The importance of organizational diagnostics

Before we can design a more effective organization, we have to understand the current one.

We have to understand how it works, and identify the causes of problems. In other words, we have to come up with a “diagnosis” of the organization.

It’s a critical part of any re-design effort. Yet it is frequently underestimated.

I have been thinking it’s a challenge that affects several areas in life.

Let’s focus on health care and medical treatment for a moment.

Most people who need to undergo a medical procedure of some sort will worry about the chances of it going wrong. In most countries, doctors are required by law to inform patients about the risks of various treatments. Similarly, many patients will ask their doctors about side effects of drugs that they are taking (or hopefully, be told without asking).

Yet, one thing is the risk associated with the medical procedure it itself, or the drug, but is it actually the one that is needed given the medical problem the patient is suffering from? Could it be the right procedure, for the wrong medical condition?

It could. It turns out that the probability of misdiagnosis (including missed diagnosis of a disease) is far higher in most studies than the chance of surgical or medication errors. In the studies I have seen, there might be a 1 in 100 (or less) chance of adverse effects of a standard surgical operation. The probability of misdiagnosis is more like 1 in 10 – that is, 10 times higher.

Now think about that for a moment. In medicine, one has a wide range of standard measures and well established, objective indicators (blood pressure, heart rate, infection indicators, etc.). One also has a set of well established interventions for the most commonly known medical problems.

What do you think the chances are of forming the right diagnosis during an organizational change process?

Unlike in medicine, there are generally no standard indicators that everybody can agree on. There is no study that says that once customer satisfaction tips below 62,5%, you have a problem, and need to inject a satisfaction-raising organizational serum.

So we are probably much worse than doctors and the probability is then below 90 percent. Maybe 50%? In any case, I think it is likely that a lot of energy is spent fixing the wrong problem. Or, put differently, that we could save an enormous amount of time and money if we improved our ability to carry out organizational diagnoses in a better way.

What could we do, specifically?

The key thing is to focus time and attention on it. We need to have a process in place to find out what the problem really is.

The fact that we don’t have standardized indicators like in medicine doesn’t mean that we don’t have data. In fact, there’s lots of data. The first thing we should do is use the data we already have – for example, in customer and employee surveys.

Then we should supplement that with data that can tell us more about the current organizational design, and how well it is aligned with our strategic goals and our business processes.

Collecting and intepreting organizational data requires a particular “investigative” attitude. Just like medical doctors, there’s a risk of just confirming our initial guess regarding the cause of a problem. We need to be aware that we may make errors. We need to remind ourselves that the first solution we come up with probably is wrong.

There are those who say, come on, we don’t have the time for this, we need to make a decision and start implementing now. I have addressed this challenge in previous blog posts.

Unlike in medicine, there is not an “organizational doctor” that makes the diagnosis. It’s a social process. You gradually create a consensus about the problem and about possible solutions. By spending time in this phase, by being systematic, and by involving people you not only increase the chances of a correct diagnosis but also lay the foundation for acceptance – and for rapid implementation of the chosen solution.

P.S. By the way, if you consider using external consultants in an organization re-design process, I would suggest that you try to evaluate their ability in this area before hiring them. I have observed that even experienced consultants do not necessarily display very sophisticated “diagnostic” skills. I think you will get a sense of this by asking how they typically proceed in a project, the kinds of questions they ask during interviews with managers, and so on. And above all, steer away from the ones who believe there is only one possible cure, regardless of affliction.

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