• Power or Organization Design
• Power of Strategic Alignment
• Power of Collaboration

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Tracy will be speaking on the topic of errors in organization redesign:

"When Reorganization Go South: An Interactive Case Study of Two Organizations."

The Fielding Graduate Institute
January 15, 2004
www.fielding.edu
South Bay Organization Development Network
February 2, 2004.
www.sbodn.com
 

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MULTI-FACETED CHALLENGES OF REDESIGN

When facilitating an organizational redesign project, we often use the Galbraith/Lawler Star Model in which the five interconnected points of the star are labeled: People, Strategy, Structure, Processes, Rewards. This internally interrelated model demonstrates very clearly that before you tweak one point on the organizational star you must calculate what the impact will be on each of the other four points. Fail to do this and you risk creating undesired or unanticipated outcomes along with the one you originally intended.

Three Legs of Good Organizational Redesign

In addition to the Star Model, I rely on my own Three Legged Stool model. A stool must have three sturdy legs if you are to sit without falling. In the same way, a good organization design initiative rests on three equally important legs that I have labeled Diagnosis, Design, and Implementation. These legs correspond to the three fundamental process steps in design work. When all three legs are solid the organization sits squarely and functions optimally during the redesign process, during the implementation, and when the new organization is in place. However, too often one leg gets ignored or mishandled. If you have ever tried to sit on a stool that has a broken leg, you know the result is disaster.

Leg One - Diagnosis

In the Diagnosis leg of redesign, the first source of error can usually be traced to what I call the "Universal Diagnosis" inevitably leading to the "Universal Solution," from the "one cure for every condition" school of problem solving. While a company may recognize it has a problem, it often fails to understand that problem's magnitude and complexity. With the focus on fixing the immediate situation there's no time or effort spent on understanding the specific needs, issues and problems that must be solved.

In other words, management fails to look systemically at the entire organization. They either don't understand or feel they don't need to examine the variety of conditions and factors that are contributing to the presenting problem. Often, neither do they look at the cultural issues that will arise from any restructuring. Instead, the most common universal solution is "Reorganize!" Too often this means nothing more than "let's move around the reporting relationships," or "let's rearrange the way in which the various resources are held in relationship to each other." Focusing only on the Structure point of the star, to the exclusion of other factors, is a rather dramatic oversimplification of what the problem really is, as well as what it is going to take to fix it. Even assuming the diagnosis is valid, management doesn't necessarily understand how to design a system in which all the pieces will plug-and-play together in new ways that will address the issue.

The importance of thinking systemically is especially important with regard to the repercussions that will be felt in the corporate culture. Unfortunately, too many times that critical element simply gets dismissed, overlooked or somehow pushed into the background. Organization Design changes that are at odds with the culture--or vice versa--lead to further complications and increased dysfunctionality.

Leg Two - Design

In our experience the design criteria are often lacking or unclear. When we ask a client to describe the reorganization or redesign they have undertaken, it's not unusual to find that they can neither document nor articulate the desired outcomes that, ideally, would have been the basis of the changes. Instead, they err by oversimplification, thinking that reorganization or restructuring is the same as a redesign. Without thorough pre-planning, they find they have created more problems than they solved, and then they call us in to bring clarity to the confusion.

It's also common to find that the redesign team (if there was one) has neglected to identify secondary or undesired outcomes of the reorganization process. Going back to the Star Model, if, for example, you initiate a change in the People space, it's going to affect, positively or negatively, the Strategy, Structure, Processes, and Rewards. It's essential to consider not just the hoped-for, best-case outcomes, but also to recognize and prepare for less advantageous results.

Sometimes we find companies have tried to solve the presenting problem by overlaying some kind of ineffective organizational matrix instead of building integrative structures and processes. Another common error is designing a new organization that can't be populated with the same people who were working in the previous version. It's very unusual to clean house, terminate everyone working in an organization, and restaff it from scratch with new folks.

Occasionally we do hear stories about companies that ask people to reapply for new jobs in the new organization. The classic case was Levi-Strauss. In the early 1990s they brought in a redesign team culled from their offices all over the world, collocated them for an extended time on one floor of the Levi-Strauss San Francisco office building, and had them work on organization redesign. As a part of the process, employees were required to apply for new positions in the redesigned organization.

Granted, that case is probably the extreme. The more likely scenario is that little or no consideration has been given to how the required capabilities or core competencies of the organization might have changed as a result of the redesign--or how changes in capabilities may have been a driver of the need for change in the first place. When you take the same people and the same culture and the same reward and simply overlay it with a new structure, not very much is going to change. If you end up with people in jobs that they aren't equipped to do, the new structure is likely to collapse under its own weight.

In short, many design errors can be traced back to an incomplete design produced by people inexperienced in designing organizations and who are moving too fast and skipping essential steps.

Third Leg - Implementation

Today's tendency is to want everything in half the time it should take, which ties into the business truism, "There's never time to do it right, but there's always time to do it over."

 Many managers are unwilling to make available the necessary time for one of their people to be a member of a redesign team that will do a thorough job. The prevailing thought seems to be that everything can be accomplished with a week of intensive work. The attitude we commonly encounter is: "What could be so hard about this?"

Internally, most organizations are highly interdependent which means you must pay particular attention to what it's going to take for the discrete pieces of the organization to cross the new boundaries and work collaboratively. If you take people who have been working more or less well under one umbrella and suddenly move them into a new structure, e.g. separating them into two sides of a matrix, I guarantee you will have problems at the intersection despite past history.

Our clients learn that what they look at as "a simple redesign" is actually a form of organization change work. We teach the teams what it means to go through a major organizational change. This means a comprehensive or sustained implementation of the redesign--unlike one company that mishandled a major reorganization by doing nothing more than sending out an email announcing that the changes were now in effect. That definitely is not how you get people to be willing or able to do things differently.

When you want someone to change their relationships with their coworkers, you have to help them figure out the "meaning making" equation. If they're not helped to do that in a way that brings them understanding, alignment, and enrollment in what the organization has in mind, they'll create their own meaning. The more diverse all those different meaning-making processes are, the higher the risk that folks aren't going to be able to work together effectively down the road.

Poor implementation strategy is another source of design error. But even when the implementation plan has been carefully thought through, it's going to be another major source of error if the company isn't willing to ensure the implementation process is systematically executed and sustained until they get the desired results.

Implementation doesn't happen by magic. You really have to pay attention, because it's about good organizational change methodology and thinking systemically. As we tell our clients, "It's easier to get the norms set the way you want them in the first place than it is to have to change them later." Good implementation is about trying to do it right the first time.

Benefits of a Good Organizational Redesign

Often the symptoms to which people over-react are just disguises for the core issues. Not everything is a design problem (or more specifically, a structural problem), even though many people want to think it is. Although everybody wants the solution to materialize quicker and faster, a valid and effective reorganization doesn't happen if you try to accelerate beyond a certain point.

It's also essential to incorporate both flexibility and stability into the process. Flexibility is vital because things change quickly and you need to be responsive to those changes rather than being tied to inflexible mandates and ways of working. You walk a fine line because while you need to be flexible, without sufficient stability it's difficult to maintain the necessary focus and sustain the energy long enough to produce the desired outcomes.

There are measurable benefits in taking the time, effort, and commitment of people and resources needed to result in a good organizational redesign. When properly planned and implemented, the redesign is an enabler, putting in place the necessary form, function, and integrative processes.

As we've shown, there are five points on the star and three legs on the stool. Even if you design the five points on the star to work together harmoniously, if you can't also maintain all three legs on the stool, the redesign is going to falter or fail.
 

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RESOURCES:

An introduction to and overview of Organization Design theory and methods can be found on the CoastWise Consulting website:
http://www.coastwiseconsulting.com/solutions_organization.htm

There is also a three-part series on this topic in the Resources section:

What is Organization Design and Why It's A Necessary Competence for Senior Managers?
http://www.coastwiseconsulting.com/article_06.htm
Structure and Process
http://www.coastwiseconsulting.com/article_07.htm
People and Rewards--The Glue That Holds it Together
http://www.coastwiseconsulting.com/article_08.htm
 

A critical part of Organization Design and key to avoiding errors lies in understanding and applying Systems Theory. Here are several useful resources on this topic:

Pegasus Communications (www.pegasuscom.com) offers one of the most comprehensive collections of resources on this topic. They offer an annual conference, a newsletter, publications, and audio and video materials. You can download their catalogue at http://www.pegasuscom.com/catalog.html. A good place to start on their site is with their brief overview of systems thinking: http://www.pegasuscom.com/aboutst.html.

Weinberg, G.M. (2001). An Introduction to General Systems Thinking. New York: Dorset House Publishing. 
 

Originally published under the title General System Theory: Foundations, Development, Applications and written by Ludwig von Bertalanffy, this classic is one of the original sources on systems theory. It's the first book I read on the topic as a graduate student studying human and organization systems. Weinberg, himself a well-published author on systems thinking, software management, and consulting, has updated the original.
 

Richmond, B. (2000). The "Thinking" in Systems Thinking: Seven Essential Skills. Waltham, MA: Pegasus Communications 
 

This newest volume in Pegasus' Toolbox Reprint Series demystifies the "thinking" in systems thinking. It includes an overview of the seven skills necessary to become a true systems thinker and an in-depth look at each individual skill. The seven thinking skills--dynamic, system-as-cause, forest, operational, closed-loop, quantitative, and scientific--are also mapped onto the four-step process that underpins the systems thinking method, so you know when to best employ each skill.
 

Anderson, V. & Johnson, L. (1997). Systems Thinking Basics: From Concepts to Causal Loops. Waltham, MA: Pegasus Communications. 
 

"Systems Thinking Basics is a self-study, skill-building resource designed to introduce you to the power of systems thinking tools. With an emphasis on behavior over time graphs and causal loop diagrams, this workbook guides you step by step through recognizing systems and understanding the importance of systems thinking, interpreting and creating behavior over time graphs and causal loop diagrams, and applying and practicing systems thinking day-to-day."

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