What is organisational design?

4 min read
Jul 8, 2024 4:34:38 AM

The answer to this question is that it is the way that an organisation is deliberately built to deliver its strategy and business goals and therefore leads to effective business transformation and impact if the right levers are pulled.

If you search for this term, you’ll get an array of answers, from structuring teams to deliver business goals, the creation of new roles, and key enablers such as processes and culture. We don’t disagree with any of that at Oxford, but for us, it doesn’t have to be fundamentally this disruptive to create a change in the organisation’s performance. New structures, new roles, and new processes can often stall a business in the short term and create uncertainty, leading to low effectiveness and inefficiency in the short to medium term.

What can you do to reset an organisation without starting from scratch?

To create a true transformation in the organisation, you don’t always need to ‘rip it up and start again’ with the organisational charts to change the status quo. I believe it starts with identifying the optimal ways of working around one or two key processes that have the greatest business impact, then embedding them into how people work day in and day out. And always enabled by strong and inspirational leaders who model the behaviours that will create the change in what people do and how they do it.

For us, this is a “Good Growth” approach to Organisational Design. A ‘Good Growth’ approach focuses on doing what is right for people, planet and profit.

I have heard numerous times from colleagues and clients who are frustrated that change is not happening fast enough. To quote one client recently, “ways of working are left to the teams to work it out; we lack the leadership commitment and drive” and “we lack a common language and ways of working, so there is so much duplication, waste, and inefficiency, but no one is held to account. We operate in a culture of no consequence” (source: client interview 2024).

A US client also shared their perspective on this:

"Organizational design is not just about structure. It's about aligning the organization's structure, processes, and people to achieve its strategic objectives effectively and efficiently." 

Getting the following 3 organisational design principles right can make a significant leap forward when it comes to transforming an organisation to drive business performance. These will deliver quick wins, a sense of progress, and positive momentum:

  1. Create ONE team with ONE way of working, role modelled from the top down. However, it must have room to be agile, responsive, and resilient.

  2. Help people to behave according to the optimal ways of working by taking a fundamental business process, ideally one that relies on cross-functional collaboration, then defining optimal behaviours and rolling them out in real time while working on live business challenges.

  3. Share the vision and give people the inspiration and motivation to change; inspirational leaders are a magnet to enable new behaviours, but it is also important to have the right tools, resources, or rewards in place.

So, in summary, build on and leverage what works, and don’t throw everything away in a hurry.

More on ways of working

When it comes to ways of working, there are many diverse approaches to organisational design that reflect the evolving needs and priorities of the modern workplace.

Of the many approaches, some of my favourites are to use an agile approach, to think about lean principles and holacracy. I think these really work due to their focus on keeping things simple, their ability to challenge the norms and traditions of organisational design, and finally, the fact that they give leaders the chance to step back and iterate as they learn what works and what doesn’t. These are also the values by which Oxford likes to work: step back, challenge and simplify.

On agile/agility in organisational design and ways of working, I think iterative development with cross-functional teams in a spirit of collaboration is key. The benefits tend to be rapid responses to change, and we have adopted scrum and kanban ourselves at Oxford as they breed flexibility, efficiency, and ability to deliver value quickly.

On lean principles, this really brings a start-up mentality to ways of working. It focuses on minimising waste, optimising processes, and maximising value for customers. Organisations that embrace lean principles often prioritise continuous improvement, employee empowerment, and customer satisfaction to drive operational excellence and competitive advantage.

And finally, on holacracy, this is a non-traditional organisational structure with ways of working that distributes authority and decision-making power throughout the organization. Instead of hierarchical management, holacracy relies on self-organising teams and distributed leadership roles called "circles" to drive autonomy, agility, and innovation.

Zappos was an early adopter of this approach and has adopted this approach and has led and faced. While not suitable for every organisation, holacracy offers an alternative approach to organisational design that promotes adaptability and responsiveness to change.

The big watchouts

  • When defining ways of working, be careful not to move from one set of silos to the next set of silos. I recently heard from a client that the new organisational structure implemented in their organisation was simply ‘reorganising deck chairs on the sinking ship’.

  • Change isn’t easy, and so often I see bad behaviour not called out. There needs to be consequences for actively defying the new ways of working or poor leadership.

  • Don’t forget processes; these often need to be reengineered or redesigned to improve efficiency, effectiveness, and agility. It might require streamlining workflows, eliminating redundant activities, automating tasks, and adopting best practices to drive operational excellence.

Organisational design is a dynamic and ongoing process that requires continuous focus and adaptation to both what is going on internally with progress and culture as well as external conditions.

Source: https://www.cipd.org/uk/knowledge/factsheets/organisational-development-design-factsheet/

About the author

Supporting people and organisations to out-perform is where I love spending my time.

My passion is to support organisations to out-perform through lining up the organisational vision and strategy with people’s skills, behaviours and values.  Only by doing this can business growth and culture change happen.

I’ve spent many years client side before moving to consulting where I have worked across numerous sectors with significant time spent in healthcare and CPG.  I thrive when I am leading programmes to transform businesses through developing strategy, activation, building capability and embedding ways of working.




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