Three common pitfalls to avoid in organizational redesign
Organizations continuously evolve – they need to be adaptive to changing economic environments, new customer preferences, or internal discontinuities. Therefore, re-organization processes are rather the standard than an exception in many companies. Those of you who have witnessed only flawless organizational re-design can stop reading right away.
However, if we are honest with ourselves, we frequently see the same (often well-intended) traps and mistakes. And those can really make the difference between a successful re-organization and a lot of pain for the company, its employees, and customers. So let me share the most common pitfalls of organizational re-design that we regularly encounter during our client work.
No clarity on the objectives of re-organization
When rebuilding an organization, it helps to clearly define what you are trying to fix. This is especially relevant as major changes in any organizational setup usually involve trade-offs (e. g. speed vs. control, or customer proximity vs. economies of scale, just to name two well-known examples). Not being clear on your re-organization goals and a lack of guidance for trade-off situations will lead to confusion and often inhibit the very momentum you intended to create. Therefore, top management must be transparent on what comes first and how to mitigate potential risks. Think of using a simple set of “design principles” to foster a productive prioritization discussion during the design process. Be mindful however, there is no such thing as a “perfect” organization.
Fixing what is not broken
“While we’re at it, let’s think the organization from scratch” – This kind of greenfield approach is well intended and has in some instances led to quite remarkable outcomes. In most cases, however, there will be casualties regarding well established processes, team structures, essential informal networks and subtle cultural agreements. These are not easy to spot, and it is paramount to rigorously analyze what is working well, what is essential to customers, and what is valuable to employees. You can only refrain from the impulse to fix things that are not broken once you really understand the inherent merits of an organization. An evolutionary approach can lead to significant short-term impact and avoid resistances (and risks) that often occur when starting from scratch.
Disregarding the human factor
Organizations are complex organisms, made of structures, processes, and systems, but first and foremost of people – their individual working preferences, communication styles, and informal networks. Bringing it all together is more a sophisticated (and sometimes cumbersome) art than a seemingly straightforward mechanistic exercise. Unsurprisingly, the first impulse in many organizations is directed at optimizing lines and boxes, spans and layers, processes, RACI matrices, and the like. And that is not wrong in itself. It is just not sufficient to get the job done. The human factor needs to be considered carefully in every design step; mutual interdependencies need to be thought through. Sometimes structures trigger new behaviors – sometimes it is the other way around. Taking this holistic perspective is one of the key success factors of organizational re-design.
To sum it up
Be clear on objectives and trade-offs. Define design principles and communicate them to the managers involved. To gain momentum quickly, follow an evolutionary approach that builds on the merits of the current organization. Finally: Think beyond lines and boxes and consider the human factor in all steps of the design process. Every re-design is unique, and each top team takes a slightly different approach, so any list of advice can only be incomplete (and we have not even addressed implementation and the associated change efforts). Because of the complexity and variety of organizations, I am curious: What is your experience with re-organization processes, which top three pitfalls come to mind?