Designing for Growth | Jeanne Liedtka

Summary of: Designing for Growth: A Design Thinking Tool Kit for Managers (Columbia Business School Publishing)
By: Jeanne Liedtka

Introduction

In the book ‘Designing for Growth: A Design Thinking Tool Kit for Managers,’ Jeanne Liedtka talks about the importance of organizational design as a crucial skill for business leaders. The book emphasizes the significance of a well-planned business framework to enable employees to be productive and adaptive. It covers the concepts of the ‘star model,’ which consists of strategy, structure, processes and lateral capability, reward systems, and people practices. The goal is to create a reconfigurable organization that responds and adapts to change, driven by active leadership, knowledge management, learning, flexibility, and employee commitment.

A Blueprint for Business Leaders

Business leaders need to master organization design, a crucial but often overlooked aspect of changing a company. This involves envisioning the right strategy, hiring the right team, and creating a corporate structure that allows employees to operate efficiently. Neglecting your organizational framework can be an impediment to growth, as a third of CEOs surveyed have discovered. Your business’s success depends on its structure, processes, metrics, reward systems, and people practices. An agile and effective organization design fosters collective effort among individuals and yields more significant results. Leaders must prioritize organization design to contribute to the success of their company effectively. The principles of organization design apply to all entities, from large multinationals to small businesses and departments.

Successful Organizational Change Using The Star Model

Successful organizational change requires an understanding of the five critical concerns at the heart of the star model. These five interconnected components include strategy, structure, processes and lateral capability, reward systems, and people practices. Additionally, a reconfigurable organization is key to adapting quickly to change, and encompasses active leadership, knowledge management, learning, flexibility, integration, employee commitment, and change readiness. When creating an organizational redesign, firms must identify the design framework, design the organization, develop the details, and implement the new design to execute their vision. Ultimately, the star model ensures a community of collective effort, exploiting all of the firm’s talent, and transforming individual efforts into something greater.

Form Follows Function

When designing an organizational structure to achieve your goals, remember that it should align with your strategies and tactics. Utilize consultants to gather data and identify necessary changes. It’s important to recognize your limitations, but innovative thinking can help overcome them.

Designing an Organizational Structure

Creating a Robust and Responsive Firm

The organizational structure of a company determines how it operates, the roles of its employees, and the lines of authority that guide decision-making. It is crucial to define the duties and interrelations of organizational roles to ensure that the firm’s value proposition aligns with its chosen structure. Companies must also choose from five structural concepts, depending on their specific requirements: single-line “Function,” proximity-based “Geography,” market-centric “Product,” relationship-based “Customers,” and operational “Front-back hybrid.” The structural concept must be in line with the company’s desired outcome, avoiding creating power imbalances. Companies must determine the required number of management layers explicitly and assign the roles, so work flows seamlessly and executives participate in “mapping” the structure to ensure coordination and designing robustness. Governance roles must be assigned to sponsors, steering committee members, and working-group representatives who will participate in restructuring alongside their regular duties. Creating responsive and adaptive organizations that withstand external environmental changes is a goal that excites managers, and the organizational structure is the foundation to achieving it.

Building an Effective Organizational Structure

Building an effective organizational structure requires a focus on setting up the necessary support apparatus that connects different functions vertically. Rather than immediately implementing a structure, it’s important to consider how information, data, relationships, and networks flow through the “white spaces” of the organization chart. Lateral capabilities are crucial for larger corporations, and fostering networks through proximity, joint learning, and revolving short-term jobs can help build these capabilities. Encouraging staffers to contribute by providing multiple views of the firm and creating various team configurations can also aid in building an effective organizational structure.

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