Succeed where others fail through better organization design

Making structural changes in your organization can be one of the most difficult parts of management: it’s highly visible, embodies change and risk, affects people (certainly jobs, maybe careers, possibly more), and is wholly owned by you, the leader. 

So, before you make a significant change like this, it deserves your thoughtful consideration.

What follows is a guide for this consideration in the guise of a document template. Feel free to use it as your own.


Organizational Evolution

Start by describing why you’re making a change. Focus on the core motivations, the reasons at the heart of the change. Write them in a way so that if you were hearing them, you’d be nodding your head in agreement that change is necessary.

Example:

Our business is growing at an incredible pace, and we’ve responded well to increased customer demand for our building products. However, we’re not attracting new customers (customer launch) or supporting our existing customers (technical support, documentation, support tools) as well as we should. As a result, we’re turning away new business. Our competitors have noticed this gap, and are exploiting it. 

Business Conditions and Strategy

To define the structure to best meet your organization’s future needs, it’s useful to start by noting your current business/market conditions in comparison to the company strategy and direction. If these are at odds, then this conflict could highlight a need for structural change.

Either way, you'll be able to assert that your proposed changes align with the future needs of the business.

Current Organization

A short explanation of the rationale behind your current organization structure can be a useful reminder (to both you and your manager) of previous decisions and changes. This establishes the firm footing upon which future changes will build.

<insert your current org chart>

Problems to Address

You’ll likely have several problems you wish to address (i.e., the ones that precipitated your thinking). Write them down. After all, they’re important. But even more so, this act clears the way for further analysis.

It’s most common to start with your organization’s roles (or titles), responsibilities, and reporting relationships. However, your thinking will be clearer and your decisions more assertive if you look broadly before narrowing it down to the structural level. To generate that more holistic perspective, the McKinsey 7S Framework is useful. 

Start with your team’s shared values, as these both connect and anchor the six other points. Sometimes, it can be useful to assert your shared values, then look at each of your team members to determine to what degree they espouse these values. If there’s a defining example or a clear lack of one, then note it. Next, analyze how strategy and systems stack up against shared values, collecting issues as you go. Then move to the soft skills of style, staff (capabilities), and skills. Lastly, include structural concerns.

As a final step, edit the list you’ve generated, leaving only the most important issues to address. For convenience, the framework (adapted by Mindtools) is included here:

Shared Values: called "superordinate goals" when the model was first developed, these are the company’s core values, as evidenced in the corporate culture and general work ethic.

Strategy: the plan devised to maintain and build competitive advantage over the competition.

Systems: the daily activities and procedures that staff members engage in to get the job done.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of company employees.

Structure: the way the organization is structured and who reports to whom.

Principles and Guidelines

Organizations have different needs as they mature and evolve. Similarly, as people evolve, so do their skills. Over time, these needs and skills don’t always align. The art of effectively managing a team involves knowing when these mismatches are important enough to address, having the foresight to identify the best outcome for your team and the company, and the courage to make necessary changes with a firm, yet empathetic hand.

This section should include a set of statements that fuel your courage and ground you in purpose. Your grounding statements will be your own - they can be motivational, they can be insightful, but the best will be those that challenge you to do the right thing.

Example

Organization changes should solve one or more of our problems. We abhor waste and practices that waste effort. At the same time, we want to create an organization where making mistakes is okay. We believe in hiring the best people and finding the right place for them in the company – and that we won’t last long if we don’t. As a consequence, our organizational design supports flexibility and experimentation.

This document shares a set of proposed organizational changes that reflect these guiding principles. The following guidelines complement these principles:

Provide an organization structure that offers career opportunities, succession planning, and continuous development of our people

Prefer an organizational hierarchy that is wide, not deep

Keep span of control for line-level managers at 15 to 20 FTEs

Keep span of control for mid-level managers at 6 to 8 FTEs

Continue to adopt agile/DevOps concepts and principles

Key Organizational Concepts

Articulating the organizing models or concepts that guide your thinking will provide additional purpose and rationale to your intended changes. This is an opportunity to provide greater depth to your thought process and establish a clear connection between the model and your resulting actions.

There are many models to choose from: functional, matrix, lean, flat, and more. Your organization is already following a model, even if it isn’t explicitly stated. Spend a little time thinking about the rationale behind the model - both the compromises it requires and the value it brings. Then decide whether it’s right to continue using it, or time to dig deeper into how other companies are handling issues similar to yours.

As an example, we’ll borrow from Spotify.

Example

There are two key concepts that guide our organization design: squads and platforms.

Squads

A squad is designed to feel like a mini-startup. They are roughly 6-8 people in size, self-directed, collaborative, and stable over time. They sit together, and they have all the skills and tools needed to design, develop, test, and release to production. Each squad has a long-term mission such as building out our web registration products or to enhance our test delivery applications.

Platforms

A platform is a collection of related services and functionality. This is also a useful organizing principle for squads, as they often work in the same area and need similar domain knowledge. The total number of people working on a platform should not exceed 100. This is based on the "Dunbar number", which says that most people cannot maintain a social relationship with more than 100 people or so. When groups get too big, we start seeing more things like restrictive rules, bureaucracy, politics, extra layers of management, and other waste.

Proposed Changes

Next, assert your intended changes. You’ll inevitably wonder whether it’s best to implement your changes in one fell swoop, or in a series of small steps? If you’re looking at a significant organization change, I suggest the phased approach. There are many things to track when making change – communication, compensation, and calendars, among them. A phased approach helps you manage this complexity and gives you an opportunity to adjust after each.

Phase 1 - Immediate

For each phase, include a summary statement followed by a clear change list such as:

  • “n1, n2, n3” moved to report to “N”
  • “m1, m2” moved to report to “M”

Then, summarize the benefits of the change, possibly by highlighting previously identified problems that will be addressed or solved.

Phase 2 - Six Months

Repeat.

Phase 3 - One to Two Years

Repeat.

Next Actions

Your conclusions will lead naturally to a series of discussions, decisions, and deadlines. Take the time now to define a high-level plan of events. Even if the ensuing weeks and months change this plan, this base will give you a much-needed head start.


Have a different opinion or your own way of tackling organization design? If so, please share.

Also, if you found this useful, please send it to a friend or manager that would find it beneficial.