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.

Outlines

00:00

📈 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.

Keywords

💡Organization Design

Organization design refers to the process of structuring and aligning the components of an organization to achieve its strategic objectives. In the video, it is the central theme, with the discussion revolving around how to effectively design an organization to execute its strategy. The script mentions that organization design is complex and involves many decisions, highlighting its importance in ensuring the organization's effectiveness.

💡Strategy

Strategy in the context of the video is the plan and direction that an organization sets to achieve its goals. It outlines how the organization will grow and compete in its market and what choices it will make regarding its operations. The script emphasizes that a clear strategy is the starting point for organization design, as it provides the defined goals and path for the organization.

💡Capabilities

Capabilities are the unique differentiators that an organization must possess to execute its strategy effectively. They are the skills, resources, and processes that enable an organization to perform better than its competitors. The video script discusses how understanding the required capabilities is crucial for determining what the organization needs to excel in its chosen strategy.

💡Structure

Structure in organization design refers to how an organization is organized, including the key roles and the allocation of power. It is one of the four tangible levers that leaders can adjust to create an aligned organization. The script mentions that while structure is important, it alone is not sufficient as it can create silos, emphasizing the need for other levers like process to complement it.

💡Process

Process in the video script refers to the management processes that link people together within an organization, defining how work flows between roles and how decisions are made. It is a lever used to cross the boundaries created by structure, ensuring that the organization operates cohesively. The script highlights the importance of designing processes that align with the organization's structure to facilitate effective teamwork.

💡Metrics and Rewards

Metrics and rewards are mechanisms used to measure success and guide behavior within an organization. They tell people how they will know if they are successful and create incentives for individuals and teams to reach organizational goals. The script notes that these are often underutilized in organization design, suggesting that they play a crucial role in aligning people's efforts with the organization's strategy.

💡People Practices

People practices encompass the talent profiles, competencies, and HR processes that an organization needs to execute its strategy. The video script discusses how these practices are essential for attracting and retaining the right people and building the necessary capabilities within the organization. It is one of the four levers that leaders can adjust to create an aligned and effective organization.

💡Culture

Culture, while not a direct part of the STAR model for organization design as mentioned in the video, is an important aspect of how an organization operates. It is influenced by the organization's strategy and the behaviors that are important for achieving that strategy. The script suggests that culture is an outcome of the organization's design and operations, rather than something that can be directly designed.

💡Alignment

Alignment in the context of the video refers to the consistency and coordination between an organization's strategy, structure, processes, and people practices. It is what determines the effectiveness of the organization. The script emphasizes that the goal of organization design is to create an organization that is well-aligned, bringing out the best in people and facilitating the work that accomplishes the strategy.

💡Five Milestone Organization Design Process

This is a specific process mentioned in the video that organizations can use to design themselves effectively. It involves understanding the current strategy, identifying capabilities, and working through five milestones to create a new organization model. The script describes this process as a way to ensure that the organization design is continuously improved and aligned with the strategic goals.

💡Talent

Talent in the video script refers to the right people needed to lead and staff pivotal roles within the organization. It is highlighted as a critical component of organization design, as the process is not complete until the right talent choices have been made. The script implies that having the right people in place is essential for the successful execution of the organization's strategy.

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]