Shipulski On Design

There are many different organizational structures, each with its unique set of strengths and weaknesses. The top-down organization has its strong alignment and limited flexibility while the bottom-up has its empowering consensus and sloth-like pace.  Which one’s better?  Well, it depends.

The function-based organization has strong subject matter expertise and weak cross-function coordination, while the business unit-based organization knows its product, market and customers but has difficulty working east-west across product families and customer segments.  Is one better than the other?  Same answer- it depends.

The matrix organization has the best of both worlds – business unit and functional – and isn’t particularly good at either.  And there’s the ambidextrous organization that I don’t pretend to understand.  If I had to choose one, which would I choose? It depends.

The best organizational structure depends on what you’re trying to do, depends on the environmental context, depends on the organization’s history and biases and the general state of organizational capability, capacity and profitability.  But that’s not the whole picture because none of this is static.  All of this changes over time and it changes in an unpredictable way.  Because the best organizational structure depends on all these complicating factors and the factors change over time, there is never a “best” organizational structure.

Constant change has always been the dominant fundamental perturbing and disturbing our organizational structures.  But, as competition turns up the wick and the pace of learning builds geometrically, change’s ability to influence our organizational structures has grown from disturbing to dismantling.

Change is the dominant fundamental, but its real power comes from the uncertainty it brings to the party.  Our tired, old organizational structures were designed to survive in a long-dead era of glacial change and rationed uncertainty.  And though our organizational structures were built in granite, the elevated sea levels of uncertainty are creating fissures in our inflexible organizational structures and profitability is leaking from all levels

If uncertainty is the disease, adaptability is the antidote.  The organization must continually monitor its environment for changes.  And when it senses an emerging shift, the organization it must move resources in a way that satisfies the new reality.  The organization structure shifts to fit the work.  The structure changes as the character of the projects change.  The organizational structure never reaches equilibrium; it survives through continual evolutionary loop of sense-change-sense.

I don’t have a name for an organization like this, and I think it’s best not to name it.  Instead, I think it’s best to describe how it behaves.  It’s a living organization that behaves like a living organism.  It wants to survive, so it changes itself based on changes in its environment.  It’s an organization that self organizes.

Directionally, organizational structures should be less static and more dynamic, and they should evolve to fit the work.  The difficult part is how to define the explicit rules on how it should change, when it should change and how it decides.  But it’s more than difficult to describe explicit rules, it’s impossible.  In domains of high levels of uncertainty there can be no predictability and without predictability a finite set of explicit rules will not work.  The DNA of this living organization is implicit knowledge, evolutionary experimentation and personal judgement.

I’m not sure what to call this type of organizational structure, and I’m not exactly sure how to create one. But it sure sounds like a lot of fun.

Image credit — actor212

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