Is your organisation designed to scale?
Rethink Your Organisation’s Design
Over the past 10 years, I’ve had the chance to meet with several company founders and top executives to discuss about their company growth, ambition and challenges. In 2021, what makes these companies successful is their focus on the people, which will probably be obvious to all of you. The most successful of them were taking the greatest care of their people and were also the most selective in their hiring process.
Of course, there are some exceptions. If you look around you, you’ll always find organisations that treat people badly and are generating a lot of cash or vice versa. Yet, what struck me the most during these conversations is that beyond caring for their people, it’s their focus on organisational design as well as their governance that seemed to have the greatest impact. There was not a particular framework that made the difference; it was their willingness to find the best approach for their organisation and workers.
Thanks to my degree and my 8+ years of experience in various company sizes and industries, I have the pleasure to help medium and large organisations redesign their operating model. Indeed, building and leading product departments gave me the benefit of interacting with all their departments. It also helped me identify the benefits and pitfalls of how certain companies operate.
The topics below are, according to me, the ones you should consider when you define your organisation’s design and its operating model.
Mission and Vision
Are your company’s mission and vision well defined? Can everyone in your organisation understand it and feel their work will contribute to it?
In many organisations, the mission and vision are not clearly defined. As a result, it’s difficult for people to understand the reasons behind certain decisions or why certain work is important. And even though the mission and vision are well defined, if your organisation isn’t designed appropriately, your key people won’t be able to embrace them or share them with their team.
Values
Values are pretty subtle and intrinsically linked to your mission / vision but they differ in the way that values also lives in the blood of your people. For example, if one of your core values is the personal development of people, how will you make sure that your organisation supports it? Who will be responsible to support such initiatives? Should personal development be the responsibility of the HR department or the line management?
Your people will be the carriers of your company culture. As explained to me by several CEO having lived hyper growth, and having experienced it in myself, your organisation will evolve and if you don’t pay attention, at some point you won’t recognise yourself in your organisation. Which may be a disaster for you and your company.
HR - Reward, Recognition and… Firing
I’ve always felt that hiring is easy. You create a job listing. You interview people and eventually select the best candidate. What comes after is much more difficult. In your current company’s framework, do you have enough ways to reward your people and recognise their work? Many people often forget about this aspect and can be confronted with a situation where, at best, they only have two options to reward someone: promote them or give them a raise. This might be okay when your organisation is still new, but over time, if you don’t have more options, you can find yourself in a tricky situation.
For example, one typical mistake is to give a CPO title to a product manager at the start of a venture because they’re a good worker. But the consequence of this kind of action can be a disaster. It’s one thing to lead a team of 3 to 5 developers; it’s another to run 3, 4, or 10 squads. What will you do if you need to hire someone with much more experience? Will you demote your employee? Fire them?
Another typical mistake is the inability to fire people. As your organisation grows, you will have to redefine your operating model and not everyone will remain a good fit. At the beginning of a venture, you’ll look for very versatile people that can wear multiple hats, but as you grow, you’ll want to have specialists and will have less room for swiss-knife people. You’ll probably end up having to let some people go and that’s okay. Keeping the wrong people at the wrong place will, most of the time, hurt your organisation the most.
Growth and Challenges
How fast will you grow? When? We all believe our business will live exponential growth but only a few of us will actually experience this. Even worse, right now everyone is impacted by the pandemic and its consequences. Is your organisation flexible enough to expand and downscale rapidly without taking a hit?
There are two patterns I usually identify in organisations:
1. The ones who want to overthink their hypothetical growth.
When you build or work in a startup, you’re driven by the hope that you will grow fast, and some people want to control this way too much. I’ve seen management teams spending days/weeks/months building plans on how they will organise departments and teams. Worse, they even brief and change people's functions before they even have any growth signal. Of course, this usually has pretty quick, negative consequences. It takes attention away from the most important thing: generating revenue. And longer-term, it actually demotivates people as they hope for growth and new challenges that never actually come.
2. The ones who underestimate the importance of their organisation’s design on their ability to scale.
On the opposite end of the spectrum, some people ignore the impact of their operating model on their growth potential. You’ll usually encounter this situation in organisations that want to grow internationally or simply start having multiple locations. How will you ensure that your organisation’s design provides enough autonomy to local teams to run and adapt the business to the local economy / culture / rules? How will you make sure that your company culture will remain the same kilometres away from your headquarters? I can’t count the amount of failed internationalisation due to a lack of control from the headquarters over the other offices.
The Magical Recipe?
If you browse over the internet, you’ll see plenty of people advocating for various frameworks such as the Spotify model, the Zappos model, Open Organisation, or others. The truth is that there is no magical recipe. There are as many organisation designs and operating models as there are organisations that create them. The mistake, in my opinion, would be to blindly copy one. Of course, they are inspiring and a great starting point, like any cookbook you may read. But as much as you’re probably fighting to differentiate your product from the competition is as much as you should do to shape your organisation and make it happen.
Defining or redefining your organisational model will take time and you should continuously reassess it. I also believe that, at the very beginning, it all starts with the people you hire and how you will empower them to help you build your company. You’ll have to take many factors into consideration to design your organisation. But never forget that how you treat people is what matters the most. The right person, the right plan, at the right time is the magical recipe that will lead to your success.
Going further?
Should you want to go further on the topic here are few resources you may find interesting:
- A small summary of what’s Organisational Design by Nicolay Worren
- Bridging the gap between a company’s strategy and operating model, by Harris Atmar, Camilo Becdach, Sarah Kleinman, and Kirk Rieckhoff from McKinsey
- The Helix organisation, by Aaron De Smet, Sarah Kleinman, and Kirsten Weerda from McKinsey
- Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era, by Aaron De Smet, Daniel Pacthod, Charlotte Relyea, and Bob Sternfels from McKinsey
- Happy RH, by Laurence Vanhée (French)
- No Meetings, No Deadlines, No Full-Time Employees, by Sahl Lavingia, Gumroad
- Zappos view on holacracy and their feedback
- Agile to Spotify by Spotify
- Agile at Scale by Atlassian
- Formula X by Ronald Park