Soviet style organization design

Frustration is said to be the mother of creativity.?That's somewhat a consolation, as I am at times deeply frustrated about the state-of-the-art in my profession, which is organization design consultancy. The line between innovation and despair happens to be thin, and much too often organizations end up on the wrong side of it. In such instances frustration brings forth ugly creations. I care about this, because organization design failures can have dramatic consequences for people and companies alike. ?

Bad structures lead to toxic cultures

Misalignment in organization design causes tensions and stress within individuals and teams. In a flawed organization structure people tend to feel sabotaged rather than supported. Depending on personal traits the ensuing behavior varies. Some might mentally redraw, others might silently feel stressed out, and yet others may lash out to their colleagues for not getting the input they need to get work done. And then there are the resilient types, the ones that never give up, and always make do. In the latter case, human perseverance covers up inadequate organizations. In all other cases, bad structures create workplaces that induce a well researched psychological mechanism called ‘the frustration-aggression hypothesis’. Bad structures lead to toxic cultures that way.

Unfortunately, anxious managers often respond to such tensions in counterproductive ways. Looking for quick fixes, they not seldomly implement ERP-driven control systems, excessive definitions of roles and responsibilities, compose unreadable RACI-matrices, or assign additional problem-solving managers and staff. In many cases such interventions are done in an ad-hoc firefighting mode to deal with problems that wouldn’t exist in the first place if an adequate organizational model would have been adopted. Worse, such measures may set in motion a subsequent iteration of a vicious spiral that makes coordination even more complex and bureaucratic. One common iteration in that spiral is to resort to matrix structures to desperately stitch ill-conceived jobs and units together in coherent reporting lines. The late Charles Handy, a renowned scholar and philosopher in organizational behavior, once wrote that in this way many corporations in free-market economies mimic the governance logic that the politburo implemented to regulate the Soviet economy.

If such structures are inefficient, how come they persist so stubbornly? My hunch is that most of the time, there will be some people who can't resist the urge to rescue the astray organization, sometimes at the expense of their own well-being. In each malfunctioning organization there are always some workers to be found that are too proud to end their working day in a mess, so they look for remedies for whatever goes wrong.Highly committed and experienced colleagues do not give up easily when the going gets tough. Instead, they go beyond their official roles, do more than their job descriptions require them to do, they mobilize their informal network within the organization and they get things done by using shortcuts in the twilight zone of informal decision-making. Such people, commonly labelled as ‘fixers’ or ‘go-to-people’, are masters in finding unorthodox solutions for virtually every problem at hand. They are the central nodes in the informal social network within an organization.

Good people make bad structures work

Fixers do the patchwork in ill-conceived organizational structures. Good people make bad structures work. They save the day, literally every working day. The root causes of disturbances are kept right there where the fixers operate. Subsurface and covered up. By the end of the day, we do deliver, don't we? Fixers informally compensate for wasteful problems that are caused by bad formal structures. Some organizations promote a 'can-do-yes-we-can-nothing-is-impossible' culture. Not seldomly, such organizations have a high proportion of fixers in their workforce. Thanks to these fixers, good cultures have a high tolerance for bad structures. Being a fixers is highly contagious. Being the social animals that we are, perseverance is a group trait, not just a matter of personality. Nobody wants to give up when everybody else keeps going. Groups of people that identify deeply with the purpose of "their" organization, continuously talk and collaborate informally to get things done. Inadvertently, they shift the strategy-structure challenge into stealth mode.

Intriguingly, Handy’s analogy with Soviet Russia is illuminating in this respect as well. Even though the Soviet regime officially installed a planned economy, there’s massive evidence that a vibrant black market existed. There’s also strong evidence that this black economy was in fact a reaction to failing supply chains in the formal organizational fabric of the Soviet production system. The fixers were a large and hidden class of people who were covertly solicited within companies when the central authorities in Moscow once again failed to deliver the inputs needed to keep organizations running. They were usually middle level comrades, not top-level apparatchiks for whom it was too risky to get involved in formally illegit transactions. It were typically workers positioned in the belly of their organization, operating subsurface, tapping into their informal networks to get their hands on necessary supplies. In doing so, they kept things running by fearlessly cutting formal corners.

I regularly tell this story on fixers when I give keynotes or workshops to middle-level managers. I then ask them to raise their hand if they recognize their onw behavior at work in this Soviet style fixing. Almost without exception, the majority hesitantly puts their hands up. Somewhat ashamed, as they realize they are forced to perform their jobs at the brink of corruption. So there I am, sharing my frustration with my clients, all of whom are very much aware that getting work done would not be so painstakingly difficult if organizations were structured more adequately.

So what are the frameworks that my profession has to offer to eliminate such avoidable pains in working life? Unfortunately, many approaches focus on partial facets of organization design. Some methods set out to fix leadership behavior, other approaches promote self-steering teams, yet other consulting techniques install bottom-up continuous improvement initiatives, other models focus on collaborative team climates while leaving aside the nature of the work. I often find that there is nothing inherently wrong about such models, apart from the fact that they tend to be so incomplete, focusing on some dimensions of organization design while ignoring others.

Strategy and structure may not be the omega, but they definitely should be taken as the alpha of organizational development.

The worldwide consultancy sector is rife with numerous models, methods and alleged best practices, but lacks agreed quality standards to tell the chaff from the wheat. It's not necessarily the most influential approaches that are the best either. The well-known McKinsey 7S model on organization design, for example, is widely spread and more comprehensive than most other approaches to organization design. Yet, it has a number of flaws that render it virtually useless as a guideline for organization design. The original authors claimed that “the shape of the diagram is insignificant. It has no starting point or implied hierarchy”. Misguided advice, because designing an organization really does require a hierarchy in decisions. The supreme position in that hierarchy are the strategic objectives of the organization. Without strategic priorities as a reference point it is simply impossible to choose between alternative organization structures. The 7S model doesn't do enough justice to that key insight.

The 7S model moreover downplays the role of organization structure. Tellingly, the publication of the 7S model appeared in an article titled “Structure is not organization”. Rather than promoting adequate organization design, the model instead emphasizes behavioral dimensions such as style, staff, skills and shared values. I find that a bit odd. The night before an important game, a football coach shouldn't be worried about all that. If he is, he probably selected the wrong players. The night before the game, a good coach will be thinking about how to defeat the opposing team, and he will be pondering about how to position his players on the pitch. He will set out the macro tactics of the team and the specific micro positions to be assigned to each individual player. In short, the coach will be foremost concerned about strategy and structure. The 7S model not so much. By de-emphasizing structure and stressing behavior, the end result in practice may well be Soviet-like organizational structures. ?

Strategy and structure may not be the omega, but they definitely should be taken as the alpha of organizational development. In order to be successful, organization design should cluster activities into coherent chunks of work that are assigned to divisions and teams in a goal-oriented way. If not, the best skills, styles and staffs will not lead to optimal outcomes. So a strategy that focuses on customer centricity requires an organization structure that fosters customer-oriented collaboration in teams (e.g. a cross-disciplinary team in an operating theatre). A strategy that aspires to bring new products to the market requires teams that enable experts from diverse knowledge domains to work together in cross-disciplinary complementary ways (e.g. agile scrum teams in IT). A strategy that emphasizes cost-efficiency requires each activity to be performed in a reliable standardized way so to eliminate variations in a workflow and to minimize cross-functional bottlenecks and alignment problems (eg. specialized mono-functional production teams in a manufacturing plant).

Too many well-intentioned attempts to achieve better organizational structures and teamwork stranded

Such insights are in essence rather simple and they are not new by any means. Already back in 1962, Alfred Chandler coined the guideline “structure follows strategy”. And yet, so many organizations still get it wrong. A common error is the failure to prioritize across irreconcilable strategic objectives. A strategy that boils down to promising that the organization can achieve anything, at any given moment for any given client is not very credible. In addition to failing to prioritize, organizations often fail to translate their strategy into an adequate organizational model. A common failure is for example to aim for innovation, while maintaining an organizational structure that is geared for cost-efficiency.

About eight years ago I undertook an attempt to set the record straight on frameworks on organization design. At the time I was working for a knowledge center on organization design that spinned off from the university of Leuven, called Flanders Synergy, later renamed into Workitects. We undertook research on the implementation of autonomous teamwork, and discovered a mixed record. Too many well-intentioned attempts to achieve better organizational structures and teamwork stranded, because essential parameters and conditions for implementation were overlooked. Frustrated about such failures, I elaborated a framework with eight building blocks for organizational design and development. From left to right, the framework acknowledges that organizational models should fit into the overarching strategy, and that individual teams should coherently fit in the organizational chart, just like individual jobs should be aligned well within collaborative teams. Like Matryoshka dolls, jobs should fit into team dynamics, teams should fit into the organizational structure, and the organizational structure should be in line with the strategic performance that the organization sets out to deliver. Unlike the 7S model, this framework thus expressly states that it really does matter where you start when developing an organization design.

Organization behavior is the result of both culture and structure, much like our own personal behavior as a human being is always the joint outcome of both rational and emotional brain impulses

In addition, the model seeks to balance cultural and structural dimensions of organizational development. The upper half of the model focuses on cultural building blocks, from vision to leadership behavior, via teams' collaborative climates on to individual attitudes and personality traits. Coherence in the cultural building blocks creates a cohesive community of people. The lower half of the model specifies the more technical structural aspects of organization design: how workflows ought to be channeled, first into a coherent macro structure, and then into accordant definitions of roles, and finally supported by adequate tools and systems. Coherence in the structural building blocks creates a well-oiled machinery to transform inputs into outputs.

By acknowledging the interwoven nature of culture and structure on each level of an organization the model avoids unproductive structure/culture controversies. Organizational behavior is the result of both culture and structure in every step along the way, much like our own personal behavior as a human being is always the joint outcome of both rational and emotional brain impulses. If you want to improve your organization, optimize culture and structure simultaneously. Never ever choose one at the expense of the other. A 'make do' culture that compensates for a crappy structure is a far cry from a well working organization, and it's harmful for people.

Today, out here in Flanders, this model increasingly found its way to practice. It has become a guiding framework for numerous consultants, organizations and sectors on their journey towards better structures, effective teams and more workable jobs, and has been a source of inspiration for several publications in Dutch on organization design and development. The introduction of this scheme was not without controversy, and even created tensions within our own organization. Workshop formats, training materials, change plans, consulting practices, measurement tools had to be adjusted, and that didn't always happen wholeheartedly. Yet, apparently, it enlightened a black spot that many people were struggling with. ?

A lot of work remains to be done to get rid of unnecessary Soviet-like organizations. There are still too many of those around. So I’m still frustrated enough to keep going, and many others are alongside me. Let that frustration be our fuel for creativity and common sense in organization design. ?