Organization Design

A Guide to Building Effective Organizations

Patricia Cichocki, Christine Irwin

• Publisher: Kogan Page
• Year: 2014
• ISBN:
  9780749470609
• Edition: 2
• Topic: Business
• Subtopic: Management
• Index: Business

With the rate of change in organizations at an all-time high, the need for strong organization design has never been more pressing. Organization Design provides a complete road map to building successful organizations through good organization design. It presents a practical process; a robust, broad-based model and a set of tools and techniques that all link together. Part One and Two together provide you with the knowledge of how to establish and run an organization design programme. Part Three covers how to respond to three perennial challenges in designing organizations. This thoroughly revised edition of Organization Design includes an increased range of archetypes, a wide variety of international examples and coverage of additional ways to gain insight, such as through exploring metaphors and positive deviance. It is a practical toolkit to take organization designers from start to finish, outlining the basic theory, providing a step-by-step approach to implementation, and offering solutions to the recurring challenges that will inevitably be met along the way.

PART ONE

Understanding organization design

01

Putting organization design in context

When the wind of change blows, some build walls, others build windmills. (ANONYMOUS)

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KEY POINTS

Organization design is:

• the process of designing an organization and the resulting configuration;
• a discipline, a framework and mindset that aims to create value;
• powerful because it holds the key to change.

Organization design matters because it:

• positively impacts performance;
• ensures resources are more effectively used;
• enables a culture of accountability;
• translates strategy into action;
• can allow organizations to fulfil their strategic intent;
• helps organizations deal with change;
• allows for adaptation without creating chaos;
• reduces risk.

What drives an organization to carry out a design?

• Defining or redefining the organizational purpose.
• Establishing or re-establishing the organization’s strategy.
• There are significant changes to operations.
• Faced with sustained evolution.
• The organization is not performing as expected.
• Cost cutting, a new leader making changes or adopting ‘best practices’ are other reasons that drive re-designs but be cautious if they aren’t supporting the context and strategy.

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Organization design: a guide to building effective organizations. What does that mean? Why should you be interested? How does organization design help you decide whether a wall or a windmill is right for your organization? The aim of this chapter is to answer the question, ‘Why design an organization’? This chapter covers what design is, what an organization is, what organization design is, why organization design matters, and why design an organization. Organization design is complex, with many facets: an understanding of all of these will help you carry out work in this arena and explain it to others. It is important to understand why organization design matters for many stakeholders and in particular the strategic leadership of an organization and the triggers that make organization design an appropriate intervention rather than other transformation approaches. There is increasing recognition that organization design matters, as Tom Jasinski, AVP, Organization Effectiveness at MetLife Inc, New York said in 2009, ‘In good times or in bad, organization design matters!’ This is because executed well, organization design can powerfully deliver business results and translate strategy into action. In addition, organization design matters because organizations have to deal with more significant and frequent change, the impact of which has higher visibility to organizations’ stakeholders. By reading this chapter you should gain an insight into the strategic context for organization design that will help frame the rest of this book.

Let’s look at organization design in context (see Figure 1.1). It is a dynamic model; the major links are shown. Organization design is a critical business activity establishing the framework by which an organization serves its customers and interfaces with the market. An organization is influenced by its external environment and it influences its environment (Daft, 2007). Strategy is the organization’s choices on how it achieves its vision. Organization design is the vehicle through which the business strategy is executed (Galbraith, 1973, 1995) and it translates strategy into results both directly and via changing culture (Salz, 2013).

FIGURE 1.1 Organization design in context

Paradoxically, the most important aspect of delivering cultural change is not to focus explicitly on changing the culture, but rather to focus on what the exact nature of the change is (a problem that needs fixing), how it will be achieved, and how the existing culture will facilitate or resist the required change. This subtle and important difference is often misunderstood.

(Salz, 2013)

Culture in turn also drives performance (Heskett, 2011 and Sackman and Stiftung, 2006). Organization design is thus a cornerstone of competitive advantage and performance. It is one of the few levers senior leaders can directly manage to help them achieve competitive advantage in an extremely challenging global marketplace (Nadler and Tushman, 1997).

What is design?

This may seem a basic question, but many people who are asked to work on organization design programmes are not trained in design or its concepts. The understanding of design outside design circles is still immature. Take a minute and think what does design mean for you.

When asked this question, people often describe the designed artefact, the end product: the iPhone, the Guggenheim in Bilbao, or the Ferrari (probably a red one). In organizational terms, people commonly describe the published organization chart. Maybe you also think of the blueprints that are produced for how the product or building will look. Those blueprints might be sketches, models, and videos of the whole or parts of the design. Design is not the frippery. It is much more than fonts, logos, posters, and clothes. As Steve Jobs said, ‘In most people’s vocabularies, design means veneer. It’s interior decorating. It’s the fabric of the curtains or the sofa. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a human-made creation that ends up expressing itself in successive outer layers of the product or service.’

Take five minutes, write down what you would have to consider if you were designing a garden. If you did this, you would probably have many things on your list. There is a lot more to design than the finished product. And is it ever finished? Good designs are powerful. Think of something that you love; something that you engage with, with strong emotions – not just something that you like or that you take for granted. Why do you love that tablet or that car so much? Now think about the car-washing kit or kitchen gadget that lies at the back of the garage or drawer – used once and never picked up again and maybe replaced by another item that fulfils the same function. As a customer why do you keep going back to the same company over and over again, when there are other companies out there that offer the same products or services and maybe even cost less? It is not blind loyalty; there are some companies that have an appeal, their products and services are pleasing to use and you have come to know and enjoy dealing with these companies. As an employee, why have you enjoyed working in some companies or one department but not another even when the work was similar? Design sets apart the OK from the great. Quality and function alone are not enough; it is the overall design of a thing that is a key differentiator. Something that is well-designed is easy to use and it works, but above that it taps into our emotions and we enjoy it. MIT, Harvard, McKinsey, P&G, Dell, Samsung and Harley-Davidson are among the many businesses moving to design to help navigate the present and the future. It is why in the United Kingdom and in Europe governments are embracing design to help redesign basic social services.

Design is both a noun and a verb. The term encompasses both the artefact and the process of designing that artefact (Walls et al, 1992). It is the design and designing. It is what designers produce and what and how they do it. But it is more than that; it is a discipline, a framework and a mindset. Design is the artefact and the supporting deliverables. It is the end result in whole or in part and the interim products and information about it; the ideas and concepts, sketches, details, features, plans and blueprints. It is how it looks and feels for the people who use it.

Design is a process – it is designing. Designing involves:

• in-depth research and analysis of many factors, such as: the intent; the context – constraints, boundaries and opportunities; it looks at the people, customers, clients and other stakeholders’ needs;
• searching for insight and foresight;
• exploring concepts: using the insight, foresight, research and analysis to generate concepts that can be communicated and tested, combined and recombined;
• creating ‘solutions’ by combining systems of concepts to make a whole and exploring their arrangement; evaluating these, refining and reiterating;
• realizing the idea and delivering the end result; producing plans at a level of detail that it can be constructed or implemented.

Design is a discipline, a framework and mindset that aims to create value. To design is to think like a designer and act like a designer. It is a way of thinking and acting that follows a loose framework where insights are collected from a variety of sources that ultimately guide activities toward a solution. The design mindset includes some core tenets:

• Action orientation – taking lots of small practical steps forward.
• A learner’s mindset – accepting that the first solution is rarely (if ever) the right solution and that introducing new things requires iteration. It uses divergent and convergent thinking at different stages to explore widely and then narrow in.
• Encouraging disparate viewpoints and getting a holistic perspective on problems and solutions. The design process is a communication process; it is about having the right people, right information, right interactions, right knowledge, right conversation, and right outcomes. Most of the methodologies and tools are about making that happen; they are the design of interactions.

Design is messy: it is non-linear. It involves engaging, discussing, thinking, iterating, reiterating, testing, learning, evolving, and making choices and decisions. A challenge, when people are new to design or working on a design, is the rush to find the perfect design and move on to action. A good designer doesn’t use one lens or only one view but is a bricoleur who understands that design is its own practice. Much like the artist or the scientist – the designer has skills, methods, processes, tools and techniques that not only can, but require the ability, to use different lenses and approaches.

Design is powerful because it holds the key to change. It has a set of tools, techniques and methods that can guide people towards a much better way of doing things. Designers, by the very nature of their professional practice, are change agents who solve complex problems. Good designers have the ability to:

• tolerate ambiguity that shows up in viewing design as inquiry or as an iterative loop of divergent-convergent thinking;
• maintain sight of the big picture by including systems thinking;
• handle uncertainty;
• handle the tensions and paradoxes that need balancing to create the desired effects;
• make decisions;
• think as part of a team – they need to work with others;
• think and communicate in the several languages of design.

What is an organization?

An organization is a group of people brought together for a purpose and arranged to form a systematic whole with interdependent and coordinated underlying parts. The Oxford English Dictionary defines an organization as ‘an organized body of people with a particular purpose, as a business,...

Table of contents

• Cover
• Title page
• Imprint
• Dedication
• Table of contents
• List of figures
• List of tables
• List of Tools
• About the authors
• Foreword
• Acknowledgements
• Introduction
• PART ONE Understanding organization design
• PART TWO Designing your organization the OPTIMAL Way
• PART THREE Dealing with recurring challenges
• Appendix 1 Skills required in an organization design team
• Appendix 2 Organization designers’ typical backgrounds
• Appendix 3 OPTIMAL Way outputs
• Appendix 4 Design outputs by level and Compass segment with examples of implementation tasks
• Glossary
• References
• Further reading
• Selected organizations and resources
• Index
• Full imprint