Guide

5 keys to successful organizational design

May 17, 2017
all great change is preceded by chaos quote

Welcome to the era where one startup rapidly and completely changes an entire industry. AirBnB and Lyft are two popular examples, and now travel and transit will never be the same.

Across every industry, technology that makes our lives easier and more automated is developed at breakneck speed. And with artificial intelligence and big data analytics rapidly maturing, we’re poised to enter another phase of great disruption.

Who’s at the helm of these highly innovative companies that make radical and lasting change?

Technology leaders that embody a strategic new creed: be bold.

fortune befriends the bold quote

That means embracing new ways of thinking and working.

It also means creating an organization that is flexible and takes a fresh view of team structure.

Getting there, as you might expect, requires a nimble and scalable approach to organizational design.

It’s the human factors equivalent of updating the IT infrastructure to address changing innovations in cloud and software-defined networks.

But that doesn’t mean you should reorg often. In fact, it takes time, sometimes a year or more, for a new or revamped organization to bear fruit. And larger enterprises, usually the hardest ships to turn, may have an even longer lead time to see the positive impact of creating teams able to manage change at scale.

Still, strong leaders recognize that and focus on building their teams with a skills-first mindset. That’s a team equipped to make the most of an organization’s human talent and prepared to move quickly to stay ahead of their markets.

 

Best practices for organizational design in an era of constant disruption

Here are five best practices to help you design an organization built to succeed in this dynamic environment.

know thyself quote

First, acknowledge upfront that retooling your organization is a tough rock to tackle.

Then, start by identifying your existing strengths. Pinpoint the unique role that your company holds against the competition. Define where these strengths will take you in the new world order.

Once that is clear, chances are the way you shape your teams won’t model any other company’s organizational structure. And that’s a good thing.

You may find that teams organized around experiences (rather than product features) will help drive your organization forward; another organization may hedge its bets on DevOps teams that joins IT and development teams to collaborate in automating the infrastructure; and still another may opt for small cross-functional teams that tackle short-term projects and objectives quickly and move on.

Regardless of your approach, a technology team should be built to accentuate the unique offerings and capabilities of the company while allowing for flexibility in order to achieve strategic goals faster and better.

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At the same time, building on your strengths doesn’t mean doing what you’ve always done.

Start by asking how the company’s unique strengths shape how people work and act. Balance that by asking where your company structure isn’t currently serving your business goals.

Les Sisney, author of “Organizational Physics: The Science of Growing a Business,” suggests asking the following questions to assess your organization’s readiness to move beyond charts and become more design centric – that is, better able to empower decision making at all levels of the company.

  • Are our vision and strategy aligned with the changing world? If not, what changes need to be made?
  • Does our current functional structure have good checks and balances? Is it collapsing too much under one strong personality? Are we missing any core functions for our long-range development and short-range execution? If so, where do we need to make a change?
  • Is our culture strong and vibrant, and are we being effective, even at the cost of some inefficiency? If not, what changes do we need to architect into the system?
  • Are we still hiring aligned people, and are they taking initiative to drive the business forward and design their own work processes? If not, where do we need communicate and influence a correction?

Most importantly, thinking beyond the org chart gives you the chance to move decision making throughout the company so that teams can be empowered to think AND act. This is crucial for nimble teams and even more crucial for ongoing employee engagement.

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No question: It’s expensive to hire, train and later (and regretfully) let go of talent. The best time to get an organizational design right is before you bring on someone new.

It makes sense, then, to make sure you know the hard and soft skills your team needs and then hire someone who has the proven ability to do just that.

Not the other way around.

That’s right – don’t hire a single candidate until you’ve clearly defined the roles that your organization needs. Then fill the gaps wisely. Match the candidate to the skills that will help you achieve your clearly articulated vision. 

Equally important is the development of those hires – and all team members – throughout their entire careers. Offer them ongoing resources and training to ensure they continue to be innovative thinkers and doers.

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Design roles that work the muscle of the people in them — that goes for both leaders and technology experts alike.

When you identify employee’s strengths, you can align them to the projects and teams where they’ll be the most effective. You can balance the needed skills across teams in the right proportions, per Elon Musk.

You can also identify where teams and individuals need to grow, so you can seek out the development opportunities that will serve their needs and position the company for further success.

Another way to make sure you can build upon the entire team’s strengths? Commit to giving leaders a team size that’s manageable.

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This one is simple: To keep employees learning, work learning into every day.

If it’s true that only 29 percent of U.S. employees are engaged at work, and only half of them find meaning and fulfillment in their roles, then there’s room for improvement when considering organizational design. It’s small, continued efforts that make a difference.

Organizations that make professional development a high priority and provide a range of flexible training options mapped to business needs are the most successful at keeping their teams at peak performance and skill level.

The good news? Today’s training options today include so much more than weeklong off-site sessions and conferences that pull workers from their active projects.

Organizations can easily provide online resources to enhance technology expertise, aligning learning to key business objectives and closing skill gaps in critical areas such as cloud, mobile, security and data analytics. They can also offer technical certifications as an employee benefit to help keep skills current.

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Bringing all employees into the learning culture while keeping the IT training budget under control is a surefire method to improve employee engagement while preparing the organization for the digital age. (And read why training beats hiring in the “The Real Cost of Hiring and Turnover.”)

Our own 2016 survey conducted by CEB confirms that learning improves employee retention. When a company invests in an employee’s career through training, job satisfaction and loyalty increases naturally follow, and in a big way.

Most importantly, a robust training program translates to more engaged workers and bigger profits. Employees benefit by using their skills to make an impact on the company goals, making them more engaged at work. Businesses benefit by having happy employees who remain in their jobs and perpetuate the success of the organization.

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Today’s Fortune 500 list rolls over faster than ever. Today, only 12 percent of the companies that made the list in 1955 still remain. And 94 percent of the Fortune 500 list believes they’ll change more in the next five years than in the past fifty.

Another startling fact: Many of those companies didn’t even exist 15 years ago.

Maybe the company you work for is one of them.

Whatever position your organization is currently in — solidly in the Fortune 500, striving to break into the ranks or measuring your success against other factors, one thing is certain:

The hurtling pace of innovation is a new constant that impacts every business.

Of course, there’s no one-size-fits-all approach to organizational design. Yet, when managed well, it’s the kind of large-scale change that doesn’t have to lead to chaos.

Technology leaders who take the bold approach, and who are open to new ways of thinking and working can design their organizations to do more than simply stay competitive, they can build a company that leads the way into the future.

Putting employees at the center of this model is the surest way to succeed.