The first person out is Paul Tremlett, a Canadian consultant and member of a community of practitioners called the Global Organization Design Society. This community is devoted to the application and further development of the so-called Requisite Organization (RO) theory proposed by Elliott Jaques.

Jaques was quite insistent that he had found the right way to design the ideal organization. So I decided to challenge Tremlett to participate in a blog interview – and clarify: How can RO help us solve tricky role/reporting issues that we are confronted with in complex organizations?

Instead of discussing generalities I wrote two mini-cases and will ask him during the interview how he would approach the situations described. The cases are based on issues that we have discussed during my previous client engagements (to fit each example into one page I have simplified as much possible while trying to keep the essence).

You can read the cases below.

The interview will be posted here in about one week’s time.

• Who delivers what to whom
• Who collaborates with whom
• Who lends resources to whom
• Who decides what

A real example – drawn from an internal document – is shown below. This is an attempt to clarify the roles in a major UK bank. My first impression was that it seemed like a rather good example of how one could clarify the roles of an organization. When there is confusion with regards to roles and responsibilities, managers and employees usually welcome efforts that can help clarify who is responsible for various decisions and tasks. A matrix like this may be a good pedagogical tool.

But when examining the document a bit more closely, I noted that the matrix contains no less than 245 cells (5x7x7) as the responsibilities (“Approach”, “Inform”, “Advice”, etc. along the top) depend not only on the particular phase in the sales process but also on the channel and product. The accompanying Word document explaining the logic of the chart shown above runs to more than 60 pages. And we are still only talking about one of the issues mentioned above – who decides what. I assume that it would require several hundred pages to fully describe the organizational model of this bank.

One may wonder whether employees are able to internalize and enact a model that is this complex. If nothing else, it is hard to communicate a model that have a lot of contingencies and exceptions to a general rule (“Unit X is normally responsible for customer contact, but if it is a segment B client requesting service 1 for Region 2, then Y is responsible, and if it is a segment C client requesting service 2 in Region 3, then Z is responsible, except when the client already has a relationship with X…”).

In my experience, a better approach is to start by looking at the overall organizational model and consider whether it can be simplified. Are goals in conflict? Are there overlapping unit mandates? Does the formal structure match the work processes? Do we know who’s the internal client, and who’s the internal supplier? If the overall model is clear, logical, and simple, there’s usually less of a need for detailed specification at lower levels.

I am not suggesting that one should practice “simplification by ignorance”. Complexity will not go away by refusing to describe it (for example, by only presenting a new organization design by means of an organization chart showing reporting lines, leaving out other important aspects, and asking employees to find their way through the maze one has created.) If it really takes 60 pages to describe roles and responsibilities in your organization, that is the number of pages you should use. But if you have a choice between two models, one that can be explained in 10 pages and one that requires 60, select the former. 

I recently completed a project for an NGO where I assisted an internal working group in developing a new organizational model for the NGO head office. This NGO carries out long term development and emergency assistance, and the head office comprises experts in various fields (e.g., logistics, water supply and sanitation) as well as so-called program coordinators who support development projects in Africa, Asia, and Latin America.

Two alternative organizational models had already been developed before I became involved. Yet the challenge was that the two models had only been described at a high conceptual level, which led to a lot of questions from managers and employee representatives, who could not understand how the new models would work.

In addition, there were also several open issues that had not been closed. For example, the models left open the question of how to organize one of the key teams – the emergency preparedness team (which assists country representations when there is a disaster): Should it remain as a team or should the people in this team be transferred to other units?

The deadline for concluding the design process was approaching fast, so we had to find a way to quickly address these challenges. During one working session, we decided to map the entire structure of one of the main departments using Post-it notes. We used the following procedure:

• Each sticky note represented one position/role, for example, Advisor or Assistant (we wrote the name of each role on the note)
• We used different colors for different categories of roles, for example, we used red for line managers and two shades of green for two types of subject matter specialists, and blue for the roles within the NGO’s emergency preparedness team.
• We placed the notes on the board to indicate how the team groupings in the two alternative organizational models would look. I took the picture shown above with my phone camera during the session, and it shows one organizational model mapped on  the left board and another on the right board.
• Once we had mapped the two alternatives, we started playing with various modifications that we thought could improve the overall design further.

Both the client and I were surprised by the speed at which we are able to come up with new ideas using the method.

When the proposal was presented later by means of a Power Point presentation, we chose to keep the same color scheme as we felt that it helped us communicate how the different categories of roles would be grouped in the new model (see example below).

I think there are three reasons why this approach is so effective:

1. It forces you to do a “reality test” of conceptual models that may only have been presented (and understood) at a high level. Rather than talking about how great it would be to have a “process based” or “geographical” or “customer oriented” organizational model, you specify the details of the model and also get a sense of how easy or difficult it would be to implement it (the color coding is important as it makes the key changes implied by the model obvious, such as the distribution of the “blue” team shown above).
2. Working together using the wall creates a better group dynamic compared to the endless point-counterpoint discussions that tend to ensue when seated around a table and listening to someone’s presentation. Instead of discussing, we design something together!
3. Having the basic building blocks defined in advance facilitates a creative process where you may quickly combine and re-combine the building blocks until you have a good “constellation”. (By the way, when designing the overall structure for a larger organization, each sticky note could represent a sub-unit or team rather than a role as in this example.)

In fact, if you first do a session with Post-it notes and then go to your desk to draw some illustrations using PowerPoint, if feels like walking in a bed of glue in comparison. Instead of using a few milliseconds to stick a note to the wall, it now takes several minutes to draw and align a box properly, adjust the fonts and formatting etc., and that may add up to several hours (or days) before a complete presentation is done.

Nonetheless, it is also important to document ideas and solutions electronically so that they can be stored, distributed and communicated. So I am afraid we need to keep PowerPoint in our tool box until something better comes along.

I should add that although the sticky note approach encourages improvisation, it needs to be well planned and well timed. It is no use starting to restructure units in this manner unless you have basic information about how the organization works or what the goals of the exercise are. In my experience, a session like this is most useful somewhere in the middle of a design process, at the stage where the goals are relatively clear and when you have started to formulate preliminary ideas for new design solutions.

Related post:

Participative design processes: The case for “low tech” workshops

Happy holidays and best wishes a well designed 2012, 

P.S. If you haven’t seen it yet you may also take a look at my earlier post about metaphors.

Most of the clients I work with are concerned about finding the best possible organizational model, given the particular strategic goals they pursue and the constraints they face. Yet some also mention to me that they believe reorganizing the firm will be beneficial in itself.

There’s actual some support for this view in the academic literature (although I have not come across any empirical research). The key idea is that complexity gradually increases in most organizations (see my earlier blog post about this topic). Over time, organizations tend to add units, layers, processes, and systems. Increasing bureaucracy means that things move slower. More complexity may also lead to more stress and conflict within and between sub-units of the organization.

In his books about complexity and design, MIT professor Nam Suh has explained that we can observe periodic behavior and reinitialization in many technical, biological, and human systems. He uses airline scheduling as a case. Airlines can reinitialize the system by moving planes down during the night. All of the uncertainties that accrue during a day (delays, maintenance issues etc.) can then be terminated to ensure that they do not extend into the following day. Professor Suh claims that such periodic behavior is critical in order to avoid the build-up of unnecessary complexity.

Maybe a reorganization is a bit like this. I am not saying that the particular organizational model that one selects is irrelevant – in fact, I think it is critically important – but the mere act of reorganizing may have some positive benefits too. When we reorganize we break up established patterns. We regroup units. We place people into new roles – sometimes people whose skills and competence were neglected in the old structure. Although any reorganization certainly has a cost it may also help ensure that the complexity of the past is not carried forward into the future.

Image used with permission courtesy of Many Cornet, www.bonkersworld.net

At a conference last week in Oslo, I attended a session where we discussed the state of academic research on organization design. An interesting talk was delivered by Professor Lars Groth of the University of Oslo (pictured below).

Prof. Groth had analyzed some purported “new organizational forms” described in recent journal articles, including: ”Flat, networked Organizations” ”Collaborative Communities” ”Holonic Organizational Architectures” “Multidimensional organizations” “C-Form (circular), F-Form (freedom) and I-Form (innovation)”

Prof. Groth dissected these organizational forms and argued that they could all be explained by using the terminology and concepts in Mintzberg’s book on organization design from 1979. As an example, he claimed that the so-called C-form is basically another term for Mintzberg’s concept of the Adhocracy.

Prof. Groth was also interested in the connection between information technology and organizational design. He pointed out that people have been repeatedly wrong in predicting that new information technologies would change authority relations. The advent of computer networks was supposed to create non-hierarchical “network organizations”.

He argued that this belief was like thinking that the introduction of the telephone would remove the need for bosses in an organization. It didn’t; and organizations with computer networks are perhaps somewhat flatter than before but still hierarchical.

I agree with Prof Groth that there is a tendency to exaggerate “newness” and create buzzwords, rather than building on earlier established concepts. The effect is that we become unable to build cumulative knowledge about organization design as we keep on reinventing the same concepts.

I would like to take issue with him on a couple of points, though. First, I do think there are some organizational forms today that were not described in the older literature. As an example, Mintzberg’s description of the matrix form is not identical to the current concept of the multidimensional organization (something I discuss in some detail in my upcoming book).

More importantly, though, I think it is somewhat futile to look at “new organizational forms” separately from the purposes and functions that they serve. It’s a bit like an engineer taking apart an iPad and concluding – “Well, there’s nothing really new here, only a screen, chassis, microprocessor, and battery – we have seen all that before!”. Yes, we have, but innovation is not only about new forms, but about how you re-combine existing things to meet functional requirements that were previously seen as incompatible (in the case of the iPad, these functions could be excellent usability, affordable price, great visual design and connectivity, etc.).

So rather than looking at organizational forms in isolation, we should ask about functions: Are there organizations today that are able to create organizations that meet different functional demands that we have thought were difficult or impossible to achieve (in combination)?

As an example, Mintzberg (1979) was very critical of the prospect of democratic organizations where workers elect supervisors and/or participate in decision making. He pointed out that the available studies show that democratic governance in organizations lead to less efficiency and more rather than less centralization. The question we should ask today is whether there are organizations that are able to introduce democratic governance, while at the same time maintaining speed and efficiency. If so, that would be something new.

Creative organization designers are not the ones who invent new words for organizational forms but those that use already familiar building blocks  (roles, processes, structures) in new combinations to achieve results that others thought were impossible.

Yet more participation does not automatically lead to a better process. One key challenge that I have noted is to strike a balance between divergence (creating alternatives/ideas) and convergence (getting closure and reaching consensus on a given solution). It’s relatively easy to ask 100 managers for their feedback regarding a proposed new organizational model. It is far more difficult to actually process the information that you then receive – each manager may have 5 or more concerns, and their concerns or ideas may (if you are unlucky!) be both sensible and thoughtful. So then you have 500 things that may need to be considered. Do you have the capacity for that? Do you have the time?

The key is to carefully structure the organization re-design process in manner so you get divergence and convergence at the right points in time. You want as many as ideas regarding possible problems and solutions at the early stage. Later, you want a finite set of decision alternatives that can be evaluated against each other.

It is also important to consider how to ask questions during the process. If a large number of people are involved, it may not be feasible to ask open-ended questions, particularly not at the later stages. Then the alternatives and decision criteria should already be established and accepted, so people should not be asked to offer their general opinion about what to do, but be invited to evaluate specific alternatives against the defined criteria.

A project team may also create various types of tools for handling the information that is collected. I sometimes use an “issue log” – a simple list in an Excel file – where I write down observations and ideas that I have myself as well as ideas and comments from those that I interview or work with in workshops. I try to categorize the issues so that I can quickly group and search through the items when the need arises.

Far too often, project teams ask for input from the organization, but have insufficient capacity for processing the information that they receive. The result is often the opposite of what is intended: Rather than increased engagement and ownership, people become frustrated and even cynical if they perceive the participatory process as less than genuine.  If we want real participation in a re-design process, we need to plan how to collect, analyze, and act on ideas and suggestions from people that get involved.

We were pleased to be joined by two leading academics, namely Andrew Campbell (pictured below) from the Ashridge Strategic Management Centre and Georges Romme from the Eindhoven University of Technology.

I gave a talk based on a project I did this Summer together with an internal consultant in a financial services group, providing a brief introduction to functionally based analysis of organizational structures. You can view the slide sets I used below.

A particularly interesting discussion, I found, dealt with the future of organization design. This discussion was initiated by Tim Pidsley of the consulting firm Tricordant, who captured our ideas about how organization will be done in 2021 on the flip chart shown below.

The key items listed here were about:

• Using methods and tools from product design to design organizations (this is already happening to some extent)
• Organization design as an “embedded activity”, i.e., something that is done on a continuous rather than an episodic basis
• New ways of visualizing organizations (no longer reliant on organization charts)
• Using “crowdsourcing” to engage a larger group (perhaps outsiders) in suggesting design ideas
• Greater use of data-driven, analytical tools – away with the educated guesswork (or worse, political and ad hoc decision making) that characterize design processes today
• The use of simuation and modelling tools to visualize and predict the implications of making organizational changes.
• New ways of designing interconnected enterprises (networks of firms).

I touch on some of these future developments in the textbook I have written, and was glad to see that others seem to agree where the field might be heading and what potential there is to raise the discipline to a new level. At the same time, naming the trends is one thing, a lot of conceptual and practical work will be required to introduce and facilitate the adoption of new organization design methods. Hopefully, the EODF and similar communities in the US and in Africa may play a positive role in this.

But we also will discuss some key organization design topics and are happy that three well-known “thought leaders” have agreed to join us: Professor Andrew Campbell from the Ashridge Strategic Management Centre, Professor Georges Romme from Eindhoven University of Technology, and Jane Lewis, a partner with the consulting firm Woodward Lewis.

I myself will give a talk about how to define high-level organizational architectures, utilizing a recent project for a bank as an example.

You can find the program for the event here. I will return shortly with a summary.

Have you ever noticed how people use metaphors in describing how their organization works? In my experience, managers and employees make extensive use of metaphors in explaining how they perceive their current organization, why they think it should be changed, and what the ideal organizational model would look like.

We should take this topic seriously. In the classic book on the subject, Metaphors we live by, the authors suggest that metaphors not only help us communicate an idea but also shape how we perceive and understand the world.

Particularly important in my field of work are metaphors, sayings or proverbs that are used to communicate criteria for evaluating the current organization or principles one should adhere to in designing a new organization. Here are some examples and possible interpretations (there may be many alternative interpretations depending on the situation):

• “We’re in the same boat” – we need to collaborate 
• “Our firm is top heavy” – our firm has many management layers
• “There’s no captain on the  bridge” – there’s no direction and leadership here (maybe too few management layers?)
• “The left hand doesn’t know what the right hand is doing” – our units are poorly coordinated
• “Too many cooks spoil the broth” – if too many people are involved nobody is responsible

Some proverbs are remarkably similar to more rigorous principles developed by management and economics scholars. Consider the proverb “Let the wolf take care of the sheep”. There are many versions of this proverb both in English as well as in other languages (e.g., a Briton might say “Let the fox guard the hen house” and an Australian might say “Let the dingo take care of the kids”). 

In the Scandinavian languages, we say (literally translated) “letting the ram take care of the bag of oats”. A friend from India told me that the equivalent expression in his language was “to give the keys to the thief”. I like that latter two versions better because they focus on the potential for conflict of interest without creating the mental image of aggression or predation.

Many economists who study organizational issues make use of the so-called Principal-Agent theory. This theory basically says that you can avoid conflict of interests by separating the role of the principal and the role of the agent (the agent is someone who carries out a task on behalf of the principal). You can then use monitoring and incentives to ensure that the agent acts in the interest of the principal.  This is the foundation for many of the recent recommendations regarding improved governance and control in financial services, for example. You actually sum up the essence of the theory quite well by using the proverb.

Although proverbs and metaphors are effective pedagogical tools and shape our thinking in many ways, one should be careful not to accept them as proof of the validity of an idea. At times they lead companies astray. I recall the story about a company (I think this was back in the 1980’s) that had two main product lines but the CEO argued that the company needed to introduce one more product line in order to have a “three legged stool”, i.e., a more stable business. Yet the diversification that followed proved disastrous and was later abandoned.

Metaphors is one way of thinking – another way is using logic. We should use both – a metaphor can powerfully express a key principle, but we should apply logic to define, test and refine it before putting it into action.