12 Organisational Design Principles that Embrace Complexity
Updated: Dec 27, 2020
What is this collection of organisational design principles?
These principles have been curated from a panel discussion series with industry leaders. Hosted by Nigel Thurlow, the panel includes leaders such as Dave Snowden, who created the Cynefin Framework, the authors of Team Topologies, Jabe Bloom, Sonja Blignaut and Andrew Blain. Links to profiles and panel videos at bottom of this post.
What makes these principles different?
These organisational design principles are grounded in the belief that organisations are complex adaptive systems. Organisations are emergent in nature and cannot be designed up-front. Instead, conditions should be created for the design to emerge.
12 Organisation Design Principles:
Foster Informal Networks
Follow the Golden Rules of Crisis Management
Embrace Sympoietic Systems
Use Organisational Scaffolding
Use temporal interventions
Distribute cognition and decision making
Don't scrap the hierarchy
Increase the Organisations Adaptive Capacity
Lower the Energy Gradient needed for Change
Don't Outsource Organisation Design
Enable Resilience and Robustness
These principles help you avoid these common organisational design traps
The false belief that organisations can be designed
Organisational Design has a central flaw that it creates an assumption that an organisation can be designed. Typical organisation design looks at the individual parts. The people, the layers, the spans. The parts are then assembled together to deliver the optimal results. It is the belief of the panel members that organisations cannot be designed "upfront". The principles shared can be used to take a different approach to organisational design that embraces complexity. Many organisation design efforts assume organisations are like a zoo, simple and ordered. The reality is organisational complexity is more like a jungle highly connected and full of surprises.
Hope Despair Cycle
This is caused by designing for an ideal target state and then trying to move towards that. You will end up in a hope and despair cycle. You should avoid designing for a target end-state instead define starting conditions and let the design emerge with a sense of direction.
It is important to evolve from the present moment, not an ideal end state. Understand the conditions of the present moment. For example, your map out your existing constraints. Dave Snowden highlights the importance of constraint mapping.
Spotify is an example where this worked well. They defined a set of organisation principles and let the design emerge. Unfortunately, many people copy this model and fall into the hope despair cycle by designing for the end-state. Aka lets implement the Spotify model.
Senior management is abstracted from the organisational design. They often hire consultants to do the design work. Managers need to do design work. They cannot delegate this important activity. This means learning about how to approach organisational design.
Cognition is not distributed
A connected trap is that cognition is not distributed. Often organisational design consultants will analyse the organisation and then design upfront. They often do this in a silo relying on copies of other organisation designs such as the Spotify model. Organisations should create conditions to distribute the design. This is where informal networks become important.
Work at an abstract level not in the detail
It's common for management to talk about abstract organisational design models and approaches without getting into the reality of the detail. These abstract ideas look good on a PowerPoint but may not be suitable for the system. Managers should focus on experiments that allow the organisational design to emerge.
Using ineffective Metaphors
The Manufacturing Metaphor is pervasive within Organisations and leads to perverse results. Organisations are not like machines. Organisations are more like an ecological system than manufacturing systems. There should be caution however in using a biological metaphor. In a biological system, the feedback mechanisms can cause catastrophic failure. But human beings seem to have the capacity to go through a phase shift in a catastrophe and change identity structures. Human systems are more complex. Once you shift metaphors you start to design and interact with the organisation in a different way.
Several conflicting optimisation goals exist in the organisation. This creates confusion across the organisation. Often organisations want to increase efficiency and effectiveness but often a Utilisation problem occurs. Managers max people out which increases the time to deliver and size of queues.
Principle 1 - Foster Informal Networks
Formal and Informal networks exist within an organisation. The majority of organisational learning (70%) happens in informal networks. You need to learn to amplify and foster informal networks. Many organisations, unfortunately, dampen informal networks rather than foster them.
Trust is automatic within Informal Networks. This is because people can opt-in or out. There is a high energy cost to create trust within a formal network. The conditions are not present for trust to emerge easily.
To foster Informal Networks create an attractor that pulls people into the network then encourage the network to problem solve collectively on their most important challenges.
A key aspect of the informal networks is the encouragement of boundary spanning. People working across traditional boundaries. This helps distribute the cognition within the organisation. It's important to reward, promote and encourage boundary spanning. With organisational politics, it can often be seen as a negative.
Within the formal network, organisations should be aware of the number of people in value-creating roles vs organisational management roles. Often within formal networks, there are high degrees of coordination roles. Andrew Blain calls this Organisational BMI. The ratio of value creators to coordinators. It's a problem when you have so many coordinators they distract the value creators from creating value.
Principle 2 - Crisis Management Golden Rules
Dave Snowden's two golden rules for Crisis Management:
Coordinate in the centre, don’t make decisions. Distribute cognition and decision making
Communicate by engagement. Don’t communicate to people, engage in the problem with people so you can understand it.
Principle 3 - Focus on Sympoietic Systems rather than Autopoietic Systems
Often organisational design approaches focus on individual parts rather than the whole. It is important to remember how things connect are more important than what they are. This means focusing on the connections between teams rather than on the team itself.
This concept is defined when as Autopoietic and Sympoietic Systems.
Autopoietic System Examples:
An expert driven task force
Sympoietic System Examples:
In Team Topologies they explore these interactions highlighting three examples:
Collaboration – Working together on discovery
Service – provision of service between teams
Facilitating – diagnosing issues, providing temporary support. Coaching mentoring guiding. Often SME’s
You might also be interested in my article on "Rewilding Organisations - An ecological approach to change"
Principle 4 - Leverage Organisational Scaffolding
Organisational Scaffolding is a structure, often temporary that can be used to help the emergence of desired outcomes. Scaffolding helps create the right conditions.
Examples of scaffolding include:
Free breakfast for staff - Many companies do this to foster collaboration and informal networks to emerge
Daily Stand Up - A lightweight approach to encourage communication
Principle 5 - Temporal Organisation Design Interventions
When approaching Organisational Design interventions you should be aware of the temporal nature of change. How long does the intervention need to exist? Not all changes should be permanent.
Three categories of temporal organisational design interventions:
Stable – Intended to be fixed over time once introduced
Plastic – Change over time
Ephemeral – Lasts for a very short amount of time. Not valuable after the intervention
The categorisation is important for the following reasons:
Avoids over-investment in intervention – Don’t over-invest Ephemeral interventions. They are meant to be thrown away
Easier to add to organisations than remove. Easier to scale than descaling. Removing roles, titles, badges, rules, policies are very difficult
As a result, Ephemeral interventions are the hardest. Be careful to dispose of the intervention (Take the scaffolding down)
Principle 6 - Distribute cognition and decision making
It's important to avoid the trap of designing organisations in isolation or delegating to an external consultancy. Put the power of organisational design into the power of people. Allow the design to emerge through self-organisation.
This doesn't mean a free for all. Management needs to provide patterns and constraints to teams from which they can self-organise.
It is often that people with the talent are excluding from the process of organisational design. Ensure to include diverse perspectives. Managers want to make change happen rather than listening and understanding the system. Management interventions often destroy value that already existed. They often make things worse.
Many organisational design efforts attempt to improve decision making in organisations. However often the ideas around decision making can be problematic. For example, senior executives think their productivity is decision making. They try to make as many decisions as possible but their productivity should come from creating the right conditions for other people to make decisions. Distributed decision making and cognition.
The Product Owner is typically not an effective role as other managers within the system overrule decisions.
A big challenge today is so many people in senior positions have no experience in the functions of their teams. There are many general managers with no experience of how the work works. So they can only make decisions based on the centre of a normal distribution. So the minute you hit an environment where the distribution isn’t normal anymore they just lost, where some of you grown up in the environment would know what to do.
Part of the decentralisation of decision making is to re-skill the individuals who need to make decisions in order to increase the adaptive capacity of the organisation for times in which challenges occur
Caution should be raised around consensus in organisational decision making. Consensus can be damaging for situations where novelty and innovation are needed which is often in the face complex situations.
Principle 7 - Hierarchy is still important
It is a misconception that the Hierarchy in organisations is bad. Hierarchy is an important constraint. Without a hierarchy there wouldn’t be friction and Mavericks wouldn't emerge. Within a crisis hierarchy, a chain of command becomes vital.
Hierarchy can also create a healthy “back pressure” effect: If we don’t make this decision the manager will (x).
Organisational Designs needs to be aware of both the formal hierarchy and also the informal network. It is important to have degrees of both within the organisation.
Principle 8 - Increase Organisations Adaptive Capacity
Adaptive Capacity is the ability of an organisation to respond to change. A primary goal of any organisation design efforts is to increase the Adaptive Capacity of an organisation.
Adaptive Capacity is like a budget. When you use it all the organisation can become very rigid and freeze. Similar to our fear capacity. As we increase fear humans can freeze. Creating the right amount of Adaptive Capacity within an organisation is important
When there is Low/Stable Environmental (Market forces, Societal issues etc.) Pressure an Organisation does not need much adaptive capacity. They can continue to make small adjustments as needed to enable change.
When there is High/Unstable Environmental Pressure an Organisation needs high adaptive capacity. Ability to refocus energy around a challenge quickly. Ability to reform the organisation around that challenge. Organisations with low adaptive capacity will quickly use up their available “adaptive budget” and freeze. Highly adaptive organisations can sense their environmental pressure and respond. They can also sense when the environment has changed and they can move back to more stable design.
A connected topic to Adaptive Capacity is the subject of “Graceful extensibility” coined by David Woods. It “is a positive capability to stretch near and beyond boundaries when surprise occurs" Organisations should build the capacity to embrace surprise. Often surprises are seen as risks that should be avoided. David also talks about Regime Shifts which are large, abrupt, persistent changes in the structure and function of complex systems. Organisations should build the ability to detect these regime shifts and adapt quickly as they occur.
Principle 9 - Organisational Energy Gradients
It is important for organisations to be aware of the energy gradients involved with change. How much energy does it take to move from one state to another?
Organisations with a lower energy gradient can enable faster learning.
Organisations with a higher energy gradient it becomes harder to learn and change.
If something is sustainable in the informal system the energy cost of making it formal is very low. Whereas if something isn’t naturally present in the system the energy cost of creating it is very high.
In a crisis is the energy costs to change drops significantly. This is because the context has made people prepared to do things differently. An example is during the coronavirus crisis where organisations who were reluctant to embrace working from home were suddenly forced to embrace that. The energy cost to shift to more flexible working was reduced.
Energy Gradients is a concept taken from Physics.
Principle 10 - Don't outsource Organisational Design
Many big consultancies drive off the belief that “if you design your organisation like x, you will get the results company y are getting”. There is often a drive towards homogenous, monocultural organisational design. It is seen that “Industry standards and consistency” is a good thing but often these interventions are not suitable in other contexts.
A challenge to be aware of is the dependency relationship that can be formed between the consultancy and the organisation. Many HR\OD departments have the CEO in a Stockholm syndrome relationship.
Principle 11 - Enable your organisation to be both resilient and robust
A system which is robust survives and change.
A system which is resilient survives with continuity of identity over time.
Informal networks enable a more resilient organisation. The multiple structures that emerge within the informal network and the interplay with the formal network is what can enable high degrees of resilience. These multiple structures create redundancy in the system which helps create resilience.
There is oftentimes when you need the organisation to break. The ability to recognise failure, reassemble quickly with a different form is an aspect of resilience. When systems break and reform the become even stronger. The organisational design should enable this reassembly and reform. Again the interplay between informal and formal networks can help.
Principle 12 - Focus on what can be managed in complex systems (e.g. Constraints)
It is important to understand what can and cannot be managed within a complex system when looking at organisation design. Constraints are one example of something that can be managed in a complex system. Identify constraints, change constraints, see what happens. Find out which constraints which are brittle and what the impact of change is.
When designing organisations don't focus on the things that cannot be managed.
Thanks to the panel for an excellent set of discussions on Organisation Design.