All organizations are perfectly designed for the results they get! – Arthur Jones
And when the results are not as per plan or shareholder expectations, there’s a need for the CEO to make changes. Urgently so! Because if s/he doesn’t, something else will change.
But just like a Central Bank Monetary policy, the conventional design options are limited. In the case of central banks, it is increasing; decreasing or keeping the repo-rate constant (depends on what the goal is: fighting inflation OR driving growth).
It is broadly the same for organization design changes as well. Either go for more centralization or decentralize it (again, depends on what the goal is: driving efficiency OR speed in decision making).
Consequently, what is of critical importance is determine the extent of the Swing!
In many instances, the following situations play out:
- Leaders take a near-extreme position/ perspective (e.g.: moving from a moderately de-centralized structure to a completely centralized one. Especially for the market-facing or enabling functions).
- Confirmation Bias: Seek to create evidence that best supports that view and expect leadership team alignment.
Rigidity: And in taking the near-extreme position, the inherent processes become very rigid (eg: approval processes for investments or pricing).
How do we deal with it? Consider the following:
- Consider taking a less extreme position.
- Adopt Stagile as an approach (stable as well as agile).
- Stability: Building a core set of principles in the org-design depending on what we are solving for (efficiency or speed). Keep those uniform and consistent.
- Agile: but continue to provide “freedom within a framework” at the edges (eg: sales; pricing or hiring approvals).
- Continue to iterate within the balanced and less extreme swing zone.
- And importantly, clearly communicate the “glide-path” one would follow (to reduce anxiety; chaos and provide clarity). Just like the forward guidance/ stance in case of central banks.
Structure design pivots of moving from a “regional” to “industry” to “cluster of product/ clients” and traversing back quickly (or not implementing fully) is a common occurrence that can be avoided.
We would love to hear your thoughts on the topic.
