What is Organization Design?
Summary
TLDRThe video script from Kate's Kler delves into the intricacies of organization design, utilizing the Jay Galbraith Star Model. It emphasizes the pivotal role of a clear strategy, which dictates the organization's growth and competitive edge. The script outlines four key levers for alignment: structure, processes, metrics and rewards, and people practices. It also touches on the indirect design of culture through organizational behavior. The five Milestone Organization Design Process is introduced as a systematic approach to strategy implementation, capability assessment, and operational model enhancement, culminating in a continuous improvement loop.
Takeaways
- 🔍 **Strategy Foundation**: A clear strategy is essential for defining goals and the path to achieve them, guiding how an organization will grow and compete.
- 🏗️ **Organizational Capabilities**: The unique differentiators and competitive advantages determine the capabilities needed for execution, shaping the organization's design.
- 🤝 **Structure & Integration**: Structure provides the primary architecture, but it must be complemented by processes to overcome silos and integrate teams.
- 🔄 **Processes**: Management processes are crucial for aligning roles, facilitating work flow, and making decisions across the organization.
- 🏅 **Metrics and Rewards**: These are often underutilized but are key to defining success and incentivizing behaviors that align with organizational goals.
- 👥 **People Practices**: Talent profiles and competencies are vital, and HR processes must build and maintain the right capabilities to execute strategy.
- 🌟 **Culture as Outcome**: While culture is important, it is an indirect result of the organization's design and operations, not a direct design element.
- 🛠️ **Organization Design Process**: A complex and challenging task, organization design requires a structured process involving multiple decisions and considerations.
- 🔮 **Five Milestone Process**: The script outlines a five-step process for organization design, starting from understanding strategy to transitioning to a future state.
- 🔄 **Continuous Improvement**: Organization design is an ongoing effort, requiring continuous learning, adjustment, and leadership involvement.
Q & A
What is the primary focus of organization design according to the script?
-The primary focus of organization design is to align the organization's structure, processes, metrics, rewards, and people practices with its strategy to achieve defined goals and execute its strategy effectively.
What model is used to describe the elements of organization design in the script?
-The Jay Galbraith Star Model is used to describe the elements of organization design, which includes strategy, capabilities, structure, process, rewards, and people practices.
How does a clear strategy impact an organization according to the script?
-A clear strategy provides a defined goal, lays out the path to achieve it, outlines how the organization will grow and compete in its markets, and defines the choices the organization will make about what to do and not do.
What are the four tangible levers leaders can adjust to create an aligned organization?
-The four tangible levers leaders can adjust are structure, process, metrics and rewards, and people practices.
Why is structure alone not enough for an effective organization design?
-Structure alone is not enough because every structure creates silos or boundaries between people working together, and to cross these boundaries, additional levers like process, metrics and rewards, and people practices are needed.
What is the role of process in organization design?
-Process is used to knit the organization together, defining how work flows between roles and how decisions are made, creating management processes that link people and create the right conversations.
Why are metrics and rewards important in organization design?
-Metrics and rewards are important because they tell people how they will know if they are successful, define how success is measured at the business level, and create incentives at the individual and team level to guide behavior towards achieving goals.
How does the script suggest approaching people practices in organization design?
-People practices should focus on identifying the talent profiles and competencies needed to execute the strategy, and establishing HR processes and routines to build those capabilities and ensure the right people are attracted and retained.
Why isn't culture considered a direct part of the STAR model for organization design?
-Culture is not a direct part of the STAR model because it is an outcome of the way the organization works rather than a direct design element. It should be considered during strategy development, but it cannot be designed directly.
What is the five Milestone Organization Design Process mentioned in the script?
-The five Milestone Organization Design Process includes understanding the current strategy and capabilities, business case and discovery, strategic grouping and integration, making talent choices for pivotal roles, and transitioning from the current state to the future state while learning and adjusting.
How does the script emphasize the importance of alignment in organization design?
-The script emphasizes that alignment of an organization, which involves the coherent functioning of strategy, structure, process, rewards, and people practices, is what determines its effectiveness and success in achieving its goals.
Outlines
📈 Organization Design Explained
The paragraph introduces the concept of organization design, emphasizing the importance of understanding the 'what' and the 'how'. The 'what' refers to the Jay Galbraith Star Model, which outlines the elements of organization design starting with a clear strategy that sets goals and defines the path to achieve them. This strategy outlines growth, competition, and choices about what the organization will and won't do. The 'how' involves determining the capabilities needed for the organization to execute the strategy, which are influenced by the organization's unique differentiators and competitive advantages. The paragraph sets the stage for a deeper dive into the components of organization design.
Mindmap
Keywords
💡Organization Design
💡Strategy
💡Capabilities
💡Structure
💡Process
💡Metrics and Rewards
💡People Practices
💡Culture
💡Alignment
💡Five Milestone Organization Design Process
💡Talent
Highlights
Organization design is best explained by discussing the 'what' and the 'how'.
The Jay Galbraith Star Model is used to describe the elements of organization design.
Strategy is the starting point, providing a clear goal and path to achieve it.
Capabilities are determined by what an organization must do better than its competitors.
Leaders have four tangible levers to align the organization: structure, process, metrics and rewards, and people practices.
Structure is important but can create silos; processes are needed to cross these boundaries.
Metrics and rewards are often underutilized but are crucial for guiding behavior towards goals.
People practices involve identifying the talent and competencies needed to execute strategy.
Culture is an important outcome of organization design but cannot be designed directly.
Alignment of an organization determines its effectiveness.
The goal is to create an organization that brings out the best in people and accomplishes strategy.
Designing organizations is complex and requires a process, such as the five Milestone Organization Design Process.
Understanding the current strategy and capabilities is the first step in the design process.
Milestone one involves business case and discovery, determining the problem and organizational implications.
Strategic grouping and integration work is done by thinking about structure and process together.
Designing the organization involves creating and iterating options, and prototyping before final decisions.
Organization design is not complete until the right talent is chosen for pivotal roles.
Transitioning from the current to the future state is the final step, with learning and adjusting along the way.
Organization design is an ongoing work of leadership, requiring continuous improvement.
Transcripts
[Music]
at Kate's kler 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 galbert 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 will 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 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 at 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 or
organization design designing
organizations is complex and challenging
work encompassing many decisions to do
it well you need a process at Kate's
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 case 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
their 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 at KES
ker.com
[Music]
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