Design a unique structure for your unique business
When a company wants to create a new organizational structure, one of their first instincts is to find out what the competition is doing. It’s natural. After all, why waste time starting from scratch if a proven solution is out there?
The problem is that organizing a company isn’t a problem that you can fix with a one-size-fits-all solution. There are guidelines, sure, but no set rules.
And in most cases, the grass isn’t greener on the other side. If a problem is truly difficult, you can bet that most companies are struggling with it. Every company is unique, which means that the organizational structures from one can’t merely be copied for another.
Creating a benchmark based on other companies can give you ideas and it can give you data — but it won’t provide a roadmap for success. Moreover, it can be a time-consuming exercise that distracts your company from focusing on its strengths and going after the change it needs.
The limits of benchmarking
The aim of benchmarking is to survey peer organizations to create a standard to which your business can be compared, and there are times when it can be useful in designing an organizational structure.
For instance, measurements of productivity and efficiency at other companies can establish a baseline to show where your organization falls short. The tools and processes other companies use can highlight best practices that you might want to incorporate when designing a new structure.
That being said, benchmarking organization structures is seldom useful. Organization charts are only valuable to an outsider if they are accurate and detailed. In most cases, they are neither.
Oftentimes, organizational charts are too abstract to be useful. Even if you could get a hold of your competitors’ detailed charts — no easy feat, as they’re closely guarded — these charts are constantly in flux and subject to the evolving needs of the business and its ability to find and retain talent. The organization chart tells you little about how the company operates.
At the end of the day, there’s one big reason you shouldn’t put much stock in another company’s organization structure: A company’s structure should reflect its own unique business model, strategy and culture, not somebody else’s.
Finding your organization in your strategy
Customers often ask me to go out and find what the competition is doing organizationally, but they’re rarely inspired by the results. The response to a benchmarking report is usually some version of: “That won’t work for us.”
They’re right. Every organization has an identity that is tied to the company’s approach to the problem it’s solving — in other words, its strategy and culture.
Recently, a healthcare company was looking to improve the way it organized teams that treat cancer patients. The problem it faced was one that the entire cancer treatment world is trying to solve: How to rethink cancer care so that patients can access all the relevant experts and services in one place, rather than bouncing from specialist to specialist, department to department.
Naturally, the company wanted to know how others had approached the issue.
Point B interviewed similar organizations and asked them how they had organized to deal with the challenge. In the end, there was no consensus. Everyone was grappling with the same choices, and each had taken unique approaches.
Since every solution has a set of tradeoffs — with benefits as well as consequences — your time is better spent defining your strategy and designing a structure to suit it. There are two critical essential ingredients to make this work:
- Be crystal clear about your strategy and longer-term goals. Without a strong sense of how you want to accomplish your objectives, it’s impossible to design an organizational structure to support that strategy.
- Have a clear process for making decisions. Implementing big changes requires buy-in at the highest levels and faith in decisions made along the way. Make sure the right stakeholders are at the table and ready to commit. There will be many choices and tradeoffs to be made, so you want to avoid last-minute doubt and indecision at all costs.
Once the decision-makers and experts are all on board, organizations should commit time to develop and assess possible structures. Stakeholders should also free their minds from the lines and boxes of an organization chart and focus on how teams will collaborate, how decisions will be made, and how leaders will govern in the new structure.
Having established a viable structure option, companies should then rigorously test the new structure to make sure that it is seaworthy. That involves imagining strategic scenarios — such as a merger or a new product launch — and thinking through how new teams and roles would react in each instance. The testing helps decision makers both refine and affirm the final structure.
Above all, keep in mind that there’s no one right way to organize. There’s only what’s right for your company and your company future.