- What is Organisation Design?
- Introducing the Organisation Evolution Framework
- Consistency and Intentional Design. Building the Organisation of the Future.
- Building the Intentional Organisation
- Business Models: the theory and practice
- Strategy Frameworks: The Theory and the Practice
- Organisation Models: a Reasoned List between Old and New
- Operating Models: the theory and the practice.
- Leadership Models: The Theory and the Practice
- Purpose: The Theory and the Practice
- Corporate Culture: The Theory and the Practice
- Organisation Ecosystem: The Theory and the Practice
Building the Intentional Organization is the realisation that we need an entirely new approach to the way we intend organisations and their design. It is the acknowledgement that past paradigms are not sufficient to adapt to new realities. The traditional model of Organisation, based on Hierarchy, Bureaucracy, Top-Down Control, Waterfall Cascading of Objectives and an opposing Employer-Employee relationship, is merely crumbling in the face of an environment that is every day more Volatile, Uncertain, Complex and Ambiguous.
The only possible answer is to rethink the way we look at organisations and their ecosystems, with a specific focus at the connection point between humans and the Organisation. It is at this connection point, where Work happens that we need to take the courage to reinvent its specific meaning, moving away from concepts such as Jobs, Roles and Employment.
Already today, successful organisations are those able to balance Intentionality and Emergence, Consistency and Contradiction carefully.
They can create a unique blend of characters that becomes their DNA for Success.
This is not easy, because we need to forget the models, the benchmarks, the blueprints, the off-the-shelf ready to use solution that some advertise, and most theories items we learnt at business school. We need to take the courage to lead a profound reinvention of the way people interact in creating shared values for themselves, for their communities and society.
Note: This article was updates after its original publication date, to align it with the Organisation Evolution Framework series.
Dec. 19th, 2021 – Alignment e relink to the series.
This long article is derived from a number of ideas I have already written about on this blog, and that I have distilled in two presentations I have done in the month of July. One in Italian (L’Organizzazione Intenzionale for which a transcript is present on LinkedIn) and the other one in the occasion of the Teal Around the World conference. A video of the presentation is available, as well as a consolidated deck (see below).
This article is pretty much a Work in Progress. As many of you are aware, I use this blog as a way to consolidate certain thoughts in a precise moment of time. I consider this post, and the idea of the Intentional Organisation a canvas on which I am knitting ideas, thoughts, experiences and know-how.
The Starting Point
“Every System is perfectly designed to achieve exactly the results it gets.“— W. Edwards Deming, 1974
This quote, attributed to E. Deming, is the frame that sits around this concept. The performance of our organisations today depends essentially from the way we designed them yesterday. There are multitudes of researches which look into the failure rate of firms and corporation, as well as their relative inability to perform. And yet, we continuously adopt the same solutions and models invented over a century ago, not considering that the world is changing. We have moved away from traditional blue-collar workers, and have developed generations of knowledge workers. We have created a system where relationship and experience count more than the product price. We have opened up to a world of global reach, where information and data are ubiquitous, accessible and omnipresent. And we have repeatedly failed to understand the impact of these dimensions on the Organisation. Why? Because we have constructed a siloed environment where opportunities are disqualified, incentives promote lags, collaboration is punished and loyalty, not performance, is rewarded.
The Organisation Evolution Framework
A few months ago, I introduced the Organization Evolution Framework, that I had defined as “a visual representation of Organisation Design building blocks and dynamic relationships “.
I am a very visual person, and I needed a place to represent all the pieces the way an organisation was built. As I was dealing with a broad Digital Transformation initiative, I had got caught by the fact that everyone was looking at it from one particular lens. For some, it was about redefining the business model. For some, it was about building a strategic initiative. For others, it was about rethinking the way technologies acted in the Organisation. Others focused on competencies. Others looked at culture as the element that did not allow the Organisation to transform. Others claimed that Leadership was the answer. For some reasons, I thought immediately that each was right from their point of view, but they were all collectively wrong.
What we needed was a holistic representation of all the building blocks. When something disruptive happens, we need to think collectively at the impact on each block and act accordingly.
Instead, what I found were a low diffusion of organisation design competencies, corporate silos prevented to have a global view because each block (or subparts of the block) are “owned” by different departments. You always ended up with an entirely suboptimal transformation action.
Introducing the Organisation Evolution Framework
Visual representation of Organisation Design building blocks and their dynamic relationships.
Now released in Version 2, open for feedback.
“Many problems in organizational design stem from the assumption that organizations are all alike: mere collections of component parts to which elements of structure can be added and deleted at will, a sort of organizational bazaar.“— Henry Mintzberg, 1981
What we need to reach is an adequate level of consistency between the different elements. The warning of Mintzberg, coming from 1981, is however very relevant still today. We cannot only “buy” a part of our Organisation from the items available in the bazaar, and add it at will in our Organisation.
Deep Dive 1. The Spotify Model Example.
A great example of the role of consistency is the recent attention to the so-called Spotify Agile Model. It became famous thanks to two very detailed videos (Spotify Engineering Culture Part One and Part Two) which highlighted the way Spotify worked in 2011. One idea has been distilled out of that video and pushed out to the public through numerous articles and consultants, essentially suggesting an Organisation Model loosely based on the agile scaling that Spotify did (thus the reference to organisational artefacts such as Squads, Tribes etc.).
Where’s the issue? In most companies that applied this model, we got a replication of a pretty standard matrix hierarchy, with different names. Few traces of the Agile way of working that Spotify developed.
What was missing? Well, as the videos clearly show, a lot of elements consistently contributed to developing this specific way of working for Spotify:
- Once and for all, its Business Model was entirely based on customer dedication. Thus it repeatedly adopted an outside-in perspective.
- Its Strategy was focused on getting its product out quickly and correcting it over time to expand its customer base.
- Key elements of its Operating Model were fully aligned with the way agile principles work. For example, in the video, it is brilliantly explained how their software release cycle worked.
- From an Organization Model perspective, Spotify took the principles of Scrum, and adapted them to what was needed, scrapping the element that did not work or apply to their reality.
- A truly distributed Leadership model was put in place to support the way of working.
- Not to forget culture: the videos talk of engineering culture, because all of the elements above blend together in the fabric of the Organisation itself.
The primary evidence of this consistency is the fact that Spotify doesn’t work like that anymore. As the company grew, it adapted its models to cope with more complexity and new priorities. It is also showing that consistency is a dynamic feature of organisation design. The idea of carving out one image out of the videos and applying it into another organisation is the best demonstration that Mintzberg was right as he pointed to the organisation bazaar.
So, what is Intentionality?
I have already written about this concept more in detail, trying to explore the features of what intentionality means in this context. But I want to respond to a frequent objection immediately: it is not about planning the Organisation in all its details from scratch. Instead, it is about being conscious that every Organization, through their Purpose, develops a direction. And in this motion, it is paramount that the inhabitants of the Organisation take conscious and deliberate actions to ensure consistency across all of its components, carefully balancing emergence and design.
When people feel comfortable and confident, when we understand how things work, when we can move through the Organisation and the ecosystem seamlessly without needing to learn or figure it out, when everybody understands a shared concept of Value, and all grasp the role of Work, we’ve reached a status of Intentional Design.
It may sound not very easy, but the idea is easily illustrated with the example of a Start-Up. Very often, these companies are born based on the concept of an entrepreneur who has a strong vision about the future. But this vision is not about the Organisation. Instead, it is about the product or service that he wants to provide to a customer. Realising that becomes the Purpose of the Organisation, often without the need of formalisation.
If the product is successful, the Organisation will grow, initially without a precise plan. We have heard it over and over; this is the moment when the culture of the Organisation is formed and is assumed to support the objectives of the firm truly. Culture is a typical element that is not designed but is emergent.
As success picks up, the company will pick more and more people from the outside. Each of these will bring their personal experience and mental models and create contamination. Slowly broader mental models will pick up the pace: rules start to be written, policies designed, delegation and hierarchies appear. Bureaucracy creeps in. Unless the founders take an intentional stance on defining what Organisation they want to be, the Organisation will simply assimilate the features of the most traditional models existing outside: hierarchical bureaucracy.
It’s precisely at this node that the choice of intentionality lies. Every choice made will impact the Organisation, every person hired, every decision communicated. Organisational Awareness becomes a pivotal capability to be developed both individually and as an organisation, as it will help to push the limits towards a proper, consistent, intentional design.
is an Act
of Deliberate and
Deep Dive 2: Human-Centric Organizations in Action
In recent years a lot of books have been dedicated to a broad movement that is trying to dismantle the traditionally hierarchical and bureaucratic Organisation. We have seen this in several books (Corporate Rebels and Humanocracy to cite two of them, but also An Everyone Culture where the concept of Deliberately Developmental Organisation is explored), and I intend to explore some of these models first hand in the future.
The characteristic of all these organisations is that they are all remarkably consistent. And not because everything was planned on paper before the new models were implemented, or the company established, but because the company learnt around the way how to embed consistency in its processes.
Buurtzog is a clear example of this consistency, that spans culture, leadership style, organisation model and operating model. Haier as well, a company that went through many different “revolutions” in its history, and is now moving into a consistent process. Same as the journey of Semco described in Maverick. Every time a change was implemented, there was another element that needed fixing.
All of these processes take time because in many cases, they are challenging assumptions and mental models that have characterised the way we work for decades, if not centuries. What however distinguishes these stories of success vs more traditional transformations, is that there was a clear perception by the initiators, that two key drivers needed to be redefined: the concept of Value and the Meaning of Work. All organisations mentioned have spent time looking into the best way to measure the Value they were creating, often moving away from simple financial measures. At the same time, they have all redefined the relationship employer-employee in ways that often challenge the foundation of traditional industrial labour law.
Redefining the foundations: Value and Work
The successful Intentional Organisation needs to go through a process that redefines two foundational concepts for the Organisation. We never question these two elements, considering them simple “axioms” of our society.
- We simply assume that the Value of an organisation is derived by profits and defined by a more and more financialised market economy.
- Work is instead aligned to the traditional employer-employee relationship crystallised during the last industrial revolution, which embeds elements such as task-division, the definition of roles and a hierarchical organisational model.
One of the pillars of intentionality is never to assume that external mental models automatically apply. Assumptions need to be challenged, and we need to be consistent in the way we act. But how?
Value needs to be redefined in light of the Purpose of the Organisation. It is through this element that we can assign priorities on choices and evaluate results. After all, Value is a relationship, and we need to continually re-draw its meaning.
Work needs to be reinvented, moving away from the Taylorisitc and Marxist perspective of Employer-Employee. Yes, there are many challenges, because this relationship is ingrained in our labour law system, derived from years of trade unions battles focused on the protection of workers. But that was a moment in which the traditional blue-collar worker was the “standard”, ingrained in repeatable tasks across engineered production processes. Today this type of Work is more an exception. So-called knowledge-workers are statistically more present, and also a lot of frontline workers are now occupying roles where creativity and relationship building skills are critical. Merely changing the job title to partners, however, is not sufficient. We need to reinvent entirely the relationship which cannot be any more of opposing forces between the Organisation and its employees. And this involves discussing everything, from power structures to compensation.
Is it possible to reinvent Work? The legal and economic framework seems to suggest it’s not.
But a journey is possible, moving away from the Employer-Employee opposition, providimng decent opportunities for all and delivering a more Human experience to all.
Consistency and Intentionality: building a continuous tension
The consequence of the reasoning above is that Consistency and Intentionality are not static dimensions. As they derive from human actions in a continually developing ecosystem, we need to consider them as constant sources of tension, which is also why successful organisations are constantly evolving.
There are four key ingredients here that need to be mastered by an Intentional organisation:
- Obsession. Every Intentional Organisation needs to be obsessed with the continuous tension between Consistency and Intentionality, interpreted through the lenses of its Purpose and Culture.
- Coherence. All elements need to exist together and in evolutionary tensions between each other. There’s not a hierarchy between the components, but each one influences the other.
- Ambiguity. Innovation and anti-fragility emerge from a system that lives on its paradoxes. So ambiguity is not a negative aspect, but a force of positive energy. We need to move away from an “either-or” approach, and into a “both-and” one.
- Truth. There is no absolute truth. No single way to define Value. No “best practice”. Each Organisation needs to find its specific truth by way of its Purpose and its daily actions. And it needs to be intentional and deliberate in pursuing it.
Recent theories about the Organisation have all advocated for a linear transition from something to something else. While these tables are an essential source of inspiration and reflection, the truth is that their Value is not in the transition between A and B, but in the capability to sustain the tension between the two sides, and find a unique way to be.
Just to cite one of my most recent reads, the advantage is not in moving from Bureaucracy to Humanocracy, but in being able to find a proper third way that balances all the necessary aspects that both systems have.
If all of the above is true, how do we then know that our Organisation is performing? Based on the tension elements above, it is not possible to define an absolute definition. Many have suggested that modern organisations should move away from Efficiency and pursue Effectiveness. Similarly to the example above, though, my thought is that each Organisation will need to seek both Efficiency and Effectiveness, in a unique balancing act.
What is essential is redefining intentionally and dynamically, the Performance Profile of your Organisation. Again, the Organisation Evolution Framework becomes a guiding toolkit for this, as we can derive this from answering eight questions, each deriving from one of the Critical Elements defined for each building block.
|Building Block||Critical Element||Performance Profile Question|
|1. Business Model||Value Proposition||What makes us Unique?|
|2. Strategy||Strategic Choices||What are our Priorities?|
|3. Operating Model||Value Delivery Chain||How do we create Value?|
|4. Organisation Model||Definition of Work||How do we get things done?|
|5. Leadership||Intentional Design||How do we stitch it all together?|
|6. Purpose||Definition of Value||What is our definition of Good?|
|7. Culture||Consistency||How do we make it work?|
|8. Ecosystem||Sustainability||How do we know it will last?|
Optimal Performance is achieved when all Organisational Components are balanced in a perfect Alchemy, that develops a positive tension with the ecosystem.
To achieve this a deliberate practice must be created around noticing, making sense and experimenting, allowing the organisation to adapt and evolve over time.
One last element needs to be added to ensure the picture is complete. By talking of the Intentional Organisation I have tried to represent the picture of a dynamic system that evolves, rather than of a static organisational model. The vector that supports this evolution is called Innovation.
However, when we think about innovation in many contexts, we often limit it to products, processes, technology. In the Intentional Organisation, the primary source of Innovation derives instead by the continuous evolution of its Organisation Framework.
Innovation is the capability of the entire organization to become an adaptive part of the ecosystem, able to deliver distinctive and sustainable Value(s) to all its Stakeholders for prolonged periods of time.
This is achieved by constantly innovating products, services and the organization itself.
This will allow the Organisation to adapt to the ecosystem continually. The changing customer wants, modifications in the stakeholders’ needs, the evolution of suppliers are all elements that need to be “noticed” by the Organisation, and embedded into its fabric by innovations applied to any of its components.
Deep Dive 3: Haier and Innovation in Action
A great example of this perspective on Innovation is Haier. Today many writers and thinkers are celebrating its pioneering platform model, called Rendanheyi.
What is a bit less known is instead the evolution that the company has pursued over time under the guidance of its chairman Zhang Ruimin. It all started in 1984.
Corporate Rebels describes five cycles at Haier.
- 1984 – 1991 Brand Building Stage.
The company was almost bankrupt in 1984. The focus in this phase was first to establish some ground rules, then to build a strong brand by focusing on Quality, an element unheard of in the panorama of appliances producers in China, all mostly focused on volumes.
This phase sees a redefinition of the Business Model, but also of the Operating Model by focusing on Lean and Total Quality principles.
A Traditional Pyramid Hierarchy is the model adopted in this phase.
- 1991 – 1998 Diversification Stage.
In this stage, Haier starts to expand internationally and also its lines of business, by acquiring companies that are not performing well. By merely extending its management style, Haier can revive most of these companies, diversifying its offer and growing significantly.
This phase sees constant innovation in terms of Strategy and extension of Leadership.
It now moves to a Matrix Organisation based on several Business Units.
- 1998 – 2005 Internationalization Stage
In this stage, Haier pursues a strengthening strategy of international expansion, targeting the most challenging markets in the US and Europe. Ruimin learns from the largest multinational companies in how they have been able to pursue excellence in international operations.
It is a phase that looks at continuous improvements of the Operating Model and frequent changes to the Organisation.
Satellite Companies are now created, pulled together with Project Teams.
- 2005 – 2012 Global Branding Stage
As the world fully enters the Internet era, Haier pursues a strategy of becoming a Global Brand. Haier actively integrates its unique management culture into local operations and cultures to deliver ‘on-demand manufacturing and delivery based on zero-inventory’. And starts buying local brands, top diversify its offering also in the name of personalisation.
It is a phase that looks intensively in the review of its Ecosystem and the impact on its Operating Model.
The company experiments with the Inverted Pyramid concept and tries self-managed teams.
- 2012 – now Networking Stage
In the era of the Internet, a firm either owns a platform or is owned by a platform. So, in April 2005, Haier proposes a ‘1000-day process re-engineering’ plan to prepare for a platform-based, and networked, enterprise.
The Rendanheyi model is born and transforms the Organisation in an agglomerate of multiple micro-enterprises. All the elements of the Organisation are rethought to ensure coherence.
This is a perfect example of an Intentional Organisation that moves through the seas of change, continually adapting to the changing ecosystem by innovating all the components of the organisation model. It also brilliantly shows that there is not a hierarchy across the building blocks; all are together in dynamic tension to ensure the Organisation can live and prosper.
How to become an Intentional Organisation
The question might come now: what are the steps to become an Intentional Organisation?
The first step is to accept that any action by every manager impacts one or more of the components of the Organisation. Building Organisational Awareness is the best way to ensure that decisions taken are reflected with a holistic perspective.
- Do you want to embark on a Digital Transformation journey? Make sure you put your customer at the centre of your design and check what the impacts on your way of working will be.
- Do you feel that you need to experiment Agile? Make sure you start with your operating model assumptions, and for example, review if your Budget Process would come in the way of your program.
- Do you want to increase Employee Engagement? Start by adopting an outside-in view, think in terms of employee experience and of all the internal silos that prevent this experience to be positive for your employees.
- Do you want to reorganise your department? Think first how the team needs to operate, discovering what the value chain is with the other parts of the Organisation. Define how it would fit your strategy and then adopt a consistent model.
- Do you want to redefine your firm as a customer-first organisation? Then check immediately what your incentive system is (not just financial, but the entire set of rewards), and ensure this is not carrying inconsistent messages.
Experimentation is vital to understand the impacts of each choice and open your eyes to the systemic effects that each option has. Each of the examples above can be tried out in a part of the Organisation and for a while. But if you consider all of the elements, you are putting up the first stage of intentional design.
The second step will be to move from Awareness to deliberate action, which means that you plan every effort based on the impact it has on the consistency of the Organisation. Because of the tensions, we have mentioned before, and the mechanics itself of so many interactive parts, you need to be ready, sometimes, to revert individual decisions. And you need to Listen to ensure you capture any unintentional effect continually.
Remember, the process that will ensure real innovation is made of three steps—Noticing, Making Sense and Experimenting.
One of the questions I got more frequently about the concept of the Intentional Organisation is: what is the model you are suggesting?
I am not suggesting a model. I am also not offering a method. I am suggesting a framework that should make managers and organisation professionals reflect that organisational components are not static elements, but dynamic ones that, similarly to a mathematical vector, follow a direction and thus influence others.
Think of water, for example. A very simple molecule. Two atoms of Hydrogen and one of Oxygen. If we would be looking for the traditional “model” answer, we would probably get easily stuck in just observing that. And miss the incredible variety of water that moves from a solid-state (ice) to a liquid, to vapour. Which model is best? We can probably like one more than the other. But try cooking pasta in an ice-bucket, or walk through a geyser, and you’ll probably immediately get the feeling that there’s not one “state” that is better than the other—being intentional means heating the water to boil the pasta, avoiding hot steam, using water to wash and so on.
It is also the main reason why in all the posts that I have done around Business Models, Strategy, Operating Models, Organisation Models, Leadership, and in the coming weeks around Culture, Purpose and Ecosystem, I have not tried to identify “one” model, but wanted to represent the complexity of points of views for any of the topic. Each model presented has worked well in at least one Organisation. And this is what counts.
The incredible variety of human beings can be boiled down to a genomic sequence made of four basic amino acids. But we can’t say that one sequence is better than the other. Well, history is made of many “isms” that tried to do precisely that: racism, sexism and so on. But each of this is setting itself in a dark corner of history.
This said a better question would be: do you have a preference for a specific model? Yes, for sure. I consider myself a rebel from many points of view in terms of my life within organisations and would love to see more human-centric models in place. If you go through my Rebel at Work List of Books, you will immediately notice what my sources of inspiration are. I would love to see more Teal in place, to follow the colour code started by Laloux. More Humanocracy. More Unbossing in action. Fewer management levels. The application of different ways to get things done.
A lot of these suggestions make absolute sense for any organisation that is based on knowledge workers, or that is experimenting with digital services, or that is becoming distributed. Yet I still see areas where more traditional models could always be useful, provided there is a consistency.
For sure, we see a trend that implicitly challenges the traditional idea of the stability of the Organisation. It is the biggest challenge today. We have to take it and intentionally design a future for our Organisation. Unless we consciously choose to become irrelevant.
The Intentional Organisation is about this: understanding that every action causes an effect, whether we want it or not. By giving up on strengthening our organisational awareness, we might be deliberately condemning our firm to oblivion.
Image Credits: Cover Photo by Ryoji Iwata. Starting Line Photo by Kolleen Gladden. Zizag road Photo by Raphaël Biscaldi. Passion Photo by Ian Schneider. Team Photo by Hudson Hintze. Spotify Photo by Sara Kurfeß. lone human Photo by Lachlan Dempsey. Way forward Photo by Vek Labs. All on Unsplash