We observe a growing appetite for organization design today among smart business leaders. Here are a few thoughts and observations why.
Every business we work with is trying to execute a more complex strategy than they have had to in the past. More powerful customers, the need to pursue emerging markets, changing demographics, new competitors all require a multi-dimensional organization. Technology has increased the pace of business – communication, product development cycle times, customer expectations. Companies need to be able to make sound decisions faster, but with more perspectives involved.
The result is an appreciation that a well-designed organization is essential to create clear interfaces and decision-rights and ensure that the critical conversations take place. Since organization design is about power allocation, leaders are more attuned to the need for the right balance among axes in the structure – function, geography, product, customer – and competing objectives such as cost, speed, quality, and innovation.
Leaders only have three levers to pull – strategy, organization design, and talent on the top team. Strategy and talent have gotten a lot of attention over the past decade. Academics and consultants have developed sophisticated and well tested models in both arenas. But leaders find that unaligned organizations can undermine good strategies and competent people can’t do their best work when the organization is an obstacle to the right conversations. With the development of frameworks, models, and process in the field of organization design, leaders are seeing that there is an art and science that can be applied to this third, neglected lever.
In many ways, this is the last type of competitive advantage to be exploited. Leaders who can design and manage complex, yet effective, organizations can execute complex strategies better than their competition.