I was looking at Deloitte’s latest human capital infographic, it’s a nice image but it illustrates our damaging obsession with formal structure.
The study identifies four key drivers of change;
- technology everywhere, digital everything
- speeding the exponential economy
- a new social contract between employer and worker
I guess we could all agree with these as important drivers – we are all seeing high rates of change in people, technology, speed and relationships.
However they go on to say that of over 7,000 global respondents, 77% are currently restructuring their organization or have recently completed the process. It is by far the biggest example they give of a response to these changes. Only 7% say they have no future plans to restructure their organization.
At a much lower level people are responding through leadership, addressing engagement, learning etc.
We work a lot with organizations introducing major changes in ways of working. In nearly every case they focus too much on structure and too little on skills.
Nearly all of them are looking for a mixture of leverage and agility, the advantages of scale together with the flexibility they need locally.
So here is an important principle – you don’t get more flexibility by adding more structure!
You get flexibility by working on the corporate culture and the way people work together – their capabilities, their connections and the way they are tasked, measured and rewarded.
True organizational change tends to flow from strategy, to structure and then to the alignment of systems and skills – the 4Ss.
Many companies don’t complete their systems and skills alignment and then conclude that the new structure is not working. They respond by going back and reorganizing again. Not only does this not solve the problem but it makes the situation worse by disrupting the networks, groups, teams and communities that emerged under the new structure to really get things done.
Once you have, for example, a matrix structure that represents the major drivers in your business – business units, functions, geography etc. then in principle you only need ever reorganize again if another major driver comes along – and this is relatively rare. Within that structure you can then exercise the flexibility you need to prioritize one over the other or to deal with environmental or internal change.
A dysfunctional structure will definitely get in the way but even the best structure will not give you the flexibility you need in a fast changing environment.
In most cases it’s probably better to focus on the soft structure such as networks, communities, teams and groups and to make sure your goal setting, metrics and rewards don’t inhibit the flexibility and the behaviors that you need.
The more we focus on structure the more we think there are mechanistic solutions to these problems, and the less likely we will succeed. If reorganizing every two years for the past decade hasn’t solved your problems then perhaps another structural change is not the answer.