A Beginner’s Guide to Org Design

The 9 words we encounter the most

At The Ready we focus on organization design and the Future of Work. It’s a lens on management consulting that helps organizations, teams, and individuals think and act differently in the 21st century.

Being on the cutting edge makes us part of a community of hardcore enthusiasts who share similar ideas, technologies, and terms. A shared vocabulary is great — but it can also be a frustrating barrier of entry for the uninitiated.

As my awareness and knowledge of this work grew I kept encountering new words, terms and quandaries — some directed at me, some I overheard, and some I stumbled across on my own. To help bring people up to speed on the various words and concepts we use in doing this type of work I’ve created a living list of the key terms needed to understand what is going on.

I will be updating this list over time as I gather feedback and come across more lingo that needs explaining.

1. Agile Squads

Definition: A way to organize people with different skill sets and functions around one product or problem.

Real Meaning: Teams that are self-contained, autonomous, and intensely focused on the customer. Agile squads have everything they need to accomplish their purpose within the team itself which allows them to work quickly and as autonomously as possible.

From Spotify.

Example: Spotify takes the Agile Squad model a couple steps further by introducing the concepts of Chapters, Guilds, and Tribes.

A small group of people (7–10) organize around a specific product or problem. They become the Squad. A Tribe is a collection of Squads that are organized around a specific mission. Usually they are designed to have less than 150 members. Chapters are comprised of functional experts across Squads (for example, there could be a Chapter of Designers or a Chapter of Engineers). This allows a structure for experts in one discipline to come together, share lessons, and offer support to each other. Guilds, on the other hand, are simply an overall topic that is open to anyone to join. People self select into the Guilds that interest them. New projects, initiatives, and products often emerge from the discussions that happen within the Guilds.

Spotify has done much of the public development of these ideas and the original articles can be found here.

2. Complex Adaptive Systems

Definition: “A complex adaptive system is a “complex macroscopic collection” of relatively “similar and partially connected micro-structures” formed in order to adapt to the changing environment and increase its survivability as a macro-structure”. — via Wikipedia

Real Meaning: A complex adaptive system is in a state of perpetual evolution where local events and interactions among “agents” of the system — be it ants, trees or people, can happen randomly and unexpectedly. These interaction eventually reshape the properties of the entire system in new ways. Unlike a complicated system where there may be many intricate parts (where the cause and effect relationships between all of them are knowable) a complex system is one that cannot be predicted with certainty because of the sheer number and randomness of the interactions.

Example: Traffic is classic case of a complex system in action. You can’t control the specific outcomes nor do you know what’s going to happen next. Small variations, like a vehicle inexplicably slowing down, can cause a long traffic jam that was not predictable.

Organizations, particularly large ones, are also good examples of complex adaptive systems. Huge organizations with thousands of people who are all interacting with each other, with customers, and with the environment cannot be treated like complicated machines simply waiting for the correct levers to be pulled. Large organizations nowadays function more like traffic or the weather where only basic predictions can be made about what will happen given a specific action.

Leaders in extremely large organizations who understand their organizations to be complex adaptive systems are much less interested in the micromanagement of employees and much more interested in how organizational culture drives behavior, in having an experimental mindset, and treating the organization like a network rather than a single entity. Certainty and complex adaptive systems do not mix.

3. Future Of Work

Definition: The primary buzzword for describing some future (hopefully better) state of work.

Real Meaning: A 21st century movement to create workplaces that accommodate for exponential technologies, more complexity, and our individual humanity. The future of work generally shuns top-down decision making, traditional managerial hierarchy, and humanity-draining ways of working.

It’s a mindset that encompasses many different ideas but often features concepts like freedom and flexibility on how and where you work, self-management, autonomy, and basically every other concept or term that is included in this list.

Example: Everything we’ve written about in this article (and add to it in the future) is related to the Future of Work. For starters, the Future of Work definitely DOESN’T look like anything this:

4. Holacracy

Definition: An organizational system developed by Brian Robertson and his company, HolacracyOne. It is a paradigmatically different way to conceptualize how an organization should be structured such that power no longer resides in a CEO but in a written constitution.

Real Meaning: Holacracy is a series of ideas, practices, and rules that an organization can adopt to work in a less hierarchical and traditional manner. Some of its key ideas include:

  1. Work should be broken into specific “roles” instead of general job descriptions. Each role has a specific purpose, domain(s), and accountabilities. Individuals can hold multiple roles.
  2. Organizational policies and roles should be created and edited by the teams they affect.
  3. Problems and potential opportunities should be channeled through a specific process (Governance Meeting) that improves the organization. Anyone can bring a tension to be resolved to a Governance Meeting.
  4. Teams are created by grouping roles that are all working together toward a larger overall purpose. The organization consists of a series of these nested teams (or Circles).
  5. Each individual and team is self-managing. Teams have a specific role called a Lead Link that has some accountabilities similar to a traditional manager, but they have much less ability to tell people what to do.

There are many more rules and concepts that comprise Holacracy. Check out HolacracyOne’s website for more information about the system.

Example: The animation below is a cool example of how an actual organization evolved over time by using the principles of Holacracy. As the demands and needs of the organization changed over time its structure changed as well:

You can read more about this system here.

5. Mission Based Teams

Definition: Mission based teams (MBT) are an elite group of committed individuals from across the entire organization, coming together to unlock strategic, urgent, or complex challenges and opportunities.

Real Meaning: A Mission Based Team is self-managing and motivated by the use of growth and their collective skills in pursuit of an organization’s vision. MBT operate according to a team charter under the guidance of and Advisory Board that helps them to navigate iteratively, creatively, innovatively, and quickly toward their mission.

Example: All MBTs forms, fly, and fold according to a team charter that includes the following five components:

When an MBT has achieved its mission OR found through iteration that the work is no longer relevant or valid, the MBT will be unwound and its learnings shared with the organization via a retrospective.

6. Self-Organization (Self-Org)

Definition: Self-organization is a description of a series of actions that influence a system without being restricted or controlled by the decisions of an encompassing system.

Real Meaning: Self-organizing companies do not have traditional organizational charts or managerial hierarchies. Instead, all members and teams self-manage. Self-organizing companies use specific practices and habits to encourage specific behavior instead of managers (for example, the Governance Meeting in Holacracy is one process for channeling tensions into productive changes in the organization without relying on managers to drive that process).

Example: Two of the most well-known companies doing interesting things with self-management are Morning Star and VALVE. Morning Star, a tomato processing company, is completely self-organizing. Employees set their own compensation, purchase their own equipment, and manage all the staffing needs of the organization. They’ve even started something called the Self-Management Institute to spread self-organizing principles to other interested people (read more here).

VALVE, a video game company, is also well-known for its self-organizing practices. Employees workstations are all mounted on wheels so that they can “vote with their feet” in terms of deciding what to work on. Decisions about which new projects and products to undertake are not made by managers. Instead, anybody can propose a new project or product and its success is largely determined by whether other people at the company want to work on it. VALVE’s employee handbook is a fascinating glimpse into what working at a self-organizing company is like.

7. Teal Organization

Definition: “Teal organizations focus on its members’ abilities to self-organize and self-manage to achieve the purpose of the organization. The hierarchical “plan and control” structure typical of Orange Organizations is replaced with a self-organizing structure consisting of small worker teams that assume all the traditional management functions as well. Positions and job descriptions are replaced with roles, where one worker can fill multiple roles. Unlike the fixed structures of Amber, Orange and Green organizations, the organizational structure in Teal is fluid, changing and adapting as circumstances demand to achieve the organization’s purpose.” — from the Reinventing Organizations Wiki

Real Meaning: First introduced by Frederic Laloux in Reinventing Organizations, a Teal organization is the final stage of a five-part framework to name the successive stages of management evolution (RED, AMBER, ORANGE, GREEN, TEAL).

The main characteristics of a Teal organization are:

  • An emphasis on the identity and purpose of the organization as a separate entity and not as a vehicle for achieving management objectives.
  • Members of a Teal organization self-organize and self-manage to achieve the purpose of the organization.
  • Positions and job descriptions are replaced with roles, where one worker can fill multiple roles.
  • The organization structure is fluid changing and adapting as circumstances demand to achieve the organization’s purpose.

Example: Teal organizations are run by self-managing teams of 15–30 people per team (on average). Each of these teams consists of workers who each fulfill certain roles — managerial and functional. In his book, Laloux uses the following organizations as successful real life practitioners of the Teal operating model:

8. Team of Teams

Definition: From The McChrystal Group’s website, “To defeat Al Qaeda in Iraq, McChrystal and his colleagues discarded a century of conventional wisdom and remade the task force, in the midst of a grueling war, into something new: a network that combined transparent communication with decentralized decision-making authority. The walls between silos were torn down. Leaders looked at the best practices of the smallest units and found ways to extend them to thousands of people on three continents, using technology to establish a oneness that would have been impossible even a decade or two earlier. The task force became a “team of teams” — faster, flatter, more flexible — and beat back Al Qaeda.”

Real Meaning: Team of Teams is an operating model that pulls together different teams — and their members, into a seamless network of organization.

In a Team of Teams, decision-making authority is pushed out to each team leader instead of residing only with the very top leadership of an organization. The role of upper leadership changes from one focused on making every decision throughout the organization to a role of providing information and context to each team so that they are all connected to a common purpose and have the best information on which to make their own decisions.

Example: In a Team of Teams, a large number of teams can capture the traits of agility that are normally limited to small teams. See below:

Source: Team of Teams, McChrystal Group

9. Wholeness

Definition: Looking at the organization as a living system where the mind body and spirit are closely intertwined.

Real Meaning: Wholeness is commonly referred to in relation to Teal organizations and the idea of “bringing the whole self” to work. In most organizations there’s an expectation to show up in a “professional” self. People are often expected to leave emotions, intuitions and spiritual considerations aside when they come to work. As such, people get very good at keeping a part of who they are as an individual away from who they are as a professional. This can be profoundly draining and dispiriting. The idea is that in truly 21st century organizations you don’t need to protect your identity by carefully curating who you are at work vs. who you are the rest of the time. Instead, the “true you” can feel safe to exist at work.

Example: An extremely simple way to begin building more wholeness into your organization is to start all meetings with a “check-in” round. During the check-in round everyone has the opportunity to answer the question, “What has your attention?” No discussion or interruptions are allowed. Each person has a chance to speak and be heard by everyone else in the meeting. The question may be answered professionally or personally. Sharing something personal that is currently vying for your attention is completely appropriate (such as, “I had a really rough morning because my kid is sick so I’m a little drained and distracted by that.”). This simple process, when practiced regularly, allows everyone to be a little bit more “whole” at work.

Ready to change how you work? The Ready helps complex organizations move faster, make better decisions, and master the art of dynamic teaming. Contact us to find out more. While you’re at it, sign up to get our newsletter, Brave New Work Weekly, delivered to your inbox every week.

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Special thanks to Kevin Goldsmith for feedback on Spotify’s Agile Squad definition.