Many clients approach us with a set of challenges that seem all too common: Their products are struggling to gain traction in the marketplace, their roadmap is pointing in the wrong direction (or no particular direction at all), and their organization is gridlocked on product decisions. Businesses like these too often blame their problems on a particular individual or team, but in reality they are missing some fundamental organizational features that are required for success.
Jay Galbraith’s book Designing Organizations lays out a useful organizational design framework that describes how these features fit together:
Strategy. Many organizations fail to recognize that their strategy is the cornerstone of their organizational design. All of the subordinate features of the organization should support its strategy. Accordingly, when an organization’s strategy changes, its structure, processes, people, and rewards will likely need to change as well.
Structure. Organizational strategy informs organizational structure. An organization’s structure is its “hardware”, consisting of the hard-line reporting relationships between people and departments. No ideal organizational structure exists. There are many ways to structure any given organization, and each of these patterns has its own strengths and weaknesses. Our job is to choose the structure whose strengths are best aligned to support the organization’s strategy.
Processes. Structure informs processes, which are the “software” that runs on the “hardware” of the organization’s structure. Processes define how people and departments interact to get work done. As is the case with structure, there is no ideal process that suits all strategies and structures. Our job is to choose from among the available options the processes that best fit the organization’s strategy and structure. A good process will complement the organization structure and reinforce areas where the structure is weak.
People. Perhaps the most-important (and least-appreciated) feature of any organizational design are the people who make it real. Too many companies are too quick to blame people — either individuals or teams — when an organization is performing poorly. Sometimes a person or team is part of the problem, but usually the problem exists at a higher level in the organization’s strategy, structure, or processes. In addition, sometimes good people do the wrong things because of how their rewards work.
Rewards. Once we have established a clear strategy, chosen an organization structure and processes that complement the strategy, and got the right people on the bus in the right seats, we turn our focus to incentives that encourage people and teams to do the right things. These incentives can be fixed, or performance-based. They can be monetary or non-monetary. Creating the right package of incentives is critical to hiring, motivating, and retaining high-performing individuals and teams.
Our approach to helping clients structure (and restructure) their product teams involves an assessment beginning with the strategy of the business, mapping the strategy to a recommended organization structure, and then recommending processes, people, and rewards that support the strategy, structure, and other organizational features. Most importantly, we support the organization through the change management process to help avoid common pitfalls in which organizations reject change that happens too quickly or revert back to old ways of doing things.