Structure – control, command, and communication.

I admit – the spaghetti was to get your attention. But it also makes a point regarding organization design. Uncooked spaghetti it is easy to overview, while cooked spaghetti is more entangled and chaotic to look at.

In the same way the organizational charts as we know them with boxes connected with solid or dotted lines are like a map of the organization. But like a map it does not show the whole 1:1 picture of what is actually there. On a map you are presented with an overview of perhaps 1:100,000 with the purpose to get you from A to B. But it does not show details like potholes, impassable tracks due to a recently fallen tree or floods or new vegetation and brand-new roads and buildings. Even a digital map may not have all details.

Likewise, an org-chart does not show all formal let alone informal lines of control, command, communication, coordination, cooperation, and collaboration. That you must decide, design, communicate and manage too. You may think it is easy to overview and handle as uncooked spaghetti, but in reality is more like cooked spaghetti – with lots of tomato sauce.

The processes that an organization is expected to execute is often be divided into batches of processes which must fit together. That is often how divisions or departments are started or emerge.

For a going organization, the structure should be reviewed and adjusted whenever significant changes are made to strategy, competencies, culture, processes, and technology. To review the structure, you should make a logic, step-by-step analysis of the at least the following areas:

1.     Strategy – What is it in essence? What are the desired outcomes and how is it supposed to be executed?

2.     Competencies – What are the key people segments that will make your strategy successful (or fail if not in place) and what development and leadership are needed for them to be successful? Look at the people available (knowledge, skills, attitude, motivation, personalities). Not only for individuals but across your organization.

3.     Culture – how is trust, collaboration, motivation, and the attitude of the organization in scope?

4.     Processes - The business processes that will enable strategy execution throughout the value chain and, what governance should be in place to ensure appropriate control, command, and communication.

5.     Technology – To enable the flow and use of data, information and control, command, and communication.

6.     Structure - What should the structure then be to enable the above with as little complexity as possible.

7.     Roles - What should then be the roles and responsibilities of the people across the chosen structure.

The organizational design criteria may be diverse and even conflicting. In my experience the criteria for organizational design changes have often been one or more of the following:

−      become a High-Performance Organization, e.g. make decisions quickly, increase launch speed, reduce cycle time and efficient utilization of resources to increase sales and productivity

−      achieve cost savings for transactional activities and operations

−      improve management across boundaries and minimizing handoff between divisions

−      improve customer experience

−      become compliant with all requirements and regulations

−      enable focus on quality and reduce cycle times through LEAN and process automation

−      become leaner and more flexible to react to short term demand volatility

−      change from one standard structure to another e.g. from functional to business unit

The organization principal structures used to accommodate the wanted criteria are often centered around one or more of the following:

−      Functional, e.g. Specialty work processes

−      Divisional, e.g. Products, Geographical markets (Local – Regional – Global), Customer segments

−      Matrix, Cross functional skills & knowledge teams with both functional and project reporting lines

Functional organizations are often incorporating:

−      Sales, Customer facing and Marketing

−      Production / Operations

−      R&D

−      Enabling functions like

−      Finance, People & Organization, Communications, Legal, HSE and Quality, Internal Audit, Purchasing / Sourcing, and others.

Other key components to consider when designing organizations:

−      Organization and distribution of work

−      Authority, Underwriting, Financial decisions, decisions with impact on the organization.

−      Numbers and Levels of leadership layers

−      Numbers of direct reports, span of control

−      Dotted line / Solid line reporting

−      Double Hat roles

−      Job Classes, Title structure

−      Organizational Health - ability to function effectively, to cope adequately, to change appropriately

For several years there has been a shift in what an organization should encompass and what should be done outside the organization. E.g. production or sales & marketing has been an internal activity while management consultants for many years have been brought in temporarily to advice on strategic processes with one or two years in between. Now, this approach is expanded even further through using external vendors on so called non-core activities. And lately even core activities are being outsourced or provided by strategic partners. So, in building and adjusting your organization you must consider what could or should be internal (build) and what could or should be external (buy) or be done in partnership (borrow).

There is no one structure that is perfect in all aspects. All structures have intrinsic weaknesses. There will be pros and cons. But you must decide on what kind of structure is best suited for the purpose and then adjust processes, technology, culture, and competences to reduce the cons and optimize the pros. If you can make the organization learn from both its successes and mistakes and adapt appropriately you are doing it right.

One of the main frustrations I have hear from leadership teams is that the different parts of the organization are not working together. They don’t ask for perfection, just an adequate degree of communication, coordination, cooperation and collaboration. Often it is labeled “silos”. Structures that do not interact well enough creates friction, obstacles, and loss of efficiency.

If the structure creates silos or the culture creates silo thinking then you must make changes to culture, processes, and structural adaptations that enable and enforce people to work together cross borders. This could include e.g.

−      Rules and processes, e.g. for control, command, and communication

−      Goal setting and interdependent rewards

−      Informal direct contact

−      Liaison roles

−      Task forces or project teams

−      Full-time temporary teams

−      Full-time integrating roles

−      Full/part-time teams

−      Communities of practice

 The control, command, and communication could include responsibility assignment like this:

A = Accountable, The one ultimately securing the completion of the task. May delegate work to those responsible.

R = Responsible, Those who do the work to complete the task.

S = Supporting, Those who work with or for the responsible.

C = Consulted, Those subject-matter experts whose opinions are sought; and with whom there is two-way communication.

I = Informed, Those who are kept up to date on progress, often only on completion of the task or key deliverables; and with whom there is just one-way communication.

To test the design options, you should ask questions like:

−      Does the design address the identified design criteria?

−      Are the business processes and the infrastructure support making sense and allow an easy flow?

−      How will the proposed structure support the flow of work & information?

−      What is an unacceptable amount of complexity?

−      Are the key internal interfaces and interdependencies clear?

−      What is the impact on the internal and external customers and stakeholders?

−      What are the pros and cons with the structure and what is the risk of it?

−      Is the organization culture congruent with the design?

−      Are there financial savings for changing the structure? Any additional costs?

−      Is there understanding and buy-in at appropriate levels? 

−      Is there well-defined communication, coordination, cooperation and collaboration or linking mechanisms?

A few words of reflection and inspiration on developing the organization’s structure

−      Managing the “empty space” between the boxes is as important as managing “the boxes” and lines between them.

−      The more complex an organization is, the longer it takes for it to settle in. And the sooner the organization will seek to change the organization again – or function with frustration.

−      Transition time from the current organization to a future one can be shortened by the amount of time spent up front to achieve role clarity and explain what should happen – and why.

−      Involve people as much as possible in designing their own future.

−      Once the preferred design is known, it is best to implement it as quickly as possible. Full speed ahead.

−      You may need to make a series of organizational changes to get to your envisioned state. It requires significant management resolve to hold the course.

“As we, the leaders, deal with tomorrow, our task is not to try to make perfect plans. Our task is to create organizations that are sufficiently flexible and versatile that they can take our imperfect plans and make them work in execution. That is the essential character of the learning organization.”

- Gordon R. Sullivan & Michael V. Harper

In conclusion reviewing your organization’s structure is crucial if you want your organization to be effective. Keep competencies, culture, processes, and technology in mind when managing your structure. They interact and changes in one will most likely require adjustments in one or more of the other. Lead the process of adjusting your structure, involve your people and make your organization learn from it.

Imagine that all your organization’s structure facilitated timely command control and communication. That would give you a significant competitive advantage.

I hope this has been helpful. I will be happy if you share your points of view in the comments below. Feel free to reach out if you wish to discuss more.

 Joachim Larsen is a founding partner in Amodo Associates, a Copenhagen based consulting company specialized in Organizational Strategy, Leadership and Analytics. Joachim formerly worked in a global role executing Organizational Strategy processes in organizations from 100 to 5,000 people.