Organisation Design for executives

On Wednesday 29th June we host our next OD Café. We will be talking about Organisation Design as an executive skill (register here). We will argue that executives need better organisation design skills. This is not to take away from the work done by Organisation Design professionals, but to enhance it. When executives understand something about the processes and practices of organisation design the design effort has a significantly better chance of succeeding. 

Our colleague Griffiths Lubisi let us know that “this is a great initiative”. Thanks Griffiths! He should know, as he is the expert on many important organisation design projects in South Africa.

Strategy and Structure

Organisation Design is a profession. It is also a way of work for any manager, as translating strategy into execution is a design effort. Executing strategy involves changing something about the way the organisation works and can be as small as shifting meeting agendas or changing a few roles. The way a team or a department is working can be redesigned. In larger cases, inter-departmental cooperation might be poor, or the entire organisation needs to respond to shifts in customer preferences. The culture of a team, a department or the whole organisation can be redesigned. All of these are organisation design projects, and managers do some of them routinely. But do they do them well?

A lot of time is spent teaching managers about strategy. Much like organisational strategy, organisational design has a bunch of flavours. Henry Mintzberg’s (1998) “Strategy safari” could just as easily be a design safari. His ten “schools” of strategy could be restated as schools of design:

Mintzberg’s Strategy SchoolCorresponding Organisation Design SchoolDescription of Organisation Design School
Design SchoolFit and Alignment SchoolEnsures organisational structure aligns with strategy, environment, and internal capabilities. Emphasises strategic alignment and holistic design.
Planning SchoolSystematic Structuring SchoolUtilises formal methodologies and frameworks to structure the organisation. Involves detailed planning, role definition, and process mapping.
Positioning SchoolCompetitive Configuration SchoolDesigns the organisation to achieve competitive advantage. Involves configuring resources, processes, and structures to best position the organisation within its market.
Entrepreneurial SchoolVisionary Structuring SchoolCentres on the role of visionary leadership in shaping the organisation’s structure. Emphasises flexibility and adaptability to pursue innovative and visionary goals.
Cognitive SchoolCognitive Configuration SchoolExamines how cognitive processes and decision-making impact organisational structure. Involves designing structures that facilitate better decision-making and knowledge management.
Learning SchoolAdaptive Structuring SchoolDesigns organisations to be flexible and adaptive, facilitating continuous learning and improvement. Encourages structures that evolve based on feedback and changing conditions.
Power SchoolPower Dynamics SchoolExamines the role of power and politics in shaping organisational structures. Involves designing structures that balance power and facilitate effective governance.
Cultural SchoolCultural Configuration SchoolDesigns organisations with a strong emphasis on cultural alignment and social processes. Focuses on creating structures that reflect and reinforce the organisational culture.
Environmental SchoolEnvironmental Structuring SchoolDesigns organisations to be responsive and resilient to environmental changes. Emphasises structures that enable quick adaptation to external pressures.
Configuration SchoolTransformational Structuring SchoolFocuses on designing organisations that can effectively manage both stability and transformational change. Involves creating structures that support gradual evolution and radical reconfiguration when necessary.

Leadership Styles and Organisation Design

These (hypothetical) schools of organisation design could correspond with the culture and styles of leadership in different firms. As you go through this list, ask yourself which manager you are, and which approach would dominate your input into a design project. Here is a sample of the different perspectives a design could take depending on the type of manager leading the work:

Type of ManagerDesign Focus 1Design Focus 2Design Focus 3
1. The Academic TheoristEmphasis on Foundational Theories: Deep understanding of classic and contemporary organisational design theories.Research Methodologies: Skills in evaluating and applying research methods to real-world organisational problems.Critical Analysis: Ability to critically analyse organisational structures and their impacts on business outcomes.
2. The Experienced CEOPractical Application: Focus on real-world application of organisational design principles in corporate settings.Leadership Insights: Insights on leadership and decision-making within different organisational structures.Change Management: Strategies for managing and leading organisational change effectively.
3. The Technology EvangelistDigital Transformation: Understanding of how digital tools and technologies can reshape organisational design.Agile Frameworks: Implementation of agile and flexible organisational frameworks to adapt to rapid change.Data-Driven Decisions: Leveraging data analytics for informed organisational design decisions.
4. The Cultural AnthropologistCultural Dynamics: Exploration of how cultural factors influence organisational structure and behaviour.Diversity and Inclusion: Creating inclusive organisational designs that leverage diverse talents and perspectives.Ethnographic Methods: Using ethnographic research to understand and design organisational cultures.
5. The Military StrategistStrategic Alignment: Ensuring organisational design aligns with strategic objectives and mission.Command and Control: Effective implementation of command-and-control structures in various contexts.Crisis Management: Preparedness and response strategies for organisational resilience in crises.
6. The Creative InnovatorDesign Thinking: Application of design thinking principles to innovate organisational structures.Collaborative Spaces: Creating collaborative environments that foster creativity and innovation.Disruptive Models: Exploring and implementing disruptive organisational models for competitive advantage.
7. The Humanitarian LeaderHuman-Centred Design: Focus on designing organisations that prioritise employee well-being and social impact.Ethical Considerations: Incorporating ethical considerations into organisational design decisions.Sustainable Practices: Developing sustainable organisational practices that benefit both the company and society.

Design in a VUCA world.

Line managers need to understand something about organisation design processes and practices. Even when there is an organisation design professional on the team (and we do recommend having one on the team), every organisation design professional serves the organisation, and the organisation is represented by the line managers. The more competent the line managers are in the design work, the better the outcome.

When there is no organisation design specialist available, Executives still need to respond to a VUCA world, and so the work of designing and redesigning is ongoing. Systems thinking teaches that slight changes anywhere can ripple everywhere in a connected system – and an organisation is a connected system. Change is ongoing, and managers are responsible for setting the direction and leading the changes.

Consequences of design failure

South African failures over the last 10 years show us what happens when the design fails. Consider this list, and ask yourself what stops your organisation from being the next one on the list:

African BankBankruptcy and subsequent bailout. Risky lending practices and inadequate risk management frameworks within a poorly designed organisational structure led to significant financial losses. The bank was placed under curatorship and required a bailout to survive.
DenelOperational and financial crises. Bureaucratic inefficiencies and governance issues led to poor strategic execution and financial mismanagement, exacerbating operational challenges.
Eskom Holdings SOC Ltd.Persistent operational and financial crises. In addition to frequent leadership changes, Eskom’s organisational design has been criticised for its inefficiency and lack of coherent strategy, leading to ongoing financial instability and operational failures in managing the national power supply.
Post OfficeOperational inefficiencies and financial struggles. Inefficient organisational structure and lack of strategic direction resulted in service delivery failures and financial instability.
Prasa (Passenger Rail Agency of South Africa)Operational failures and financial losses. Prasa’s complex and inefficient organisational structure, coupled with frequent changes in leadership and lack of strategic direction, led to operational inefficiencies and financial mismanagement. The agency struggled to maintain and operate an effective rail service.
SABC (South African Broadcasting Corporation)Financial instability and operational inefficiencies. Poor corporate governance and a lack of effective leadership have led to financial mismanagement and operational challenges at SABC. The broadcaster has struggled to adapt to changing media landscapes, resulting in a loss of viewership and revenue​ (SABC News)​.
South African Airways (SAA)Financial mismanagement and operational inefficiencies. Complex and misaligned organisational structure, coupled with ineffective leadership, resulted in significant financial losses and reliance on government bailouts.
Steinhoff InternationalAccounting scandal and massive financial losses. Steinhoff’s complex and opaque organisational structure facilitated fraudulent accounting practices. The lack of transparency and inadequate internal controls led to a scandal that wiped out billions in shareholder value and severely damaged the company’s reputation​ (SABC News)​.
Tongaat HulettAccounting irregularities and financial crisis. Tongaat Hulett’s organisational structure allowed for significant accounting irregularities, leading to a major financial crisis. Poor internal controls and governance practices resulted in inflated asset values and misstated financial results​ (SABC News)​.
TransnetOperational inefficiencies and financial losses. Frequent CEO changes and a lack of consistent leadership have plagued Transnet, with nine CEOs since 1994. The lack of a stable and coherent organisational structure has led to a decline in operational performance and financial health, impacting the transportation sector significantly​ (IOL | News that Connects South Africans)​.
VBS Mutual BankFraud and liquidation.Poor governance and internal controls allowed for large-scale fraud and mismanagement. The bank’s collapse was primarily due to a lack of oversight and regulatory compliance, resulting in significant financial losses for depositors and stakeholders.

Call to action.

Do organisational executives need a better grasp of organisational design? 

Join us on Wednesday 26th June when we explore this topic with fellow OD professionals and our customers. Or you can contact us to talk about an in-house program that develops organisation design skills in your executive team.