- 20 years experience in the application and study of organizational design issues
- Assistant Professor, Strategy at INSEAD
- Lecturer, Management and Strategy, Northwestern University - Kellogg School of Management
- 11 years at Bayer AG, where he held management positions in the U.S. and Germany in industrial marketing, information technology, mergers & acquisitions, and strategic planning
- PhD, Managerial Economics
- All 7 Best Practices
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If you are reading this, odds are that something about your organization is disappointing you. Maybe sales are down. Perhaps innovation is lagging. New projects may be stalling. Maybe your employees seem to lack initiative, motivation, or enthusiasm. Maybe you can't put your finger on what is wrong; you just know that something isn't right.
So you may be wondering: Is the design of my organization behind the problem? And how would I know? How does one tell the difference between a well-designed organization and a poorly-designed one? And how do I fix a poorly-designed one?
Many of the problems cited above can be traced back to poor organization design. A company can have a great mission, great people and great leadership, but still not flourish because of poor organizational design. And even the best-designed organizations are filled with tensions and contradictions, so reorganization is not always the cure. Anyone who has ever lived through a major organizational redesign knows that they can be costly and painful. So, before tinkering with an existing design, it's vital for executives to know what they can and cannot hope to achieve by changing it.
Many trends are pushing companies to re-think their organizational design. For years, "empowerment" of employees was the watchword. Then, following the recent financial crises, companies learned that plans long on empowerment but short on oversight and accountability can cause more problems than they solve. Thinking through the redesign process is critical.
Companies often make many preventable mistakes when planning or implementing a redesign. A surprising number launch into the project without a clear understanding of why they are doing it. They get caught up in the details and lose sight of the original strategic objectives. Many forget about the "law of unintended consequences." They forget that every organizational solution to a problem will create new ones, often in unexpected places.
A good organization design will have thought these consequences through, considered multiple scenarios, and typically gone through multiple iterations before being adopted. Another mistake is hurriedly adopting the "best practice du jour." Your organization design should solve your unique set of challenges. It should be tailored to your needs. Just as you would not buy a suit off the rack and expect it to fit perfectly, you should not expect someone else's mass-produced design to be the right one for you.
Organization design is therefore not a matter of copying what works from someone else's template. And it goes far beyond the sticks and boxes of the organization chart. Instead, it's a matter of asking smart questions about the complex relationships among tasks, workflow, responsibility and authority, and understanding how those relationships are configured to support the business objectives.