Seven Building Blocks for Designing Organisations for Growth, Innovation and High Performance
You started doing it your way - Why Stop Now?
Changing any growing organisation may seem daunting, but it doesn't have to be. Mastering the building blocks of organisational design empowers you to create your unique design so that your organisation grows and succeeds just as it needs to.
The changes needed are like changing the plane while it’s still flying.” The best people to do that are the people on the plane. You don’t need an engineer from ground control to fix it.
What makes any organisation unique is the dynamic fusion of the people, their behaviours, their platform, their language, and the overarching vision. And, of course, the products, services, and experiences it sells to its customers. In their unique way, they influence, contribute to, and shape the conditions of the organisation, paving the way for the exciting emergence of a distinct culture that customers recognise and desire.
Change is inevitable. Every leader must understand the nature of organisation design to adapt to future business needs. The way to create a transformative and innovative organisation is by understanding the design elements and how they interact. The seven main elements or building blocks of organisation design are;
Leadership, Vision, Hierarchy of process, Platform technology, Social contract, MIcroTeams™, Guiding principles
To grow, organisations need to implement changes in their design, and employees are the source of the best innovation. Understanding the seven building blocks of organisational design is the best way to create a new operating system while flying the plane.
A growing number of new organisational structures - at least twenty are documented - define the core rules, structure, and processes for governing and managing an organisation. They are like “operating systems” for business.
But why consider implementing another organisation’s operating system, which is not your way of doing things? You are fitting your organisation into someone else's framework. You have a fantastic family heritage that you want to take with you into the future.
I’ve identified the building blocks required to implement a successful transformation in a business, but I don’t provide a system to implement in your organisation. I introduce the building blocks of organisational design so that you can arrange them to suit your needs and help you implement your design. How they are arranged, the language used, and the governance applied will be unique to every business and designed to deliver the vision successfully.
To keep your uniqueness, keep doing it your way!
Learning to use the seven building blocks of growth, innovation, and high performance provides any leader with the power to scale and grow their business without limits. It enables you, the leader, to tap into the limitless well of human innovation and creativity while providing the boundaries that ensure alignment and collaboration are maintained and thrive.
The Building Block of Organisational Design
1 Leadership
Leadership is less about who they are, their charisma, and popularity and more about their behaviour, competence, and character.
The leader needs high self-esteem, which comes from having the competence and worthiness to fulfil the role so that everyone feels their work is a worthwhile experience and desires to perform at their best. In our third book, The Power of Clean Leadership, we mapped out the characteristics of what being a Clean Leader means and the characteristics that must be present
2 Vision
Communicating the vision is more straightforward in a start-up as you are all close. However, as the organisation grows and distinct structures appear, the vision can become distorted and even lost.
The one thing everyone hates is a lack of information. Humans hate voids or empty spaces, and when we come across them, we immediately try to fill them with meaning. The first question children ask is “Why?” and adults never lose that need for information.
A well-communicated, clear, and powerful vision influences everyone exposed to it.
Make it relevant to every employee; all communication must include the vision.
The vision clarifies decision-making at all levels. It defines the core language of the organisation's future, and unlike the existing language, it opens up new possibilities that could not previously be discussed. Our structures of communication are built on the language we use and how we use it. When working with clients I focus on developing leaders understanding of the structures of communication that enable them to fully engage people in their vision. I have also created a standalone course called the Leadership Communications Course to help leaders and managers communicate powerfully to engage their teams.
3 Hierarchy of Process
An organisation without hierarchy is chaotic, and a hierarchy based solely on position is toxic. Every organisation has three distinct levels of hierarchy: executive, management, and workforce. Each level is a distinct process and a distinct role. An individual must adhere to the dynamics of the role of an executive, a manager, or part of the workforce.
Executive
The executive looks outward, gathers knowledge and information, and translates it into information relevant to the organisation.
Management
The management takes the information from the executive and translates it into meaningful parcels for the different workforce processes. Management uses their knowledge to create the conditions that enable workforce teams to use it effectively.
Workforce
The workforce produces the end product, whether physical or digital, products, services or experiences. A flow of knowledge and information exists that starts with the executive and ends with the workforce, and a reverse flow starts with the workforce and ends with the executive.
The three roles cannot exist without each other, and each distinct process must exist in every organisation, regardless of size.
Authority
The final element of hierarchy is authority. As an organisation grows, authority changes. Going from one to seven people is easy because the founder or founding team has the authority and is connected to all aspects of the business, including financial, ethical, strategic, and people.
As distinct structures such as operations, finance, production, marketing, and sales develop, unexpected consequences of this expansion can become roadblocks, where the flow of authority becomes a bottleneck. Where one person or a sequence of people is required to “sign off” becomes problematic as the volume of business increases.
Seventeen to seventy is the most complex challenge for authority because people become disconnected from the four primary drivers, finance, ethics, strategy and people, and tend to focus on a couple or even one of them.
Growth requires the continuous readjustment of freedom and control, which can only be achieved by changing the conditions surrounding everybody. These conditions must provide guidance, influence, and governance for all aspects of the business, including authority.
4 Platform Technology
Every business is a platform; it requires platform technology to run successfully. Your organisation's platform technology comprises unique conditions, such as the vision, language used, communication structures, people, relationships, and social contract. The organisation's culture emerges by adding guiding principles, physical constraints, and governance structures.
The emergence of culture does not happen in a simple, linear way; every element influences every other element. It also occurs over time, and the platform's effectiveness determines the speed of progress as it emerges.
A platform comprises three domains: the core, the hybrid space and the edge.
The core is resilient, well-structured and rigorously governed.
The hybrid space assimilates innovations into the core
The edge supports innovation and creativity
At the edge, the rules are less robust, more flexible, and open to interpretation. Changes at the edge do not impact the core; the hybrid space between the edge and the core protects the core.
Governance occurs at the core. Here, those in authority approve changes to the core of the business. For an innovation that started at the platform’s edge, there must be a pathway for that innovation to be tested, not only in the market outside the organisation but, importantly, the market inside the organisation. Along its journey to the core, innovation can be halted or revised by differing levels of authority.
5 Social Contract
A social contract exists in every human organisation or community, rarely by design. It results from all the interacting elements in a society or community and has emerged over time.
Designing a social contract for an organisation is manageable and can quickly achieve extraordinary results in organisations of less than 200 people. In smaller organisations, the range of divergence from the core social contract is less.
In larger organisations and corporations, the work is achieved in small groups at the platform's edge. By designing the corporate platform to support small teams, you can protect the core, which has already been built successfully, and simultaneously provide spaces for innovation. A social contract is exceptionally powerful in a business because it supports the emergence of a beneficial culture and provides the means to retain a continuously transformative one.
A social contract supports a rigid core set of values and allows for interpretations of these values as you travel away from the core. Yet, the social contract at the platform's edge is instantly recognisable as being derived from that core.
At an organisational level, the terms of the social contract must be broad and inclusive while also clear and rigorous. Designing your social contract must encourage positive action - Thou shall do x,y,z. It needs to be a rallying call to action that is positive and moves the organisation towards its vision.
A well-designed social contract is a powerful management tool, an excellent motivator for the team, and an enabler of teams to act autonomously with authority.
6 MicroTeams™ - the smallest unit in design
In organisational design terms, the smallest element is a MicroTeam™(MT), which consists of at least four people and not more than fifteen. Any change within an organisation must start at the MT level. It does not matter what you call your teams; it is the way they operate and how they are managed that is important. In our second book, The Power of Management, we dug deep into how to initiate an MT and how to provide the management structures to support them.
An MT is an autonomous, fully functioning unit of people capable of delivering a specific or a set of specific outputs. Each MT exists on a platform governed by a social contract. Each MT has the authority to act autonomously with its platform and adjust its processes.
Whilst an MT does not have a manager, team members will take the lead as and when their skill set enables them to fulfil the leadership role in the MT. Managers operate externally to MTs and are responsible for creating the conditions that facilitate the MTs' autonomous operation and connecting them with adjacent MTs. The role of management is to control and facilitate the flow of information to and around MTs.
All platforms have fuzzy boundaries; precise lines do not define the edges. The fuzzy edges of MTs can overlap, and incredible innovation can occur during the overlap. Management is responsible for observing and governing these fuzzy edges; it is time to define and design a new MT when they become too distorted.
7 Guiding Principles
Embrace the beautiful constraints should be the mantra for all organisations. The conditions leaders create, the platforms, social contracts, MicroTeams™, and guiding principles are the beautiful constraints, the designs that enable an organisation to fulfil its purpose and deliver its vision.
It is essential to consider each of these four guiding principles as having equal weight. Where one is given primacy over the others, the system becomes corrupted, producing skewed and distorted results.
Finance
For any organisation to remain in business, it must generate a return on invested capital. Understanding how that is achieved is the knowledge that must be shared with anyone who wants to decide how their company or MT operates. As organisations distribute authority and autonomy to MTs, team members must be educated in financial principles and have support in understanding the economic consequences of their decisions. While the core financial principles will be similar for organisations, each will have unique adaptations.
Corporate Ethics
As with the ethical rules in tennis, an organisation's ethical principles define how people at all levels of the business are expected to behave. Writing these principles requires care so that there is a balance between freedom and the ethical standards expected. Also, the ethical principles should apply to the broadest possible range of circumstances.
Strategic Intent
While strategy is a good place to start, it needs to be expressed as a strategic intent that calls forth action from the perspective of guiding principles. Strategic Intent also allows the guiding principles to be translated at different levels of the organisation, remaining consistent with the overall strategy while calling forth specific action at the MT level.
Development of People
No matter what business sector, every business is a people business, and guiding principles for the development of people are as important as financial, ethical, and strategic principles. The principles define the organisation's why, what, how, and when people must be developed. As businesses grow, so must the people.
The current skills shortage is less of a skills shortage and more of a development shortage because businesses have assumed they can buy the necessary talent from the market.
The aim of any development principle must be to develop people as best you can so that they are ready for the next career move and treat them so well that they never want to leave.
8 Resulting Culture
Culture is an emergent phenomenon continually changing due to conditions in and around the organisation. Your desired culture will emerge by creating conditions based on leadership, vision, hierarchy of processes, platform technology, social contracts, MTs, and guiding principles. All of these elements are created in the language of your operating system. When aspects of your culture are lacking or unwanted, you can look to the conditions to influence the emergence of new characteristics.
The benefit of creating a new organisation design from within by learning the structure and elements that make effective organisational design are long lasting. The resulting culture is innovative and transformative, a way of being that embraces the possibility of change and is designed to leverage it.
I’ve identified the building blocks required to implement a successful transformation in a business. These building blocks do not form a system that should be implemented in your company. Instead, you must arrange the building blocks of organisational design to suit your business's needs. How you arrange them, the language you use, and the governance you put in place will be unique to your company and designed to deliver your vision successfully.
To keep your uniqueness - keep doing it your way!
9 Next Steps
Most people will consider this interesting and leave it at that, and if you are not most people, if you are someone who champions a cause, wants to make their make or is passionate about making something happen that is significant, you know you have to act.
There are three ways you can take action;
You can start making changes and using some of the ideas in this document to do things differently and involve more of your people in making your vision a reality.
You could buy and read some books. I recommend three books you can buy here: The Power of Organisation, The Power of Management and The Power of Clean Leadership.
Or you could get in touch, and we could discuss the challenges you face in making your vision a reality and discover how we could work together. That is what I do. I teach people about the different building blocks of organisational design and help them successfully implement them in their business. I work with and through your people, and the results happen quickly because your people understand your business intimately and can identify the changes needed quickly.
To book a 30-minute Introduction Call, click here. Select a time convenient to you, answer a couple of questions, and we will have a date in the calendar.
