When moving into new offices, we consider carefully the dynamic we want to create between our people, the resources and technology required, and the experience we want for customers and our staff. Of course, we understand that great design will enhance performance significantly. But we give little consideration to how our organisation is designed to allow it to compete more effectively.
Active Knowledge Question:
Can you draw a picture of how your organisation operates to deliver value to its customers?
Ask most leaders to draw a picture of their organisational design or to explain how it works, and they will pull out an organisational chart. But an organisational chart at best reflects titles, reporting lines and levels of authority. They are a pyramid structure with the Board and CEO at the top, C-suite executives at the next level, and it flows down until the page is full. Some, of course, have multiple pages.
This is a ‘command and control’ style diagram and typically reflects very little about how the business actually works. And more importantly, it reflects very little about how it competes or delivers value to its customers.
Businesses exist to compete no matter whether they consider themselves for-profit or for-purpose. They compete against themselves to bring their greatest potential to the forefront and apply it in delivering value to their customers. A value that outcompetes everyone else in their marketplace. If they do this well, profit is earned, and purpose is fulfilled.
Most business leaders cannot draw or create an image of how their business actually works. And as such, they are unable to get a handle on how they are really resourcing their business to be competitively fit.
In any business, you are competing around the value that you are able to deliver to a customer’s needs. And in competing, you are seeking to deliver more value than your competitors. So, in competing, the question then becomes ‘how do all the various parts of the business work together, effectively and efficiently, to deliver that value’?
A business’s competitive strength lies in the combined talent and effort of every person who works within and with a business. The greater the talent and effort that can be mustered and focused, then the greater the competitive effort.
The role of leadership is to lift this potential to the surface. ‘Direct, focus and align’ are the words that come to mind once that potential is energised.
Organisational purpose, motive and vision are the elements that will energise that potential, but only if worthy leaders are at the helm, ensuring barriers are continuously dismantled, and rewards are properly available and assigned.
These are elements of the competitive engine that exists in every business, operating 365/24/7 whether recognised by leadership or not. This competitive engine sets the floor and ceiling to the competitiveness and performance of a business. It determines how competitively fit a business is.
How a business has decided to compete so it will win is reflected in its competitive posture. It falls out of a business’s strategy after considering the:
- Marketplace in which it is competing.
- Competitive landscape within that marketplace.
- Strengths that business can bring to bear in that market so it can outcompete.
I think of the analogy of a boxer who enters the arena knowing their strengths and seeks to direct the competition so that their strengths will win the day. They are not static, rigid or fixed, they are fluid and move with the rhythm of the competition, always positioning themselves so that their strengths are at the forefront.
Marketplaces are dynamic and must also be businesses; competitive posture seeks to capture the essence of a business’s strategy to win.
In business, winning is a team effort, and the competitive posture must capture the role of each team member’s contribution to that effort. In a business, many elements must come together — sales, marketing, research, production, creativity, resourcing, warehousing, delivery, service, and so the list can continue. Of course, people are present throughout every aspect of a business.
How a business views its marketplace, the needs of its customers, and agents impacting that market and customer value will vary and likely be unique if they are to be successful. But, again, this will be captured in its competitive posture.
And what must be clear is each team’s role in contributing to that competitive posture. What is their unique contribution, and how does it fit into that winning formula?
Forget about the organisational chart of your business and think about how you intend to compete. Be succinct in the role of each element (team) plays within your business in their contribution to the whole.
Draw a picture of each of the working parts of your business, how each connects with the other, compounds on what the other has done and adds to the value you are delivering to your customers.
Yes, some parts might be more important, complex and require more resourcing than other parts. And that mix will change over the life cycle of a business and as the market evolves and your business grows.
In each case, the question you are asking is ‘what do you contribute to the value we deliver to our customers’? Your business is customer-centric, and if some person/team is not contributing to customer value, then question their role and realign it or remove them.
Effective organisational design can flip an organisation on its head and reveal who is really important and contributing to competitiveness and who is seeking to merely hold authority.
Here is an example of how I drew my business when I first conceived it:
The concept of organisational design is captured well in the work ‘Organigraphs: Drawing How Companies Really Work’by Henry Mintzberg and Ludo Van der Heyden.
Capturing the customer value add of each element/team in your business as a functional diagram is a great way to ensure all teams know their and everyone else’s role. It allows your organisation to play at their best and ensures that it is fit for purpose.
An entirely new level of performance.
Want to become a part of the Entrepreneurs+ Community and learn how to make your business competitively fit? Join now.
All the best in the success of your business,