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Organisation Design 2
- 1. Success and Failuresin Organisation Design ORGANISATION DESIGN ASSIGNMENT 2
- 2. Introduction If I wereto ask you a random and seemingly strange question, “Why does a rocket behave the way it does and how is it different from a parachute that behaves the way it does?” You’d probably say something like, “Well, duh, they’re designed differently. One is designed to go fast and far and the other is designed to cause drag and slow an objection in motion. Because they’re designed differently, they behave differently.” And you’d be correct. How something is designed controls how it behaves. (If you doubt this, just try attaching an engine directly to a parachute and see what happens). But if I were to ask you a similar question about your business, “Why does your business behave the way it does and how can you make it behave differently?” would you answer “design?” Very few people — even management experts — would. But the fact is that how your organization is designed determines how it performs. If you want to improve organizational performance, you’ll need to change the organizational design. And the heart of organizational design is its structure.
- 3. Successful in OrganisationDesign Leadership at all levels : Leadership has to start at the top but it isn't great unless it spreads throughout the organization. The most successful companies recognize effective leaders and harness them to maximize results. Applied wisdom : When an organization shares important information across the organization and applies that information to improve results, that is applied wisdom. Applied wisdom is sharing internal best practices and knowledge about customers across departments. Strategy is comminicated all the way to the front lines and successful practices are replicated across the organization.
- 4. Successful In OrganisationDesign Effective communication : Successful companies communicate the overall strategy so every person in the organization understands his or her role. Strategy, like the champagne tower at a wedding, starts at the top but cascades throughout the organization. Effective communication requires transparency and candor. Speed optimization : Successful organizations know when to accelerate and when to slow based on indicators built into their processes. Think of a subway or train system. Stations are milestones, signals tell the engineer when to go faster or slower, depending on what is ahead. Find money where others don’t look : Successful companies turn customer complaints into new business. They focus on customer retention, not customer service.
- 5. Causes and failures Thestrategy changes but the structure does not : Every time the strategy changes — including when there’s a shift to a new stage of the execution lifecycle — you’ll need to re-evaluate and change to the structure. The classic mistake made in restructuring is that the new form of the organization follows the old one to a large degree. Functions focused on effectiveness report to functions focused on efficiency : Efficiency will always tend to overpower effectiveness. Because of this, you’ll never want to have functions focused on effectiveness (sales, marketing, people development, account management, and strategy) reporting to functions focused on efficiency (operations, quality control, administration, and customer service).
- 6. Causes and Failures Functionsfocused on long-range development report to functions focused on short-range results : Just as efficiency overpowers effectiveness, the demands of today always overpower the needs of tomorrow. That’s why the pressure you feel to do the daily work keeps you from spending as much time with your family as you want to. It’s why the pressure to hit this quarter’s numbers makes it so hard to maintain your exercise regime. Not balancing the need for autonomy vs. the need for control : The autonomy to sell and meet customer needs should always take precedence in the structure — for without sales and repeat sales the organization will quickly cease to exist.
- 7. Causes and Failures Havingthe wrong people in the right functions : I’m going to talk about how to avoid this mistake in greater detail in a coming article in this series but the basics are simple to grasp. Your structure is only as good as the people operating within it and how well they’re matched to their jobs. Every function has a group of activities it must perform. At their core, these activities can be understood as expressing PSIU requirements. Every person has a natural style.
- 8. Conclusion The first challengeof the design process is to create a streamlined and effective organization that is aligned with the strategy and desired results of the organization. The second challenge is to get buy-in from the entire organization and implement the new design so that it dramatically and positively changes the way the business operates. Many organizations fail to adapt and adjust their internal infrastructure to the rapidly changing business demands around them because their business processes, structures, and systems act as barriers to efficiency and common- sense decision making. These internal barriers can trap capable people who eventually become cynical and disheartened by their inability to change or influence obvious gaps, inconsistencies, or burdensome constraints within the organization. The design process identifies ineffective work flows, structures, or systems, redesigns them to fit current business needs, and develops plans to implement the new changes, promptly achieving better results throughout the organization. Processes are streamlined, structures are simplified, and systems are improved as people are organized into business units and teams which allow them greater authority and responsibility for their success.
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