Designing an Adaptive Organization: 2 Key Principles

There are very few things you can count on for sure in business. One of these is change. A highly adaptable organization has a significant competitive advantage in an environment of constant and regular change. For this reason, when we are designing or redesigning an organization, we like to design it in ways that provide flexibility.

Taking an Agile approach is a helpful start in designing an adaptive organization. We have had much success in using Agile principles to create fast, flexible organization design solutions that help organizations become more nimble and resilient. However, adaptive organization design is not just adopting Agile ways of working.

While there are many things to consider when designing an adaptive organization, we have identified two of particular importance. Let’s examine these two key tenets of adaptive organization design.

Flexibility Through Governance

Governance, even more than structure, is one key area that affects the flexibility of an organization. The first principle in designing an adaptive organization is that the organization must have governance mechanisms that allow it to flex and adapt. Mechanisms that allow the company to be governed in a flexible fashion help to override rigid patterns and routines that can slow the organization’s response time and decision making.

For example, most budgets in a business are cascaded from the top down. At the highest level is a big pool of money that the organization has available to allocate. The minute you start to divvy out that pool of dollars within the organization, it introduces a degree of rigidity. People in any given function start to consider the money theirs, forgetting that when it comes down from the top it really belongs not to the function but to the organization as a whole.

The organization may function quite well with such a mindset in place—until something comes along that necessitates a change in strategy. Suddenly, the organization sees that it would be much better off if the money that had been allocated to one function could be shifted somewhere else. Without governance mechanisms in place that allow plans to be revisited, someone now has to figure out on the fly how to siphon the money back out of IT and reallocate it where it’s needed most. It becomes a workaround, not a process—and workarounds in an organization nearly always take longer. They also often create political consequences that could be unhealthy for the organization.

An adaptive organization has mechanisms that allows it to shift plans, direction, and resources as needed. This pertains not just to finance and budgeting but to all areas of governance within the organization.

Providing a Sense of Place

The second key principle to keep in mind when designing an adaptive organization is to provide some way for the people in the organization to maintain a sense of stability.

In adaptive organization design, there is often an assumption that people have to be highly fungible and flexible: “Today come in and do this, tomorrow come in and do that; work over here today and over there tomorrow.” While there is indeed value and power in that degree of flexibility, most human beings need a degree of stability—a sense of place—to perform at their best. They need to have some degree of certainty around where their place is, what their role is, what they are expected to do, how they can know if they’re successful, where to go to get things approved, how to get feedback, and so forth.

If, in designing a highly adaptive organization, you remove a lot of those semblances of place and stability for people, you run the risk of creating a situation where people feel rudderless and confused, not knowing where or how best to contribute. Productivity drops, and eventually turnover may even increase. Therefore, it’s important when designing an organization for flexibility to consider ways to provide people stability, definition of roles, and a sense of place in the organization.

A good example of this principle at work is at a large engineering company that does most of its work based on projects. Even though the engineers who are assigned to those projects operate very independently, the organization works well for the most part because an engineer coming back from a project sits on a team of like engineers – for instance a mechanical engineer will sit with other mechanical engineers. They know that when their projects end they have a place to go, a home base with other mechanical engineers. It may seem minor, because most of the work actually happens on the project rather than with the engineering team, but it gives them a sense of place and purpose.

Stay Aligned With Adaptive Organization Design

An adaptive organization is one that can change and morph appropriately in response to changing conditions in the market without losing momentum or having to redesign itself continuously. The two key principles discussed above help to achieve this result.

In your design sessions, ask the following questions to ensure that these principles are addressed in your organization design:

  • Does the organization have governance mechanisms in place that allow it to respond to change in a timely and efficient manner?
  • How will the organization give its people a sense of place and stability within a flexible environment?

Leaders can use adaptive organization design to proactively prepare for change. For example, an organization that wants to double in size or acquire another business needs a certain amount of creative adaptivity to be able to handle that growth in a controlled and sustainable way.  Whether the future changes your organization encounters are planned or not, designing flexibility and resiliency into the DNA of an organization will help position it for strategic success.

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