A coherent strategy also provides the necessary starting point for the organizational design process. Without clarity about the “what” (the way the company creates value), one can’t possibly define the “how” (the way to organize to create value).
Take our fictional company Seabright. Historically, its way to play had been as a premium producer; it provided targeted information to business professionals in several industries. It had a well-known brand name and strong customer retention; leaders in some industries could not function without it. But in recent years, as the value of print publishing faded relative to the value of the Internet, the company had lost its identity. On any given day, it was hard to tell whether it wanted to be a reputation player (building, like many other media companies, from a long-established brand name), a digital innovator, or a value player offering inexpensive data through online platforms.
Much of Seabright’s reputation had come from its mastery of rapid print distribution. It could outpace rivals with its network of printing plants and other facilities, optimized to reduce costs and speed up delivery. Unfortunately, that capability was rapidly becoming obsolete. But another was more relevant than ever. Over the years, through its loyal subscriber base, Seabright had refined its ability to measure and understand customer insights. It also had a strong innovation capability, with the skills to tailor new products to meet customer expectations.
The existing organizational design, in formal and informal ways, tended to favor the print-related capabilities over those with more digital relevance. Joanna had already known, coming in, that she would have to reorient the company’s strategy. Now she saw that she would also need to rapidly shift the organization to support the movement to digital.
Eight Building Blocks, One Design
Two weeks after her email epiphany, Joanna convened one of the most critical meetings of her tenure at Seabright. Gathered around the conference table were the heads of several business units and functions, along with two promising midlevel executives, Jill and Sanjay. Jill was a talented operations manager with a decade of experience in manufacturing. Sanjay had run finance at two digital media startups. Both were well respected in the organization and had a knack for delivering unpleasant truths with a minimum of drama.
“Effective today,” Joanna said, “you two have a new assignment: Develop a fresh organizational design and bring back your high-level recommendations to this group in a month. At that point, we’ll see how it fits with our company strategy, and I’ll make the call on whether to detail out the new design and how to adopt it. This is the top item on my agenda.”
Jill and Sanjay exchanged a glance. Joanna could tell, in that moment, that they appreciated this rare fast-track opportunity, but they also saw the risks. One major reshuffling effort had gone down in flames just two years before.
“I know,” Joanna continued. “It sounds like a big, unwieldy job, but it boils down to deliverables. First, I want a diagnostic of our organizational problems: critical bottlenecks, pain points, and areas where we’re stepping on ourselves or replicating efforts.”
“OK,” Sanjay said quietly.
“Second,” Joanna said, “I want a plan to rectify those issues. That means a new organizational design for the company.”
“From scratch?” Jill asked.
“Not entirely from scratch,” Joanna said. “We’re a decades-old company, with more than 15,000 employees. We can’t—and wouldn’t want to—just rip up all our institutional heritage. But you should be bold in your proposal, and especially clear about how it will explicitly support our digital growth strategy.”
“Anything else we should know?” Sanjay asked.