How might we design better organizations?
Part 1 of 2: Why it is time for improved design at the core of organizations.
A Brief Look Back
Organizations have been around for thousands of years, the largest of which grew out of the industrial revolution. As we harnessed the steam engine both to power factories and move goods around, organizations quickly found their headcount expanding. With this rapid growth and new complexity, a need for order soon emerged, and so organizational and process designs as we know them today were born.
These models made tremendous sense at the time as they led to stronger decision making and increased productivity. Organizations with proprietary information and structures for managing the flow of this information could understand what the future might hold. This predictive ability, combined with efficient processes, often created competitive moats, which for years were the hallmark of good strategy. Today, however, we live in a very different world.
Today’s Playing Field
Even for a company like Google, there is more information outside their walls than within them. The world is currently awash in data, and the Cambrian explosion that will likely come out of the development of the Internet of Things (IoT) is just beginning. This tectonic shift in information availability alone should change how we design organizations, but there is more.
In addition to information becoming ubiquitous, software has been “eating the world” as Marc Andreessen wrote in his 2011 Wall Street Journal article. Once upon a time, economies of scale were king, and long product development cycles with huge upfront costs made good business sense. Now, software-based products can be built in a garage, deployed seamlessly to mind-numbing scales and updated on the fly.
This change strikes at the core of many organizational models and challenges how to design both businesses themselves and their products. Even though there have been tremendous shifts over the years, many organizations are still using relics for their business foundation. More than ever, these relics have damaging implications if not adjusted to be more responsive.
Paralyzing Organizations with Old Ideas
These relics include, most famously, organizational hierarchies which have transitioned from two-dimensional waterfalls to three-dimensional matrixes. However, the often lamented pyramid structure remains. Process designs that previously led to efficiency are now categorized as red tape and have become an accepted reality in all but a handful of companies. Meanwhile, compounding legacy systems are creating corrosive platform debt which is turning operating models into paralyzed entanglements.
In a world that is changing as fast as ours, this is creating operating models that are no more nimble than a deer in the headlights. When change is rapidly approaching, they realize that a drastic move is required but they fail to act because of the crippling fear of missing short-term targets, shattering organizational morale, or breaking fragile technology platforms. So here lies the problem — the core components of today’s organizations are built to stand still.
Designing Products
This has harmful implications, so why is there so much resistance to designing differently? When it comes to an organization’s products, the jury returned from deliberation years ago and stated that product design must be responsive. This change in mindset led to the abandonment of linear design processes and the uptake of cycles in their place. Excellent examples of these cycles are IDEO’s Design Thinking, Google’s Design Sprint, d.school’s Methodology, and Lean Startup’s Build Measure Learn Loop.
These circular design processes are unique from their past counterparts as they never conclude. Moreover, they continually probe users, the North Star that all organizations should follow, and feed this information into new iterations or pivots. The list of winners, from using a combination of design thinking and agile development over the past decade, is staggering, so why are these methodologies still so rarely used in core organizational components?
Designing Organizations
The first reason is that unlike products, organizations contain a human element which makes them particularly messy. The second is that regularly changing products are perceived as less risky compared to a business that is frequently shape-shifting. After all, isn’t it true that an organization often has many products, but all those products only have one organization?
This perceived many-to-one relationship shifts the risk-taking approach drastically. With products, small volume experiments can occur painlessly while organizational changes always appear extensive and transformative. In reality, though, most large organizations have carved themselves into so many pieces that the relationship is many-to-many rather than many-to-one. With all of these business areas in an organization, there are often many that would love to be released from the red tape and pose little risk if things go sideways — so find your early adopters and get started!
Unleash Early Adopters in the Ranks
Similar to how product design infiltrated many organizations, find a team (or two) of early adopters in your business and experiment with new ways of working. Push the boundaries when building that team’s operating model so that the design process never truly finishes and the structure itself is responsive. Design with experimentation and testing in mind so that meaningful change originates with the users (in this case employees).
As learning comes in from pilot teams, encourage them to tell their stories to those in other areas of the organization. Allowing teams to experiment with not only how they build products but also the ways in which they organize and work will create a mosaic of new ideas. In fact, some of these mosaics are already beginning to show themselves.
Turn a Burden into an Advantage
Smaller organizations are already playing with dynamic designs like Agile Squads, Open Allocation, and Team of Teams with positive results. In larger organizations, however, few challenge the designs at the core of their business. This is a shame as their many organizational branches could become a vibrant experimentation lab for testing new designs.
After all, who will figure out that sticky human element first — the startup that gets one move at a time or the multinational that can play with many designs at once?
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