The Advanced Strategist: Spring-Summer 2006, Vol. 16, No. 1
Organizational Design Methodology
by Steve Clowse

The Advanced Strategies Approach to Organizational Design

The Advanced Strategies Approach to Organizational Design

Over the past year we at Advanced Strategies have seen an increase in the number of client requests for help in undertaking organizational design projects, in order to meet the growing challenges of business in the 21st century. We have worked with large government agencies, businesses in the private sector, and non-profit groups to enable both the redesign of current organizations and the creation of new designs for emerging organizations.

Key Steps for a Successful Organization Design Project

You don't have to be in the working world long before getting swept up in changes to your organization. Does any of this sound familiar?
  • Your organization shifts to centralize functions in order to gain consistency and efficiency, then a few years later de-centralizes them to put them closer to the customers.
  • A new executive is brought in who wants to re-organize to put his or her stamp on the organization. Departments or functions are shifted, merged, and/or split.
  • Resources are tight, so a project is launched to improve the organization in order to do "more with less".
  • Every time a new challenge or opportunity arises, the head of the organization knee-jerk adjusts the org design and/or staffing. Eventually, the organization feels like it is held together by band-aids and duct tape.
It is easy to wonder if their approach is just to keep trying something new and hope that someone will eventually find the right answer. For staff in the trenches, the challenge is even greater because these changes add uncertainty and confusion to their jobs. Individuals feel less clear if they are doing the right work and how their job fits into the broader organization.

We live in a fast-paced world in which change cannot be stopped or ignored. In response to this, management is often tempted to task a couple of people to rush an organization design in a "smoky back room". But the result is almost always based on a limited perspective and often lacks sufficient detail to be explained and defended. The resulting chaos can paralyze an organization. However, there is a methodical approach to developing an optimal organizational structure that clearly defines roles for staff and management. By following this robust process, the resulting organization will be able to withstand major business changes without having to re-design the organization structure.

The following illustration summarizes the key steps for a successful organizational design effort. This methodology works whether you need to re-design an existing organization or are building a brand new organization. Each step is explained further in the subsequent sections.

Specify the Business Strategy ("Vision")

Before initiating any organizational design work, it is critical to start with some fundamental questions: Why does the organization exist? What are its goals? Who does it serve? What products and services does it offer?

If an organization is to achieve a strategy, that strategy must be identified and clearly communicated. In our approach, the Business Strategy Model documents this using multiple elements, shown in the following graphic and described below:

  • Intentions: The reason(s) the organization exists. What it seeks to achieve.
  • Values: The set of beliefs, trade-offs, criteria, and guidelines that govern behavior in obtaining desired intentions.
  • Means: What the organization intends to do to achieve its intentions. Products, services, and/or solutions it will offer and markets the organization serves.
  • Environments: How the organization will operate, both internally and externally, to achieve its intentions.
  • Vision: A statement that encapsulates and summarizes all of the elements of the Business Strategy Model.
A Business Strategy Model provides direction to the organization. It enables improved communication and a means to monitor and evaluate progress. In addition, the Business Strategy Model guides decisions, including how the organization is structured.

Identify the Work Needed to Achieve the Vision

With a common understanding of the organization's strategy, the next question is what work needs to be performed to realize the vision. This step typically begins by identifying the current work of the organization, then assessing it against the Business Strategy Model. Historical activities that do not support the future vision are identified and not brought forward in the design of the new organization. Also, new tasks that are needed to achieve the vision are identified for inclusion in the design.

There are two ways to identify the work of the organization and convert these into a list of "Work Units": (1) The simplest way is to identify and refine a list of activities; (2) A more complete method is to develop Business Process Models. The approach is driven by available time and staff, existing documentation, and desired outcomes from the organizational design. For example, if the project involves consolidating multiple organizations with different processes or if re-engineered processes are needed, then Business Process Modeling is necessary to gain sufficient insight and ensure the work is forward-looking.

Configure the Work into Organizational Roles

The methodology next involves a series of steps to configure one or many Work Units into Organizational Roles ("Org Roles", in brief). An Org Role is a series of responsibilities and duties that can be assigned to a person. It may or may not be an actual job or title, and a person may perform more than one Org Role (i.e. one person may wear many "hats"). But at this point in the approach, the intent is to clearly identify the roles that staff must play to cover the work so the organization can achieve its vision.

First, key drivers, considerations, policies, etc. must be discovered to guide the organizing of the Work Units. Examples of this type of criteria include: bring under-served customers up to a baseline, all procurement will be centralized, administrative work will be outsourced, the organization must easily scale to accommodate peak work load, standard procedures are needed, management requires a flat organizational structure, etc.

Typically, the most significant criterion is the driver of the work:
  • Is the work being driven by the qualifications needed? Does it require a high degree of expertise, knowledge, or skill? Is the qualification uncommon or hard to obtain?
  • Is the work process-driven? Does the process need consistency, reliability, rapid response, etc.? Is a high degree of knowledge of the process required?
  • Does the work require the development and maintenance of relationships with customers, partners, or others? Is a high degree of trust, history, or knowledge of these relationships needed to get the job done?
  • Does the work require a strong understanding of and affinity for the offerings (products/services)? Does the work require someone passionate about promoting offerings and matching them to customer needs?
These four possibilities comprise the acronym QPRO. Although every Work Unit involves a mix of drivers, the primary QPRO must be identified, along with the specific qualifications, processes, relationships, or offerings called for. Ultimately, each Org Role should be defined to include work for the same QPRO and other criteria. For example:
  • Work that involves expertise (Q) in laptop computers is likely not the same as expertise in mainframe computers. Therefore, these would be assigned to different Org Roles.
  • Work that requires deep, trusting relationships (R) with customers is very different from work where processes are followed to gain speed and efficiency (P). Because it is unlikely to find staff who are competent and passionate about both, these should be assigned to different Org Roles.
  • An organization has sales work that covers too large a scope of offerings (O) for one person to manage. Therefore, the offerings could be split among multiple Org Roles (e.g. by geographical region or by size of the organization being served).
Another consideration is whether the organization values formalizing the work or relying upon staff? For example:
  • Formalizing processes (P) involves defining and communicating standard procedures. However, formal procedures are likely not cost-effective for occasional or non-critical processes. Therefore, the process might vary depending upon the specific person executing it.
  • Formalizing expertise (Q) could involve building a knowledge base so the organization captures critical information. Alternately, the organization could simply hire experienced staff to bring the expertise, recognizing the risk that the expertise would no longer be available if the staff were to leave.
Given the drivers of a Work Unit, the level of formalization, and the amount of work (i.e. workload), enough insights exist to begin identifying where collaboration is needed across Org Roles and where oversight is needed. Team structures and reporting lines begin to emerge, although the goal at this point is not to flesh these out - more inputs are needed.

Complete the Organization Design

The components of the new organization have emerged, but the work thus far is not ready to be implemented. First, management Org Roles must be identified for the Org Roles by working through a series of considerations. For example:
  • Looking at one or a grouping of Org Roles, could one person be expected to manage them based on the nature of the work (look at the QPRO)?
  • What is the span of control, in terms of complexity, workload, etc.?
  • Are there external demands on the manager of these Org Roles, such as upper management, politics, or customer interaction?
In grouping Org Roles of performers with a management Org Role, the structure of teams will begin to emerge. On an org structure diagram, indicate where links among the Org Roles require guidance, direction, collaboration, reporting relationships, etc.

Next, all Org Roles are converted into Positions that staff can be assigned to. Steps include:
  • Clustering related Org Roles into full time equivalent loads, such that each Position can be staffed by one or many people.
  • Analyze if the resulting Position will be attractive to the appropriate staff. Is the work rewarding? Will there be promotion potential?
  • Are there available staff internally or for hire that could fill the Position? Note that Org Roles with different QPRO can be clustered into a Position, but you have to assess whether it is reasonable for one person to bring that variety of skills and temperament.
  • The Positions need to be adjusted to accommodate policies (Human Resources, government, etc.) so that the organization will be approved.
The last step involves mapping existing staff into the new Positions, considering their skills, experience, and desires. As you attempt to map them into Positions, look at the QPRO and other criteria of the Position and compare it to what the person brings. Some adjustments and issues will arise. For example:
  • There may be Positions where no incumbent staff person is appropriate. The decision will have to be made to either hire from outside the organization, to re-train existing staff, or to leave the Position vacant (if the work still has to be performed, someone will have to be deemed responsible on an interim basis).
  • There may be Positions where an existing staff person is not an exact fit. The Position may need to be adjusted with Roles and/or Work Units shifted to other Positions in order to accommodate the current staff.
The following is a simplified example of an org structure diagram. There would be descriptive text for every Position, including what Org Roles and/or Work Units comprised that Position. When looking at the diagram, remember that this is the last step in the design and is optimally structured to accomplish the work needed to meet the strategic vision. It is specifically not the first step into which people and processes are shoe-horned.

Plan the Transformation

Transformation defines how you get from an organization defined on paper to an organization poised to achieve its Vision. Having the blueprints does not give you a functioning organization! Every element of the new organization needs to be stood-up, including:
  • People, which may include re-training staff, defining a new culture, opening new lines of communication.
  • Processes, which may include defining new procedures and training staff on them.
  • Facilities may need to be shut down or altered … or new facilities opened.
  • Computer systems may need to be altered to reflect the changes in the organization. New applications may be needed and/or old ones retired.
Depending upon the scope of the change that triggered the organizational re-design, the transformation can be very involved. Therefore, the transformation has to be planned and managed. To begin the transformation process, first analyze the difference between the current organization and the future/target org:

For each gap identified, a plan needs to be developed for how to close the gap. These transformation activities are added to the Transformation Plan. For each activity, the resources needed must be identified (staff, facilities, funding, etc.). Finally, a timeframe must be specified for the transformation activity (could be a duration, deadline, and/or schedule). These elements comprise the Transformation Plan.

With large re-organization efforts, this is typically where organizations try to short-cut the process and end up doing a poor job. Management may begin to get impatient and declare the stand-up complete, with everyone expected to function in the new model. However, no one defined how the new organization would work or how changes would occur. At this point, the staff stumbles into the new world, trying to figure out how to get things done. Eventually, inertia takes over, and few, if any, of the desired changes are accomplished. Management often does not realize that transformation is often the most complicated time for the organization:

Elements of the current/outgoing model still have to be supported while activities are underway to make changes. And as new structures come online, they have to be sustained. As these overlap, customer service drops, staff confusion (and anxiety) goes up, and efficiency goes down. All of this increases the risk that the org design will not be successfully implemented. To maximize the chances for completing the effort, management and the staff must develop a robust Transformation Plan and be disciplined about following it in order to put the changes into action.


This may seem like a lot of work, but consider the question: "What can be skipped?" None of the steps highlighted in this article are "nice to haves". Can you risk the success, efficiency, and morale of your organization by doing an incomplete job? Maybe you can continue to tweak and patch your organization. However, if your organization isn't aligned to your vision or your customers… or you are being pushed to do more with less … or your staff are so unclear on their responsibilities, they are stepping all over each other … you may not have a choice. But the good news is there is a methodical approach where a complex effort can be broken down into manageable steps. With the right resources dedicated to the effort, it can be successful and occur in a timely manner.


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