to answer questions about the best way to manage a large firm” (127)

“two points: first, that measures of design are organisation specific; and second that there has to be a clear purpose, related to the business strategy, for the measurement” (128)

“visual data should be:

• content rich, design straightforward;
• intense;
• subtle and effective with colour;
• rich in typographic information;
• luscious with multiple layers of micro/macro information, a typographic layer + a symbol layer + a data-map layer;
• calm but clear scale bar always present;
• free of chart junk and optical clutter; * accommodating a diversity of users” (132)

“most organisations have access to a lot more data than they can manage and assess” (133)

“we simply don’t have the continuous decision-making methods that can make effective use of the continuous data stream we have at our disposal” (134)

“to get actionable information rather than noise …

• Narrow the field
• Agree criteria and boundaries for choice
• Decide in the measurement tool source” (136)

“An ideal scenario is one where an organisation designer partners with a measurement expert” (137)

Bad: “Line management is not communicating results or action plans to staff and action is not consistently taken to address low survey scores” (139)

“Preparing the ground for success involves supporting people in taking actions suggested by the findings of the measurement. Word quickly gets around if nothing happens as a result of a survey, and when this occurs it is difficult to get support and participation in further data gathering” (139)

“Part of preparing the ground for success includes thinking about follow-up. This frequently falls by the wayside when other organisational events overtake the organisation design work or the costs of taking action outweigh the benefits” (139)

“two principles that must always underpin any form of measurement: respect for people and respect for quality of output” (140)

“When measurement is found to be of low quality, fabricated, misleading, or misreported (either internally or externally) there is usually deep damage done to the reputation of the responsible party” (142)

“Robust measurement reporting requires a mindset of scepticism, detachment and neutrality. With these qualities there is less likelihood of stating, conveying, suggesting, or omitting results in order to present a rosy view” (142)

“leaders who at stressful times are able to admit fallibility and find support and guidance to help rethink their approach are more likely to be winners than losers” (147)

“The acronym FABRIC provides a useful checklist for making decisions about measurement tools and methods

• Focused
• Appropriate
• Balanced
• Robust
• Integrated
• Cost-effective” (149)

6 Stakeholder engagement

“an intentional process … financial, social responsibility and environmental performance (known as the triple bottom line) … alignment of mutual interests, reduced risks to the organisation and improved results in the triple bottom line” (152)

“How knowledgeable are stakeholders about the current state of affairs?” (153)

“How can we balance what stakeholders might want in a new design with what is best for the business?” (153)

“trust, loyalty and advocacy” (153)

“Stakeholder engagement objectives

• educate … the business case
• balance
• implementation
• feedback” (154)

“When identifying stakeholders, it is important to cast widely to begin with” (155)

“Stakeholder engagement work continues through the life cycle of the project, as any individual or group can swiftly move from one position on the matrix to another. Treating a stakeholder map as a static and stable piece of information is highly risky” (158)

“Deutsche Post DHL’s performance; customer satisfaction scores are also tracked across a scorecard of over 50 measurements” (161)

“Companies that foster commitment do so in various ways, for example by:

• learning from feedback on products or services;
• collaborating across the organisation and with external stakeholders to solve problems or address opportunities;
• improving the quality of life in their local communities;
• operating in a responsible and ethical way;
• seeking to contribute more than simple bottom-line profit” (161)

“The resulting ‘face’ of commitment is stakeholder trust in the company, loyalty to it and advocacy of it to others. These three stakeholder attributes are also fundamental to organisation design project success” (161)

“Trust is the willingness to be vulnerable to (or rely on) another party when that party cannot be controlled or monitored” (162)

“if employees trust management and leaders they will focus on the job (and thus remain productive), rather than spend time and focus attention on various forms of defensive and self-defensive (covering their backs) risk-mitigation behaviour” (166)

“Organisational design changes can produce or destroy employee trust depending on how the implementation is structured and managed” (166)

“demonstrate their belief in employees and the business, pointing out how the design work is trying to help employees accomplish their work goals more effectively and reminding them regularly that all parties are working for the same thing” (167)

“Remember that people easily lose trust during periods of instability and change” (167)

“Loyalty is the emotional and functional state of being unswerving in allegiance, or faithful to an institution or product” (167)

“dedication to a relationship that people believe will improve their lives in the long run” (167)

“when mapping stakeholders it is helpful to label and/or measure their current and aimed for levels of loyalty” (169)

“Investing in developing emotionally (not just functionally) loyal staff is good for business results” (169)

“It is estimated that the cost of employee turnover can range from 40% to 400% of an employee’s annual salary” (169)

“Customers too want to feel that they are human beings and not simply a source of revenue” (170)

“promoting, supporting and enthusiastically recommending it to others” (171)

“With all types of organisation there is a tendency to focus on designing the ‘hard’ aspects of the new state—the systems, processes, structures and technologies—and to neglect the design of the soft aspects—behaviours, culture and relationships. This is a mistake” (180)

“the soft stuff is the hard stuff to design” (180)

“The people and culture aspects of an organisation are the more difficult ones to design, so it is tempting to pay less attention to them and hope things will work out” (181-182)

7 Leadership and organisation design

“Power shows the man. —Sophocles, Antigone” (187)

“in practice designs are developed, implemented and led by many” (187)

“As a leader, you’ve got to live this every day, because what you are doing is changing the culture of the organisation by changing the behaviours of the leaders. If you think you can stop leading the weekly report-outs on improvement work, or stop doing gemba walks la form of management by walking around] to see what is going on in the organisation, or say that executives don’t have to be certified lean leaders any more because they are too busy and because we’ve come so far, you’re wrong. If you start backing down, if you give up on important commitments you have made as leaders—which really make up the structure and discipline of the management system and require that leaders be coaching and mentoring on the front lines of the organisation—you’ve lost” (188)

“there are many sources of power that leaders can draw on” (188)

“Organisation design success depends on the complex interactions of four broad leadership groups: internal formal leaders, internal informal leaders, external formal leaders and external informal leaders or opinion influencers” (192)

“designated leaders … three specific power sources: formal authority; control of scarce resources; and use of organisational structure, rules and regulations. They may have additional sources of power, but it is these three that are usually associated with hierarchical position” (192)

“Have a clear grasp of the vision, mission and purpose … To understand what is being taken on:

• identify and assess what is going on behind the scenes;
• meet at least some of the stakeholders and get their views;
• make certain there is high-level agreement (sponsor or accountable executive) on outcomes and deliverables; agree and document the context and boundaries of the leadership role;
• assess and get a realistic view of the project in the context of all the other work that makes time demands” (195)

“Mobilise the formal and informal leaders to work together … the right balance of getting on with those you have to work with and getting on with achieving the objectives of the project” (196)

“Build trust quickly by being both credible and competent …

• how they react to critical incidents and organisational crises;
• how they allocate scarce resources;
• instances of deliberate modelling, teaching and coaching;
• criteria for allocating rewards and status and recruiting, selecting, promoting, retiring and excommunicating organisation members” (197)

“Use power wisely: Leaders who consistently use the same power source(s) usually fail, sometimes spectacularly, in achieving their mission” (199)

“The Columbia Accident Investigation Board report notes that within the agency:

With Columbia, as with Challenger, the board found, decisionmakers were overly influenced by pressures to launch on time. In blind adherence to safety rules, they ignored hunches and intuition about faulty equipment. They valued organisational charts over good communication. The report chastised the agency for habitually turning a deaf ear to outside critics, and for clinging to the belief that NASA alone knew best how to safely send people into space. Signals were overlooked, people were silenced. Communication did not flow effectively up and down the formal chain of command” (199)

“leaders flex their style depending on the needs of the follower. This responsiveness creates a culture of openness where followers feel respected and valued” (200-201)

“Organisation design projects by definition shake things up coalitions change as the project progresses. In most cases there are some leaders who feel that they will either win or lose from any proposed design and will then act to preserve their own interests at the expense of organisational interests” (201)

“Efforts that don’t have a powerful enough guiding coalition can make apparent progress for a while. But, sooner or later, the opposition gathers itself together and stops the change” (201)

“Informal leaders emerge in organisations usually because they have a particular passion or belief and characteristics that engage people in their cause. These informal leaders are found at any level in the hierarchy because what they spearhead is independent of hierarchy” (202)

“Informal leaders muster support not only by their approach … but also by their use of referent power … and their personal characteristics” (204)

“Informal leaders can initiate new organisation design work by their actions or they can intervene in an already initiated project. To achieve their goals, they use predominantly referent power combined with an approach and a set of characteristics that enable them to muster support without jeopardising their position” (205)

“This is often tricky in difficult situations where, for example, there is no opportunity for a second chance, or there is a lot of resistance from another person or group” (205)

“Collaborative working, where people feel good about their interactions and the results they produce, is hard to achieve” (206)

“Territorial game playing … People in the company, for example, do their best to minimise friction… It is considered much better form to wage our battles sneakily behind each other’s back than to confront each other… directly with any semblance of complaint… We are all on a congenial, first name basis, especially with people we loathe. The right to this pose of comfortable intimacy does not extend downward” (208)

“Territorial games interfere with getting work done effectively. They cause bad feeling, poor-quality decisions and defensive behaviour. Yet there is great reluctance to expose and discuss game playing openly. Overcoming this reluctance is the first step to understanding territorial instincts and choosing to work in more productive ways The more people learn about the games they play the less effective destructive gamesmanship is” (208)

“During the 1990s many companies spent time and effort in trying to become learning organisations, but there is little evidence that any achieved this (or consensus on what it would look like if they did)” (210)

“We’ve got far more expertise at our disposal than I was aware of” (212)

“‘It is better for us to be friends,’ they said, ‘than to be eaten by vultures’” (215)

“Putting together a smaller leadership team to drive the design work (bearing certain considerations in mind). In most cases it is difficult to get agreed actions initiated and followed through if the team is bigger than six people. However, the six people have to form a balance of capability to work successfully. A group of six ‘shapers’ and no ‘evaluators’, for example, will struggle to carry through the design” (215)

Simmons, A., Territorial Games: Understanding and Ending Turf Wars at Work, Amacom, 1998 (216)

“Engaging the formal leaders in open discussions about aspects generally relegated to the ‘too difficult’ box” (217)

“Leading organisation design projects also takes guts and a great deal of awareness—of self and of others—to carry things through, keep on learning, admit fallibilities and deal with consequences” (219)

8 Culture and group processes

“Organisation doesn’t really accomplish anything. Plans don’t accomplish anything, either. Theories of management don’t much matter. Endeavors succeed or fail because of the people involved. Only by attracting the best people will you accomplish great deeds. —Colin Powell, former US Secretary of State” (220)

“a ‘visioning’ process kicks off an organisation design project” (220)

“the cultural and group processes—typically the hidden dangers that block the route—are not discussed … participants choose not to acknowledge that the path between the current state and their desired future state is perilous and that they are often ill-equipped to take it” (220)

“local culture … organisation’s culture … group processes” (220)

” seven factors…

• blamed someone else for the situation they were in (a blame culture);
• wanted to hear only good news (a denial culture);
• refused to discuss aspects of the expedition (the shadow side of the organisation);
• were unable to make quick decisions;
• failed to solve the problems they faced;
• escalated rather than managed conflicts; commented on social media about the problems and conflicts” (221-222)

“One or more of these seven factors commonly blocks an organisation design implementation. (Note that the first three relate to the culture of the organisation and the next four to group processes)” (222)

“surprising how few of the organisation design models shown in Chapter 2 specifically mention culture” (222)

“much about culture is implicit and difficult to describe because it is socially construed and manifested in norms, behaviours, expectations and ‘the way we do things round here’” )223

“Cultures that are misaligned … must be changed as part of the organisation design process if there is to be any chance of success” (224)

“A TV series Super Nanny, first shown during 2004, provided a model for behaviour change that organisation designers could well learn from:

Her simple methods stress consistency, communication and reasonable consequences for poor behaviour, all delivered with loving firmness. She emphasises the importance of spelling out the new rules of the household to children in advance, as well as explaining the consequences for infractions. She also candidly points out to parents where they need to be more decisive, more flexible or even how they may need to adjust their expectations of a child’s readiness for certain behaviours” (225)

“One of the things I learnt through ten-plus years of dealing with people who didn’t like what we were telling them about their heart surgery results is their first response is to say, ‘the data’s wrong’. The second response is to say, ‘okay, the data’s right but your analysis is wrong’” (229)

“The shadow side deals with the covert, the undiscussed, the undiscussable, and the unmentionable” (230)

“characterising the shadow side in terms of three levels of culture is not helpful as it does not exhibit in that way” (231)

“survive best by working with both parts of the brain … organisation design projects are often initiated and planned using predominantly the rational (left side) of the cultural brain” (231)

“groups commonly stall on things like making decisions, problem-solving, handling conflicts, communication and boundary management (which includes obtaining resources, sharing information, admitting people into the group, and relationships between the group and the wider organisation/environment)” (232)

“Without the process skills to build confidence, bring people along, generate commitment and help people listen to each other, designers will struggle to make their projects successful” (232)

“The Six Senses of Project Leadership”, www.standishgroup.com (233)

“critical practitioner …

• being constructively not negatively critical;
• coping with uncertainty and change;
• using knowledge with awareness of personal biases;
• adopting no moral direction, apart from the fundamental professional commitment to social justice for others and empowering, anti-oppressive work” (233)

“The International Masters Programme in Practising Management (IMPM), a radically different alternative to a traditional MBA, co-founded by Henry Mintzberg, Cleghorn Professor of Management Studies at McGill University and author of Managers Not MBAs, aims to develop managers able to:

• manage themselves (the reflective mindset);
• manage organisations (the analytical mindset);
• manage context (the worldly mindset);
• manage relationships (the collaborative mindset);
• manage change (the action mindset)” (233-234)

“Decisions are the essence of management” (234)

“Generally, managers are taught to make organisational decisions using the first—a structured way of getting to a situational decision. A common method is the Vroom-Yetton-Jago model of decision-making. The naturalistic method suggests that decisions are made in a much less analytical way drawing on a range of sources” (236)

“they spend a lot more time trying to develop consensus in the decision group. The virtue of it is that although it takes longer to make the decision, implementation goes a lot faster, because there isn’t resistance or sabotage that works its way through the organization” (239)

“Problem-solving … The Peter Principle, Laurence J. Peter” (239)

“Problem life cycle” (242)

The Institute of Risk Managers, The Risk Management Standard, 2002 (www.theirm.org) (242)

“Managing conflict: Those involved in organisation design projects frequently find themselves in conflict with others. Recognising that conflict is inevitable and learning to manage it constructively rather than trying to avoid it is critically important” (243)

“Conflicts are most likely to occur when a person or a group feels that their social, psychological, emotional, physical or other space is threatened, and only some form of dialogue will resolve the conflict” (245)

“Belbin’s team-roles” (246)

“Motivational and transferable skills cards: These are available both online and as physical cards from CareerPlanner.com” (253)

9 Continuous design

“every stage in the evolutionary sequence must be capable of holding its own in a competitive world. —R. McNeil Alexander, Bones” (256)

“Organisation design look for assurances that their design is right and that it will endure. They aspire to ‘future proof’ its success, but this is impossible because they are not designing a static building or a monument. An organisation is a dynamic system with its own life cycle” (256)

“an organisation continuously changes shape, size and membership, yet lasts over time. Threats generally come from externalities, such as environmental change or predators, which can be subtle or cataclysmic. So it is with organisation designs” (256)

“Good designs are not a one-shot effort; they allow for meeting continuous change while simultaneously keeping the business operations running successfully” (257)

“people appear more responsive to contextual changes in their personal lives than in their working lives” (260)

“One reason is that organisations often encourage employees to be narrowly focused and therefore blinkered. Organisation control devices such as reporting lines, performance appraisals, scorecards and measures suggest that employees have to achieve certain targets to a specific schedule, so the wider context is not sufficiently brought to bear in making strategic and operational decisions and choices” (260)

“traditional control systems and processes militate against organisations’ developing a continuous design capability, and it is difficult to develop adaptability and responsiveness” (260)

“To lay the foundations for design flexibility it is necessary to keep abreast of three aspects of an organisation’s external context and three of its internal context:

• External context:
  • new businesses and models;
  • collective responsibility for our future;
  • market developments.
• Internal context:
  • corporate governance;
  • psychological contracts;
  • workforce demographics” (260-261)

“The first year in which emerging markets accounted for more than half of world GDP on the basis of purchasing power parity was 2013” (267)

“There are two aspects to corporate governance. The first is the behaviour of corporations, as measured by performance, efficiency, growth, financial structure, and treatment of shareholders and other stakeholders. The second is the framework established by law within which companies operate - the rules and regulations - together with financial, labour and other market practices” (269)

“The International Finance Corporation (part of the World Bank Group) has a comprehensive approach to assessing the health of an organisation’s corporate governance” (270)

“governance … activities …

• Approving a corporate philosophy and mission.
• Selecting, monitoring, evaluating, compensating and—if necessary—replacing the CEO and other senior managers, and ensuring management succession.
• Reviewing and approving management’s strategic and business plans, including developing a depth of knowledge of the business being served, understanding and questioning the assumptions upon which such plans are based, and reaching an independent judgment as to the probability that the plans can be realised (referred to as ‘constructive engagement’ in strategy).
• Reviewing and approving the corporation’s financial objectives, plans and actions, including significant capital allocations and expenditures.
• Reviewing and approving transactions not in the ordinary course of business (if the transaction would cause the disappearance of the corporation or the sale of all its assets, then only the board can make this decision; it may not be delegated to a committee or to management).
• Monitoring corporate performance against the strategic and business plans, including overseeing the operating results regularly to evaluate whether the business is being properly managed.
• Ensuring that the corporation has in place systems to encourage and enable ethical behaviour and compliance with laws and regulations, auditing and accounting principles, and the corporation’s own governing documents.
• Assessing its own effectiveness in fulfilling these and other board responsibilities (subject to minimum statutory requirements such as quorum requirements for meetings under state corporation law).
• Performing such other functions as are prescribed by law, or assigned to the board in the corporation’s governing documents” (270-271)

“The Second Machine Age … new technologies will require very different kinds of work and work skills” (275)

Commentator’s Note: I was watching Skeleton Crew while reading this book, and the job placement sequence at the school on At Attin was very indicative of the new work skills of required in a “machine age”

“current organisation design will inevitably give way to a future design” (278)

“designs must be dynamic” (278)

“building adaptive capability into any design is a necessary part of the process” (278)

“many leaders:

• do not know enough about the processes and theories for designing effective organisations and fail to appreciate the range of options open to them;
• choose designs that are more political and more complex than they need be, less than optimal because they exclude important knowledge crucial to the success of a new organisational design, and resisted when implemented;
• work on a design that solves a specific symptom rather than the underlying cause giving rise to it (identifying the root cause of issues and responding to these is crucial to the success of an organisational design project);
• separate a new design from their organisation’s strategy and external environment, when they should realise that a good organisation design is a means for implementing strategy and can also open up new strategic options;
• fail to recognise how much of their time and active involvement is required in organisational design work and cannot delegate their role to consultants;
• overlook the fact that organisational design is a multi-stage process during which the organisation must continue to operate and change, so the design process must synchronise with the dynamic of the organisation” (278)

“an enterprise has a shelf life in a particular form and can last only so long before it becomes obsolete … A History of American Business, C. Joseph Pusateri” (279)

“One way of thinking about shelf life is in terms of an organisational life cycle. Typically, it takes the form of an S curve (see Figure 9.4), sometimes called the sigmoid curve” (279)

“There is a theory that the organisational maturing and decline cycle can be interrupted by jumping into another sigmoid curve at an appropriate point, thus avoiding the inevitability of decline” (279)

“it is difficult to judge when an organisation is at the midpoint; and when things appear to be going well, as they typically do in the first half of the maturity phase, there is usually little incentive to change” (279)

“Data analysis is critically important if organisations are to be capable of adapting” (282)

“If they are to continuously adapt, organisations must be future aware, and then use not just their own expertise but the input of others (amateurs, consumers and partners) to help them work through ways of meeting the future in good shape” (283)

“In 1986 Craig Reynolds was looking for a way to model the flocking behaviour of birds. He was looking for a small set of behavioural rules to achieve the desired result and managed to come up with just three:

• Separation: steer to avoid crowding local flock mates.
• Alignment: steer towards the average heading of local flock mates.
• Cohesion: steer to move towards the average position of local flock mates” (283)

“These three rules are sufficient to generate flocking behaviour” (283)

“flocking behaviour …

• there is no leader who says ‘follow me’—at any time any flock member could be the leader;
• each member follows the same rules—there is no hierarchy of rules;
• each member is concerned only with what its neighbours are doing—there is no attempt to try to comprehend the behaviour of the whole;
• the rules are not directly concerned with global-level behaviour. The appearance of flocking is an ‘emergent’ property resulting from all of the mutual interactions between members” (284)

Commentator’s Note: This is total football

“Such simple rules when applied to an organisation make for flexibility, autonomy and adaptability without losing overall control. They make organisational behaviour visible, and once articulated it becomes possible to discuss whether the behaviours they generate are the ones the organisation wants or needs in order to keep adapting or whether design work should aim to change them” (284)

“How to keep an organisation continuously designing…

• Grooming managers for the long term
• Enabling people to be part of the next generation of the company requires involving them in what is going on
• People who can run hard and dream big are generally curious and innovative and these capabilities need managerial nurturing” (284-287)

“Good to Great Diagnostic Tool

• Disciplined People
• Disciplined Thought
• Disciplined Action
• Building Greatness to Last” (289-290)

“This tool provides a snapshot of the type of activity needed to keep an organisation’s constituents moving along the adoption and adaptation curve” (290)