What is Organizational Design?
At NOBL, we help ambitious leaders accelerate change through organizational design. As leaders in this discipline, we’ve decided to share our perspectives and tools with the hope to educate others and contribute to the growing body of open-source knowledge. This essay is a group effort from our teams around the globe. We hope you like it.
PART ONE: INTRODUCTION
When you put the user at the center of a product design process, it’s called design thinking.
When you apply design thinking to the shared experiences of customers and employees, it’s called service design.
When you apply design thinking to the way companies behave and change, it’s called organizational design (org design for short).
Org design is the next evolution of design thinking, and according to Deloitte, it’s an important concern for more than 90% of senior leaders. But like design thinking when it was introduced, few leaders have experienced org design first-hand or have training in how it works successfully.
But all of us know when work hasn’t been consciously designed.
In large companies, many of us feel stifled. Bureaucracy stands in our way of moving work forward. We’ve lost touch with our customers and the impacts of our actions. We’re tasked with responding to a faster world by working longer and harder, not smarter. We crave some semblance of work/life balance, but rarely find a calm moment to even discuss it. Work feels like a treadmill from which we can’t escape.
In rapidly scaling startups, many of us feel lost and overwhelmed. We know that what got us here won’t be what gets us to the next horizon, but we’re unsure what steps to take. What processes should be more defined, which should remain flexible? Will catered meals and ball pits be enough to retain our best colleagues? How do we hire and onboard the next onslaught of new employees, and who will do it? Work feels like a frenzy of uncertain choices, none of which we feel we can afford to flub.
In both large and scaling companies, without organizational design, we measure the wrong things and then the wrong things become our priorities. We amass bureaucracies. We create busy-work. We lose our best people, and suppress the collective potential of the people who remain. Our tools shape us, rather than the other way around. Our products become more of a reflection of our org chart than our user’s needs. We lose the cultures we worked so hard to cultivate, and eventually we lose outright to our competitors.
Let’s be clear, though: you as a leader are not to blame for these conditions. These conditions are the product of a world where technology can scale exponentially, but people cannot. The latter half of the 20th century birthed the first companies large enough and wealthy enough to rival nations, and the 21st century has given rise to companies that scale to that size and power within a matter of years. Humans have simply never had to coordinate and collaborate at this scale or at this speed. No aspect of our lives is immune: we’re struggling with it in our organizations, governments, cities, and cultures.
The challenges we face at work were germinating long before you became a leader, and will continue to accelerate long after you retire. So no, you aren’t responsible for these conditions. But as a leader, you are responsible for taking action in response to these conditions.
The first thing you must do is educate yourself. Organizational design offers a set of perspectives and tools to help you see your organization with fresh eyes and to help you make meaningful, lasting changes to it. This article serves as a comprehensive introduction to the discipline and a peek into our toolset.
PART TWO: DEFINING ORGANIZATIONAL DESIGN
Organizational Design is a human-centered approach to improving how people work together and how companies respond to change.
Organizational design borrows from the design thinking toolkit, chiefly: empathy, systems thinking, co-creation, and experimentation. Through iterative design cycles, organizational designers work with teams, in their native environment, to identify opportunities for improvement and test the fit of potential new ways of working.
What does this actually look like in practice? At NOBL, our outcome is always the same: high-performing firms and enriching cultures. But the format and output of our work varies during the course of a single engagement:
COACHING: Leadership and team coaching, change management coaching, often conducted in-person embedded with the team
RESEARCH: Sprints into competitive and comparative organizations (structures, budgets, processes, etc.) and assessing the existing conditions of a team or organization (often conducted, too, while onsite)
FACILITATION: Team offsites and workshops, critical for developing cross-team collaboration and strengthening social bonds
TRAINING: Targeted courses to address critical teaming skill gaps (e.g. cultures of continuous learning, adaptive leadership, prioritization, strategic time management, etc.)
At NOBL, these organizational design activities are conducted by teams of people with diverse backgrounds. Some of us are trained organizational psychologists and change management professionals. Others of us arrived at organizational design by leading design thinking or service design practices. A few of us are recovering management consultants. We are stronger for the collisions between our differing experiences, perspectives, and tools. We believe that this discipline can only grow more effective as people from more diverse fields participate.
PART THREE: PRINCIPLES OF ORGANIZATIONAL DESIGN
Because organizational design by its nature can affect large swaths of people with just a single change, we believe that this work must be done with care, compassion, moral intent, and wisdom. Organizations are not your petri dishes. Organizations are groups of human beings trying to be something greater than themselves and trying to achieve something that would be impossible for any individual alone. At NOBL, we’ve developed the following organizational design principles to encode what we’ve learned from our years of practice and to remind ourselves of the gravity of what we do every day:
Serve. An organization’s highest priority is to serve its customers and communities.
Anticipate change. An organization should be at least as dynamic as its environment. Changes to the organization should be expected and welcomed, so long as the changes are made in service of customers and communities.
Surrender the past. Honor what’s come before and help individuals grieve the losses that accompany change. Then, move forward together.
Chase fit, not fads. Success is an organization well-calibrated to its environment and out-delivering on its customers’ needs. Agile isn’t always the answer and six-sigma isn’t always the problem. Context is king.
Do no harm. Value small, “safe-to-fail” changes you can learn from quickly over a single, slow, sweeping, and risky change. From the small changes, spread and expand on what works. Learn from what doesn’t.
Design by doing. Organizations are complex adaptive systems, meaning you can’t understand how they behave or respond to change until you introduce changes. Diagramming in PowerPoint is not organizational design, it’s organizational fiction.
Play your zone. Focus others to first change the things in their control. Move on to the things they can influence. As you succeed together, you’ll expand both zones.
Advocate for the individual. Organizational change is merely individual behavior change on a mass scale. Individuals need the capability, motivation, and provocation to change. Train new skills. Design better rewards. Stage inspiring interventions.
Delay drawing boxes. Don’t start with org charts or titles. If you focus on purpose and strategies, structures will emerge organically.
Keep work simple. There are two kinds of organizational complexity: the complexity natural to delivering what customers need, and the added complexity of bureaucracies and personal egos. Kill the latter whenever it arises.
Make change a habit. Every team needs a recurring time and space to reflect on how to become more effective. Remember that when you document the implicit parts of teaming (norms, policies, roles, strategies, habits, procedures, and processes) you make them easier to reflect on and change.
PART FOUR: THE ORGANIZATIONAL DESIGN PROCESS
Traditionally, an organization will hire management consultants to tell them what to do, and then hire a change management firm to plan and oversee those changes. Our organizational design process combines both fields into a single, modern process that creates rapid, viral change. For most clients, our process can be completed in just 100 days.
Our organizational design sprint process, in five steps:
Prep: We ready the launch of the program by defining an initial set of change initiatives
Align: We align leaders around the changes to come, brief affected teams, and kickoff change initiatives
Prototype: We develop and launch minimum viable change experiments
Trial: We successfully capture opportunities and realize our change goals by testing and refining the change prototypes
Adopt: We ensure 100% adoption of the successful change programs
Our process is unique and produces unique results because:
We embed onsite with our clients. This ensures we learn directly from their teams, absorb their culture, and are immediately available to troubleshoot any barriers or blockers.
We co-create change. We involve our client’s teams in the design process starting on day one. They help us uncover insights, prototype new ways of working, and then they take the lead on testing and refining those changes.
We make change simple. Our researchers scour the globe for new ways of working sourced from the highest-performing teams, but we distill those practices into minimum viable prototypes that make it easy to try and then tailor to our clients’ needs.
We create lasting cultural moments. To make the need for change feel both inspiring and inevitable, we take teams offsite twice in our process to create distinct cultural events. At our Align event, we ensure leaders are aligned around the priorities for change. At our Adopt event, we ensure those same leaders are fully bought in to the changes their teams have designed and tested. These offsites are designed to be emotional and memorable for our attendees.
We make change spread. As our prototypes in change begin to gain traction in one area of the organization, we introduce them to teams in other areas. Because we’ve involved their colleagues in the design and implementation of these changes, new teams are more apt to accept these prototypes. One small change quickly becomes a viral phenomenon inside the organization.
What do we mean by prototypes in new ways of working? When we work with clients, we tackle their challenges by developing lightweight tools and new ways of working they can try and refine to suit their needs. A few examples include:
When a client found their departments no longer working well together, causing project delays and in-fighting, we developed a cross-functional team structure, a process for forming those teams, and a set of habits and rituals for the team to follow. Those instructions for the team fit on just two printed pages and allowed the program to get off the ground quickly and prove immediate results. Over time, the team has refined our initial approach to suit their evolving needs.
When a client in a rapidly scaling startup realized that group decision-making was slowing them down, causing them to miss opportunities, we developed a simple decision tree (and eventually a Slackbot) for their teams to use to find the right decision-making model for each situation they encountered. This tool has evolved into a speedy governance process which includes fast decision-making sessions.
For a client with non-stop, high-stakes projects, we helped them avoid constant fire drills by helping them develop a simple checklist to gauge 1) if the issue was truly serious, 2) who the right people to contact were, 3) who not to bother, and 4) how to ensure open lines of communication during the fire drill. The department went from having a weekly widespread crisis to nearly none at all.
When an established client found themselves being outpaced by upstarts, we developed a lightweight innovation pipeline structure and hired expert trainers in design thinking and physical prototyping. After training, our clients uncovered millions of dollars in new opportunities just by visiting a local store with paper prototypes. This team went on to launch new innovative services and grab tech headlines for their brand.
PART FIVE: PREPARING INDIVIDUALS FOR CHANGE
By now, it should be obvious that change is the natural outcome of the organizational design process. But individuals are often resistant to change, especially at work. After all, change threatens the loss of their time, pride, control, familiarity, competence, and narrative.
To help the people we work with overcome their resistance to change and avoid change fatigue:
We help leaders craft an inspiring vision for change. People won’t embrace change if they don’t like where it will get them. We work with leaders to fully articulate a compelling vision which includes: why, why now, what it will look like when its successful, what questions remain unanswered, and what parts others are called to play in the process.
We prepare teams for the emotional journey to come. Our organizational psychologists walk our clients through the possible emotions they may feel in response to the change process. We build their self-awareness for change resistance by helping them understand what’s to come, and by giving them language to express those feelings.
We help leaders unlock fast wins. When change moves quickly from talk to action, cynics turn into champions. We look for easy ways to build momentum so that their staff gains energy as they move the work forward.
We help teams reduce unnecessary work and unproductive meetings. Change takes time—time which has to be taken away from another activity or priority. One of the first things we do with leaders is review their processes and meeting habits with the goal of finding 10-20% more time back. We then spread those changes down to more teams.
We share control over the design process. Our process is highly collaborative and at times, client-led, so that the people we work with feel a greater sense of ownership in the process. If they want to slow down or take a short break, they have the power to do so.
PART SIX: THE STAGES OF ORGANIZATIONAL DESIGN NEEDS
As organizations scale, the specific help they need changes. Needs can be driven by funding, customer acquisition, the rate of new hires, employee engagement, the age of the company, team performance, an acquisition/IPO, or even by the founder’s well-being (or lack thereof). At NOBL, we obsessively study what organizations should be paying attention to at each stage of their growth. While there is a great deal of fuzziness between these stages, and no two companies follow the same growth trajectory, our model is meant to serve as both a checklist and conscious reminder that every stage of growth triggers new priorities and requires a renewed focus.
Based on our experience and research, as organizations scale their strategic focus may evolve in this order:
Conflict and diversity: While searching for the right idea and execution, proto-organizations should embrace healthy conflict and diverse perspectives.
Unity of command: To present the case for a business as a coherent idea, fledgling organizations need coherent and effective leadership structures.
Formal planning: As product market fit locks in and rapid growth begins, organizations can finally begin developing medium-term plans.
Formal structures: For sustainable growth, organizations need structures that deliver upon their strategy and work well together.
Leadership refresh: Passions may need to be renewed and conditions may require new strengths and perspectives.
Re-risking: Defending a captured market position and developing new opportunities requires all forms of innovation.
Depicted in our model, the engagement ranges in blue are an amalgamation of CultureAmp and Gallup data. The founder’s emotional journey and team performance lines are the average of the many conversations and workshops we’ve had with our clients. Social complexity is charted as the rate of new relationships generated by each new hire. Survival rate is based on data from Crunchbase, Radicle Labs, and Fortune. The examples shown at the bottom represent a small fraction of our research database of startup case studies.
Our Service: Scale Advisors, a lightweight advisory service for both scaling startups and venture funds that helps organizations scale successfully (reach out for more info)
PART SEVEN: EXPLORING AN ORGANIZATION FOR THE FIRST TIME
As an organizational designer, either working for a client or in-house, the pressure to get up-to-speed quickly is real. At NOBL, some of our prep activities will be familiar for clients: we conduct a representative sample of 1:1s; we use a proprietary survey to measure attitudes toward change; and we conduct project retrospectives (A.K.A. post-mortems). But in addition to those activities, we include two critical workshops in our prep process.
First, we map the organization at 50k feet. Specifically, we conduct a workshop with the organization’s or department’s leadership to see if, strategically, the organization is effective and coherent. We call this tool our Organizational Charter.
Our workshop helps clients see their organization for the first time in a truly holistic way. To do so, we use an Organizational Design Charter that encompasses five domains: Environment, Purpose, Strategies, Structures, and Systems:
Environment: the conditions around the organization. We go wide and explore competitors, customers, partners, technological opportunities, cultural trends, and forecasted futures by industry experts. We want to understand the forces exerting pressure on the organization and its leadership.
Purpose: the reason why we choose to work together in response to the Environment. We ask leaders to describe the legacy they want to leave behind, their vision for the company’s future, and how they’ll mark their progress toward that vision. We look for alignment and misalignment from leaders here.
Strategies: the bets we’re currently making to fulfill our Purpose. We ask leaders to define the tradeoffs they’re making to win customers and block competitors. We interrogate those tradeoffs by having leaders explicitly state the assumptions behind those choices (e.g. “We price ourselves at a discount in the market because we hypothesize that there will eventually only be room for one player in our space.”) We look to see that you can draw a straight, rational line from an organization’s Environment to the Strategies they’re following.
Structures: the division of work and resources we need to execute our Strategies. Before we have leaders draw an org chart, we have them draw the most critical processes for the company or department (e.g. how a marketing campaign is created for a new product). We then have them reflect on their Purpose and Strategies to identify possible alternative processes and structures (e.g. if faster speed to market is our strategy, what process barriers can we remove and can we benefit from cross-functional teams?).
Systems: the tools we need to align behavior across our Structures. Here we ask leaders to list the cultural norms, rituals, values and global tools that are most essential to the organization’s health. Here we look to see if the organization is being overly influenced by its systems.
These domains sit like Russian nesting dolls: Purpose follows Environment. Strategies follow Purpose. Structures follow Strategies. Systems follow Structures. Therefore, a change within a higher domain should trigger changes to the domains below it. Too often, teams start at the Structure level, and hold a reorg with the hopes they’ll be more effective. But if you haven’t addressed the Strategy motivating the reorg in the first place, your team will continue to struggle. And in today’s dynamic environment, the organizations that can sense change better and make internal changes faster will outperform their rivals. This workshop is incredibly powerful, not only in helping us see the organization as a whole but also in testing alignment among leaders of the business.
After we’ve looked at the organization from 50k feet with our org charter, we zoom in on the employee experience. We partner with our counterparts in HR and involve a sample of both brand-new and veteran employees to reflect on the phases of the employee journey using our employee experience map. We look for bright spots where the organization is exceeding expectations, as well where the employee experience needs to improve. The opportunities we identify will be developed into prototypes in new ways of working and trialed with teams.
Often, too, our HR partners continue to use our map as a dashboard to measure changes across the employee experience.
Putting both workshops together, the on-the-ground experience of an employee and the strategic view of the organization, we can quickly generate issues and opportunities to be addressed with our organizational design process. Often in those workshops, we even being to prototype solutions that can then be trialed by teams.
Our Service: Employee Experience Design, a 1-day workshop designed for HR and People Ops teams to apply org design thinking to their employee experience (reach out for more info)
PART EIGHT: EXPLORING A TEAM FOR THE FIRST TIME
After we’ve explored the organization as a holistic system, we need to get to know the individual teams we’re supporting. After all, teams are where the work gets done and where our changes will be felt most.
Always, the first step is to get to know the people on the team. For that, we use a tool called a Personal Primer (others call this a User Manual). This quick exercise exposes basic needs and working preferences of the team. It’s a great way for us to get to know the folks on the team quickly and it’s even a useful exercise for teams who have worked together for a long time — you might work with someone every day but still overlook, or incorrectly make assumptions about, their work habits. We typically tailor the Personal Primer to account for issues we see across the organization. For example: if we see that work/life balance is a challenge, we may ask a question like, “What does it look like when you’re beginning to feel burned out?”
Questions we often ask:
How do you prefer to communicate?
What does it look like when you disagree?
How do you respond to a crisis at work?
When you need help, how do you let others know?
When you need help, what do you want that help to look like?
How have others misunderstood you in the past?
What organizational changes do/don’t you welcome?
What do you expect from your colleagues?
How do you want to be remembered?
Personal Primers are great for us as outsiders, but they should also be used by the team when onboarding new teammates. The primer helps everyone get to know each other better by asking the important questions we rarely stop to ask each other.
Once we’ve gotten to know the members of the team, we turn our attention to the dynamics between the tea that express themselves through the work. We believe that teams can be described and improve by focusing on six elements of a team’s anatomy:
Customers: First, we define the internal or external customers who consume the direct output of the team. Using design thinking tools (like the jobs-to-be-done framework), we explore the met, unmet, and emerging needs of those customers.
Strategies: Like the organization’s strategies, next we interrogate the choices and tradeoffs the team is making to serve their customers. We look to make sure the team’s strategies are aligned with their customers’ unmet and emerging needs that we identified.
Projects: We then list the biggest chunks of work required to fulfill the team’s strategies. We help the team re-prioritize their portfolio based on their strategies.
Processes: After we know the work to be done, we have the team map their high-level processes that move the work forward. We then conduct a process retrospective to identify improvements and reduce friction.
Roles: To increase clarity and confidence on the team, we have them then define who owns each step in the process and what they need to fulfill their role effectively. Here we also check to make sure everyone’s role equally balances responsibility with control.
Rhythms: Lastly, we map the team’s recurring habits and rituals. We help them make those discussions more efficient while also ensuring there is time set aside to routinely find ways to become more effective.
We’ve found that teams can remain high-performing by setting aside time twice a year to reflect on and improve these elements of their team.
Once we’ve come to understand and empathize with both the individuals of the team and the behavior of the team as a whole, we can introduce changes far more effectively and humanely.
Our Tool: The Anatomy of a Team (PNG), the elements of a team which dictate how a team works together
Our Service: Team Refresh, a 2-day workshop to boost your team’s performance, where we reflect on the anatomy of your team and make improvements (reach out for more info)
PART NINE: WARNINGS FOR NEW ORGANIZATIONAL DESIGNERS
Warning: Use Personality Tests Cautiously
When you’re getting to know a team, a personality test can seem like an effective tool. But they can do more harm than good when used for the wrong purpose. Rather than helping leaders develop self awareness, they treat randomly-acquired habits as stable identity, which limits people’s ability to change in response to new circumstances. They also tend to create labels, which can hamper team members’ perceptions of each other. And they can entrench conflicts by leading people to see conflict as personality differences, instead of more solvable issues of aligning on priority and values.
When getting to know your team:
Get curious. Administer a light test, but instead of thinking of a person’s positions as who they inherently are, think of it as somewhere they’ve been. What are they seeing that is different than what you’re seeing? Question their position with a tone of curiosity rather than doubt.
Build psychological safety. Have everyone talk about a movie they’ve all seen. This will serve some of the ends of personality testing: giving people practice at discussing a phenomenon from different points of view, without the labels and baggage attached.
Allow room to grow. The people around you are not sitcom characters, falling into the same patterns week after week. If you want to get to know them better, try Peter Drucker’s trick: write down your predictions about how the people around you will ultimately behave in a given situation, then follow up to see what they actually did. There will be plenty of surprises.
Warning: Don’t Fall in Love with Fads
People who are new to organizational design (including leaders) can become myopically enamored by a shiny new teaming model like agile squads or with specific companies, such as Spotify or Bridgewater Associates. They see a successful organization or read a persuasive article and instead of prototyping small changes as we do, they try to copy and paste an entire company on top of another. These new practitioners lack an understanding of the role market conditions should play in the organizational design process and they also underestimate the damage such widespread changes can cause (especially when it’s change for change’s sake).
At NOBL, we think that instead of there being a single best model for organizing a company, there’s instead a spectrum of “fixed” vs “fluid” models and tools. We believe that the right portfolio of ways of working for your organization is likely a combination of tools from both sides of the spectrum.
Let’s dive deeper:
Fixed models (like military chain of command structures, Six-Sigma, TQM) tend to work well in maturing markets: when competitors are consolidating and new entrants are rare, when products are relatively static, and when consumers don’t yet appear to want anything different. These models ensure foremost that the organization produces quality products and consistent financial returns. However, fast-scaling startups can often benefit from borrowing aspects of fixed models to help stabilize their operations as they grow.
Alternatively, fluid models (like flat org charts, agile squads, democratic governance) tend to work well in emerging markets: when new competitors are popping up every day (often from unexpected places), and when products are dynamic and business models have yet to be fully validated. These models ensure foremost that the organization moves quickly and can vary its output to test and learn from the market. However, legacy organizations can often benefit from borrowing aspects of fluid models, especially around their products and services which are at risk of disruption.
If you’re a new practitioner, please heed the lesson to not fall in love with any single company or model. Continue to explore new ways of working and let yourself be inspired, just don’t assume that what works well for one company is easily translatable or even necessary for another company. Try small experiments and listen to the teams experiencing and advancing the changes.
PART TEN: CONCLUSION
Successful products put the user at the center of their form and functionality in order to become beloved and irreplaceable.
Successful businesses thoughtfully design customers’ experiences in order to exceed expectations and ensure customers will buy the service again.
Successful employers thoughtfully design employees’ experiences in order to exceed expectations and ensure employees will DEVOTE THEIR LIVES, day in and day out, to serving their customers.
Organizational design isn’t a nice to have, it’s mandatory in a world of exponential scale. In this world, organizations continually drift toward the edge of chaos as they interact with their environment. Leaders aren’t responsible for that chaos, but they are responsible for steering in response; both through their own actions and by empowering those closest to the customer.
Organizational design can help you see your environment with fresh eyes. It can rally your people behind a purpose that genuinely inspires them. It can unlock new strategic opportunities. It can make structures more clear and less political. It can simplify systems and knit together the organization under one unified culture.
If the world of work were more thoughtfully designed, perhaps the majority of workers wouldn’t be disengaged. If more leaders understood org design, maybe fifty-percent of employees wouldn’t quit because of their manager. Just maybe we could give back the 30% of time that employees say isn’t used productively. Maybe we could erase the lack of diversity in our firms and instill a greater sense of belonging among our teams. Maybe we could save more world-changing companies and technologies from being scaled to death.
The first step is to learn. The next step is to listen to those around you. Then, together, make thoughtful changes and learn from where they take you.
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