What is Organization Design? And How to get it Right? Part I

There has been a lot written on the topic of Organization Design. If you do a simple Google search, you will come across 2,46,00,00,000 results. Most of the available material ranges from building the right organization structure to pretty much covering everything under the sun.

Having been a practitioner of Organization Design for almost a decade, I am sharing what I have found to be useful and can be implemented. Below is a practitioner' handbook and the following approach has worked well for my customers and business. I am sure there are other approaches, however feel free to pick and choose what you find useful from the following.

This is a 2 part article. In the first part I will be talking about the definition of Organization Design and how to initiate an Org Design project. The 2nd part will cover how to build an organization structure, define capabilities and staff an organization.

Organization Design primarily helps find answers to the following questions, which in turn bring to life the business strategy and operating model:

1. "What" is our organization structure?
2. "What" capabilities are required to make us successful?
3. "How" many people do we need to staff the organization?

Before you jump right into organization design, there are a few things you need to get right at the onset.

Do you have the "right" working/core team?

Where most organization design projects fail is, in their inability to execute the plan. The most difficult part of an org design project is not finding solutions to the above questions (what, how, who) but staying true to the solutions.

What I have found useful is creating a small but effective group comprising of representatives from:

1. Business - a business leader who can help provide deep business context, connect-the-dots from a business perspective and secure buy-in across their peers
2. People function - a people partner who understands the business well and the interconnections between organization design and other people processes
3. Program Management - a program manager who can connect-the-dots between the various sub-workstreams and keep the project on track
4. CoE Partners - you will need to bring in representatives from the Organization Design & Workforce planning and Talent Architecture/Management teams for various segments of the project

Before we get to finding answers to the questions on structure, capabilities and workforce plan, let's start with a basic question -

Do you understand the business strategy? If yes, do you understand what's new or changing?

Strategy is not margins, costs or operational metrics. Often strategy conversations have a tendency to devolve into discussions around how can business metrics improve or what the immediate requirement is for the business. However, to effectively help your business, you would need to take a step back and ask a few hard questions - Is there a vision that the leaders have? What's the change that they would like to bring in? How is the end-customer benefitting?

In one of my projects, when I asked a business leader questions around how their business model was evolving, what would change for their customers.. and so on, I got very few inputs. There was so little information provided that I didn't know if they even needed a change in their structure. So to that end, my team and I did our own research, looked at their business charter, competition' annual reports, market landscape and worked on putting together their change in strategy.

The business loved what we brought to them and were very pleased with the way we had identified the how their business model was evolving and what differentiated them from competition, defined their new competition landscape and how their customer segment was evolving. This also provided clarity on what they could expect from this project.

This was the starting point of organization design for us.

Not every project you run, you might come across the above situation - but do make it a point to understand the following questions:

1. How would CEO/CXO/Business leader define their business strategy?
2. How is the business model evolving? Where do they see the most value being created?
3. What are their strengths? What differentiates them from their competition? How would they define their competitor landscape?
4. Who is the end customer? What does the end-customer expect?
5. What opportunities are they trying to address with the restructuring or the new setup?

I am sure there are more questions that could be sector/organization/situation specific you could add.. but you get the the drift. The above questions should help you initiate the conversation.

Once you have created the core team, have had an understanding of the strategic shift - you are ready to start your organization design journey.

In the next article I will address questions "what" your organization structure should look like and "what" capabilities are required for your organization to be successful and "how" should you staff the organization.

Would love to hear your experience and stories.

#strategy #organizationdesign #leadership #designthinking #workforceplanning #talent #capability #managementconsulting

P.S. All opinions expressed are my own and not representative of any organization.