The Pitfalls of a “Closet” Organization Redesign

Creative ideas blossom in a collaborative environment.

— Innovation Through Collaboration

For an organization to remain competitive, it must respond to shifting consumer expectation, evolving market trends, and advancing technology as well as organic changes that occur because of internal development and initiatives. The most effective way to reclaim a competitive edge is through a redesign that aligns strategy with structure, enabling more diversity, increased efficiency, and a better ability to innovate new goods and services.

But not all redesigns are created equal. The better the quality of a realignment design, the more likely an organization will achieve the full potential of its end-goal strategy. And two of the keys for a successful redesign are communication and collaboration, which is why conducting a “closet” organization design—where a small group conducts the strategic organization redesign behind closed doors—is fraught with peril.

Traditionally, the go-to structure for organizations has been a top-down hierarchical system with distinct divisions. The intended advantages of a hierarchical structure is a clear chain of command intended to establish clearly defined responsibilities, a methodical, step-by-step path for promotion or advancement, and specialized departments such as marketing or human resources to improve efficiency and help instill employee loyalty to their team.

But there are also some distinct disadvantages. Hierarchical structures can be bureaucratic and lack agility, so they adapt slowly to changing needs and most problematic, it does not always foster communication among the chain of command. The result can be an us-and-them mindset where the rank-and-file feel disconnected from C-Suite decisions. These problems are exacerbated when upper management embarks on a closet organization design, resulting in a buffet of negative consequences.

  • Buy-in is lost. Employees and managers have no emotional skin in the planned changes, so they are less apt to embrace the redesign. Also, when the organization’s rationale for the change is not understood, it can create frustration, fear, and efforts to undermine the new design.
  • Break down of trust in the organization. Without clear communication, employees will feel like the executives are hiding something from them, which creates an atmosphere of distrust.
  • Key leaders and teams not involved in the process are disempowered. When left out of the loop, stakeholders will feel impotent and disengaged.
  • Uncertainty about the future caused by a lack of communication and free-flowing information can prompt employees to seek new employment.

Collaboration Is Key

As technology advances and as an organization grows, knowledge is becoming more and more specialized because there’s more and more to know in the world. With the percentage of what each individual knows decreasing, leaders need to tap more specialists to be successful in any endeavor, but especially a redesign because of its complexity. Without encouraging ideas from all sectors, important elements may be left out or not adequately addressed, leading to a less than optimal redesign.

It is normal for leaders to be guarded and careful as they go through an organization redesign because of potential consequences. Both external (they want to keep the strategy they feel will give then a competitive edge from being appropriated by a competitor) and internal (the fear of alienating management when the driving force behind the change can be perceived as negative, such as cost reduction efforts). There are valid concerns that leaks during the design process can prevent stakeholders from viewing the redesign objectively and without self-interest. But on the flip side, if you limit the collaboration and move forward with a closet redesign, you for sure will have to deal with some problematic trade-offs, most notably:

  • It will be much more difficult to achieve a complete design concept if certain key leaders and subject matter experts are not involved.
  • Without a deep understanding of the whys, employees will exhibit counter-productive behavior simply because they do not understand and what organizational problems the redesign is intended to resolve.

The negative consequences of a closet redesign is far greater than the benefits it may provide. As noted in Mastering the Cube, an organization design should involve a “broad group of leaders and subject matter experts in organization alignment both to gain the benefits of their thinking and to enfold them in the thinking revolution inherent in the process.”

The value of key leadership teams going through the design process is powerful. In our experience organizations following a collaborative design process not only implement the change much more quickly and with less disruption, they also see bottom-line results improve faster, leading to an enduring and impactful change. So when embarking on a redesign, all organizations—but especially those with a hierarchical structure—need to create a process so that there is open communication with all stakeholders to get everybody on board to the changes to come. Such a high-involvement approach may take longer, but the overall results are well worth the effort.