What is Organization Design?

Summary

The 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.