Organisation design – lessons from architecture
I like good design. Products and buildings that are well designed are aesthetically pleasing, but for me, they also evoke human ingenuity. I often wonder when and how we moved from tent-like constructs to awe inspiring buildings like the Louvre Pyramid…and I would rather sit on a Hans Wegner Cigar chair or aJapanese Toto washlet than on a Michael Aram Steel Skeleton chair.
However, I don’t blindly advocate designs that push the boundaries, merely that I applaud well-crafted work (the form) that gets the job done well (the function). There is a prevailing idea in architecture and product design that ‘form follows function’, put simply, the design of something should aid its intended purpose. This can also mean how something is designed influences the way it behaves or interacts with you (and there are plenty of examples in architecture where this is demonstrated for better or worse).
For me, this rings true also for the design of organisations. If you want your business to behave (function) differently, then you have to alter the design (form). Of course organisation design is not the only element that can influence performance, however poor organisation design makes good performance more difficult to achieve.
In this short piece, I suggest that business leaders and design professionals can avoid some common mistakes made during organisation design by considering the architectural principle of ‘form follows function’ during the process.
Let’s assume an organisation is not a fixed object like a chair or a building, but a complex system of inter-related parts. If the organisation’s design is not sound, it simply won’t perform in the way it was intended. There are three things that I think give an organisation its ‘form’ and influence the way it ‘functions’, and ultimately the way it performs:
What the core activities really are (as opposed to ‘departments’):
Fundamentally what an organisation needs to do to achieve its goals, and for most I would argue they are: innovate, delight customers, bring products and services to market, develop talent, deploy technology, and exploit data.
Where activities sit in relation to one another:
Where the activity resides in the organisation structure and how it works and interfaces with other activities – e.g. does it reside at a high enough level or is it always vying for attention?
Degree of autonomy:
Freedom to take decisions regarding specific activities without interference.
This focus on core activities is a good and important start to the design. However, all too often, organisation design doesn’t deliver expected outcomes and performance levels. It can be counter-productive, resulting in low morale, delayed decision-making and confusing roles and responsibilities. So what are some of the common mistakes people make and how can the ‘form follows function’ principle help?
Changing the strategy but not the structure:
A common mistake made during organisation design is that the new structure does not stray too far from the old one. A new strategy is proposed and a re-design is done but the old power structures remain. A few new boxes appear on the organisation chart, and some are removed, but essentially the new has been super-imposed onto the old. This common mistake often causes a re-think of the design further down the road, with potentially double the amount of disruption than would have occurred if right the first time.
Applying the principle: The most successful organisation design efforts take a close look at the core activities needed in the business (and make a clean break from the past) and then design the new structure according to a clear set of principles derived from strategy.
Not balancing between the need for autonomy vs control:
Having the right controls in place should give people the freedom to do their jobs well and produce good results. In organisations however there is often an inherent and natural conflict between autonomy and control and we are all too aware of the impact when this balance is not right – Lehman Brothers collapse, VW and Enron come to mind. The consequences of a lack of control can be severe and so the question is where best to put the controls to protect the organisation from systemic harm, without putting a straitjacket on those activities that drive revenue and growth.
Applying the principle: One design principle that serves many organisations is to give as much autonomy as possible to activities closest to the customer, while centralising as far as possible those activities which mitigate against systemic risk such as financial control, HR, legal etc.
Having the right people in the wrong roles (and vice- versa)
The structure is only as good as the people in it and how well they’re matched to their roles. This can be a challenge during organisation design because often there is pressure to complete the design quickly. Also, some company policies dictate a completely open selection process, which has obvious merit, but also some limitations.
Applying the principle: The best practice we see is to make a crystal clear link to the fundamental activities that a role leads, manages or supports (and not just the established functional processes within a department), and a selection process that clearly (and quickly) tests suitability against these activities. It’s important to make sure that the process of individual aspiration and consultation doesn’t override the obvious best fit, or take too long, leaving you with serious gaps in the structure in the short or medium term.
Putting an F1 engine into a family car will not give you F1 performance. This is because a family car and a F1 car are inherently designed to do different things. The mistakes that people make in organisation design are akin to this, often just moving a few boxes around the chart without taking a critical look at core activities or addressing issues of autonomy and control, and often putting the wrong people into critical roles. We suggest that, if nothing else, during your organisation design process keep the principle of ‘form follows function’ at the front of your mind and you may just avoid it being a wasted effort. It may even end up as good as a Hans Wegner chair!