Aligning structure and strategy Archives

Aligning structure and strategy

In these posts, I discuss why we need to align the organization with the strategy – and also show you some practical methods you can use to do it.

The missing link between strategy and structure? The unit mandate

March 28, 2025 By Nicolay Worren Leave a Comment

A few years ago, I wrote a teaching case about a recently established marketing department in a large company. The department had been formed by merging three smaller units, and on paper, it looked like a fairly standard restructuring.

But something interesting happened when I used the case in class: My students often pointed out that the new department’s mandate seemed incoherent. It was supposed to both provide advice and services to internal units — and also monitor those same units for compliance with corporate marketing guidelines. In other words, the unit was meant to serve and control at the same time.

That tension stuck with me. If a large, resourceful organization can create a unit with such conflicting expectations, how often does this happen elsewhere? And what would the criteria be for a good mandate?

That question eventually became the seed for a longer research project — and a collaboration with my colleague Shawn Pope. When we turned to the academic literature to ground our work, we were surprised to find almost nothing. The idea of a “unit mandate” is familiar to most managers (everyone I spoke to could articulate their own), yet it has received little attention in organization theory.

That gap was part of our motivation for the article we just published in Academy of Management Perspectives. In it, we argue that organizations need more than inspiring purpose statements — they also need to align their formal structures with that purpose, through clearly formulated unit mandates.

You can read the abstract of the article here and watch a video where Shawn and I explain the main idea.

And if you’d like a copy of the article itself, feel free to message me.

Why you can’t retrofit a mission

January 27, 2024 By Nicolay Worren

I once helped a global, medium-sized company develop a new organizational model.

At the time, it had a regional model, with units for Europe, Africa, the Americas, and Asia, plus staff units such as IT, HR, Finance, Procurement, and Legal.

One executive was sceptical about the process, and compared it to a game of corporate solitaire.

In a moment of dry wit, he commented at the end of a workshop: “Somebody always ends up with IT and Africa.”

It was intended as a joke (and it resonated with the rest of the participants).

Luckily, we were able to avoid this scenario (We recommended a product-based model instead of the regional structure. This recommendation was accepted and implemented.)

But unfortunately, if you look around in most organizations, you will probably find some odd combinations of sub-units.

So imagine what would happen if they actually had formed such a unit.

What would the management team do after they established the IT+Africa unit?

Well, they might ask the poor manager of the unit to formulate a mission or mandate to clarify what the unit was supposed to do.

The manager could write:

By running the Cairo office, and thereby the Africa region, and also by providing IT services across all four regions, our mission embraces the dual challenge of maintaining IT’s global service commitments while also placing a focused spotlight on Africa’s unique market dynamics…

Or perhaps something like this:

Our mission is to synergize the global prowess of our Information Technology services with the regional focus of our African operations…

Or maybe this:

Our mission is to innovatively combine the global reach of our Information Technology services with the focused expertise of our African Regional operations…

Well, you get the point. The manager would probably struggle with this assignment.

Why would it be so difficult?

It’s because the combination is problematic.

The employees might ask: Are we now a profit-center (like the Afria regional unit) or a cost center (like the IT department)?

The statements above fail to clarify that.

But the relationship toward the other regional units would also be unclear. People in those units might suspect that the IT staff would now favor the needs of the Cairo office ahead of the needs of other regions.

This is just a hypothetical example, of course. But I think it describes a fairly common phenomenon, namely that we tend to retrofit the mission on units that have been already organized.

But if the units are illogically organized to begin with, no amount of mission-formulation can make up for that problem.

Instead, you will have to endure endless discussions about the mission, without gaining any clarity.

The solution is obvious: You need to consider the mission (or unit mandate) of each unit before — and not after — that you decide on a new organizational model.

I am not saying that you need a complete mission statement or a detailed mandate; but you need to at least specify what the unit is supposed to deliver and to whom (what I call the unit’s “function”).

Then you can test whether this function is aligned vertically and horizontally with other units. My colleague Shawn Pope and I describe how to do this in a new paper that we have written (summarized in this blog post).

On the positive side, perhaps, the clarity of a unit’s mission or mandate can serve as a litmus test for the effectiveness of the organizational model.

Ambiguity in a unit’s purpose may signal a need for redesign.

Related posts:

Why you need a focused mandate

Embedding the mission and purpose in the design of the organization

Sustainability and organization design: Is there a connection?

September 1, 2023 By Nicolay Worren

There are more than 100 posts on this blog, covering a wide range of topics related to organization design.

But so far, I have not tackled the issue of sustainability.

I have hesitated, I must admit, because so far, I haven’t seen anything new.

Of course, to implement a sustainability strategy, a firm will have to make organizational changes, including structural ones.

The changes are often difficult to implement (see this and this article).

But the repertoire of management techniques is a familiar one, and consists in such things as setting goals, defining responsibilities, and aligning the incentives with the goals.

The things you would do to get any strategy implemented.

But there might indeed be something unique about sustainability as a challenge.

I was reminded of this recently while reading the book “Mission capitalism”, written by Mariana Mazzucato, professor in economics at University College London.

Mazzucato is characterized as “left-wing” by some commentators but I think most of her proposals will be viewed as sensible to people across the political spectrum.

Her first point is that to tackle climate change and other sustainability problems, we can learn from how grand challenges have been tackled before.

So in the book, she describes how Preseident Kennendey established the mission to put a man on the moon.

She explains in some detail how NASA handled this challenge from a leadership and organizational point of view.

And this is where it gets interesting.

It was not enough to create technological innovations: NASA had to radically re-design its organization as well.

Among other things, NASA had to ensure sufficient coordination across different units and sufficient communication across vertical layers, as well as effective collaboration with suppliers.

This had to be done in a system of 300.000 people.

The organization was re-designed into program offices and centers. Centralized planning was combined with decentralized project execution. Many innovations in engineering management were also introduced.

I was curious to find this definition of systems management, provided by George Mueller (the then head of the office of Manned Space Flight):

a structure for visualizing all the factors involved as an integrated whole, much as system engineering visualizes all of the physical aspects of a problem”…which permits the manager to “recognize the nature and interaction of complex procedures in advance of their becoming problems

It is almost as if he describes the concept of an organizational digital twin, 60 years before the term was coined.

(By the way, also in more modern times, NASA’s organization has been examined by researchers, e.g., see this study).

But back to my earlier point: What Mariana Mazzucato is saying is that organizational innovation is critical to handle grand challenges.

In particular, she argues that governmental agencies need to pursue bolder and riskier goals, and create more dynamic internal structures to implement them.

A second point she makes, which is also related to organization design, has to do with the use of missions-oriented management. Here, she is not so much thinking of missions as “organizational purpose” (as we do in our field), but as the big goals that must be accomplished to handle a particular challenge (say, a plastic-free ocean).

The key principle is to define the missions so that the outcome is clear, while allowing different types of solutions. As she writes in an article (Mazzucato, 2018, p. 811):

Missions must be chosen. Yet their success will depend on the bottom-up processes that nurture innovation… A culture of experimentation and risk-taking is a crucial element in the philosophy of missions.

Although Mazzucato is mainly concerned with how the government can practice such mission-oriented policies at a macro level, her example from NASA also shows that this is relevant at a more micro level.

For example, a key element of the Apollo program was to specify the goals but allow internal units (as well as suppliers) to come up with the solutions.

We can ask ourselves how such a model can be implemented within an organization.

As an example, if “A plastic-free ocean” is defined as a key mission at the societal level, then it seems clear that this macro-level mission must be broken down into company and even product-specific missions, for example, “Plastics free packaging for our consumer products”.

And as with a mission at the societal level, we of course need to break it down into more specific requirements – and ensure that we have the organization in place to realize it.

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Imagining an alternative future

April 14, 2023 By Nicolay Worren

You cannot re-design an organization without thinking about the future.

Professor Georges Romme (University of Eindhoven) has an elegant way of putting it. He says that design is “inquiry into systems that do not yet exist”.

This holds true whether we design an organization from scratch or whether we adjust an existing organization.

Even in the latter case, the adjustment is based on assumptions about the future (e.g., whether customers will continue to buy our product, or whether the same technologies will continue to dominate).

But there are at least two major challenges with designing for the future.

The most obvious one is that the future is uncertain. We know what we have today (or at least we can collect information and find out what we have). So with the right tools and techniques, we can optimize based on the current situation.

But there are many scenarios for how the future will pan out. How can we design an organization when we don’t know what will happen?

The main proposal here is that we design a flexible organization, one that can adapt to different circumstances (e.g., see this blog post).

The second challenge is a psychological one. The current situation dominates our thinking. We have become accustomed to the way the current organization works.

It takes effort to imagine that the organization could look differently. We may even suffer from so-called “status quo bias” – we are emotionally attached to the present and afraid of change.

There are many strategies and interventions have been proposed to counter these challenges.

I find Russell Ackoff’s idealized design approach particularly intriguing.

His basic idea was that we should design the organization from scratch, rather than extent the present model. But at the same time, he did not advocate that we should try to predict the future.

His recommendation was that we ask ourselves what the organization ideally would look like, if it was designed anew today.

According to Ackoff, we do this by formulating a set of specifications, just like we would when asking an architect to design a house for us. For an organization, the specifications may be the overall mission, broken down into more detailed requirements or desired outcomes (also see my recent blog post on unit mandates).

Once we have a common understanding of what we want, we can then gradually introduce constraints so that that it becomes a model that we are able to implement.

See this video (duration: 28 minutes, it’s part of a series) for further information. I would guess that the video is from the early 1980’s – but Ackoff was way ahead of his time – this is really “design thinking”!

By the way, Ackoff recommended the same approach for education. He didn’t like the use of case studies, for example; he said that they only lead to discussions about superficial features of existing organizations. Here too, his proposal was to ask students to design ideal systems instead of modifying existing ones.

However, I don’t think idealized design is the best approach in all situations.

It seems well suited for situations when performance is far below expectations, or when there is a radical change in strategy, triggered by external changes. In these situations, it may be necessary to start from a blank slate and re-imagine the whole system that you are dealing with.

But the majority of re-designs occur in fairly well-managed organizations and in situations with only modest strategic shifts. Of course, we should still try to come up with a future-oriented organizational model, but we may do that improving or reconfiguring the current organization rather than by starting from scratch.

But even here – for a more limited area (say, a particular unit or business process), one can still generate more creative solutions by asking what the ideal solution would be and by working backward from there to the current situation, instead of extrapolating from the current situation into the future.

I would also add that even if we use idealized design, it does not imply that we can ignore an analysis of the current organization. As I mentioned, even Ackoff agreed that you have to (gradually) take into account technical and practical constraints to find a solution that you can implement.

Being future-oriented does not imply that you ignore the current realities, only that you temporarily free yourself from them when thinking about potential solutions.

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How to create effective unit mandates

November 27, 2022 By Nicolay Worren

To deliver on the purpose of an organization, we need to focus on the mandates of the different units in the organization (teams, departments, and so on). That was the topic of my previous blog post.

In this post, let us look more closely at this topic. How do we establish effective unit mandates? As I mentioned last time, this is the topic of an article that Shawn Pope and I are working on.

In the article, we propose five criteria that you can use as a check list when formulating a mandate.

1. Vertical alignment. As I explained last time, the mandate should first of all describe the unit’s key function or purpose.

For example, the key purpose of a team can be to serve customers, to develop new products, or to ensure that the IT infrastructure is working.

But the team is not an isolated entity; it is probably part of a department, which may be part of a business unit, which (in a large firm) may be part of a business area.

So one has to ask oneself how the team, by performing its function, will contribute to fulfil the mandate of the department of which it is part.

2. Clarity. An effective mandate is one that clarifies why the unit exists, what its domain (or, to use a legal term, jurisdiction) is, and its authority or decision rights.

To evaluate the degree of clarity, you can ask employees how easy or difficult it is to set goals and determine which actions they should pursue to reach the goals.

Another method (suggested by Julian Birkinshaw of LBS) is to ask several people to describe the mandate and check whether they have the same interpretation.

3. Coherence. The three elements of the mandate (purpose, domain, authority) need to reinforce each other.

As an example, a few years ago, I wrote a case study about a market development team of a large food production company.

The team’s mandate was to define tools and frameworks for brand managers related to business development, portfolio management, and innovation.

The team was also supposed to ensure that brand managers actually made use of these tools and frameworks (in order to ensure consistency across different brands).

But this turned out to be an impossible task. The team was placed at the same hierarchical level as the brand managers and had no formal authority to ensure compliance.

In other words, the team had an incoherent mandate. The authority it had been delegated was not commensurate with one of the key functions it was supposed to perform.

4. Focus. How broad or narrow should the mandate be? You can err in both directions.

If it is too narrow, it reduces the autonomy of the team. The team will not be responsible for a complete deliverable (e.g., a product, module, or feature) but only provide inputs to others.

But if the mandate is very broad, it may include so many goals and activities that some of them are likely to conflict with each other (making it impossible to attain all of the goals).

The marketing team that I described above faced this challenge as well.

On the one hand, it was supposed to ensure compliance with company guidelines to standardize the marketing processes. But it was also supposed to provide support based on requests from the brand managers.

These are two roles that can be hard to combine.

5. Horizontal alignment. It is not enough that a team mandate is aligned with the mandate of units at higher levels of the organization; it also needs to be aligned with the mandates of other units at the same level.

One thing you can do is to interview people in different units and ask them to describe their respective roles and the interfaces toward other units. For example, do they consider themselves as internal clients our suppliers to the other units?

The idea is that the unit mandates need to be complementary to each other (as opposed to conflicting) and that people need to understand both their own mandate and those of other units that they interact with.

* * *

This was a summary of the key points in the article that we are writing. Let me know if you have any comments or questions!

Related post:

Why you need a focused mandate

One more time: How do you simplify your organization?

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