Organization Design: It's Like A Basket
Organizational design is a term that the business world doesn’t use very often; however, it is critical to success. An organization’s design is the framework used to execute the strategy. Design elements include the organization structure, human resources practices, management processes, and work design. In easier terms, think of organization design as the descriptions of how an organization works and why. The organization design is closely held together through a reporting structure that reflects communication practices, leadership chains of approval, and departmental responsibilities.
The reporting structure is sometimes reflected through an organization chart. How many org charts have you seen that breaks down functional departments all reporting to the Director or CEO? They usually look like this.
Source: Functional-Organizational-Structure.jpg (649×679) (marketbusinessnews.com)
In the functional organizational structure, the different department heads focus on their departments and talk strategy among their peers. While this functional structure provides clarity for departments, the structure can also lead to silos in departments where frontline workers must go up and down the structure for approval. The functional structure is built for stability and efficiency. However, it is only one option for organization design.
Another option for organization design is the matrix organizational structure. In this setup, functional departments still exist, but cross-functional teams take on responsibility for new products and projects. An example of cross-functional team responsibility is piloting a new product. One employee from each functional department will be assigned to this team to build out the functional processes so a new product can be piloted in a small market. The matrix structure looks like this.
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The matrix structure is built for speed and well-developed coordination. Yet, it is only one option for organization design. The functional and matrix structures are two of many options for design.
In my experience, organization design is not a flat, one-time activity; it is a constant, 3D experience. An organization needs to bend when business dictates it and hold tightly in difficult environments. An effective organization requires integration and innovation. That’s why I use a basket weave as an example of organization design in consulting conversations. A basket is a container that can be used in different ways. The basket weaving design process has a long history rooted in indigenous practices. And the basket shape changes based on the user’s needs.
The vertical materials of a basket are a functional structure, where departments report into a single place. The horizontal materials of a basket are a collaborative structure, where members of different departments work together across the organization on a key product or process. The side walls, the vertical and horizontal materials, are important for the structure. The base of the basket is important; in fact, the base determines much of the structure. In organizations, the base is the strategy and framework for implementation, such as the vision, mission, and values. Finally, the handle of the basket is the delivery mechanism. The handle is about user experience and stakeholder feedback. It looks like this.
Source: Loftis Partners website link
A basket is not a perfect structure, just like an organizational structure. No matter how well we design the basket, the structure will still leak. The structure will not capture every nook and cranny – just like an organizational structure. Over time, baskets wear out and need improvements or even replacements. There is no perfect organizational structure. That’s why it is important to continually review your organization strategy and design.
Organizations have weathered so much in 2020. Whether it’s decreased revenue from shutdowns to backed up supply chains to workers going remote to building new virtual offerings overnight, this year has tested every business. Business leaders have been knocked down on their rears and forced to lead and deliver differently. It’s a big shift on top of the overwhelming shifts we’ve all experienced in our personal lives and as a nation. How is your organizational design basket doing after 2020? It may be time for a review.
Photo Credit: Ronald Cuyan on Unsplash