Are You Truly Co-Creating Your Organization Design?
Reed Deshler | October 26, 2016
Leveraging your executive team to co-create or co-design your organization is an organization design best practice. It creates buy-in from the organization, facilitates change management efforts, helps eliminate blind spots in the design, and ultimately creates a more competitive organization. For most executives and leaders that we work with, they understand this important design principle intuitively. However, we have found this best practice can be harder to execute than it appears on its face.
The opposite of co-creating or co-designing the organization is doing so in a closed, secret, or exclusive setting. In our book, Mastering the Cube, we refer to this as, “The secret society.” Best intentions aside, sometimes leaders inadvertently exclude critical organization stakeholders from the design process. When this happens (even by accident), the consequences are detrimental to your organization alignment efforts in the short and long term.
There are three ways that executives undermine their efforts to co-create their organization’s strategy and design.
Role-centric decision-making. Each executive has a job to do and a scope to their position. It will vary by role from selling products, to inventing new products, to keeping IT systems running, to handling legal matters. In well-run organizations, executives are empowered within their domain of work to get things done. However, there are times when the consequences of a role-specific or functional decision can have significant implications for the rest of the organization. At times, one executive might inadvertently make a decision that has implications for the entire organization design (or at least other parts of the organization) without the input of others and in a setting that doesn’t leverage the benefits of true co-creation with other organization members.
For example, let’s assume that the CFO looks at the company finances and says, “To meet our year-end financial obligations, we need to reduce our costs.” This is a perfectly legitimate way for the CFO to do her job and think about the organization. In essence, she is trying to help the organization continue to have the trust of Wall Street to let the business operate the way it wants to operate. CFOs often make these kinds of decisions on their own with the rationale of, “Why would I bother an operating unit leader to figure out where to reduce costs so we can hit our earnings expectations? This falls under my functional responsibility.”
The problem, however, arises with the consequences of the CFO’s decision. In the spirit of trying to manage the enterprise and fulfill her role, the CFO is making substantial decisions in a “secret society” that may put a freeze on travel, slow marketing spend, and otherwise change the direction and resources for an organization design or strategic plan. As a result, and without the input of the other executives involved in the organization, it can feel like the rules are being handed down from a couple of people rather than realigned by an executive team in a cohesive way.
Compartmentalize problems and solutions. Often, we get all of the C-suite executives in the room, and we set the strategy together as a group. Then, when we get to the Operations review, we only involve the business leaders that are responsible for the P&L with the thinking that, “They are the ones we hold accountable for the performance of the business.” While that thinking might not be true, it is how things play out sometimes.
The problem here is that even though we tried to co-create strategy, we have completely compartmentalized the responsibility for execution, which could involve how the organization is designed, how resources are allocated, how initiatives are reprioritized, and how costs are managed. While the direct business leaders certainly have a lot of expertise in the performance of the business, the other members of the executive team have stakes in how the organization is set-up and aligned to support the organization strategy and organization performance. Failing, to build governance processes and an operating cadence that involves the right stakeholders can lead to compartmentalized decision making and result in a “secret society.”
In-crowd vs. the out-crowd. In a recent article by Bob Whipple, he talks about favoritism in the workplace. While he acknowledges that favoritism can pose problems for organizations, he also candidly states that to favor some individuals over others is natural, human, and impossible to entirely avoid.
Within your executive team, there will inevitably be some individuals that you get along better with, perhaps trust more, and ultimately know better. As a result, you will probably have more frequent and deeper conversations with them about the direction of the organization design and thus naturally align with them around future expectations and decisions.
While this is normal, the danger is that when you get together with the other members of the team, it can feel like the design is a foregone conclusion and handed down from the few in the “in-crowd.” This can seriously hinder true co-creation and can create a difficult environment for your executive team. While giving equal time to each member of your executive team is not practical (and, as Whipple argues, will not eliminate favoritism, either), recognize how your increased contact with leaders can affect the whole team and take the necessary measures to guarantee true co-creation.
While the three common ways that executives design in a secret society mentioned above may be unintentional, the consequences are the same. Avoiding designing in a secret society can help your organization produce the best design and strategic direction and ultimately help your organization implement strategy and organization transformation objectives faster and more effectively.