This document provides an outline for a presentation on leading organizational design and transformation. It begins with introductions and outlines the topics that will be covered, including defining organization design, principles of organization design, models of organization design, designing governance, and leading organizational change. It discusses concepts like the importance of organizational culture, different sources of power in organizational design, and the differences between management and leadership. The overall document provides an overview of many important concepts in organizational design and transformation.
3. “Part of the reason why design is a
neglected dimension of leadership:
little credit goes to the designer. The
functions of design are rarely visible;
they take place behind the scenes.
The consequences that appear today
are the result of design work done
long in the past, and work today will
show benefits far in the future. Those
who aspire to lead out of a desire to
control, or gain fame, or simply to be
“at the centre of action” will find
little to attract them in the quiet
design work of leadership.”
– Peter Senge
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
4. OUTLINE
What we’ll cover today…
1. Assumptions
2. Defining Organization Design
3. Four Questions
4. The Problems Organizations Face
5. Process of Organization Design
6. Organizational Culture
7. Principles of Organization Design
8. Organization Design Models
9. Six Design Vectors
10. Designing Governance
11. Leading Organizational Change
12. Final Thoughts on Good Design
5. ASSUMPTIONS
We all exist and work within complex social systems.
We are all responsible for the design, development,
and maintenance of purposeful systems.
To build a great team, you must have an organization
design that enables teams to design great customer
experiences.
Before you can design an amazing customer
experience, you must design a team to create the
customer experience.
The most accute constraint organizations current face
is that their organizational design is incongruent with
their strategy; places to many policies, procedures,
reporting lines, and queues between the teams
delivering great experiences for their customers.
“Rational discussion is useful only
when there is a significant base of
shared assumptions.”
– Noam Chomsky
6. “Design is a plan for arranging
elements in such a way as best to
accomplish a particular purpose.”
– Charles Eames
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
7. WHAT IS
Organization Design?
“Organization design is conceived to be a
decision process to bring about a coherence
between the goals or purposes for which the
organization exists, the patterns of division of
labor and inter-unit coordination and the
people who will do the work.”
― Jay Galbraith, Organizational Design
There is no one best way to organize.
8. WHAT IS
Organization Design?
“Organization design is the deliberate process
of configuring structures, processes, reward
systems, and people practices to create an
effective organization capable of achieving the
business strategy. The organization is not an
end in itself; it is simply a vehicle for
accomplishing the strategic tasks of the
business. ”
― Amy Kates & Jay Galbraith, Designing Your Organization
9. “Design is a plan for arrangin
elements in such a way as best
accomplish a particular purpo
– Charles Eames
“Org charts are to organization design what
wireframes are to user experience design.”
– Will Evans
10. ORG DESIGN
Is Systems Thinking
Organization design requires a systems thinking
approach, taking into consideration all the
interactions between various subsystems and
agents.
Fundementals of Systems Thinking:
• A system is a coherent network of agents
• Systems have clearly defined boundaries
• Systems behavior is highly emergent
• Feedback loops govern the system’s behavior
• Systems are sensative to small perturbations
• The structure of the system influences the behavior
of the system
• You must change the system’s WHY before changing
the system’s WHAT & HOW.
“To manage a system effectively, you
must focus on the interactions of the
parts, rather than optimizing for the
behavior of the parts.”
– Russell Ackoff
11. WHY CHANGE?
THE 4 QUESTIONS
01
WHY CHANGE?
What are the fundemental
reasons for change? What are
the biggest challenges being
faced?
02
WHAT TO CHANGE?
What obstacles or problems
must be solved, removed, or
mitigated against so that the
organization can realize its
purpose?
03
WHAT TO CHANGE TO?
What new structures, systems,
capabilities must be created,
aligned to the strategy, to
achieve the organizations
purpose?
04
HOW TO CAUSE THE CHANGE?
Where to start? What is the
first step on the jouney?
WHAT TO CHANGE?
WHAT TO CHANGE TO?
HOW TO CAUSE THE CHANGE?
12. 7 MODERN PROBLEMS
“Having no problems, is the
biggest problem of all.”
–Taichi Ohno
1. Customer Centricity
2. Asymmetric Competition
3. Global vs. Regional
4. Matrix Structure
5. Centralization/Decentralization
6. Innovation
7. Agility
13. 7 MODERN PROBLEMS
“Never start with the solution. Start
with the problem. The surest way to
fuck-up organizational design and
transformation is to walk in with a
playbook.”
–Will Evans
1. Customer Centricity
2. Asymmetric Competition
3. Global vs. Regional
4. Matrix Structure
5. Centralization/Decentralization
6. Innovation
7. Agility
14. UNPACKING
Organizational Agility
There are generally three types of agility spoken
about in the context of challenges enterprises face.
Those three types of (A)gility are:
1. Portfolio Agility is the capability to shift resources away from
steady-state or declining operating companies, business units,
or functions into products, markets, or business units that are
likely to grow.
2. Operational Agility is the capability to quickly identify revenue-
enhancing or waste-removing opportunities to deliver faster
flow of value to customers and the business.
3. Agile Software is a mindset and set of principles focused on the
continuous delivery of quality software to end-users or
customers. These principles include collaborative teams, time-
boxed sprints, small batch sizes, quality baked-in, and
continuously learning through feedback loops.
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
15. BOTTOM-UP or TOP-DOWN?
Organization design is both top-down and bottom-up!
The top-down task starts with identifying the strategic
requirements of the business and selecting a basic
organizational structure to support the strategy.
The bottom-up view is focused on the work, tasks, and
interactions and seeks to layout business processes,
value-chains, value-streams, customer journeys, and
supply chains in the most effective manner that is
aligned to the strategy, and delivers value effectively to
customers.
16. Establish Sense of Urgency1
Why Change? What Sucks?
What is the business case for change?
Create Guiding Coalition2
Craft Vision and Strategy3
Communicate the Change Vision4
Define Boundaries, Design System Model, Empower Action5
Create and Market Short-term Wins6
Transform to New Operating Models, Develop Talent7
Anchor Practices, Behaviors in the Culture8
Who will lead the change?
How will they function as a team?
What is Our Purpose?
Creating the vision and design the strategy aligned to the
purpose.
Create the Communications Strategy
Communicate the Vision and Strategy.
What to change? Remove obstacles, structures, policies
What to change to? Structures, Systems, Processes, Rewards.
PROCESS OF ORG DESIGN*
*Kotter, John P. (2012) Leading Change, Harvard Business Review Press
How to cause the change? Create a Kaizen Culture
Problem Solving, Short-term wins
Transform to new Operating Models
Develop new talent to implement
Change.
Reinforce Practices,
Behaviors, and
Values; reward and
promote based on
change vision.
17. WHY CHANGE?
Building the business case
The first step to effective organization design is
to build the business case for change.
The business case is made up of the key elements of strategy, an analysis
of the current state of the organization including customer research
(qualitative/quantitative), and a clearly defined set of design drivers,
principles, and measures..
Steps for creating the business case include:
1. Clarify strategic priorities (what to do/what not to do)
2. Define the case for change which includes:
1. What capabilities must we build or buy to compete?
2. What is our current state analysis? What sucks?
3. UX Research including: Context, Ethnography, NPS, VOC,
Market, Partners, Vendors,
3. Identify the biggest problem/contraints on achieving the strategy
4. Measurement Criteria (How will we know we’re getting better?)
5. Comms Strategy (Where, when, and how often you will
communicate the change?)
18. “Design is a plan for arrangin
elements in such a way as best
accomplish a particular purpo
– Charles Eames
“Org Charts are to organization design what
wireframes are to user experience design.”
– Will Evans
“Culture eats strategy
for breakfast.”
– Peter Drucker
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
19. Culture is a pattern of shared basic assumptions and norms
learned by a group as it solves its problems of external adaptation
and internal integration.
“Culture matters. It matters because
decisions made without awareness of the
operative cultural forces may have
unanticipated and undesirable
consequences.” – Edgar Schein
CULTURE
20. ESPOUSED VALUES
TACIT ASSUMPTIONS
ARTIFACTS & BEHAVIORS
Schein, E. H., Coming to a New Awareness of Organizational Culture. Sloan Management Review.
SCHEIN’S CULTURE MODEL
This is what a company says it stands for
and claims to value. These are often times
completely incongruent with actual
behaviors.
These are the norms, assumptions,
tacit knowledge that govern the
organization and have the biggest
impact on decision-making. These
are the things most people ignore.
This is the easiest part of organizational
culture to see and touch. It includes posted
values, office layout, plans, policies and
observable behaviors.
21. PRINCIPLES OF
Organizational Design
These are some high level principles of good
organizational design. A key to choosing or
designing an organization model is identifying which
are important given your context.
“Principles and rules are intended
to provide a thinking man with a
frame of reference.”
– Carl von Clausewitz
1. Active & Present Leadership
2. Requisite Complexity
3. Coherence, Not Uniformity
4. Complementary Sets of Options
5. Structural Reconfigurability (loose vs tight
coupling)
6. Evolve, Do Not Install
7. Clarity of Interfaces & Interactions
8. Emphasize Kaizen Over Kaikaku
22. • An image or framework that presents a template for
guidance; or
• A representation of a set of components of a process,
system, subsystem, or subject area, generally developed
for understanding, analysis, improvement, and/or
replacement of the process; or
• A representation of information, activities,
relationships, interactions, and constraints between
components.
A model is simply:
SYSTEMS MODELS
Defining the Damn Thing
“Remember that all models are
wrong; the practical question is how
wrong do they have to be to not be
useful.” – George Box
23. SYSTEM MODEL
What is the point?
• Help structure approaches to problems,
improvements, or events;
• Provide a framework for communication of changes
and transitions;
• Give the design process a common language and
vocabulary;
• Illuminate and help resolve design challenges or
problems;
• Illuminate interations, interdependencies, and
alignments
• Help create a “new story” of the organization
The value of a model lies in its ability to:
24. It is an axiom in organization design that structure follows strategy, a play
on Louis Sullivan’s modernist architectural command that form follows
function. In general, organizational structure follows strategy.
25. ORGANIZATION DESIGN MODELS
Galbraith‘s Star Model McKinsey‘s 7-S Model Weisbord‘s Six Box Model
Burke-Litwin Causal Model Nadler‘s Updated Congruence Model Holonic Enterprise Model
26. The Star Model is one useful framework for
understanding design and governance choices
and policies across five categories:
1. Strategy: determines the future direction of the
organization and where it will compete
2. Structure: determines the location, clustering,
and reporting of decision-making and
distribution of power.
3. Processes: determines the flow of information,
raw materials, stage gates, and approvals to get
shit done.
4. Rewards & Policies: influence the motivation of
people to perform and address goals while
overcoming challenges.
5. People: includes culture, norms, mindsets, and
skills of the people needed to generate value
and allow the organization to achieve it‘s
strategy.
GALBRAITH’S STAR MODEL
28. Operating governance is how managers delegate
decision-making vertically into the organization
through hierarchy and policy, and establish
decision rights horizontally across functions and
business units.
Operating governance is a process by which
power is intentionally allocated across the
organization.
When power dynamics are not designed well, the
result is prolonged decision-making, endless
meetings, mindless email chains, misunderstood
communications , friction, failure, and death.
DESIGN FOR
Operating Governance
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
29. The Four Levers of Control model
(derived from Robert Simon‘s work)
serves as a way for leaders to consciously
make governance part of the
organizational design process.
The four levers are defined as:
1. Belief Systems, used to inspire and direct the
search for new opportunities
2. Interactive Networks, used to stimulate
organizational learning and the emergence of new
ideas and strategies
3. Boundary Systems, used to set limits on
opportunity seeking behavior
4. Measurements, used to monitor and reward
achievement of specific goals.
DESIGN OF GOVERNANCE
Robert Simon‘s Four Levers of Control
30. LEADING
Organizational Change
A leader can directly impact three leavers of
performance in an organization, which means
changing:
1. The Strategy
2. The Executive Team
3. The Shape of the Organization
“We cannot change what we are not
aware of, and once we are aware, we
cannot help but change.”
– Sheryl Sandberg
Leading means understanding how to deploy and manage
power to achieve results… there are six sources of power
that need discussing.
31. 6 SOURCES OF
Power in Org Design
• Legitimate Power which is formal authority in a hierarchy.
• Expert Power is derived from possessing knowledge or
expertise in a particular area.
• Referent Power is based on the use and exercise of
interpersonal relationships a person cultivates and social capital
a person accumulates.
• Coercive Power is derived from a person’s ability and
willingness to influence others through threats, violence, or
sanctions.
• Reward Power arises from a person’s ability to influence the
allocation of incentives within an organization including pay,
appraisals and promotions
• Informational Power relates to a person’s ability to control the
flow of information and disinformation within a social group.
“There is no power relation without a
correlative constitution of a field of
knowledge, nor any knowledge that does not
presuppose at the same time power relations.”
– Michel FoucaultFrench, John R. and Raven, Bertram (1959) The Bases of Social Power. Studies in Social Power
32. “These patterns emerge in
complex, responsive processes of
interaction between people taking
the form of conversations, power
relations, choices, and intentions.
What happens is the result of the
interplay between the intentions
and strategies of all involved and
no one can control this interplay.”
– Ralph Stacey
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
33. • Maintaining & improving the organization
• Coaching and mentoring people
• Problem solving
• Planning and budgeting
• Monitoring and controlling
Management
MANAGEMENT VS LEADERSHIP
Management is a set of processes that
keep a complex system of people, assets,
and technology working together to
deliver a steady flow of value and service
to customers at a reasonable cost to the
organization and society.
Management tends to focus on the following:
Leadership
Leadership is a set of processes that
creates organizations in the first place or
adapts them to significatly changing
circumstances. Leadership defines what
the future should look like, aligns people
with that vision, and inspires then to
make it happen despite the obstacles.
Leadership tends to focus on the following:
• Defining the future reality
• Aligning people to the vision
• Motivating, inspiring, and energizing people to
work towards the vision
34. A leader is best when people barely know that he exists, not so good when people
obey and acclaim him, worst when they despise him. But of a good leader, who
talks little, when his work is done, his aim fullfilled, his people will say,
“We did this ourselves.” – Lao Tzu
SEMANTIC FOUNDRY ATELIERMADE WITH LOVE
35. Hersey & Blanchard‘s Situational Leadership Model
MODELING LEADERSHIP
Organization Design is a Leadership Competency
whose success depends on the complex interactions
of four key groups: internal formal leaders, internal
informal leaders, external formal leaders, and
external informal leaders.
Leading Organization Design requires:
1. A clear grasp of the purpose, mission, and strategy
of the organization;
2. Establishing the boundaries of the change and the
roles required to transform the organization;
3. Develop an appropriate leadership style;
4. Mobilizing formal and informal leaders to
collaborate together;
5. Creating a sense of urgency by communicating the
business case while recognizing and respecting
people‘s fears.
36. Establish Sense of Urgency1
Why Change?
What is the business case for change?
Create Guiding Coalition2
Craft Vision and Strategy3
Communicate the Change Vision4
Define Boundaries, Design System Model, Empower Action5
Create and Market Short-term Wins6
Transform to New Operating Models, Develop Talent7
Anchor Practices, Behaviors in the Culture8
Who will lead the change?
How will they function as a team?
What is Our Purpose?
Creating the vision and design the strategy aligned to the
purpose.
Create the Communications Strategy
Communicate the Vision and Strategy.
What to change? Remove obstacles, structures, policies
What to change to? Structures, Systems, Processes, Rewards.
REVISITING PROCESS*
*Kotter, John P. (2012) Leading Change, Harvard Business Review Press
How to cause the change? Create a Kaizen Culture
Problem Solving, Short-term wins
Transform to new Operating Models
Develop new talent to implement
Change.
Reinforce Practices,
Behaviors, and
Values; reward and
promote based on
change vision.
37. FINAL THOUGHTS
On Good Organization Design
• Good organization design starts with a clear and shared
understanding of your customer, context, and problem(s) to
be solved.
• Good organization design requires whole systems thinking,
including all subsystems, interfaces, interactions, constraints,
boundaries, partners, vendors, community, and society.
• The process of good organization design requires requisite
diversity of ideas and people.
• Good organization design develops future leaders to
constantly manage continuous course correction through the
change.
• Good organization design tackles power and decision-rights
explicitly, placing authority and responsibility where it can
achieve the best throughput.
• Good organization design is iterative and requires developing
an experimental mindset.
“You cannot understand good design if
you don’t understand people; design is
made for people.”
– Dieter Rams