We have to talk about Organizational Design

<Reposted with Permission from Forbes>


Organizations – Not By Design

We all nod and agree whenever the topic of old dinosaurian organizational structures is mentioned. Everything from homogenous boards and lack of diversity to rampant politics, misguided incentives, a disregard for the new paradigms of the new ways of work, lack of authentic vision, fake purpose and no real regard for the power of technology or respect for people.

We all have the stories to illustrate the issues. Cue the eye rolls and the heavy sighs. We all instinctively all know organizations are tired, sick maybe even terminally ill.

Bizarrely most discussions about this abruptly stop once there’s agreement on the burning issue, and they rarely culminate with a call to arms to see a fundamental change by redesigning if they are so clearly wrong for our evolutionary scope these days.

The origin of the topic can be traced to Peter Drucker’s examination of General Motors tens of years ago and was refined and studied when the Star model surfaced from Galbraith in the 90s along with a few other notable publications at the beginning of the 2000s but realistically, if one wanted to study it in detail, there wouldn’t be much of it to look at since.

What does it mean today, though? What has happened in the meantime? How does it differ in nature from one industry to another? How can it help us enter a new age where it all comes together – the technology and the humans that employ it?

Let’s look at banking in particular – Who designs the organization in banks these days? Does anyone? And what does this organization look like?

To go any further we have to leave the debate on the role of HR out. Dissecting why HR doesn’t have the weight and the seat at the big boys’ table that it should, is not an easy feat and it deserves separate and careful consideration.

For the purposes of this article, let’s presume they did. That they were part of the really significant strategic conversation and human capital was more than a PR claim. If they were firmly sat at the top of the decision-making table, what is their point of view when it comes to designing the organization?

By and large – non-existent is what it is.

They may peripherally touch it when they refer to the antiquated tenants of the organization in terms of people – the Recruitment, Retention and Development functions-, but never in a meaningful transformational way.

When do they stop to say “Hold on board, you keep banging on in earning calls about investment in people and I don’t see anyone having stopped and wondered if we have the right structure.” When do they knock on the CEO’s door and say “This may sound crazy but we need to rethink this entire thing.”

When do they start on the arduous road of rebuilding the pillars of the way people are working together?

Why should that happen? Because we are being equal parts deluded and conceited to believe anything will change in banks and that they can compete with the tech giants, until such a time that they fundamentally change the way they are organized internally.

Genesis Of Teams

In banks, we have Groups, Departments, Divisions and Teams and in the progressive banks, we have the labs, the Agile experiments, the Tiger teams, the SWAT people. Both kinds are composed by one of two methods:

The “Looks Good On Paper” Method

This is where HR recruit internally or externally by looking at skills off a CV and matching them with the requirements by sophisticated methods such as heavily relying on keywords or even aleatorily choosing off an excel table from a multitude of individuals who all seem equally qualified. Reinforcing semi-educated guesses with stiff, corporate and in-authentic interviews conducted solely to underline how solid the initial choices are.

This is, in particular, the method employed for initial team formation when a new structure is needed to be built from scratch, and as such, it’s most likely to be the way the “innovative” structures for new projects are built.

The “Finger In The Wind” Method

This dimension comes into play in particular when teams evolve, so existing structures are more vulnerable to it. Accidental nomenclatures to fill in a qouta; “I’ve known Bill for years” vouching for specific individuals; and the “meh, I’m sure Mary would do” throw-away mandate, they all come in under this “method” like a finger raised in the wind with consequences neither considered, nor held in high regard.

Ironically, seeing how it involves a much more human element, this method is not all bad news and some parts of it could be valuable if they were geared towards a specific outcome and their power was genuinely harnessed.

Not Fit For Purpose

Aside from how flawed these methods of creating collaboration are, we have to consider that the purpose of having people come together in a team has changed over the past 20 years and it is now on a path of even faster evolution.

The technology employees are expected to utilize, -as well as the one they are expected to deliver if that’s their mandate- is inexorably more complicated and more empowering than any other time in history.

The methods above simply can’t deliver structures that are free of the conventional and deliver better than the paradigm which is what we should be aiming for.

First Principles Design For Organisations

We have to get back to the drawing board and wonder what makes the organization efficient, flexible, reliable and above all, simple and solid.

We have to ask what makes people willing to share knowledge, lend a helping hand, collaborate truly, be themselves, dare, care, have drive, work hard, invest, apply themselves, bring others along, embrace change, trust, learn, burn with some type of inner fire and move at a pace that makes it all possible.

Leadership has to have the courage to re-examine every assumption and then work really hard to imagine a new world where people come together around a common purpose, interest and need to succeed not floor space.

They have to look up from business projections and be curious about the way the new ways of work impact the psyche of their people, their aspirations, their needs, and strengths and start investigating the ways to get the best versions of these people to interact with each other rowing in the same direction. Where and when is it that people gravitate towards each other and bring bits and pieces of value together, because they believe in themselves and their company, and they believe in the intent of these leaders that have let them find the best way to achieve.

The organization’s ROI will from here on, only come from a place where they have achieved real workplace chemistry and serendipitous cultural alignment a la’ the likes of Apple or Google.

The answer no longer is “stick them in an aleatory “Looks Good on Paper and Finger in the Wind” team.

Empty Rhetoric Versus Rolled Sleeves

Some claim the age of information has now been replaced by the age of purpose. This sounds aspirational on paper but it assumes we have, as organizations, done anything to have adapted to the information part. We have not.

Tools and processes have evolved and the canvas of the organization has stood still, frozen in the 80s, unwilling and unable to come along on the evolutionary path. Consumer expectations have grown and thinking of how to put people together so they are best equipped to meet them has shrunk. Technology is running at a million miles an hour and organizations are crawling along to the tune of the same KPIs and Departments.

In most industries but in particular in banking where the urgency is palpable, we can’t afford to let organizations just happen and then just fester and deteriorate.

We can’t afford to not make this topic first on the agenda. We can’t afford to wait and eschew.

We have to stop paying lip service to the notion of people being important and ask the hard questions, examine the existing structures of the organization and be willing to take a can of kerosene to the status quo.

We have to rethink, re-dream and redesign the organization. Only then can we compete.

Only then can we truly grow.

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