* Gaps: A full-service organization includes all of the
functional building blocks. If any are missing, critical activities
will not occur with reliability and quality.
Ensure that responsibility for every
building block is placed somewhere in the new organization chart,
whether or not it's a full-time job.
This does not mean that every building
block must be staffed with permanent resources, whether or not
demand for its services exists. It simply means that someone must be
accountable for every line of business, whether the work is
fulfilled by one's own staff or contractors. That manager can then
select and supervise contractors, and build staff as workload
warrants.
* Rainbows: Don't combine building blocks unless you have strong
business reasons (no rainbows).
Designing a job that's responsible for
multiple building blocks inevitably creates impossible requisite
variety, and generally creates conflicts of interests. The result is
lower performance.
Thus, it is best to separate the
building blocks (with their conflicting objectives), ideally leaving
only the organization's executive responsible for more than one.
Reserving inevitable conflicts of
interests for the highest possible level of the organization has a
number of advantages. It ensures that the most seasoned leaders,
those with the broadest strategic purview, deal with the difficult
balancing acts involved in paradoxical objectives such as innovation
versus operational stability.
It also separates conflicting forces so
that the executive can explicitly adjust the balances among them.
Focusing jobs on a single functional
building block also sends a clear message to everybody in the
organization about their roles and their relationships to each other
and to clients. Excellence comes from focusing on one subject area
in great depth.
Clearly focused jobs also help people
understand what others in the organization offer, building a basis
for collaboration.
Generally, the impulse to create
rainbows can be addressed through better teamwork among specialists.
* Scattered campuses: Keep all related lines of business (each
high-level building block) together under a common boss. The job of
this boss is to cultivate the function, and to ensure that the
domain is covered completely and without overlaps.
Furthermore, in a healthy structure,
groups are defined by product lines (i.e., what they produce for
clients and each other) rather than by tasks or "roles and
responsibilities" (what they do). The result is termed "whole jobs,"
where people are responsible for every aspect of producing a set of
products or services.
With whole jobs, people can be
entrepreneurial, and they feel a sense of ownership of a portion of
their organization's business.
Whole jobs are also the basis for
empowerment. By focusing them on products and services, people
become creative about the processes by which they deliver those
results. Furthermore, whole jobs are the basis for customer focus,
since people who "sell" products understand they have customers to
please.
* Inappropriate substructure: Layer by layer, divide people up
based on the building block's product line, i.e., based on their
specialty. The nature of each building block determines the
appropriate basis for structure within that part of the
organization.
For example, if groups are divided by
client (business unit, industry, or market segment), they will get
to know their clients very well and become generalists with regard
to other dimensions (such as the organization's products and
technologies). On the other hand, if groups are divided by
technologies, they will become specialists in their respective
disciplines and gain only a general knowledge of clients'
businesses. In a healthy organization chart, boundaries are defined
in terms that match people's specialties.
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