I recently wrote about the importance of “Framework Thinking” as a way to simplify how you look at problems, structures, and processes so I thought I would extend that thinking as an example of how you can think about how you organize your business structure. Scaling an organization requires an evolution of maturity in your structures, your processes, and your approach to priority management and without recognizing that need for evolution and a focus on building a solid foundation you can quickly find yourself in crisis mode as you grow.
I have written about the importance of foundation as well in the past as it related specifically to building an innovation capability in your organization, but the same concept of foundation applies as you think about your organizational structure.
Most leaders and organizations think of their organization in terms of functions, usually articulated on a simple organizational chart.
Each function fits nicely into a box on the grid and each box is filled with a leader, often with grand titles like CMO, COO, CPO, COO, CHRO, CFO, or CIO. Areas of responsibility are clearly defined by the function of the box, and the CEO is tasked with aligning all of the separate interests around the common organizational vision and strategy as you grow the business.
While this view is the commonly accepted way to articulate the organizational structure, I would argue that it is also a driver for the siloed behaviours we often see in companies today. Each leader has a scope of responsibility and drives to execute within that “box” to deliver against their metrics and measurements and maximize their functional value to the organization. The problem is that while the focus lives within the box the organization doesn’t have a strong common foundation or a clear cross-functional vision of differentiating value that can be easily seen from the structure.
If we think only of the organizational structure we wind up with organizations that behave in a misaligned fashion with different processes and standards in each area of the business. Individual teams have their own norms for behaviour, culture, standard operating procedure, and measurement that aren’t necessarily aligned to other teams.
Rather than thinking of an organization as a simple organizational chart I would suggest you instead consider two new items in your organizational structure: foundational capabilities and differentiating value creators.
The foundational layer provides standards for how the business with operate, providing core capabilities to the organization that can be shared across silos and which drive a standard approach to work. In the foundation we find capabilities like business management, financials, process management, operational excellence, measurements, human resources, and metrics. The foundation provides a solid base of operations for the organization which will allow it to scale and grow while operating from a common foundation.
While this addresses one half of the scaling equation it still allows the individual functions to map to their own vision and strategy which can create misalignment in the value that the organization creates. You are now in a position to scale your operations, but you may continue to be misaligned in your approach to the market and to what matters to your customers.
The final component that is required to truly align your team to be ready to scale and win in the market is a common differentiating vision. This is where you bind the top of the “house” together to create clear alignment from the foundational capabilities to the organization’s vision, strategy, and innovative capabilities which will deliver value to your customers and ultimately create value for your company. I call this your “house of differentiation”.
With the roof securely mounted on the top of the house you can direct each of the disparate functions within your organization toward a common set of outcomes building from a common set of core capabilities. Teams will align their behaviours and culture to the norms and expectations of the organization, and will measure themselves according to metrics that drive value out of the system.
Simply visualizing your organization in a slightly different way you can see quickly how each team can support the development of an orchestrated ecosystem that is ready to win in your market and quickly focus on the things that are important to align that value. In a future post I will look at the process of priority setting for those organizational activities that will help you build this alignment and get you out of the crisis and fire-fighting that plagues many growing organizations.
Frameworks work. They simplify your thinking. They help you visualize and communicate your story. Think about your own organization and how it is currently organized and how you tell that story. Is it clear how each business unit supports the overall organizational value proposition? Can people quickly see how the pieces interact with each other? Could you explain in 5 minutes or less to your board how you have organized your capabilities to win? Consider using a framework like the “house of differentiation” to visualize your organization and see how your story changes. And let me know how it works for you!
Tim Empringham, MBA
Tim Empringham is a passionate advocate for Innovation in organizations of all sizes as a mechanism to drive growth, create uncontested market space, create new customer value, and drive efficiency into the internal organization. His focus is on disruption of thinking and markets through integrative thinking, structured Innovation frameworks, and leadership development of Innovation and Change leaders within the organization.