Which is more important, the structure of the organization (flat, cross-functional, hierarchical, or siloed), or the way the organization behaves within the structure?
For years I have advocated that metrics drive behavior and that organizational design is critical to a company’s success. When I speak at industry events and talk to clients, I encourage companies to evaluate and develop an organizational structure that is aligned with their supply chain.
As a huge fan of Eli Goldratt and a disciple of his teaching and theory of constraints, one of my favorite quotes is, “Tell me how you measure me and I will behave accordingly; if you measure me illogically expect illogical behavior.” In other words, you can change behavior through measurement systems.
Management consultants will tell you that compensation is the true measuring stick; if you want change behavior, tie it to compensation. Although I agree compensation is a key component to driving behavior, it is actually further down the list of performance factors than one might think. The most important factor is creating a structure that enables employees to perform to their greatest potential – and then communicating expectations and measuring against them.
So how do you develop the ideal organizational structure? There have been countless books written on Organizational Design and Structure and there are many professed subject matter experts on the topic. Tom Peters co-developed the 7S model when he was with McKinsey, which took Organizational Design and Structure to a new level. Rightfully, Peters went beyond basic structure by adding: Strategy, Style, Staff, Systems, Skills, Shared Values and Structure. These elements are the building blocks for “what” is required to build a fully functioning organization.
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The 7S model serves as a framework for organizational design. However, it is missing the critical component of how an organization is built within the framework. Metaphorically speaking, it is like an architect creating blueprints detailing a magnificent house design, but leaving out the bill of materials that instructs the craftsman how to build the house. And then more importantly, when the craftsman does not build the house exactly to plan, how does the structure recover or rebuild?
Like many people, I was trained in what I call deficit-based problem-solving. This involves identifying the problem (something is not working or must be wrong), developing a plan of action to fix it, jumping into execution mode and fixing it, then stepping back and evaluating by having good measurement systems in place; correcting the plan if off course, and then developing a new plan or fixing the old plan.
I have come to realize that deficit-based problem solving only points back to the status quo and does not really provide true transformation. So if we use traditional problem-solving techniques to develop an organization, we assume that the structure is broken and requires fixing. While the approach of Plan, Do, Check and Act (Deming’s PDCA Wheel) and SWOT analysis (Strength, Weaknesses, Opportunities and Threats) all have merit, I now use a new approach and that starts with asking the question in a different manner.
Instead of asking what do I want less of in my organization (fixing the problem), I propose asking, “what do you want more of from your organization?” The shift in mindset is to focus on strengths vs. weaknesses. Assume your organization has a sexual harassment issue and a committee is formed to stop it. The obvious question is how do we stop sexual harassment? A more profound question is how do you develop working cross-gender relationships that promote open communication and mutual respect between genders? Hopefully you see the difference. By asking an affirmative question that is focused on the positive vs. the negative, you go beyond merely fixing the problem.
This focus on the positive as means to go beyond the norm to create revolutionary results is based upon the Constructionist Principle, which was developed by Dr. David Cooperrider while he was attending Case Western. Since that time, one of the many related principles developed over the last 20 years is the practice of Appreciative Inquiry, which is rooted in the affirmative. Appreciative Inquiry (AI) is the study and exploration of what gives life to human systems when they function at their best. AI is an approach (not a methodology) to personal and organizational change. AI makes the assumption that questions and dialogue about strengths, successes, values, hopes and dreams are themselves transformational.
The Genesis of AI is learning. AI Implies a quest for new possibilities, being in a state of unknowing, wonder and willingness to learn. The word inquire means:
- To ask questions
- To study
- To search, explore, delve into, or investigate
Organizations benefit from AI. They need less command and control by a few and more exploration of new possibilities among the many. I have found AI as the answer to “HOW” the craftsman uses tools and a bill of materials to build out the Organizational Framework . It also provides a more agile path to set a course of action when things don’t go as planned. Peters is a great architect, strategist and thought leader, but it has been Coopperrider and many AI practitioners that are the co-constructionists responsible for building the house and ensuring the vitality and sustainability of the organizational structure.
In order to develop and sustain an organization, you must mastermind how the organization behaves within the organizational structure. Many companies want to jump into Visio or Microsoft PowerPoint to develop an organizational chart with boxes with individual names. Voila – we have a structure! Unfortunately, this technique fails because: 1) the structure does not focus how to get things done and 2) it does not focus on how individuals need to behave within the system.
I recently witnessed an organizational structure redesign with a mid-sized retailer. The Executive Team walked out of the meeting after the “Silo Killer” CEO made the organizational announcement. Do you think anything changed? The answer is no, the same behaviors continued (sabotage, passive aggressiveness, command and control).
An organization must establish the behavior and actions that are in line with the company’s desired outcomes. This is better known as Organizational Accountability. But what happens when things do not go as planned? Your organization, department and teams will not always act in accordance with your desired outcome and conflict will occur. Thus, you must create a proactive recovery plan that recognizes the behavior, and asks the questions: what are likely to be the barriers or challenges working in this new structure and design, how do we avoid the challenges, and when we do have conflict, how do we handle it as a unified team?
My final recommendation for developing an organizational structure that is sustainable and full of life is to co-create the structure with a team of cross-functional team members. The reality is that you will not get your organizational design perfect, and it most likely will have to change the design over time. However, creating it with a cross-functional team ensures some level of buy-in, acceptance and flexibility. Complete buy-in is not required (it is not realistic to think you are going to make everyone happy). However, we humans are more likely to hold on to and verify a lottery ticket where we picked the numbers than the ticket where the numbers were predetermined for us.