Sergio Caredda
The Organisation Evolution Framework is the result of my experience and research on Organisation Design applied to many cases encountered across my professional career.
It is a visual map of the building blocks of an Organisation from a design perspective. It offers a comprehensive model for understanding and managing organisation design and transformation. But it is also a powerful set of reference mechanisms to understand and describe an organisation.
I introduced this map for the first time in 2020 with an extensive research on its main components. I’m reviewing this main presentation today with an updated graphic, providing definitions and key concepts around each component.
This essay page, that will be updated over time, provides also an entry point to the key articles and tools related to each concept, acting as an index to further content.
The Organisation Evolution Framework: what is it for.
The Organisation Evolution Framework, offers a comprehensive model for understanding and managing organisation design and transformation. It identifies key components, including Business Models, Strategy, Operating Models, Organizational Models, Leadership Models, Purpose, Corporate Culture, and the Organization Ecosystem. Each component plays a critical role in the organization’s success, not just alone but in a constantly evolving, dynamic relationship with the each other component.
The elements of the component exist in every organisation. Formalisation is not a required element. In analysing an organisation it is actually rare that all these elements are fully defined and documented. They are all however traceable from a number of Visible Artefacts that can be observed and described.
Each component of the model can be broken down to different building blocks, that all together assembled constitute the fabric of the organisation. Available literature often attributes these building blocks to various components (an example is “capabilities”, seen often as elements of Business Models, Operating Models or Organisation Models). The taxonomy that I propose is therefore subjective. What I tried to do is however to identify, for each component, the Critical Element: i.e. that building block that, if inconsistent with the rest of the organisation construct, can create issues on the overall effectiveness of the organisation design.
Effectiveness of an organisation is therefore the result of the consistency of all components of the model. Which can be traced, to its minimum, to the consistency of all critical elements of the organisation.
The framework can be further utilised to explore two very important dynamics:
- Intentionality vs. Emergence in design, i.e. how many of its components are intentionally designed vs. emerging as result of the interactions of the organisational system.
- Consistency vs. Congruence across the components, i.e. how many of the building blocks have similar, consistent patterns of behaviors vs. how much the entire system is intentionally designed as harmoniously congruent towards design principles, values and objectives.
But let’s review the key components together.
The Components
The image above illustrates the overall map of all components, with a “whirling arrow” at the center that underlines the dynamic nature of the framework. As such, it is possible to imagine the framework not only as a picture in a moment of time, but as a way to analyse and review the interactions of the elements over time. Actually, it is impossible to describe some of the components if not observing them through their interactions. Some of the components are inherently linked to a time-scale (e.g. Strategy), other can only be traced down to a number of interactions (e.g. Leadership, Ecosystem).
But let’s review the components more in detail.
1. Business Model
The definition of “Business Model” provided is very ample, underlining the concept that what is interesting here is the offering that the organisation has and (implicitely) the identification of “customers” of the same organisation.
Per se this definition allows to intercept many different types of organisation, independently from their mission, purpose or objective. Both Profit and Not-For Profit organisations can be catered by the model, and the same applies also to public and governmental organisations.
There are many elements that underlie a Business Model, but the truly critical is the Value Proposition. The Business Model de facto connects the external market to the internal side of the organisation, and requires a clear Value Proposition to be present and articulated. Its absence is one of the main derailers for an organisation in terms of their effectiveness. When external customers do not understand the Value that an organisation offers, this can be the primary reason for its failure.
- Company Boundaries
- Network Structure
- Revenues Sources
- Cultural Paradigm
Here a list of some of the Visible Artefacts that can be identified to analyse the Business Model. There can be various others, but from my point of view these are the critical ones. Identifying Revenues Sources, for example, is the best way to identify customers and make hypothesis on the Value Proposition. Company Boundaries (including legal structures and governance models) are also critical in analysing a business model. Network Structure allows to identify how the organisation interacts with customers and suppliers and so on.
2. Strategy
The definition of “Strategy” provided is also very high level, with a specific distinctive element in being time-bound. Through my research on strategy, it is clear that these are inherently “choices of direction” that are relevant for a period of time.
A second component of my definition is that, within the proposed framework, not all decisions are relevant, but those that are useful to activate or enable the business model. This is one of the elements where consistency starts coming into play. Many companies label as “strategy” a lot of stuff that is not inherently linked to their Business Model.
Strategy, though, is the component that is more often documented in organisations.
In essence strategy is about prioritizing actions, which is why I have identified Strategic Choices as the critical element to be observed. These are the big bets the organisation is addressing, and should be examined not only in terms of what is declared and written, but rather in what is governing decisions and behaviors.
- Business Priorities
- Capital Allocation
- Competition Strategies
- Protective measures
Here a list of some of the Visible Artefacts that can be identified to analyse the Strategy. Also here there can be various others, but the most critical ones from my point of view are linked to Resource Allocation and to all Protective Measures that the organisation puts in place. Think about it, often the lawsuits that a company starts tell a lot more about priorities than stated strategic priorities. Same about investments and allocation of resources.
3. Operating Model
The definition of “Operating Model” creates a direct linkage to the Strategy and, therefore, to the business model. Why? Because this is the “engine” of the organisation in terms of set up of systems, processes, people and technology. Its effectiveness can only be evaluated in sync with the above elements. It needs to be fit-for-purpose in terms of alignment with the business model and the strategy.
The Operating Model is the source of the biggest misunderstandings, and is the one that is more often overlooked. Ask any manager of what their organisation’s Operating Model is, and answers will vary from showing you an OrgChart, to talking about their governance model, to discussing about their latest ERP implementation, to discuss their business model.
The key issue with Operating Models is that these are very often the realm of “best-practices” consulting, systems implementation often resulting in one size fits all solutions, unfit for the organisation, and often the biggest source of inefficiency for an organisation itself.
That’s why the building block I have defined as Critical Element is the Value Delivery Chain. Very few organisations are exactly clear about how value is generated within their organisation, how each element of the organisation contributes to the value generation and how this flows across to customers. For sure, external rigidity in the forms of accounting principles and management practices (such as budgeting) add to the complexity. But there is really not enough attention to this element.
Which also drives an immediate observation in terms of consistency. Is your internal Value Delivery Chain aligned to your Value Proposition expected by the customers?
- Definition of Efficiency
- Information Flows
- Role Models
- Technology Choices
From an Operating Model perspective there are tons of visible artefacts (process documentation, system documentation, technology etc.), so the list above is just a small example. For sure it is important to understand how an organisation defined Efficiency. It may seem weird (we all think efficiency to be a mathematical formula), but the reality is that every organisation has its own definition in practice, that is visibile on how resources get spent and productivity achieved (or not).
4. Organisation Model
The definition of Organisation Model is high level, again stressing the linkage with other components (choices in this case), but particularly reflects a connection with the foundational concept of Work. If the operating model defines the mix of components the organisation necessitates to deliver its strategy, the organisation model defines how some of these get combined in what we can define as work.
This is why, whereas we traditionally identify as organisation model the way roles are split and task allocated among employees, the reality is that all elements of work (including relationship with external providers, as well as usage of technology to automate tasks) is part of the organisation model.
This is the area where there is abundant literature also on the need to evolve our models from the traditional “hierarchical” principle of organisation of work. And this is also the area where there are the biggest misconceptions about the value of work itself.
This is also why I feel it is necessary to identify how an organisation defines Work, to really come to grasp and understand its Organisation model. Let me give an example. The fact that an organisation has implemented an agile way of working and has developed an intranet page that shows people in teams rather than orgcharts, does not automatically mean that its definition of work has changed versus what is today “generally accepted” across traditional organisations. If targets are still assigned top-down by managers, if elements like working time are still rigidly controlled and enforced, probably we are not far from a traditional set-up.
The Definition of Work essentially creates the bounding contract between an organisation and its collaborators (whatever form this take). This critical element is also what pushed me in deepening my understanding of the Meaning of Work across history,.
- Ways of Working
- Automation Levels
- Organisation Structure
- Talent Strategy
From an Organisation Model perspective it is easy to find many documents (think about job descriptions). What is relevant here is however to observe not only the formal structure of the organisation, but also its informal one. Many tools have been developed over time looking at collaboration patterns, for example, Organisation Network Analysis, and we should always have a look at these elements.
5. Leadership
In this case I have not tried to define Leadership as an overall concept (although I have written extensively and mapped many different models), but have tried to focus my attention to Leadership as the approach that holds the organisational building blocks together.
By using this definition very specific to the model, I wanted to underline the impact that Leadership has in the continuous design and innovation process of an organisation. Leadership sits at the center of the already mentioned continuums of intentionality - emergence and consistency - congruence.
It is not a coincidence that organisations that have high congruence between all the components of their design, are still managed by their founding entrepreneur. A clear leadership here, independently from its style, often is the best recipe to ensure intentionality in design across all relevant components. On the contrary, absence of leadership can be very often traced down to inconsistency in components, and ultimately in the failure of the organisation to reach its goals.
Listing Intentional Design as the critical element to observe to trace down Leadership may seem counterintuitive. But the reality is that this is the element that really matters and sits at the core of the consistency of the organisation framework. Understanding how much an organisation is intentionally designing all of its components, how much it listens to external environment changes and internal impacts, and translates these in reviews of the various components.
This does not necessarily translate in a hierarchical view of leadership, but for sure the observation needs to focus on agency within the organisation linked to change, adaptation, innovation and continuous improvement.
- Change Management approaches
- Transformation Governance
- Innovation Governance
- Formalised Leadership Model
This is why the artefacts I suggest we trace are all linked to how change is managed within an organisation, as this is the part that dynamically impacts and tests the organisation. Many companies have Transformation PMOs, today, but how do these interact with the definition of the different building blocks of the organisation? Are these only technical roles, or is there really a “leadership” impact? How is Innovation managed within the organisation? Especially disruptive one? What are the Change Management practices that exist and are put in place?
6. Purpose
The definition of Purpose sits at the core of the continuum between consistency and congruence within this model. At the core the purpose represents the ultimate goal for which the organisation has been created, and the source of meaning for all its components. This is why I represent it at the intersection between the inside and the outside of the organisation.
There are several elements here that I want to explain about my definition.
- Purpose is essentially the why a group of people sits around a table and decides that an organisation is the best way to solve a problem. This is the reason why the first element a purpose has to serve is to create a bond between the founders, and, successively, with the other members that will join after.
- Over time, however, if the organisation grows and survives, the simple original Bond will not be sufficient. Sooner or later the original problem will be solved, so the question is what will keep the organisation moving ahead? In many ways it is a simple “survival question”: which often leads to the emergence of an identifying characteristic that I define fuel. Profit is an example of “fuel” in the sense that profit is needed to allow an organisation to work and prosper. Many organisations tend to focus on the fuel for a big part of their existence, simply because it is what gets the machine going. Without interrogating on what it really means.
- If we move from pure emergence into intentionality, then purpose will also represent the driving force behind organisational actions. This serves both to attract new members and explain to the outside what we stand for.
- What the Purpose allows is to then define what interactions are meaningful with the external environment.
Purpose serves two main functions, from my point of view:
- It defines who we are as opposed to the external environment, thus creating the physical bond that creates the “us” vs the external environment.
- Makes the organisation “choose” what ecosystem(s) it want to be part of.
So far there is not a moral or ethical connotation to the concept of Purpose that I am suggesting. I have, however, introduced a view on this in the framework of the concept of the Intentional Organisation, but will discuss this separately.
Exactly because Purpose is about defining boundaries between internal and external, and creating the bond between the organisation stakeholders and the fuel for its sustenance, the most critical element we should look for is the Definition of Value.
We are used to think about Value as something scientifically defined. When we buy something we are used to associate value to its price. But the concept of value is much more complex than this.
Understanding how performances are evaluated in an organisation, how work is rewarded, how suppliers are paid, how shareholders are remunerated, all these elements can hint to the definition of Value the organisation ultimately possess (and thus give some very important hints on its purpose).
There are a lot of examples around this, many companies started writing down their purpose statements, focusing on sustainability and other hot topics. But if their internal performance systems are all tuned solely on Shareholder’s Returns, then inconsistencies become visibile.
- Performance Management Systems
- Incentive Systems
- Shareholders Remuneration policies
- Corporate and Social Responsibility Reports
Also here there can be many visibile artefacts. I tend to insist on remuneration of the different production factors as these very often give real big hints on what an organisational true purpose is, independently from its declarations.
7. Corporate Culture
Culture is one of the most discussed topics when looking at organisation. I chose to focus on Corporate Culture to underline the focus on what is relevant for the organisation. Also here, there could be many different approaches and definitions, and I have elsewhere researched extensively these type of models. Broadly speaking, there are two philosophical approaches to culture as an organisational attribute.
- The first identifies Culture as an independent variable, where Culture itself is something that is imported in an organisation through membership. Culture in this view is something that an organisation has, can be measured and can be subject to culture change programs by influencing its members.
- The second identifies Culture as as dependent variable and organisations are entities capable of producing culture. As such, each organisation develops a unique culture which is the product of its history. Culture in this view becomes a more complicated entity, linked to the many relationship the organisation holds not only with its members, but also with all stakeholders.
I am not taking a stand in between these two views, in the sense that both have advantages and disadvantages in terms or organisational understanding. I do see somehow a relationship between emergence and intentionality also in this context, whereby Culture always exist, but it can become a true organisational feature only through acts of intentional design.
When examining culture, what is important is to identify the consistency between behaviours of members and anything that is declared at the level of culture (values, principles etc.).
- Rituals, Celebrations, Ceremonies.
- Working environment layout, decor and features
- Declared Value and Charters.
- Communication Style
Culture analysis is full of examples of artefacts that can be visualised and observed, so also here the list is partial. Depending on the culture approach you may use, what is important is to identify elements that can make emerge the deeper assumptions that are at the basis of the culture in practice in the organisation.
8. Ecosystem
The concept of Ecosystem reveals a not so hidden view that organisations cannot survive alone. A big chunk of their success is highly dependent on the quantity and quality of relationship with all agents in the external world. The definition I provide is again pretty broad, to underline all relationships the organisation possesses and nurtures.
In fact, organisations sits comfortably at the crossing of multiple ecosystems. Some of these we can relate to as markets. But there is more: from talent, to innovation, knowledge, to regulatory, many different webs of relationship connotate the way the organisation exchanges values with.
And this again is a very much dynamic element that needs to be monitored through the flow of multiple interactions. With an additional element that for me is key: the permeability of the border between inside and outside. In the past defining an organisation was all about clearly defining who’s in and who’s out, today boundaries are a lot more subtle, greyish. An example is the concept of “talent” for an organisation. Is it only employees? What about consultants? Collaborators? The network of outsourcers that work on behalf of the organisation providing specific services? And those students who are doing a research study?
Here I do not refer to the concept of Sustainability in the sense of Environmental or Social, but to the sustainability over time of relationships that the organisation is able to build with the environment. Let’s face it, the easiest way to predict the failure of a company is to see the number of customers reducing. Sustainability looks at the exchange of values with the environment, and checks how much the organisation is releasing out to the environment vs. how much it is attracting from the environment. This is why a company that has focused its existence solely on very high profits, might not be sustainable over time, as growth will have certain limits.
- Formalised Partnerships and Alliances
- Platforms and Marketplaces
- Knowledge and Innovation ecosystems belonging
- Stakeholders Mappings
With Ecosystems it is sometime difficult to find visibile artefacts, beyond basic stakeholders mapping. So a bit more research might be required.
It is interesting to notice, though, that there has been a development, in recent years, supported by technological advancements, about Business Models that embed Ecosystems in their dynamics. Platforms are one example, but there are different types of marketplaces or knowledge exchange environments. In my view these examples are simple demonstrations of intentionality applied in the design of the ecosystem or relationship, rather than an entirely new cluster of organisations. After all, value-enriching ecosystem effects, such as network effects, have been existing for some time and are not only linked to technology.
Other Component
Over time I collected several feedback pointing to the absence, in this framework, of this or that component. As with all models, also this framework is a simplification of reality, and therefore I had to make choices in terms of what to look at.
The most frequently cited elements that this framework would be missing are:
- Capabilities. Beside the fact that the concept “capability” can be encompassing different elements, when we talk about Organisational Capabilities, these are for me part of the Operating Model of the organisation, as they essentially result out of the combination of people, processes, systems and technology.
- Talent. Definitely a critical enabler for an organisation success, it is however a joining element underpinning most of the components of the model, and is particularly relevant in the case of the Organisation Model,. which effectively defines the relationship between individual members and the organisation.
Overall Model
The model is available also as an overall deck that can be downloaded and printed.
This article is part of a series where I examine the different components of Organization Design, analyse models and theories and propose a specific approach of Intentional Design.
Key Content Articles
- The Organization Evolution Framework
- Business Models: The Theory and the Practice
- Strategy. Frameworks: The Theory and the Practice
- Operating Models: The Theory and the Practice
- Organization Models: a Reasoned List between Old and New
- Leadership Models: The Theory and The Practice
- Purpose: The Theory and the Practice
- Corporate Culture: The Theory and the Practice
- Organization Ecosystem: The Theory and the Practice
- Building the Intentional Organization
- What is Organization Design?
- Consistency and Intentional Design: Building the Organization of the Future
What’s Next?
I will review some of the existing content that is supporting the model, plus will release in the coming month a sort of high level canvas that is useful for the analysis of an organisation.
I will then connect more the element of the Organisation Evolution Framework to the concept of the Intentional Organisation, trying more of a toolkit approach that can be readily usable and applicable to concrete cases.
As usual, will be happy to review any feedback and comment provided through the comment below or directly contacting me.
Thank you for your support!
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