Organisational Architecture.

The Strategic Alignment Framework (SAF) is a contemporary Strategic Management tool that builds upon a number of existing influential strategy and organisation frameworks. This particular Matrix is underpinned by four dynamic links of the organisation value chain. Using this particular matrix, leaders can make sense of how to strategically align their:

1. Business strategy;
2. organisational capability;
3. organisational architecture; and
4. Management systems.

These are needed to fulfil their organisations long-term purpose. So conceptually, the SAF builds on a number of existing strategy as well as organisation frameworks. In essence the SAF offers a range of useful practical applications to help leaders in their "informed" decision-making. If we look at the SAF intuitively, as in the ability psychics have to predict the future, then leaders are enabled to:

1. Map their current and future organisation;
2. Measure the strength of their organisation's "alignment" between the current state of their organisation and its ideal strategy, using a tool such as "Gap Analysis"; and
3. Prioritise interventions. Thus the SAF can help to inform, prioritise and articulate change management efforts.

The SAF matrix has two dimensions: the first dimension opposes organisational stability with organizational agility. The second dimension opposes organisational autonomy with organisational connectivity. From the combination of the two dimensions emerge a range of different strategic approaches. There approaches are:

1. Efficiency Maximiser;
2. Enterprising Responder;
3. Portfolio Integrator and
4. Network Exploiter.

So where does organisational architecture fall in with the above? The organisational architecture is the engine of every organisation and the source of what makes it distinctively capable in several essential ways:

• the aggregated skills, behaviour and knowledge that reside within an organisation's human capital;
• the value of networks (NQ) {Your Networking Quotient (NQ) gauges the degree to which you're recruiting, developing meaningful relationships, and cultivating a highly effective personal network} and the relationships through which people connect and cooperate formally or informally, i.e. social capital - grapevine, chain of command and so on (According to Robert Putnam, social capital refers to "connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them." According to Putnam and his followers, social capital is a key component to building and maintaining democracy);
• formalised structures, systems, processes and organisational cultures or capital (In an organizational structure, “chain of command” refers to a company's hierarchy of reporting relationships – from the bottom to the top of an organization, who must answer to whom);
• physical assets such as real estate, machinery and facilities (physical capital); and
• the value of its technologies, whether information or production related (technological capital - think of the fourth industrial revolution we are currently embracing).

Organisational architecture, as it is conceived here, focuses on four core organisational components that make an organisation good enough to compete with - core people; core organisational structure, core organisational culture and core work processes. A number of authors and business theorists have written and published their philosophies and business processes on organizational architecture. The results are a variety of different models that can be applied to a particular business structure. One model is the Tricord Model, which focuses on three main points, including strategy, systems and culture. This model illustrates that these three components all contribute to a company's identity, and may add to the Corporate Brand Equity. Another model is the 5-point Star Model. This model includes some of the same points as the previous two with specific additions in human resource management, structure and business processes, and Human Capital and Business processes are two elements of the Balanced Scorecard.  Watkins identifies the five elements of organizational architecture:

1. Strategy: the core approach the organisation will use to accomplish its goals.
2. Structure: How people are situated in units and how their work is coordinated.
3. Systems: The process used to add value, and value propositions.
4. Skills: The capabilities of the various groups of people in the organisation - such as key core competencies.
5. Culture: The values, norms and assumptions that shape behaviour, and are socialised and internalised in the organisation

Watkins also identifies some common traps you should avoid:

• Trying to restructure your way out of deeper problems - unbundling, turnover strategies and so on;
• Creating structures that are too complex. Perhaps a really tall structure with a long chain of command, can be "flattened" and made lean. A lean organisational structure is a structure that is designed to create more customer value using fewer resources/inputs than a traditional organisational structure. Members of an organisation that utilizes a lean structure focus on the value stream the organization uses to deliver goods and services to their customers. This can include logistics and Supply Chain Management.
• Automating problem processes - this is becoming more of a reality every day.
• Making changes for change’s sake - a new CEO may want to change something that is working, so perhaps "if it ain't broke, don't fix it." More contemporary theory that embraces nondisruptive creation, state: "if it ain't broke, then break it."
• Overestimating your group’s capacity to absorb strategic shifts. What is your talent management strategy like; do you have lifelong learners and so on.

1. Strategy: the core approach the organisation will use to accomplish its goals. Use "T" Managers - the vertical line represents the core competence, and the horizontal line means cross-functional synergy, and to avoid entropy.
2. Structure: How people are situated in units or SBUs (Strategic Business Units) and how their work is coordinated.
3. Systems: The process used to add value. Value-stream mapping, also known as "material- and information-flow mapping", is a lean-management method for analyzing the current state of the organisation and designing a future state for the series of events that take a product or service from the beginning of the specific process until it reaches the customer, i.e. input - transformation process - output of products and services. A value stream map is a visual tool that displays all critical steps, and critical success factors in a specific process and quantifies easily the time and volume taken at each stage of the business process. Value stream maps show the flow of both materials and information as they progress through the process. The difference between a value stream and a value chain is that a value stream focuses only on areas of an organisation that add value to a product or service, whereas a value chain refers to all of the activities within a company, and this includes the competencies of your SBUs in terms of span of management or control.
4. Skills: The capabilities of the various groups of people in the organisation, delegation is an important concept here. Who do you delegate to?
5. Culture: The values, norms and assumptions that shape behaviour, and this must be evaluated at the recruitment stage of job analysis. Thus will lead to cultural relativism.

By organisation structure we mean three things: the location of decision -making responsibilities in the organisation (centralized or decentralized - more decision making in various regions for example); the formal division of the organization into subunits such as functions, product divisions, and in addition national operations; and the establishment of integrating mechanisms to coordinate the activities of subunits (such as cross-functional teams - such as the effective operation of the horizontal line of the "T" manager.)

Controls are the metrics used to measure the performance of subunits and judge how well managers are running those subunits, using Business Intelligence Dashboards, KPIs and so on, and predictive analytics. Incentives are the devices used to encourage desired employee behavior, such as extrinsic and intrinsic rewards, for example Victor Vroom's expectancy theory. Incentives are closely tied to performance metrics. For example,the incentives of a manager in charge of General Electric’s lighting business might be linked to the performance of that particular division, and once again Gap Analysis is an effective tool to gauge the performance.

Organizational culture refers to the values and assumptions that are shared among the employees of an organisation. Just as societies have cultures, so do organisations as stated above. Organisations are societies of individuals who come together to perform collective tasks.They have their own distinctive patterns of culture and subculture, leading to formal quality circles, Kaizen concepts, and the insidious grapevine.

Finally, by people/employees and managers, we mean not just the employees of the organisation,but also the strategy used to recruit, compensate, motivate, and retain those individuals and the type of people they are in terms of their skills, values, and orientation—in other words,their human capital, aligned to the acquisition and retention strategies of the organisation. EQ is a really important element.

Prof Rory Dunn.