Have you ever wondered why business leaders are so obsessed with redrawing organization charts when they want to improve company performance? We are amazed, and frankly disappointed, with this untempered urge given the countless restructurings and reorganizations that have failed to achieve their intentions and, in many situations, ended up destroying shareholder value. Think Robert Nardelli and Home Depot or Leo Apotheker and HP.Instead of resorting to boxes and lines, we think business leaders should heed the words of the famous American architect, Louis Sullivan. Back in 1896, Sullivan provided business leaders with the wisdom, and the key, to designing their organizations for sustained success:
So what can we as business leaders learn from Mr. Sullivan? Before you embark on restructuring remember — Form Follows Function. It always has and always will. If you want to drive sustainable improvement in your business, you must begin by understanding its function, a.k.a, its mission and strategy. Once this is well defined and understood, your efforts should be directed at aligning your organization’s design and talent to most effectively deploy your strategy. Don’t fall prey to your childhood fascination with drawing boxes and lines — it is but one element of organization design and oftentimes the last element you should evaluate and modify. Apply Sullivan’s wisdom and consider using the following steps to align your strategy, organization, and talent for success.
- Clarify the value drivers of your strategy to understand the key levers to achieving it. Take a hard look at discerning the most critical drivers and avoid the temptation of identifying everything, including the kitchen sink, as creating value.
- Assess your current organization design analytically and holistically to pinpoint what is limiting your ability to unlock value. Remember to always “start with the work” to understand if your core and support business processes are delivering the results you need and expect. Don’t stop there: take a hard look at how you measure performance, gather and share information, and govern and make key decisions. Based on this, determine the changes in business processes, metrics, information flows, and governance needed to successfully execute your strategy.
- Evaluate how your current structure enables or impedes the performance of your core and support business processes, the flow and quality of information needed to get the work done, the speed and quality of decision-making, and (don’t forget!) the degree to which your structure (dis)engages the hearts and minds of your workforce. (Think Frederick Taylor and Scientific Management — a great model for employee disengagement!). Use this insight to make informed and targeted changes in your structure to fully enable and engage your organization.
- Take a hard look at your people and your talent management processes and ask yourselves some tough questions: No kidding, do I have the right people, in the right place, with the right skills? Am I able to attract and retain the best talent? Is my organization a ” talent factory” that develops the talent I need to run my business? Do I really manage performance? If your answers are unsatisfactory, make the needed changes in your management processes and practices to ensure you have number, type, and quality of people your business needs.
- Routinely measure and fine-tune your design. Chances are that your initial decisions will not play out exactly as you had hoped given the dynamics of your organization and the environment in which you operate your business.
Remember Sullivan’s words of wisdom — form follows function — and resist the urge to simply re-draw a chart or change reporting relationships to solve your organization’s woes. A parting question for you to ponder and share and thoughts on: Do you think today’s CEOs and in particular, American CEOs, have the capability, patience, and ego to follow embrace Sullivan’s wisdom?