The Political Test of a Proposed New Organizational Model

 A few years go, I was assisting a firm in developing a new organizational model, working together with a colleague.

We first identified key design criteria, based on interviews with more than 40 managers.

The most important criterion was to design an organization that would help the firm achieve growth for one of the key products. It was also important to find a model with the right “balance” between different business areas.

At the same time, there was a need to simplify the structure, and reduce the number of management layers.

We then started developing a couple of alternative models.

It was pretty hard work, trying to identify a model that would meet the different criteria, while avoiding an increase in costs. But one evening, in a meeting with the VP of Human Resources, we thought we had found at least one possible solution.

We went through the criteria and could check off one after another. We concluded the meeting on an optimistic note.

But as we were about to leave, the VP remarked:

That question re-framed the discussion. Suddenly we were not talking about what you could call the “rational” criteria, but about the impact on individuals and whether the proposed model would get the support of a large enough coalition to be accepted (and once accepted, whether it would be implemented with some level of enthusiasm).

So we looked at the model, and considered the potential impact for each of those who currently held leadership position (and who would be candidates for key positions in the new model).

A simple count suggested that the balance would be negative: A lot fewer would move up than down in the management hierarchy.

So we went back to the drawing board. And in the end, we did produce three alternative models that were more attractive, both from the “rational”, and from the political side. One of the proposed models was then selected by the CEO. The subsequent implementation of the model went quicker than we had anticipated.

* * *

One word of caution here: I am not suggesting that you should “start with the people” in the sense that you should tailor the design to the personal interests of the current members of the management team.

The main design criteria should be derived from the strategy of the firm (see my book for a detailed description of a methodology you can use for this purpose). 

The political test is an additional step that you carry out, once you have a potential solution that fulfills the main requirements, and satisfies the key design criteria.

But it’s a step that you shouldn’t skip– if you want your proposed model to be implemented.


Why you can’t retrofit a mission

I once helped a global, medium-sized company develop a new organizational model.

At the time, it had a regional model, with units for Europe, Africa, the Americas, and Asia, plus staff units such as IT, HR, Finance, Procurement, and Legal.

One executive was skeptical about the process, and compared it to a game of corporate solitaire.

In a moment of dry wit, he commented at the end of a workshop: “Somebody always ends up with IT and Africa.”

It was intended as a joke (and it resonated with the rest of the participants).

Luckily, we were able to avoid this scenario (We recommended a product-based model instead of the regional structure. This recommendation was accepted and implemented.)

But unfortunately, if you look around in most organizations, you will probably find some odd combinations of sub-units. 

So imagine what would happen if they actually had formed such a unit. 

What would the management team do after they established the IT+Africa unit?

Well, they might ask the poor manager of the unit to formulate a mission or mandate to clarify what the unit was supposed to do.

The manager could write:

Or perhaps something like this:

Or maybe this:

Well, you get the point. The manager would probably struggle with this assignment. 

 Why would it be so difficult?

 It’s because the combination is problematic.

 The employees might ask: Are we now a profit-center (like the Afria regional unit) or a cost center (like the IT department)?

 The statements above fail to clarify that. 

 But the relationship toward the other regional units would also be unclear. People in those units might suspect that the IT staff would now favor the needs of the Cairo office ahead of the needs of other regions.

 This is just a hypothetical example, of course. But I think it describes a fairly common phenomenon, namely that we tend to retrofit the mission on units that have been already organized.

 But if the units are illogically organized to begin with, no amount of mission-formulation can make up for that problem.

 Instead, you will have to endure endless discussions about the mission, without gaining any clarity.

 The solution is obvious: You need to consider the mission (or unit mandate) of each unit before — and not after — that you decide on a new organizational model.    

I am not saying that you need a complete mission statement or a detailed mandate; but you need to at least specify what the unit is supposed to deliver and to whom (what I call the unit’s “function”). 

 Then you can test whether this function is aligned vertically and horizontally with other units. My colleague Shawn Pope and I describe how to do this in a new paper that we have written (summarized in this blog post). 

On the positive side, perhaps, the clarity of a unit’s mission or mandate can serve as a litmus test for the effectiveness of the organizational model.

 Ambiguity in a unit’s purpose may signal a need for redesign.

Business network web banner photo set in concept of management and growth by using corporate teamwork and people networking skills .

How to Build Purpose-driven High-performance Organizations?

Purpose-driven organizations are those that have a clear sense of their mission beyond just making money. They are driven by a desire to make a positive impact on the world and prioritize their purpose over short-term profits.

Some may view the growing attention to purpose within organizations as merely a branding or employee engagement tactic. Others see it as an inevitable positive response to the current state of the world.

No matter which side of the fence you are, there is growing evidence, that when organizations follow a clearly defined purpose, they have a better chance of financially outperforming their peers in their industry.

Obviously, purpose needs to be more than just a catchy statement on a corporate website. Purpose must be authentic, and it must be operationalized.

In today’s fast-paced world, strategy can no longer be based on accurate predictions of the future. Instead, organizations need to focus on developing capabilities that allow them to adapt rapidly. This requires organizations to have a strong sense of organizational identity and a vision based on a shared purpose.

When done right, purpose energizes an organization and accelerates its performance in three ways:
1. Purpose serves as a compass to guide both short- and long-term actions. Thus, purpose-driven organizations are better internally aligned.
2. Purpose builds trust. Thus purpose-driven organizations enjoy loyalty among their clients, suppliers and other ecosystem partners.
3. Purpose inspires. When employees feel that their work holds purpose, they are more likely to deliver outstanding work.

So, how can companies become purpose-driven, high-performance organizations?
Here are some key steps:

1. Define your purpose
This should be done in an interactive process with the full range of your stakeholders. Note that purpose is not something that is negotiated like a salary or targets. It is not the company that defines purpose for individuals, but individuals who endow their work with a purpose. In purpose, there are no bosses, superiors, orders, or chain of command.
Purpose should express the positive impact and legacy a company aims to leave on this world. It should be ambitious and strive for the seemingly impossible. It should be a meaningful and authentic source of inspiration. All ll employees and other stakeholders must understand it and connect with it.
2. Align your operating model with your purpose
Start with defining the key capabilities and functions that are essential to deliver on your purpose. Translate the key functions into meaningful activities and assign responsibilities for these activities to your organizational units.
3. Pro-actively identify and resolve bottlenecks
When people buy in into a shared vision, they will do their best to achieve the desired outcomes. But if they hit the walls of ill-designed organizations, they lose energy and leave the organization – or worse stay as dead wood. So identifying broken links or ambiguities or overloaded resources in the organization is key to becoming a high-performance organization
4. Foster a high-performance culture
To achieve exceptional results, you need a culture that encourages innovation, collaboration, and continuous improvement. This requires a focus on employee engagement, development, and empowerment.
5. Measure and communicate your impact
Finally, to be a purpose-driven, high-performance organization, you need to measure and communicate your impact. This includes not just financial metrics, but also social and environmental impact.

In conclusion, purpose-driven, high-performance organizations are those that prioritize their mission while also delivering exceptional results.
Let me know if you would like to discuss this. 

Recommended reading:
– Hit Refresh, The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone by Satya Nadella
– Deep Purpose: The Heart and Soul of High-Performance Companies by Ranjay Gulati
– The Revival of Purpose Driven Companies – China Europe International Business School https://www.youtube.com/watch?v=ptzvx7llkxc