Build or Buy

The adage, “re-invent sliced bread” conjures up all kinds of images and musings. It applies perfectly to the build or buy question facing an internal HR Function deciding whether to develop its own Organization Design solution. The Maturing of Organization Design as a Business Solution Organization Design is a complex business solution involving the complete re-design, implementation and governance of an operating model that fits with an intended business direction and strategy. It goes well beyond people in jobs and their reporting relationships. An operating model is required in any business to bring the business model to life. Organization Design incorporates over 50 years of documented science and proven best practices from behavioral- and neuro-sciences, industrial engineering, human factors and business. The idea and practical solution of organization design emerged in the 60s and 70s, maturing into a recognizable and sought-after management intervention in the last twenty years. Evidence of its maturity includes: Regular publication of the Journal of Organization Design (published by Springer) Various regional and global professional organizations dedicated to the research Teaching and practice of this solution Certification for organization design professionals (Certified Organization Design Professional) based on an accepted set of knowledge, skill, and experience standards A few of the pioneering professional organizations include: Organization Development Community (ODC) European Organization Design Forum (EODF) US Organization Design Forum (ODF) and Socio/Technical Systems Roundtable (STS RT). In the last five years, demand for organization design services has been exploding with service providers and competition following suit. Need proof? Just search organization design services on the internet and count how many pages appear with providers of this service. Consider that every major management consulting house has an organization design practice and there is a plethora of local, regional and global boutique consultancies and individual practitioners solely focused on offering organization design services with more popping up daily. Overnight, almost every consultant and consulting firm has become experts in organization design. Differentiating Organization Design Solutions from Digital Transformations, Restructuring, and Strategic Design Of course, not all who offer organization design services are either experts or do organization design work. It is quite common to confuse various management interventions such as technology innovations and digital transformation, restructuring, management level reduction, span of control optimization, structure and organization chart changes with Organization Design. While these interventions impact parts of an operating model, these interventions are not organization design themselves. Consider, most large consulting houses in their approach to “organization design” start with management roles, shapes and spans. This is not a redesign solution but restructuring and de-layering – nothing more. Also consider the many technology companies offering digital transformations. I contend there is no such thing as a digital transformation – only operating model transformation driven by the likes of digitalization, customer centricity, etc. Good luck if you choose to have a technology company redesign your operating model. While many boutique firms and individual practitioners focus on a part of organization design such as strategic design, proto-typing concepts, or game playing as a method to stimulate conceptual thinking, most stumble their way through set-up, detail design and implementation of a new operating model. In addition, governing a new operating model once in place is not on most service provider’s menu. The Difficulty of Building an Organization Design Solution Internally For those internal HR functions intending to develop its own Organization Design solution, it is not a cobbling together of activities completed within a few weeks or months. Unfortunately, this is what sometimes happens when facing a request from the business for organization design support. It is disconcerting that the increasing number of internal HR functions who decide to develop their own organization design solution in this way. Sure, most experienced HR professionals have been involved with business transformations and/or restructurings, reductions in force (RIF), developing job descriptions, changing salary or compensation structures and may have taken an organization design training class and/or read a related book—but doing so does not make anyone competent or confident enough to deliver an organization design. However, this valuable experience and solid grounding is a much-needed platform to continue to learn. An Over-simplification As part of our service offering, OTM has reviewed and audited numerous internally developed Organization Design solutions. We have trained and developed over 5000 internal change agents and leaders of which at least 50% are internal HR professionals, in organization design using the 10/20/70 model of development. And, we have spoken with tens of internal HR professionals about what they decided to include in their organization design solution. We find these are the typical set of activities and steps that are included in most HR developed organization design solutions: Design Principles Jobs Org Charts Job Assignments Change Management Like a mixed green salad, use a McKinsey 7S model, toss in a Galbraith’s STAR model, sprinkle in various additional activities and you are off. It’s not that easy. Adopting a framework or model, grouping together a set of activities and stamping an organization design title on it way oversimplifies the solution entirely missing the nuance, decisions, trade-offs, critical pathing, challenges and risks associated with this work. Doing an activity is not the same as knowing how to use it. Building Organization Design Competence As stated earlier, organization design is a complex business solution and a skill set not easily learned. Org Design skill development is not a one-time training class but must entail, knowledge gain, application, practice, feedback and support over time. This is the power of the 10/20/70 model of development. Including a Plan for How the Work is Completed The other element that is almost always neglected in an HR developed Organization Design solution is the “how.” How the organization design work is completed is as important, if not more important, than the work itself. This is a total blind spot for most HR functions and in some cases, is completed in an unknowing collusion with the business. In part two of this article (released in our July Organization Design e-Digest), I will expound further on above statements with practical case-in-points, identify the most popular drivers and risks behind an internal HR’s decision to develop their own Organization Design solution and what is the most effective, impactful course of action with the most ROI. In the meantime, thanks to the numerous HR professionals who spoke with me candidly about their own decisions. I want to hear from you and welcome your comments and feedback. You can connect with me at mlascola@on-the-mark.com. Never miss out on OTM blog updates. Subscribe to be notified whenever we post. OTM is the leading global boutique organization design consultancy with offices in the USA and UK. With over 450 successful redesigns and operating model modernizations completed, OTM is owner of the industry’s most integrated, comprehensive and holistic organization design solution. OTM enables its clients to realize their future ambitions.