Strategic organization design is the process by which the CEO creates the conditions within the organization to deliver the strategy. It creates the linkages across organization structure, leadership and leadership capability, and innovation in the knowledge economy. Strategic organization design enables leaders to ensure value is created by every role and every role holder in the organization today and for the future. It establishes the conditions that will enable the organization to attract and retain high performing talent. It provides the framework to grow and create value.
When you consider your organization structure ask yourself:
- Is the organization performing to the level that is required or can it do better?
- What value is not being realized as a result of poor organization design?
If you see opportunity for better performance in the short and longer term, then read on.
Getting started – what is an organization structure?
At its most basic an organization structure is a framework to distribute accountability and authority in order for work to get done. Accountability and authority for work is delegated from the most senior into roles created one level down. In large complex organizations this process is replicated hundreds or thousands of times as leaders ensure all the necessary work gets done by creating roles to which they delegate that work. The result of this cascading of accountability and authority is the organization structure.
Setting the stage – Strategic Organization Design
Strategic organization design is the process that takes the work of an organization and arranges it in a logical pattern or structure that is understandable to employees and external stakeholders. It enables work to be carried out in an effective and efficient manner.
Roles are occupied by people and so the role itself provides employees with the scope of what they are expected to achieve, the authorities they possess to do that work and the boundaries or other constraints they must work within. Well defined roles answer the question “how big is my sandbox?”
Making hierarchy work for you
Organizations have roles that are created with different levels of accountability and authority. In most organizations, these roles are arranged in a hierarchy, with some roles more senior and some less so.
In a properly structured accountability hierarchy, the CEO (or most senior role) is the most complex and has accountability to deliver the organization’s long term goals while balancing the accountability to ensure short term goals are also achieved. The scope of accountability for roles below this most senior role are smaller and outcomes are not targeted as far out into the future.
An often-repeated theme in business literature is “hierarchy is bad”. Claims that hierarchy interferes with employees being empowered and engaged or that hierarchy slows organizations down are common. The words hierarchy and bureaucracy are often used interchangeably, but they are not the same thing. Bad hierarchy fosters bureaucracy and poor performance. A well-designed accountability hierarchy fosters value creation, speed of execution, employee engagement, employee development and growth.
Strategic Organization Design – One role accountable to lead the organization
The starting point of well-designed accountability hierarchy is at the top.
The board or governance body holds one role holder accountable for the success of the organization. When two or more role holders share the top role then the organization’s capability to deliver its strategy is weakened and accountabilities can overlap or become muddled.
There have been several prominent examples where confusion at the top affected business outcomes. Blackberry is an excellent case in point. At the start of the 2010’s Blackberry (then known as Research in Motion) dominated the smart phone market. The Blackberry was the choice of business leaders, Presidents and Prime Ministers, and Blackberry was seen as the smartest and most secure -smart phone available. Today Blackberry has all but disappeared,. It has withdrawn support for its software in early 2022, has sold off its mobile patent portfolio and is no longer in the Smartphone business.
BlackBerry’s Collapse
The primary reason cited for BlackBerry’s collapse was its inability to adapt and respond to a changing competitive landscape. A closer look at the organization structure is telling.
Research in Motion was led by co-CEOs Mike Lazaridis and Jim Balsillie. With Lazaridis focused on technology development and Balsillie leading the marketing and general management, on the surface it looked like it could be a formula for success. When an organization has two leaders capable of running the entire organization, with their vision of how to do so, you create the conditions for factions and internal competition. At Blackberry this played out in the creation of two factions. Employees were on Team Lazaridis or Team Balsillie. This Co-CEO model drew employee focus away from the customer and the competition and focused energy internally in how to meet conflicting demands. Meanwhile Apple established smart phone dominance with its iPhone, and Blackberry was unable to respond to this competitive threat and quickly disappeared. The lesson here is foundational to successful organization design. When 2 people or more are accountable for the same work, no one is accountable.
An effective organization structure can be the lever by which an organization creates value and achieves a strategic advantage in its marketplace and is evident in a number of ways. Our next blog will discuss how strategic organization design creates the conditions to delivery of the strategy, in a fast and reliable way while supporting growth, innovation, and talent development.
This blog is part of our ongoing series Organizations that Work. To see all of the blogs in the series that have been posted so far, click here.
Every Tuesday over the next few months, we will be posting blogs that take you from the pain of poor organization design, to identifying the root causes, to the benefits of undertaking strategic organization review. We will discuss the steps needed to effectively align your structure and work with your strategy, and we’ll discuss the processes that take out the guess work and help you to get it done. Through it all we will discuss how to lead the change from start to finish.
If you’d like to speak with us about how we can help you on your journey to an organization that works, please follow us on LinkedIn or book a call directly with one of our partners.
This blog was written by Michael Brush. As a partner with Core International Inc. since 1997, Mike Brush has worked with many of Canada’s largest companies in structuring to deliver strategy and improve performance.
Our approach draws on several bodies of work including Stratified Systems Theory, the work of Dr. Elliott Jaques. For more on Dr. Jaques and his work visit the Requisite Organization International Institute at ROII Requisite – ROII Requisite.