Explainers

What is Organizational Design?

Successful products put the user at the center of their form and functionality in order to become beloved and irreplaceable. Successful businesses thoughtfully design customers’ experiences in order to exceed expectations and ensure customers will buy the service again. Successful employers thoughtfully design employees’ experiences in order to exceed expectations and ensure employees will devote their lives, day in and day out, to serving their customers.

At NOBL, we help ambitious leaders accelerate change through organizational design. As leaders in this discipline, we’ve decided to share our perspectives and tools with the hope to educate others and contribute to the growing body of open-source knowledge. This essay is a group effort from our teams around the globe. We hope you like it.

PART ONE: INTRODUCTION

When you put the user at the center of a product design process, it’s called design thinking.

When you apply design thinking to the shared experiences of customers and employees, it’s called service design.

When you apply design thinking to the way companies behave and change, it’s called organizational design (org design for short).

Org design is the next frontier of design thinking, and according to Deloitte, it’s an important concern for more than 90% of senior leaders. But like design thinking when it was introduced, few leaders have experienced org design first-hand or have training in how it works successfully.

But all of us know when work hasn’t been consciously designed.

  • In large companies, many of us feel stifled. Bureaucracy stands in our way of moving work forward. We’ve lost touch with our customers and the impacts of our actions. We’re tasked with responding to a faster world by working longer and harder, not smarter. We crave some semblance of work/life balance, but rarely find a calm moment to even discuss it. Work feels like a treadmill from which we can’t escape.

  • In rapidly scaling startups, many of us feel lost and overwhelmed. We know that what got us here won’t be what gets us to the next horizon, but we’re unsure what steps to take. What processes should be more defined, which should remain flexible? Will catered meals and ball pits be enough to retain our best colleagues? How do we hire and onboard the next onslaught of new employees, and who will do it? Work feels like a frenzy of uncertain choices, none of which we feel we can afford to flub.

In both large and scaling companies, without organizational design, we measure the wrong things and then the wrong things become our priorities. We amass bureaucracies. We create busy-work. We lose our best people, and suppress the collective potential of the people who remain. Our tools shape us, rather than the other way around. Our products become more of a reflection of our org chart than our user’s needs. We lose the cultures we worked so hard to cultivate, and eventually we lose outright to our competitors.

Let’s be clear, though: you as a leader are not to blame for these conditions. These conditions are the product of a world where technology can scale exponentially, but people cannot. The latter half of the 20th century birthed the first companies large enough and wealthy enough to rival nations, and the 21st century has given rise to companies that scale to that size and power within a matter of years. Humans have simply never had to coordinate and collaborate at this scale or at this speed. No aspect of our lives is immune: we’re struggling with it in our organizations, governments, cities, and cultures.

The challenges we face at work were germinating long before you became a leader, and will continue to accelerate long after you retire. So no, you aren’t responsible for these conditions. But as a leader, you are responsible for taking action in response to these conditions.

The first thing you must do is educate yourself. Organizational design offers a set of perspectives and tools to help you see your organization with fresh eyes and to help you make meaningful, lasting changes to it. This article serves as a comprehensive introduction to the discipline and a peek into our toolset.

PART TWO: DEFINING ORGANIZATIONAL DESIGN

Organizational Design is a human-centered approach to improving how people work together and how companies respond to change.

Organizational design borrows from the design thinking toolkit, chiefly: empathy, systems thinking, co-creation, and experimentation. Through iterative design cycles, organizational designers work with teams, in their native environment, to identify opportunities for improvement and test the fit of potential new ways of working.

What does this actually look like in practice? At NOBL, our outcome is always the same: high-performing firms and enriching cultures. But the format and output of our work varies during the course of a single engagement:

  • COACHING: Leadership and team coaching, change management coaching, often conducted in-person embedded with the team

  • RESEARCH: Sprints into competitive and comparative organizations (structures, budgets, processes, etc.) and assessing the existing conditions of a team or organization (often conducted, too, while onsite)

  • FACILITATION: Team offsites and workshops, critical for developing cross-team collaboration and strengthening social bonds

  • TRAINING: Targeted courses to address critical teaming skill gaps (e.g. cultures of continuous learning, adaptive leadership, prioritization, strategic time management, etc.)

At NOBL, these organizational design activities are conducted by teams of people with diverse backgrounds. Some of us are trained organizational psychologists and change management professionals. Others of us arrived at organizational design by leading design thinking or service design practices. A few of us are recovering management consultants. We are stronger for the collisions between our differing experiences, perspectives, and tools. We believe that this discipline can only grow more effective as people from more diverse fields participate.

PART THREE: PRINCIPLES OF ORGANIZATIONAL DESIGN

Because organizational design by its nature can affect large swaths of people with just a single change, we believe that this work must be done with care, compassion, moral intent, and wisdom. Organizations are not your petri dishes. Organizations are groups of human beings trying to be something greater than themselves and trying to achieve something that would be impossible for any individual alone. At NOBL, we’ve developed the following organizational design principles to encode what we’ve learned from our years of practice and to remind ourselves of the gravity of what we do every day:

  1. Serve. An organization’s highest priority is to serve its customers and communities.

  2. Anticipate change. An organization should be at least as dynamic as its environment. Changes to the organization should be expected and welcomed, so long as the changes are made in service of customers and communities.

  3. Surrender the past. Honor what’s come before and help individuals grieve the losses that accompany change. Then, move forward together.

  4. Chase fit, not fads. Success is an organization well-calibrated to its environment and out-delivering on its customers’ needs. Agile isn’t always the answer and six-sigma isn’t always the problem. Context is king.

  5. Do no harm. Value small, “safe-to-fail” changes you can learn from quickly over a single, slow, sweeping, and risky change. From the small changes, spread and expand on what works. Learn from what doesn’t.

  6. Design by doing. Organizations are complex adaptive systems, meaning you can’t understand how they behave or respond to change until you introduce changes. Diagramming in PowerPoint is not organizational design, it’s organizational fiction.

  7. Play your zone. Focus others to first change the things in their control. Move on to the things they can influence. As you succeed together, you’ll expand both zones.

  8. Advocate for the individual. Organizational change is merely individual behavior change on a mass scale. Individuals need the capability, motivation, and provocation to change. Train new skills. Design better rewards. Stage inspiring interventions.

  9. Delay drawing boxes. Don’t start with org charts or titles. If you focus on purpose and strategies, structures will emerge organically.

  10. Keep work simple. There are two kinds of organizational complexity: the complexity natural to delivering what customers need, and the added complexity of bureaucracies and personal egos. Kill the latter whenever it arises.

  11. Make change a habit. Every team needs a recurring time and space to reflect on how to become more effective. Remember that when you document the implicit parts of teaming (norms, policies, roles, strategies, habits, procedures, and processes) you make them easier to reflect on and change.

Download our Organizational Design Principles (PDF)

PART FOUR: THE ORGANIZATIONAL DESIGN PROCESS

Traditionally, an organization will hire management consultants to tell them what to do, and then hire a change management firm to plan and oversee those changes. Our organizational design process combines both fields into a single, modern process that creates rapid, viral change. For most clients, our process can be completed in just 100 days.

Our Tool: Organizational Design Sprint Process (PNG), how we accelerate organizational change and performance

Our organizational design sprint process, in five steps:

  1. Prep: We ready the launch of the program by defining an initial set of change initiatives

  2. Align: We align leaders around the changes to come, brief affected teams, and kickoff change initiatives

  3. Prototype: We develop and launch minimum viable change experiments

  4. Trial: We successfully capture opportunities and realize our change goals by testing and refining the change prototypes

  5. Adopt: We ensure 100% adoption of the successful change programs

Our process is unique and produces unique results because:

  1. We embed onsite with our clients. This ensures we learn directly from their teams, absorb their culture, and are immediately available to troubleshoot any barriers or blockers.

  2. We co-create change. We involve our client’s teams in the design process starting on day one. They help us uncover insights, prototype new ways of working, and then they take the lead on testing and refining those changes.

  3. We make change simple. Our researchers scour the globe for new ways of working sourced from the highest-performing teams, but we distill those practices into minimum viable prototypes that make it easy to try and then tailor to our clients’ needs.

  4. We create lasting cultural moments. To make the need for change feel both inspiring and inevitable, we take teams offsite twice in our process to create distinct cultural events. At our Align event, we ensure leaders are aligned around the priorities for change. At our Adopt event, we ensure those same leaders are fully bought in to the changes their teams have designed and tested. These offsites are designed to be emotional and memorable for our attendees.

  5. We make change spread. As our prototypes in change begin to gain traction in one area of the organization, we introduce them to teams in other areas. Because we’ve involved their colleagues in the design and implementation of these changes, new teams are more apt to accept these prototypes. One small change quickly becomes a viral phenomenon inside the organization.

What do we mean by prototypes in new ways of working? When we work with clients, we tackle their challenges by developing lightweight tools and new ways of working they can try and refine to suit their needs. A few examples include:

  • When a client found their departments no longer working well together, causing project delays and in-fighting, we developed a cross-functional team structure, a process for forming those teams, and a set of habits and rituals for the team to follow. Those instructions for the team fit on just two printed pages and allowed the program to get off the ground quickly and prove immediate results. Over time, the team has refined our initial approach to suit their evolving needs.

  • When a client in a rapidly scaling startup realized that group decision-making was slowing them down, causing them to miss opportunities, we developed a simple decision tree (and eventually a Slackbot) for their teams to use to find the right decision-making model for each situation they encountered. This tool has evolved into a speedy governance process which includes fast decision-making sessions.

  • For a client with non-stop, high-stakes projects, we helped them avoid constant fire drills by helping them develop a simple checklist to gauge 1) if the issue was truly serious, 2) who the right people to contact were, 3) who not to bother, and 4) how to ensure open lines of communication during the fire drill. The department went from having a weekly widespread crisis to nearly none at all.

  • When an established client found themselves being outpaced by upstarts, we developed a lightweight innovation pipeline structure and hired expert trainers in design thinking and physical prototyping. After training, our clients uncovered millions of dollars in new opportunities just by visiting a local store with paper prototypes. This team went on to launch new innovative services and grab tech headlines for their brand.

PART FIVE: PREPARING INDIVIDUALS FOR CHANGE

By now, it should be obvious that change is the natural outcome of the organizational design process. But individuals are often resistant to change, especially at work. After all, change threatens the loss of their time, pride, control, familiarity, competence, and narrative.

To help the people we work with overcome their resistance to change and avoid change fatigue:

  • We help leaders craft an inspiring vision for change. People won’t embrace change if they don’t like where it will get them. We work with leaders to fully articulate a compelling vision which includes: why, why now, what it will look like when its successful, what questions remain unanswered, and what parts others are called to play in the process.

  • We prepare teams for the emotional journey to come. Our organizational psychologists walk our clients through the possible emotions they may feel in response to the change process. We build their self-awareness for change resistance by helping them understand what’s to come, and by giving them language to express those feelings.

  • We help leaders unlock fast wins. When change moves quickly from talk to action, cynics turn into champions. We look for easy ways to build momentum so that their staff gains energy as they move the work forward.

  • We help teams reduce unnecessary work and unproductive meetings. Change takes time—time which has to be taken away from another activity or priority. One of the first things we do with leaders is review their processes and meeting habits with the goal of finding 10-20% more time back. We then spread those changes down to more teams.

  • We share control over the design process. Our process is highly collaborative and at times, client-led, so that the people we work with feel a greater sense of ownership in the process. If they want to slow down or take a short break, they have the power to do so.

PART SIX: THE STAGES OF ORGANIZATIONAL DESIGN NEEDS

As organizations scale, the specific help they need changes. Needs can be driven by funding, customer acquisition, the rate of new hires, employee engagement, the age of the company, team performance, an acquisition/IPO, or even by the founder’s well-being (or lack thereof). At NOBL, we obsessively study what organizations should be paying attention to at each stage of their growth. While there is a great deal of fuzziness between these stages, and no two companies follow the same growth trajectory, our model is meant to serve as both a checklist and conscious reminder that every stage of growth triggers new priorities and requires a renewed focus.

Based on our experience and research, as organizations scale their strategic focus may evolve in this order:

  1. Conflict and diversity: While searching for the right idea and execution, proto-organizations should embrace healthy conflict and diverse perspectives.

  2. Unity of command: To present the case for a business as a coherent idea, fledgling organizations need coherent and effective leadership structures.

  3. Formal planning: As product market fit locks in and rapid growth begins, organizations can finally begin developing medium-term plans.

  4. Formal structures: For sustainable growth, organizations need structures that deliver upon their strategy and work well together.

  5. Leadership refresh: Passions may need to be renewed and conditions may require new strengths and perspectives.

  6. Re-risking: Defending a captured market position and developing new opportunities requires all forms of innovation.

Depicted in our model, the engagement ranges in blue are an amalgamation of CultureAmp and Gallup data. The founder’s emotional journey and team performance lines are the average of the many conversations and workshops we’ve had with our clients. Social complexity is charted as the rate of new relationships generated by each new hire. Survival rate is based on data from Crunchbase, Radicle Labs, and Fortune. The examples shown at the bottom represent a small fraction of our research database of startup case studies.

Our Tool: Organizational Design Stages, a model for growth and organizational design (PDF)

PART SEVEN: CONCLUSION

Successful products put the user at the center of their form and functionality in order to become beloved and irreplaceable.

Successful businesses thoughtfully design customers’ experiences in order to exceed expectations and ensure customers will buy the service again.

Successful employers thoughtfully design employees’ experiences in order to exceed expectations and ensure employees will DEVOTE THEIR LIVES, day in and day out, to serving their customers.

Organizational design isn’t a nice to have, it’s mandatory in a world of exponential scale. In this world, organizations continually drift toward the edge of chaos as they interact with their environment. Leaders aren’t responsible for that chaos, but they are responsible for steering in response; both through their own actions and by empowering those closest to the customer.

Organizational design can help you see your environment with fresh eyes. It can rally your people behind a purpose that genuinely inspires them. It can unlock new strategic opportunities. It can make structures more clear and less political. It can simplify systems and knit together the organization under one unified culture.

If the world of work were more thoughtfully designed, perhaps the majority of workers wouldn’t be disengaged. If more leaders understood org design, maybe fifty-percent of employees wouldn’t quit because of their manager. Just maybe we could give back the 30% of time that employees say isn’t used productively. Maybe we could erase the lack of diversity in our firms and instill a greater sense of belonging among our teams. Maybe we could save more world-changing companies and technologies from being scaled to death.

The first step is to learn. The next step is to listen to those around you. Then, together, make thoughtful changes and learn from where they take you.

Published October 14, 2018