I’ve heard it said: It doesn’t matter how many resources you have; if you don’t know how to use them, it will never be enough. Formally, organization design is the process of designing organizations to achieve desired results through a deliberate alignment of key dimensions of the organization. These include work processes, structure and governance, information and metrics, people and rewards, continuous improvement, and leadership and culture (e.g. “six sides of the cube”, see Mastering the Cube: Overcoming Stumbling Blocks and Building an Organization That Works).
In short it’s the blend of successful organizational change and performance. But however you define it, the most important takeaway is realizing that organization design is less about nuts and bolts as it is hearts and minds. With proper timing, selection of tools, and the right know-how, leaders can facilitate positive and lasting change with relatively minimal disruption to the organization.
The seeds of organization development are firmly rooted in social science, not business theory. Psychologist Kurt Lewin (1898–1947) is considered the founding father of organization development. The term didn’t even exist when he was developing his concepts of group dynamics, experiential learning, and action research. Lewin’s Field Theory, which asserted that behavior is the result of the individual and the environment, had a significant impact on social psychology by advancing the idea that our individual traits and the environment interact to cause our behavior.
It wasn’t until the 1950s that the term organization development was coined to describe the methods used to bridge knowledge and practice within an organization to improve effectiveness in everything from productivity to employees’ work-life balance. But aligning those organizational choices can be very challenging because people are a complex blend of emotions and intellect, ambition and insecurity, discipline and whimsy. So thoughtful planning is integral before implementing any organization design methodology.
With organization design, it’s not just a matter of what but when. For example, not taking the time to analyze and understand key stakeholders’ needs can lead to a strategy that misses the mark. Here are some typical events/situations that are indicative that the time is right for an organization design intervention:
- change in company direction and/or strategy
- declining company performance such as profitability
- technology upgrades
- rapid growth
- loss of market share
- rising employee churn or dissatisfaction
Beyond these indicators, it’s hard to assess when organizational change is needed, but the more proactive you can be, the more likely you can improve your strategic position.
Knowing what tool is best suited to solve the problem at hand is highly critical. For example, should we solve the problem by using cross-functional teams or consider a new organization rationale such as a matrix organization. Decisions such as these have significant consequences and should be weighed against a risk and benefit analysis and are part of the trade-off process.
There are many organization design tools you can employ, but generally speaking organization design should always follow a defined process, where each step builds upon the last and where each tool is used with purpose and in order, ultimately resulting in optimal organizational alignment.
Successful organization design execution can be realized without being an expert in the field, but a fundamental understanding of the concepts goes a long way. Leaders that have the ability to get to the root cause of organizational misalignments and then deliberately apply the right organization design concepts while factoring in all six dimensions of an organization— represented by the sides of a cube—achieve the greatest results. Leading organization design requires a team effort and a committed organization.
Organization design efforts should also have communication and transformation management plans nested throughout. Many design efforts fail to reach their full potential simply because the implementation leader underestimates the power of employee behavioral factors. Best practices consider corporate communication, leader involvement, and transformation management just as important as the organization design itself.
Beneath the tools and methodologies, the purpose of organization design starts and ends with individuals seeking to provide the opportunity for employees and company alike to reach their full potential by creating a fulfilling, supportive, and challenging environment for workers while simultaneously building the company’s strategic position.