What is organization design?

“Organization design” involves the creation of roles, processes and structures to ensure that the organization’s goals can be realized.

Some people associate organization design with the mechanical arrangement of positions and reporting lines on the organization chart.

It is certainly true that organizational designers also need to define the vertical structure, including reporting lines.

However, organization design is much more than “boxology”.

Organization design problems are often some of the hardest problems that leaders face. Finding the right design often requires inventing a new solution to resolve a dilemma. And decisions made with regard to formal structure, roles and processes directly impact the jobs and careers of employees – and the ability of the firm to realize its strategic objectives.

In an organization re-design process one may consider elements at different levels:  

  • The overall organizational “architecture” (e.g., the corporate level, the role of the headquarters versus business areas in a large firm, etc.)
  • The design of business areas and business units within a larger firm
  • The design of departments and other sub-units within a business unit
  • The design of individual roles

The field of organization design sits at the intersection of strategy, operations, law and HR.

 

 

1. An important driver for organization design is the organization’s strategy – but the design of the organization may also to a great extent determine which strategies we may be able to form in the first place.

2.  We should, in general, attempt to align the organization with the work processes – so there is a close link between operations and organization design.

3. The design of the organization is also influenced by laws, regulations, and governance principles adopted by the industry sector.

4. Last but not least, organization design is fundamentally about people. People inhabit the roles that are defined in the organization design proces. People participate in design processes and also influence designs in many direct and indirect ways. 

 

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Using Reconfig to Create Agile at Scale

According to one study, 90% of all companies have adopted agile methods in some form. Typically, companies use agile methods for software development, but many also use agile principles more broadly.  At the same time, some companies experience challenges with agile implementation (e.g., see this article). This suggests that there is a need for systematic tools and methods to support both initial implementation and continuous development of agile organizations. 

Reconfig is a software tool that is used to map and optimize the design of an organization. There are at least three factors that make it relevant for agile organizations. 

The key feature of agile organizations is the small, cross-functional and self-managing teams. But how do you set up these teams – which roles should be combined to form a team? Reconfig has an algorithm that helps you identify teams with a combination of roles that benefit from being organized together.

One critique of the original Agile approach was that it was too focused on the individual team. Somehow, we need to scale up this concept to fit larger organizations. In a larger organization, you will have multiple teams or squads, organized within larger units, “tribes”, or programs in a project-based organization. You can use Reconfig to make sure that you set up a logical grouping of different teams within larger units. 

Finally, even in an Agile organization, not every part needs to be flexible, in most organizations, there needs to be a combination of stable and moving parts. Reconfig supports this by making sure that you can filter and optimize the organizational structure based on work processes or functions. And the algorithm is set up so that it will customize the design of the organization to each unit, rather than imposing one design principle to all units independent of how they work.   

If you’re interested in learning more about how to design an agile organization effectively, visit our web page at https://www.reconfig.no where you can download a white paper or request a demo that explains the key principles behind it.

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