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Right Intentions, Wrong Focus

"Every problem is a gift-without problems we would not grow."

-Anthony Robbins, Awaken the Giant Within (2007)

Too many organizations bring in consultants and coaches and architects and a host of other people to try to "fix" employees' experiences and performances, as my experience with the aforementioned global conglomerate showed, in the all-too-often vain hope that these changes will translate into company-wide improvements in productivity, growth and product quality. After more than 20 years of organization strategies consulting, I believe the same three challenges plague traditional organization design:

1. Design decisions are not linked to behavior.
2. Design solutions are focused primarily on the individual.
3. Design ignores the power of horizontal networks.

Design Decisions Are Not Linked to Behavior

The first fundamental gap in the existing models is that they do not clearly link the big, macro decisions that happen at the system level of an organization to the individual and group behaviors that result. However, due to a set of hardwired evolutionary conditions in human brains, the environment an individual or group is in has a direct and predictable influence on feelings and behavior. By understanding the context that has been designed and combining this with the psychology of how humans think and feel, we can understand individual thoughts and behaviors that are the direct outcomes of these design choices.

Let's say Company A wants to reorganize. It used to be organized by its brands. Each brand had a leader, a product team that designed and improved the brand, a marketing team that advertised the brand, and a sales team that sold the brand to customers. There was a great deal of internal competition between brands. One sales team bragged about selling more of one brand than another sales team did and how big their paychecks were, marketing teams were rewarded by increasing the market share of their respective brands, and the company's executive meetings looked more like warfare than an integrated team of professionals working together.

In an effort to meet ever-changing customer demands and grow the company, Company A decides to organize by the solutions customers care about. Instead of just selling its different brands to the same customers, it is going to sell a whole solution that solves customers' problems. The solution will better meet the needs of Company A's loved and respected customers! It will sell more goods and services people need to more people who need them! It will help the enterprise! Everybody wins!

So what does Company A do? It changes the leaders of the brands and tells them they are now leaders of the solutions. The company updates its marketing materials and asks the marketing and sales teams to collaborate to reach customers in a coordinated fashion with the solutions. It asks the engineers in the product teams to collaborate and share ideas and information about how to improve the solutions.

And what happens? Well, the sales teams pretty much ignore the changes at the top and keep engaging with their customers in the same old way. After all, they are paid to sell a brand. How much of that brand they sell directly impacts their paycheck. They would be worse off personally if they followed the new solution structure.

The marketing people are furious with the salespeople because they are now incentivized by solution market share, but the salespeople are not working with them on this. So instead of collaborating, they put up higher and thicker barricades. They don't know or trust each other. Morale quickly plummets, absences increase, and turnover ensues in large numbers. The engineers like working with each other and sharing new ideas across the different brands, but production and innovation slows to a standstill because it is unclear whom they should work with to get solutions to market, given the behavior of the marketing and sales teams. Each team is responding rationally to its unique and separate context but, in doing so, is suboptimizing the enterprise.

Today we talk about organizations' ecosystems and platforms, strategy and transactions, and the operating models and capabilities needed for future success. In addition to the chief executive officer, we have chief strategy officers, chief transformation officers, and various business unit heads. Then, in a totally separate part of the company, we talk about workforce experience and employer brand, incentives and rewards, and hiring and retaining for the workforce of the future. Often these issues are relegated to the chief human resource officer, the chief diversity officer, or some similar title, like chief impact officer or chief people officer. These conversations occur in separate silos, as if they are completely unrelated to one another, but they are actually one and the same.

The choices made on how to set up an executive team, their roles, and their accountability for profits have a direct and predictable impact on how middle managers feel and how frontline workers act. We need to use these insights early and often to create an environment where an understanding of human behavior is at the center of the design.

Design Solutions Are Focused Primarily on the Individual

The second, related challenge is that the interventions suggested to remedy the many trials of traditional organizational design in today's environment are almost solely focused on the individual, with only the occasional attempt to address the group. Consider some of the corporate terms you've heard over the years, such as "enterprise mindset" or "collaborative culture." These are typically offered up with little guidance on how to design the context that drives the desired individual and group behavior in the first place. There is much of the "why" at the system level-think "meaningful work" or "shared purpose"-but little of the "how."

This challenge has plagued me for a long time-all the way back to my graduate school days. In my doctoral dissertation on this topic, "How to Have Fun at Work," I hypothesized that there were fun people and fun work climates. Much to my surprise, I only found support for the second half of my hypothesis. I learned there were ways to design environments that made work feel more fun, that prompted workers to express more enjoyment and happiness. The presence of fun coworkers was not predictive of this at all. In other words, enjoyment at work is not related to someone's personality or their mood-it's driven by the design of their organization.

To create meaningful, positive impacts, the levels of analysis that matter are not just individual, but also group and system. Yet could you not argue that the core question of organizing is how to ensure that any individual in an organization has the right information to make the right decisions at the right time (Dignan 2019)? Perhaps, but the challenge with considering interventions at the individual level in organization design is that you cannot actually change the individual. Sure, you can try to hire the right person with the right skills and the right attitude, and these are all good and important objectives. But once the person is within the organization's four walls, for the most part, you have what you have. Spending time teaching interpersonal communication skills, coaching for implicit bias, and investing in leadership development could bring about some change at the individual level in some cases, but ultimately, focusing on the individual is a flawed approach to changing an organization.

When we do try to positively influence the workforce, our interventions predominately focus on individuals-their skills, their mindsets, their strengths-yet there is ample evidence showing these tactics don't impact team effectiveness or organizational performance (Duhigg 2016). For example, the largest study ever done on teams, with the most data and computing power, was Project Aristotle by Google, which proved that individual attributes like personality (e.g., extroversion), intelligence (IQ), performance, seniority, tenure and so on had no impact on team performance (Duhigg 2016).

We have repeatedly restructured our traditional hierarchies and moved individuals around but have made minimal improvements because we were ignoring group and system dynamics. It is the networks of relationships at the team and at the organization level that show us how decisions get made and how work actually gets done, and ultimately how people behave.

Design Ignores the Power of Horizontal Networks

Organizations have traditionally been relentless in their pursuit of an ideal design that leads to maximized output, productivity, and stability. The problem is that almost every minute of the day geared toward these pursuits is dedicated to a relatively small percentage of what it takes to get things right. With recent advancements in the field of network analysis, it is becoming evident that important work is increasingly accomplished collaboratively through networks. But until very recently, the only network we ever paid attention to was the hierarchy.

Network analysis is a set of mathematical techniques to depict relations among people and to analyze the social structures that emerge from these relationships.

If...