So many business experts will tell you that they know how to shape your business to make everything better. Normally they prescribe to one particular method that they advocate for or are familiar with, and vary on that idea pretending it is a one-size fits all solution. Some methods are actually really interesting:

  • Holacracy is a structure based around self-organising (but not self-directing) teams made up of roles, not job functions. Zappos (the shoe and clothing company) runs similar to this
  • Fully-flat organisations have no hierarchy whatsoever and are completely self-directing. Valve (the game and software company) runs similar to this
  • Extreme-hierarchical organisations have high levels of management, and will likely include varying levels of junior, middle, and senior management, likely bookended by front-line staff on one end, and the boardroom on the other. Most traditional organisations (think IBM, Chase, Telecom, etc) run similar to this

There are hundreds of different organisational types. To understand the best structure for your business, you need to go back to basics and work out what it is you’re actually doing in business in the first place.

First principles

Organisations are like people. Every single one is unique and will have its intricacies in the way it operates, and in the way it delivers. This is a good thing! But understanding the way in which any organisation delivers its stuff, we’re going to want to accomodate those intricacies.

Understanding the fundamental purpose as an organisation is the only way we can really then start to break down how it is that we should operate. The trap that most organisations fall into is often defining the wrong purpose, or adulterating that purpose in a way that is not based on their customers, but is based on their own desires.

A true, fundamental purpose can only be defined in customer’s terms, from a customer’s point of view. 

A good way to work out if we’ve got our purpose defined is actually easier than you might think – ask your customers! You’ll always get a lot of different responses as each customer, individual as they are, will want different things in different ways. As you go through asking customers though, you’ll start to see patterns around what it is that customers think it is that you do.

So we know why we’re supposed to be here, but it doesn’t match what we want to do!

Yes, this can be a point of inflection… an epiphany in many systems thinking interventions. And it’s often how businesses lose their way; working on things that don’t benefit the customers, resourcing around that work, scaling it. Many multi-national organisations have teams of teams dedicated to functions that do absolutely nothing to deliver what it is that the organisations’ customers are actually wanting!

Some inflammatory examples might include:

  • Accounting and Finance ‘departments’

What do accounting and finance departments actually do – in the customer’s language? If you ask a customer, it’s likely that they can’t tell you a damn thing about your finance department. These departments will typically be producing reports for mostly-internal groups. They are not contributing anything toward the outputs for the customer.

  • Reporting and Analytics ‘departments’

The same thing goes for all of those reporting people. Where do the reports go? Who’s managing the infrastructure to house all of these reports? Most importantly, what do these reports do for the customers? Not exactly much if you ask your customers.

  • Customer Insights ‘departments’

The ultimate of controversial inclusions is the customer insights departments. They are supposed to be telling the organisation what to put in the pipe next, what customers want, and how they want it. Truth be told, in most organisations these departments have minimal influence on how things actually get delivered. It would be far more efficient to have that knowledge up the front where people are doing the work to deliver to customers, instead of off in a silo thinking up widgets. Again, put this one to your customers…

Wow, all quite controversial… but bear with me as I am not done yet 🙂

What’s all this got to do with my organisational structure?

The best delivering organisations are set up around customer delivery. Getting what the customer wants done, in the way the customer wants it should be the ultimate defining factor as to how you fundamentally run your business. Anything else that is done… well it frankly isn’t done in the best businesses.

There are notable exceptions to this. Legal requirements as mandated in law and by government cannot be scattered to the winds. If you do that, you can’t deliver anything to your customers as you’ll likely be shut down and maybe locked up. Some of these external influences aren’t always what they seem though.

A really good example of this is one I use often – share price and the market. Most board members will tell you point-blank that the share price, market reception, and stability are key to the organisation’s survival. This is wrong. So very, very wrong.

From 1996 through to mid-2012 Apple did not pay a single dividend to any shareholders. Not. One. Cent. Initially and in the extreme short term, the share price went down further. And then over those years, Apple went off and focused on it’s customers, and ignored pressure to pay dividends. In that time, it became one of the richest organisations in the world simply by ignoring that external pressure and focusing on doing what its customers were asking for.

Wow.

Chopping teams

You may be asking yourselves “so if we change or get rid of all those teams, who does the work they were doing?”. The point is that the work they were doing likely does not need to be done, if the company is now truly focused on delivering purely for customers. All of those people can be re-skilled if needed and working on things that directly contribute to delivery for customers.

Some of the work does need to be done though… but it can be done in a different way. A way that more directly affects customer delivery without onerous organisational overhead. A good example of this is the corporate spending card.

Many of us have one of these nasty little things in our pocket. They can be a benefit and a curse at the same time. A benefit because they enable you to go and spend money on (or with) a customer right now… and a curse because you likely now live in a receipt and auditing nightmarish circle of hell.

When was the last time that something really, truly bad happened with a corporate card in your organisation? Would the world stop turning if you dropped the audit requirement and instead made sure that everyone understood the responsibilities of using the card?

On one particular overseas intervention I ran, I gathered up no less than 78 different receipts for services from vendors all over the place. It took me over a day to appropriately scan and code and attach and file and verify every single one. That whole day was a non-event for a customer, because of an organisational auditing department requirement. Think about how many people need to travel for work: how much time have those non-contributing department requirements just eaten in your organisation. Eek.

Just because one person at one time, somewhere, somehow broke the rules, should not create mountainous burdens for everyone else and take away from time and resources that could be used to deliver ‘the things’ to customers.

So, okay. What now?

This was a very long winded, example-ridden piece about what to look out for, what to understand better, and how to begin. But really, it doesn’t matter how you organise yourselves. Always be prepared to ask – and act on – causes of distraction and wasteful acts which do not contribute directly to the customer’s experience. If you commit to doing this and really, actually do it, you can’t fail.

The best organisational structures enable everyone to focus purely on how to deliver exactly what the customers want, when and how they want it… without stuff getting in the way.

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