This post builds on a previous post in this blog, where I made the case for having architects for organizational systems. Under this paradigm, business outcomes hinge on the interaction between 5 sub-systems: org structure, incentive systems, work systems, collaboration systems, and people systems.
The Table Group, Patrick Lencioni’s consulting group, argues that “organizational smarts” – strategy, technology, marketing, finance, etc. – is no longer the driver of competitive advantage, since intellectual ideas are not a sustainable differentiator in an age when information is ubiquitous. Therefore, what truly matters is “organizational health” – minimal politics, minimal confusion, high morale, high productivity, low turnover, etc. I’d argue that even “healthy” is not enough. What we really need are organizations that are “fit” to deliver on their mission/business outcomes. All athletes/top performers need to be healthy. But a weight-lifter and a cyclist need to be fit in different ways in order to be the best in what they do.
Which brings us back to the 5 systems. Organizational fitness is reflected in the way these systems work in concert to drive the specific business outcomes an organization is trying to accomplish. And, without falling into a recursive trap, building and maintaining organizational fitness is then a business outcome in and of its own. Therefore, we must ask ourselves: since org design is a key system that enables business outcomes, are businesses organized in a way that enables them to build and maintain fitness?
The good news for the Table Group, and the bad news for almost everyone else, is that the short answer is: no. We know from Conway’s Law that the way we divide and assign responsibilities in the organization has a material impact on its function. A typical organization has departmental heads for all the “organizational smarts” disciplines: a head of marketing, a head of technology (R&D/CTO), a head of finance, and so on. Yet “organizational fitness” is not expressed in the organizational structure in any material way. Responsibility over the 5 systems is typically no-one and everyone’s job, so it’s no surprise that many organizations are not organically poised to build and maintain a high level of organizational fitness. The one exception to this rule is people systems, which have a well defined owner, at least in theory – the head of people. But that’s a story for a different blog post altogether.
So perhaps it’s time for organizations to revisit the traditional structure of the executive team, and consider whether an alternative structure can better express the growing importance of organizational fitness as a critical discipline driving competitive advantage.