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In today’s economy where change is the only constant and knowledge is
the most valuable asset, successful companies must be nimble and
flexible to adjust to rapid market changes. Likewise, their organization
models must accommodate these evolving circumstances.To keep pace, companies frequently look for ways to design the right
organization structure. Simply put, “organization design” is the frame-
work that channels individual and group behavior into patterns that
contribute to improved performance. But finding the right organization
design solutions to achieve the highest levels of performance is not
easy.
Over the past several years, there has been a lot of attention given to
the notion of “organization re-design” or “organization restructuring.”
This practice is based on the premise that if you move around the
individual pieces of an organization, the performance of the whole will
be increased.
However, organization re-design by itself does little to affect business
performance. It is akin to rearranging the storefront window display
without changing the merchandise inside. While putting on a fresh face
may provide a hopeful sign for some, it often does not affect lasting
change. Structure, in and of itself, is not an agent of change, but
rather an enabler of it.
Re-design efforts often fail because they do not clarify and align three
core business components:
- business strategy,
- management infrastructure, and
- organization behavior.
Together, these three components are what we at The Clarion Group refer
to as an “operating model.” Enhanced business performance will result
only when organization design effectively aligns with a company’s
operating model. (For more on Operating Models, view the Autumn 1999 Clarion Call “Operating Models: Gearing Up
for Performance“ ).
The Building Blocks for Success
Understanding the purpose of each operating model component and
how they interrelate is essential to developing effective organization
design.
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Strategy. The role of strategy is to analyze
market forces in order to define both the basis of competition and
the customer value proposition. Without strategy, there would be
no direction or coordination of effort. Business strategy
articulates the organization’s goals and suggests the structure
for achieving them. For example, if the business strategy is to be
customer intimate, the structure should reflect the ways in which
you interface with the customer.
Infrastructure. The management
infrastructure provides the operating architecture for a business.
It establishes the rules that govern decision- making, planning
and priority-setting.
Behavior. Organization behavior deals with
the human side of the business equation. Success depends on the
coordinated efforts and over - all operating style of people
within an organization to achieve common goals. Coordination of
effort in turn is dependent upon the alignment of shared values
and beliefs central to the organization’s strategy. |
Effective organization design must unify these individual components.
To take it a step further, organization design also must reflect the
historical factors of the business itself, the environmental factors of
the market- place, and the evolutionary stage of the business.
Ultimately, organization design provides an overarching model used to
coordinate work and move the business forward.
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