Aligning Structure
“Structure follows strategy” is my mantra. Organizational structures, processes and systems exist to help you achieve your strategy. They provide clarity of roles and boundaries between functions. Processes are designed to advance work through the organization and push it out to clients/customers. Systems help us to track and measure progress so that we can optimize performance.
Another way to think about structure is a manifestation of trust. Years ago a now famous experiment called The Playground Study was conducted on pre-school age children. The study observed the children playing first on a playground with no fence or barrier and later playing on a similar playground with a perimeter fence serving as a boundary. In the first scenario, the children played close to the teacher for the duration of play. In the second, the children spread out to the edges of the fenced boundary. The conclusion is that boundaries make us feel safer and actually expand our comfort zone. The same is true of many organizational structures and processes – they give us clear boundaries to operate within.
In business, it’s important to remember that structures are dynamic and not static. As a company grows and the strategy evolves, so must the structures. Unlike the playground example, leaders have the ability to move the fence to meet the demands of the situation. In highly entrepreneurial organizations at an early stage, the field might be quite large with lots of room to roam and explore. In later stage companies or those focused on operationalizing their products and services, the boundaries might be quite tight to promote consistency and quality within very well-defined parameters. The key is to know what your strategy is, what stage of growth you’re in, and what kinds of structures to apply to the situation to achieve the desired results.
Strategy, number of people, and complexity tend to be the biggest drivers of change in organizational structure. When a company moves from the Emerge Stage to the Operationalize Stage there is a significant shift in strategy. In the Emerge Stage the focus is on proving the concept – can we do this? In the Operationalize Stage, the focus shifts to developing the organizational competency to execute on the product or service reliably and predictably - can we do this well every time? The latter strategy not only requires a different skillset, it requires more structure and process.
At the Operationalize Stage, the team expands and departments emerge that specialize in certain functions like Product, Sales, Customer Support, Finance, HR, etc. Each of these functions has a specific role to play in sustaining and growing the business. We sometimes talk about this stage as building the mousetrap, but I think building the plumbing is a more apt metaphor. Basically, you are building the foundational structure that moves the product or service through the system. There’s a strong internal focus at this point in the life of the company as leaders work hard to build the infrastructure needed to grow.
The Growth Stage is when you turn on the water to see if it works. With the infrastructure in place, the question becomes can we do this at scale? How much water can we move through the plumbing without bursting the pipes?
Can we help your business align its structure for growth? Visit our website at www.PeopleCap.com.
