Does this scene from the Executive Team's Strategy Retreat sound familiar?
CEO: “We have a great company, but we need to adapt in order to drive growth. We are too slow to respond to the market.”
COO: “I agree. We need to be nimble, but we’re stuck in our silos. There’s too much turf warfare among product management, marketing and the sales force.”
EVP Marketing: “The real problem is that we have great products, but we struggle to innovate. Frankly we are too product-centric.”
EVP Sales: “We just lost another big deal to our arch rival. The other company developed a more tailored solution, co-created by their Solutions Team and the customer’s buying group.”
You’ve seen this movie before, and often times it ends with “let’s reorganize for growth!” It’s all too predictable. New organizational groupings are put in place, usually in the form of a shift from product-marketing-sales groupings to a solutions, line of business or regional grouping. Yet these shifts by themselves fail to make the organization more nimble—they just create new business unit or regional management silos.
The Missed Opportunity
The fundamental flaw in most organizational redesign efforts is failing to create the requisite linking mechanisms that coordinate work across organizational lines. Linking mechanisms include business processes, cross-functional teams, collaborative technologies, task forces, etc. that connect various groups.
Linkages are the “DNA” of organizational agility, for three main reasons:
- They feature the sharing of information and insight
- They connect people with diverse opinions and experiences
- They are flexible and fluid—they are relatively easy to start up, change or stop
Without these linkages, you can have the strongest foundations of an organization yet never get the results you seek. The secret lies not in the new boxes themselves but how the boxes interact with one another, intelligently and by design.
3 Cases in Point: Linkages that Unlock Organizational Agility
Transforming the Brand and Engaging New Customers. A media and consumer research organization is changing the way it works, its brand and its methods of engaging audiences—a fundamental transformation. Rather than redesign all functions, it is using cross-functional teams to focus on 8 key annual operating priorities tied to its new strategy. These teams are fluid and can change membership and focus as they “test and learn” new approaches.
Linkages for Innovation and Growth. A high tech, Software as a Service (SaaS) company develops technologies that connect organizations and people in a variety of markets. Its HQ office includes an open office environment, an Innovation Lab to encourage collaboration and an annual week-long software development innovation contest. The leadership team conducted a recent reorganization focused solely on developing new linkages, rather than on redesigning the existing organization structure.
Marketing and Innovation Capability to Drive Growth. A global building materials and engineered products company is refocused on growth after a long period of consolidation and operational efficiency. It created a linking group of Marketing, IT, Strategy and Innovation executives to build greater marketing capability across the company and redesigned its leadership development processes to develop growth competencies across the organization.
3 Actions for Unlocking Organizational Agility
1st, use equal doses of grouping and linking during redesign efforts. Most companies spend 90% of their energy on re-drawing boxes and lines. When new groups such as business units or regional structures are created, put equal focus on how those groups will be linked through processes, teams and communications.
2nd, link your leaders. Almost all companies have executive teams of direct reports to the CEO and key unit leaders. However there is great value to aligning leaders across the business in creative ways, through broader leadership teams, strategic task forces and ad-hoc councils focused on important issues. Like other linkages, these can be started and stopped fairly easily and adapted on an annual basis.
3rd, design linkages for decision-making. For each linking mechanism, determine the decisions that will be made when connecting various parts of the organization. Cross-functional teams are not just for socialization and brainstorming—they are for decision making of a higher order.
The Bottom Line
Don’t get complacent thinking that your reorganization will automatically yield the results you want. Pay special attention to the formal and informal linking mechanisms in your organization—they hold the key to unlocking the organizational agility you seek.
Read more from The River Group on organizational design here.