Video Transcript: Organizational Design

At Kates Kesler, we're often asked, what is organization design? We find it best  explained by talking about the what and the how. Let's start with the what. We  use Jay Galbraith's Star model to describe the elements of organization design.  It begins with strategy. A clear strategy provides a defined goal and lays the path to get there. It outlines how we'll grow and compete in our markets and defines  choices we'll make about what we do and don't do. Once we have a clear  strategy, we need an organization to get us there. What are the unique  differentiators our organization must have. What must we be able to do better  than our competitors? The answers to these questions determine the  capabilities that we need for our organization to execute the strategy. Leaders  have four tangible levers to adjust to create an aligned organization. The first is  structure. How should we organize? What are the key roles? How should power  be allocated? What kind of structure should we use as the primary architecture  of the organization? While structure is very important, it is a powerful but blunt  instrument. Structure alone is not enough. Every structure creates silos or  boundaries between people working together. To cross these boundaries, we  turn to our second lever process, we need ways to knit the organization  together. Decisions need to be made about how work flows between roles and  how decisions are made. Management processes that link people together and  create the right conversations need to be designed in alignment with the  structure. Third, we need to consider metrics and rewards, which are often  underutilized in organization design. Metrics and rewards tell people how they'll  know whether they are successful. At a business level, we need to determine  how to measure success, and in an individual and team level, we need to create incentives that guide behavior to reach our goals. None of this is possible  without people. The final lever is people, practices, what talent and profiles are  needed? What competencies do we need in order to execute our strategy, what  HR processes and routines will build those capabilities and competencies and  ensure we are attracting and retaining the right people? We are often asked,  Why isn't culture a part of the Star model for organization design. Culture is an  important part of organization design. It should be considered as part of strategy development. We suggest leaders identify what behaviors will be most important in achieving our strategy. What will it feel like to work in our organization if we  are successful? However, you can't design culture directly. It is an outcome of  the way the organization works. That's why we say alignment of an organization  is what determines its effectiveness. Our goal is to create an organization that  brings out the best in people and makes it easy to do the work that will  accomplish our strategy. Let's move on to the how of organization. Design.  Designing organizations is complex and challenging work encompassing many  decisions to do it. Well, you need a process at Cases Kesler, we use the five  milestone organization design process. We begin by understanding the current  strategy, the capabilities required to execute the strategy, and the current 

operating model. This knowledge then informs work in each of the five  milestones. In milestone one business Kates and discovery, we determine what  problem we're trying to solve, the organizational implications of the strategy and  the gap between where we are and where we're trying to get to. From there, we  can start our strategic grouping and integration work. Think structure and  process together. We choose a basic structure that supports the strategy and  begin tying the pieces together, intentionally designing the points of linkage  across boundaries. We tend to do this work in a very participative way, involving  people from across the organization. We really focus on the design in  organization design to create and iterate options, evaluate them and create  prototypes that can be used and tested before we make final decisions. Once  we're clear on our new organization model, we need great people to lead and  staff pivotal roles. Organization design isn't finished until the right talent choices  have been made. Finally, we must determine how we will transition from our  current state into the future state, learning and adjusting as we go, realizing that  organization design, like any continuous improvement, is the ongoing work of  leadership. There you have it together. These two models describe how we  bring the what and the how of organization design together with great success,  both with small and large firms around the world. Please learn more about  us@casekesler.com.