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Leading Organization Design
In a sentence
A practical, five-milestone process for business leaders to make deliberate organization design decisions that translate strategy into executable capabilities, balanced power relationships, and the right talent.
Leading Organization Design argues that in a world of complex, global, matrixed strategies, organization design has become an essential leadership competency rather than something that comes naturally. Drawing on forty years of consulting experience and building on the foundational work of Jay Galbraith, Walt Mahler, Robert Simons, and Dick Axelrod, Greg Kesler and Amy Kates offer a clear, scalable, five-milestone road map—Business Case and Discovery, Strategic Grouping, Integration, Talent and Leadership, and Transition. They equip leaders with concrete frameworks (the Star Model, the six design drivers, the strategy canvas, governance levers adapted from Simons's levers-of-control, the leadership pipeline, and the design charette) that marry the art and science of design while engaging the right people in the process. The book shows leaders how to define the real problem to solve, choose and blend basic structures, govern the inevitable matrix through balanced power, design and staff critical roles, and lead the transition all the way through—turning accumulated experience into applied wisdom and building organizations that competitors cannot easily copy.
The four lenses
- Science
- Statistics
- Systems
- Strategy
Tags
The model
A causal framework in which strategy-derived capabilities and the operating model act as conditions that drive design levers (strategic grouping, integration/governance, talent and leadership design, transition management), which in turn shape psychological and behavioral states (decision quality, collaboration, employee engagement, experience of complexity), ultimately producing outcome metrics of capability building and business results.
Strategy Clarity and Capabilitiescontextual condition
The degree to which the business strategy is clear, understood, agreed upon, and translated into a short list of differentiating capabilities that serve as design criteria for all subsequent design decisions.
Operating Modelcontextual condition
The chosen positioning of the organization on the continuum from holding company to single integrated business, specifying how closely linked operating units need to be and how much authority is delegated versus centralized, which informs every design milestone.
Problem Definition Qualitydesign lever
The clarity and fact-based accuracy with which the organization design problem to be solved is articulated through a current-state assessment, producing a concise problem statement that focuses subsequent design work.
Strategic Grouping Choicedesign lever
The selection and blending of basic building blocks (function, geography, product, customer) and matrix forms to identify the major load-bearing units that group work, power, and authority to build the capabilities required by strategy.
Integration and Governance Designdesign lever
The design of mechanisms (networks, councils, processes, integrative roles) and the four governance levers (beliefs, networks, boundaries, diagnostic measures) used to tie grouped units back together and allocate balanced power across boundaries and the matrix.
Talent and Leadership Designdesign lever
The design and staffing of critical roles, reporting structures, span and layers, talent pivot points, and the defined work of the executive team to ensure the right people are in the right seats to execute the new design.
Transition Leadership and Pacingbehavioral pattern
The degree of sustained executive attention, deliberate sequencing, pacing, and use of tipping points to lead the implementation of a new design through launch, momentum, and learning phases until new capabilities are built.
Stakeholder Involvement in Processdesign lever
The breadth and quality of engagement of the right cross-section of leaders and employees in the design and implementation process, such as through assessments and design charettes, to enrich decisions and accelerate change.
Decision Quality and Speedbehavioral pattern
The extent to which the organization enables aligned, high-quality business decisions to be made consistently against strategy and without sacrificing speed, reflecting clear cross-boundary decision rights and balanced power.
Cross-Boundary Collaborationbehavioral pattern
The behavioral pattern of productive teamwork and information sharing across functions, geographies, products, and the matrix, reflecting healthy tension that is governed rather than dysfunctional conflict.
Experience of Complexitypsychological state
The internal experience of complexity felt by employees and customers as distinct from the structural complexity of the organization, which good design seeks to minimize while still managing necessary strategic complexity.
Employee Engagement and Commitmentpsychological state
The degree to which employees understand the rationale for change, feel heard, identify with the new direction, and are emotionally committed to the new design rather than disengaged or resistant.
Capability Buildingoutcome metric
The successful development of the differentiating organizational capabilities (such as innovation, global account management, brand building) that the strategy requires and that are difficult for competitors to copy.
Business Resultsoutcome metric
The ultimate lagging financial and customer outcomes (growth, profitability, market share, customer satisfaction) that result from effective strategy execution enabled by an aligned organization design.
How they connect
- strategy clarity → influences problem definition
- strategy clarity → predicts strategic grouping
- problem definition → influences strategic grouping
- strategic grouping → predicts integration governance
- operating model → moderates integration governance
- integration governance → predicts decision quality
- integration governance → predicts collaboration behavior
- strategic grouping − influences experience of complexity
- talent leadership design → predicts decision quality
- strategic grouping → predicts talent leadership design
- stakeholder involvement → predicts employee engagement
- stakeholder involvement → influences decision quality
- transition leadership → predicts capability building
- employee engagement → influences transition leadership
- decision quality → predicts capability building
- collaboration behavior → predicts capability building
- capability building → predicts business results
- experience of complexity − influences employee engagement
A candidate measure
Leading Organization Design — derived measurement candidates
Strategy Clarity and Capabilities
degree of leader agreement in interviews; presence of strategy canvas profiles; specificity of capability statements
self-report suitability: medium
Operating Model
classification on holding-to-single-business continuum; executive committee interdependence rating
self-report suitability: medium
Problem Definition Quality
existence and specificity of problem statement; data support behind each statement
self-report suitability: medium
Strategic Grouping Choice
org chart structure; design driver trade-off analysis
self-report suitability: low
Integration and Governance Design
existence of RACI/RAPID grids; council charters; perceived balance of votes
self-report suitability: medium
Talent and Leadership Design
number of layers; direct report counts; fit of incumbents to roles
self-report suitability: medium
Transition Leadership and Pacing
milestone completion rate; number/timing of tipping points; agenda time devoted
self-report suitability: medium
Stakeholder Involvement in Process
participant roster breadth across levels/functions; self-reported inclusion
self-report suitability: high
Decision Quality and Speed
decision cycle time; escalation frequency; role-clarity perceptions
self-report suitability: medium
Cross-Boundary Collaboration
council output quality; cross-unit project counts; survey reports of collaboration
self-report suitability: high
Experience of Complexity
employee complexity-perception items; customer ease-of-doing-business feedback
self-report suitability: high
Employee Engagement and Commitment
pulse survey scores; participation in change activities; resistance signals
self-report suitability: high
Capability Building
new product cycle time; capability scorecards tied to design criteria
self-report suitability: medium
Business Results
financial statements; market share data; customer satisfaction scores
self-report suitability: none
The story
The reader A general manager, business leader, or HR/OD professional who wants to execute a complex strategy and build organizational capabilities that competitors can't easily copy.
External problem
A misaligned organization structure that creates barriers to execution, slow decisions, role confusion, and an inability to build the capabilities a new strategy demands.
Internal problem
Feeling that they know change is needed but are unsure how to make the best design decisions, fearing they'll solve the wrong problem or lurch from one reorganization to another.
Philosophical problem
It's just plain wrong to rely on instinct and 'good people' alone when today's complex, global strategies require deliberate, explicit organization design as a leadership discipline.
The plan
- Build a business case: clarify strategic priorities, define the case for change through assessment, and set design criteria.
- Choose a basic structure through strategic grouping using the six design drivers.
- Tie the pieces together and allocate power through integration and governance levers.
- Design and staff the critical leadership roles and define the work of the executive team.
- Lead, measure, learn, and adjust through a deliberately paced transition.
Success
- Aligned decision making against strategy with high consistency and speed.
- Built differentiating capabilities that are difficult for competitors to copy.
- Talent placed in the right roles and leaders grown through stretch experiences.
- A complex organization whose complexity is managed without overwhelming employees and customers.
At stake
- Repeated reorganizations that change structure but never change business results.
- Wasted creative energy, disengaged employees, and risk-averse, suboptimized decisions.
- Designs that underperform because the transition was never finished and new capabilities were never built.
- Loss of competitive advantage as the organization lurches forward randomly.
Chapter by chapter
ch01Allocate Power in the Matrix: A Case Study in Governance
This chapter explores the complexities of power allocation within matrix organizations, emphasizing the critical importance of intentional governance structures to enable effective decision-making and leadership.
ch02The Five Milestones
The chapter establishes a structured roadmap for organization design through five essential milestones, emphasizing the importance of clarity, decision-making, and alignment with strategic priorities.
- Successful organization design requires a clearly articulated business case and consensus around strategic priorities.
- Stakeholder engagement and transparency are vital for securing commitment to a redesign initiative.
- The first milestone, Business Case and Discovery, is foundational for effective decision-making and future success.
- Clarity on the nature of the organizational 'problem' is essential for aligning design efforts with strategic goals.
ch03Clarify the Strategic Priorities
This chapter argues for the imperative of aligning organizational design with strategic priorities, as organizations must navigate both top-down and bottom-up processes to ensure agility and effectiveness in a changing environment.
- Organizations must recognize that effective design starts with a clear understanding of strategic priorities, as this alignment is crucial for success in a rapidly changing environment.
- Jay Galbraith’s Star Model remains a relevant framework for guiding the alignment of organizational structures and strategies today.
- The strategy canvas is a powerful tool for visualizing how organizations can differentiate themselves in crowded markets and identify long-term opportunities for growth.
- Organizations that adopt a more strategic agile approach will be better positioned to respond proactively to new opportunities or threats in the marketplace.
ch04Define the Case for Change
This chapter argues that a clear, comprehensive current-state assessment is essential for defining effective organizational change, highlighting the importance of articulating specific problems and engaging stakeholders in the design process.
- A successful organizational change begins with a comprehensive current-state assessment that reveals both strengths and weaknesses.
- The formulation of a precise and fact-based problem statement is vital for addressing organizational challenges effectively.
- Engaging employees at all levels helps surface insights and innovative solutions, fostering a culture of inclusion.
- Identifying resistance early allows change leaders to tailor engagement strategies and mitigate potential conflicts.
ch05Set the Design Criteria
This chapter emphasizes the essential role of organizational capabilities as design criteria to evaluate and support strategic execution, urging companies to focus on building enduring capabilities rather than merely addressing present challenges.
- Capabilities serve as vital design criteria, ensuring organizations can effectively execute their strategies while maintaining competitive advantages.
- Agility, both portfolio and operational, is essential for effective organizational design, requiring distinct structural arrangements.
- External benchmarking can inspire innovation, but it should be employed judiciously to avoid misplaced best practices.
- Establishing a comprehensive set of design criteria that are specific, observable, and measurable is crucial for evaluating organizational design options.
ch06Use the Six Design Drivers
This chapter explores the importance of strategic grouping within organizations, emphasizing how utilizing six design drivers can enhance a company's ability to innovate and effectively execute its business strategy.
- Strategic grouping answers the question, ‘What basic grouping of work do we believe will best create the capabilities necessary to deliver the strategy?’
- Success in innovation is dependent not merely on spending but on organizational arrangements that catalyze creative capabilities.
- Companies succeeding in innovation tend to structure themselves to elevate management attention on critical initiatives.
- Specialization can drive focus in innovation; however, it must be balanced with integration efforts to ensure responsiveness and coherence.
ch07Choose the Best Grouping Option
Choosing the right grouping structure is essential for maximizing organizational effectiveness, requiring a careful balance of benefits and risks across strategic options.
- Strategic grouping is a pivotal aspect of organizational architecture that requires balancing benefits and risks.
- Using visual tools like bubble diagrams can greatly aid in elucidating and exploring various organizational architectures.
- Different business archetypes necessitate distinct capabilities; understanding this differentiation can inform optimal structural choices.
- Geographic organization must adapt to emerging market dynamics and demands, stressing the importance of localized management strategies.
ch08Embrace the Matrix
This chapter discusses how organizations can effectively leverage a matrix structure to manage multiple strategic priorities, highlighting the inherent tensions that arise within this complexity.
ch09Design for Operating Governance
This chapter argues that effective operating governance is essential in managing organizational complexity and that well-defined power dynamics enhance decision-making efficiency across diverse business units.
- Effective operating governance is crucial for enabling swift decision-making and enhancing organizational agility amidst market volatility.
- Balancing autonomy with strategic oversight prevents critical innovation investments from being neglected and fosters a culture of proactive leadership.
- The four levers of control—belief systems, interactive networks, boundaries, and diagnostic systems—should be leveraged to create a dynamic governance structure that navigates complexities effectively.
- Operating governance encompasses more than procedural compliance; it thrives on a culture of shared beliefs and a willingness to adapt to changing market conditions.
ch10Allocate Power in the Matrix
The chapter explores how Apparel Brands Inc. restructured its matrix organization to align with consumer-centric strategies and effectively balance power between product units and geographic divisions.
ch11Redesign Functions to Be Integrators
This chapter argues that corporate functions like HR, finance, and IT must transform from traditional support roles into integrative forces that unify interdependent business units and enhance overall organizational performance.
ch12Design the Leadership Organization
This chapter argues for a deliberate approach in structuring leadership roles within organizations to align with strategic objectives, ensuring that leaders are equipped to address complexity while fostering adaptability.
ch13Make the Right Talent Choices
This chapter emphasizes the critical importance of making strategic talent decisions during organization redesign, advocating for targeted investment in key roles to enhance overall performance and support future growth.
ch14Set the Implementation Plan
This chapter details the structured approach necessary for implementing organizational changes systematically, emphasizing the importance of defining a clear destination, choosing the right pacing, and effectively sequencing tasks.
- Successful organizational realignment hinges on envisioning a clear destination, which fosters credibility and focus among managers and staff during transitions.
- The choice between a 'Big Bang' approach or a phased implementation should be informed by the specific strategic needs of the organization and the external pressures they face.
- Transparent communication about the changes—and the reasoning behind them—is critical to mitigate uncertainty and anxiety among team members.
- Pilots can serve as valuable learning opportunities, provided they are well-aligned with the overall system and not isolated experiences.
ch15Navigate the Transition
This chapter addresses the critical processes and leadership actions necessary for successfully navigating organizational transitions, emphasizing the importance of ongoing engagement and adaptability throughout the implementation phase.
- Proactive executive engagement is crucial to the success of organizational transitions—walking the talk inspires similar commitment throughout the ranks.
- The first 90 days following a major redesign are foundational; establishing routines and expectations during this period can significantly improve long-term adoption.
- Tipping points serve as powerful signals of organizational change; timing these carefully can enhance perception and support for new structures.
- Ongoing feedback mechanisms are essential to track sentiment and resolve conflicts as they materialize during the restructuring process.
ch16Conclusion
This chapter argues that organization design is an ongoing, collaborative process crucial for success, requiring leaders to embrace diverse perspectives while navigating challenges of power dynamics and control.
ch17Roles, Involvement, and the Project Timeline
This chapter examines the critical roles in an organization design project, the involvement strategies for various stakeholders, and outlines a project timeline to effectively guide the design process.
ch18The Design Charette
A design charette serves as a powerful process for harnessing diverse perspectives, fostering innovation, and collaboratively crafting effective organizational designs, ultimately leading to improved decision-making and implementation.
- A design charette is fundamentally about fostering creativity and collaborative decision-making in organizational design.
- Leaders play a pivotal role in framing the charette as an opportunity for input, not consensus.
- Diverse participation is critical; a broad spectrum of voices leads to innovative solutions and greater buy-in for organizational changes.
- Proper preparation and a structured agenda are vital for successful charette outcomes; early groundwork can lead to higher-quality discussions.
ch19Learning to Lead Organization Design
In an era where organizational agility is paramount, this chapter argues that effective leadership transcends vision and emotional intelligence; it necessitates a profound understanding of organization design to activate talent and drive sustained results.
- Effective organization design is not a one-time project; it is a continuous process integral to leadership.
- Strong leadership requires an appreciation for how organizational design enhances or undermines talent and strategy execution.
- Leaders must develop capability-building frameworks to ensure sustainable success beyond individual performances.
- Engaging high-potential talent in organizational redesign fosters both development and immediate strategic alignment.
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Related in the literature
The measurement literature behind this signal — sourced, so you can defend it.
“Internal Working Relationships This measure applies to the HR team specifically. In many companies, a centralized OD resource works with or through HR generalists or other internal support groups. Any friction and confusion shows to the client. Ask, “How well did we work…”
— Leading Organization Designmatch 66%
“The best option will be based on such factors as where the top executive wants to spend his or her time, the scope of the roles of direct reports, where jobs need to be placed in order for them to be effective, and comfort with wide as opposed to narrow spans of control.The…”
— Leading Organization Designmatch 66%
“Our Point of View on Organization Design When we approach an organization design project, our thinking is guided by a number of beliefs that speak to both the content and the process of organization design work: 1. Good design always starts with a clear picture of the problem…”
— Leading Organization Designmatch 66%
Resources: Leading Organization Design