Part 4: The Organization
In “Part 3: The Team” of our five-part blog series, we explored how high-performing teams deliver work in an Adaptable Organization. However, teams need to be allocated thoughtfully within an organization to be able to collaborate effectively together and avoid duplication of work.
In an era of exponential change, traditional organization models are not enough. So, how should organizations begin changing their structure and people to work around customer needs? Their purpose and structures need to evolve to encourage flexibility and engagement by using the power of informal networks, connections, and systems.
Adaptable Organization design aligns formal and informal structures to customer-focused missions.
Traditional organization charts are outdated. “Sticks and boxes” offer little insight into how work gets done and who influences whom. Organization charts cannot account for the blurred boundaries of the broader ecosystem. In an Adaptable Organization, value emerges from assessing informal structures within the organization: relationships, power, connections, and informal communication. Because the informal system can be more powerful in influencing behavior, efforts to innovate within the formal system often fail. Today, even successful organizations may succeed despite their structure, rather than being enabled by it, and the collective “calorie burn” of individuals trying to navigate a structure that works against their preferences and working norms is a truly wasteful endeavor.
Building a network based on natural human interactions does not mean relying on people to form networks and hope they meet the needs of the organization. Adaptable Organizations prioritize design efforts on getting as close to the customer as possible. Adaptable Organization design uses informal networks to assess how individuals and teams align to identified customer missions.
The new networked design must balance customer adaptability and scaled efficiency.
In the ongoing battle between efficiency and flexibility, many organizations believe that they can only have one or the other. Adaptable Organizations simultaneously manage efficiency and flexibility through centralized and decentralized teams. They also recognize that organization design is not static and shift teams accordingly as the work or environment shifts. Certain teams within the organization may operate in a more centralized, operationally focused “Shared Services” model, whereas others that interact with the external ecosystem with a growth and innovation focus may deploy more cross-functional teams. Even with customer mission-based design, many organizations, particularly in highly regulated industries, will need to maintain a stable backbone of internal support functions. Organizations pursue efficiency, structure, and functional expertise in an adaptability model where it makes sense.
The design of an Adaptable Organization will be very different for each organization but will always rely on teams. Deloitte has long advocated the power of networks-based teams.1 Team-based design focuses less on who people work for and more on who people work with. Teams are diverse, often cross functional, connected by specific missions to serve a customer, product, or organizational outcome and have clearly defined cultures, mindsets, and behaviors. Teams working in this way can more easily leverage the power of diverse thought to help achieve successful outcomes by working with (or even more easily meeting with) people who think differently, who ask different questions, and who approach problem solving in a way that helps the group see around all sides of a challenge.2
To enable an Adaptable Organization, carefully establish flexible governance and decision-making models.
For this model to work effectively, governance (decision-making) must also become adaptable, given the absence of traditional top-down formal hierarchy. Adaptable Organizations deploy minimal bureaucracy (e.g., pushing signoff authority down to lower levels of the organization) that supports appropriate risk management without excessive meetings, reviews, and escalations. To enable success, power should flow away from those who are likely to defend their autonomy and toward those who seek to support the organization’s purpose. A test-and-learn approach to implementation is typically more effective Adaptable Organization design. When shifting from a purely stable organization to an adaptable one, evolutionary, incremental changes are most effective. The figure below highlights options, starting with a safely-piloted approach in projects or experimentation to test the culture and ways of working required for the organization. Some organizations will aspire to move all the way to the right and deploy autonomous, customer-focused P&L accountabilities and teams across the enterprise. Others will see maximum value somewhere in the middle.
Source: Deloitte Consulting LLP, 2019.
The structure, governance, and models will look different depending on the stability of the external environment and the complexity of customer missions. However, generally speaking, leading practices encourage a larger number of cross-functional teams in order to minimize hand offs and work more holistically toward solving customer needs. Once established, the customer-focused structure comes alive, now representing an organism instead of a rigid, mechanistic organization. Flexible design establishes a platform enabling the free flow of ideas, culture, and change across the organization, and aligns teams, leaders, and individuals to the new way of working. Measuring the success of these models in new ways balances their tangible and intangible value. Adaptable Organizations emphasize softer metrics like team performance and human relationships. In many team-based organization designs, the concept of a C-suite does not disappear; in fact, it becomes more important and requires symphonic harmony to navigate today’s complex environment. The role of the C-suite shifts from independent functional experts to the ultimate cross functional team.3
Organizing work along informal systems in the way people naturally behave helps maximize opportunities to drive experimentation, innovation, and idea generation and makes for a happier workplace. An Adaptable Organization understands and taps into the value of informal systems, relationships, and connections and organizes work through a network of multidisciplinary, living organizations. Our final post in this series on the Adaptable Organization will take a closer look at how successful organizations—with the right individuals, leaders, and teams—thrive in the ecosystem.
Tiffany McDowell is an Organization Transformation principal in Deloitte Consulting LLP’s Human Capital practice and leads Deloitte’s Organization Strategies Market Offering. She focuses on delivering operating model, organization design, talent strategies, and global change management solutions for large-scale transformation projects.
1 Human Capital Trends 2016: Out of sync?, Deloitte, 2016.
2 Diversity’s new frontier: Diversity of thought and the future of the workforce, Deloitte, 2013.
3 The Fourth Industrial Revolution is here—are you ready?, Deloitte Insights, January 2018.