In the text "Excellent People, Confusing Structure? Time to Redesign Your Organization," we touched on the topic of organizational design, starting with the fact that it's not mainly about "drawing boxes" on a slide, but rather a strategic tool that can accelerate or hinder performance. Now we're going a step further: how design affects all business processes, from HR to innovation and customer satisfaction.
Organizational design is the foundation. If the foundation is weak, everything you build on it, recruitment, sales, product development, decision-making, starts to crack.
Why Is Organizational Design Crucial for Business?
Speed of Decisions
- Clear lines of responsibility lead to faster decisions
- Unclear responsibilities inevitably lead to ping-pong accountability
- We constantly talk about responsibility but rarely about authority. Many organizations "overlook" this accidentally or intentionally, but the effect on business and competitiveness is very much felt
- There are excellent examples of clear definition and communication of authority to micro-teams. The ability to make decisions independently is directly proportional to success and acceleration of innovation.
Operational Efficiency
- Without clear roles, work is duplicated or, worse, left unfinished
- Various approaches exist, mostly personal or dictated by line managers. We do some things automatically because no one told us not to or to stop because someone else is doing it too. A common example is some useless reports that no one even looks at but were done in the past. Maybe we just need to align? The opposite of this example is certainly the assumption that someone else will take over and do something, but it doesn't happen in critical situations. Missing deadlines or actions altogether leads to damages that can be of larger proportions.
- Rigid structures lead to exponential cost growth
- Waiting for approval through the entire or part of the hierarchy, in addition to operational risks, creates stress in the process of waiting and aligning all participants.
Innovation and Product Development
- A structure that encourages collaboration accelerates innovation
- Rigid hierarchies stifle creativity
- I believe most of us have experienced some of this firsthand. How many good ideas have been "archived" because it wasn't possible to align the opinion of the entire hierarchy of interested parties. How many abandonments there have been from presenting good ideas because it would involve xy presentations, going back several steps, waiting. In exchange for that, we go down well-trodden, familiar paths even though we think it could be better.
Customer Satisfaction
- Agile structures shorten the time from idea to launch.
- Slow structures inevitably cause missed opportunities.
HR Processes
- Clear levels and job grading reduce the sense of injustice and speed up recruitment.
- Without it, HR becomes a "firefighter" instead of a strategic partner.
How Should Companies Approach Creating an Adequate Organization?
1. Start from Strategy, Not from Org Charts
- Mistake: drawing hierarchy without understanding business goals.
- Success: design that matches strategy (e.g., if the focus is innovation, the structure must be agile).
- Correction: start from business goals, then design roles, decisions, and work processes around them.
2. Include Business Leaders, Not Just HR
- Mistake: HR works alone, so the design is an "HR project."
- Success: joint work of HR and top management because design is a business decision.
- Correction: co-design HR + business; decisions about structures, KPIs, and responsibilities are business matters.
3. Define Clear Roles and Levels
- Mistake: confusing titles, overlapping responsibilities.
- Success: standardized job grading, clear career paths.
- Correction: "Rewiring" the entire system: network of teams, clear missions, OKRs, end-to-end ownership.
4. Test Flexibility
- Mistake: rigid structure that cannot adapt to changes.
- Success: models that enable quick regrouping of teams (example: agile approaches not only in IT).
- Correction: Continuous reevaluation of the organization to ensure the best support.
5. Communicate the Design to People
- Mistake: employees don't understand the structure, so confusion arises.
- Success: transparency, clear job descriptions, salary grades, career paths.
- Correction: communication in different phases ensures understanding and acceptance but also very often productive suggestions.
6. Consider the Entire Organization
- Mistake: Selective piloting of agility without scaling.
- Success: "Rewiring" the entire system, i.e., network of teams, clear missions, end-to-end ownership.
- Correction: Consider the entire organization and team interdependence because otherwise the pilot will remain isolated.
McKinsey introduced Rewiring as a term, and essentially it's a redefinition of the organization with a focus on people, structure, and processes and includes:
- Process redesign - not just automating old steps, but creating new, more efficient workflows and ways for work to function in the digital age.
- Changing the way decisions are made - transitioning from intuitive to digitally driven and data-based decision-making, now often with the support of artificial intelligence.
- Integration of technology into the core of business - so that technology is an integral part of work, rather than just an addition.
Rewiring doesn't end after one initiative but is a continuous process of improvement and adaptation. Organizations that do this well create value because they can innovate and improve their business continuously.
It can be said that this is essentially a small upgrade and change compared to what organizational design usually defines, the integration of technology, culture, processes, and decision-making models in a way that enables agility and competitive advantage.
According to research conducted by McKinsey, companies that "rewire" their organization achieve 60% greater competitive advantage.
"Blueprint" for Success
- Define strategy and decisions (WHO, HOW, WHEN)
- Align roles and structure (job families, levels, cross-functional teams)
- Determine end-to-end ownership (team owns outcomes, not activities)
- Learn through OKRs, feedback, and regular design "health checks"
If you want to speed up decisions, reduce costs, and increase engagement, don't start with tools. Start with the organization: who makes decisions, who holds end-to-end responsibility, how is performance measured, and how transparent is all of this.
Neither the best people nor the best products can succeed within a framework that constrains them.
Organizational design is not an HR project, it's a business strategy. If you want faster decisions, more efficient processes, innovation, and customer satisfaction, start from the foundation.
