TBM 269: Three Organizational Design Principles

I have been thinking a lot about organizational design lately and how it relates to how we collaborate and how managers/leaders collaborate.

I have come to understand three principles:

Principle #1: Hierarchical Collaboration Parity

To be sustainably successful, the level of collaboration and alignment among managers or leaders in an organization must be equal to or greater than the level of collaboration required among their respective front-line team members to complete a task successfully. 

As a corollary, the effectiveness of an organization is rate-limited by the available bandwidth to build close, collaborative relationships or by organizational design decisions that facilitate more transactional relationships. This principle applies across all levels of the organization. Teams can make do, but not for extended periods (see Principle #3).

Principle #2: Alignment and Work Style Gaps

Building on Principle #1, three critical gaps constrain team effectiveness.

1. The divergence between leaders' perceived level of alignment and their actual degree of alignment

2. The mismatch between the level of alignment among leaders and the alignment level required by the real-world demands of the task at hand

3. The mismatch between the level of collaboration required to do the task at hand and the practical constraints of the environment (e.g., the ability to work together closely)

These gaps collectively limit the potential for success, representing a disconnect between leadership's understanding and the practical realities front-line teams face. Teams can pragmatically adapt (see Principle #3 below), but this approach is fragile.

To improve, you have to close these gaps.

Principle #3: Elephants and Front-Line Pragmatism

Organizations are optimized to avoid confronting deep-seated tensions or 'elephants in the room' at the leadership level. This avoidance manifests in front-line teams having to navigate these unaddressed challenges in their daily work pragmatically. 

This is a double-edged sword: on one hand, it showcases the adaptability and resourcefulness of humans. Humans naturally adapt by bending official rules and policies while adhering to the spirit of "doing their best".

In situations where clear alignment from leaders is absent and escalating things don't work, teams resourcefully 'figure it out' through informal adaptations and agreements. However, this approach invariably leads to increased stress and sub-optimal outcomes. The working relationship is often fragile—when breakdowns occur, they escalate with damaging results.

Ashby's Law

These principles will all seem familiar if you are familiar with Ashby's Law. Ashby's Law, also known as the Law of Requisite Variety, states that to manage a system effectively, a control system must have at least as much variety as the system it is managing. Note how this relates to our three principles:

1. The variety in responses and strategies at the managerial level must match the complexity and variety of challenges faced at the front-line level. Managers can't have a transactional relationship if their teams have highly collaborative relationships.

2. If leaders are not truly aligned with the realities of the front-line work, they cannot provide the necessary variety of responses to manage these challenges effectively. When there is a blow-up, they'll respond with quick fixes.

3. Front-line teams adapt and create workarounds for challenges, often without adequate guidance or alignment from leadership. The front-line teams are increasing their variety of responses to match the variety of challenges they face. However, if this increase in variety is not matched by a corresponding increase in variety at the managerial level, it leads to suboptimal outcomes.

4. For an organization to navigate complex challenges effectively, it needs diverse communication methods that match the complexity of its internal and external environments.

Just Trust Each Other More

Leaders and managers are frequently bombarded with advice emphasizing trust and accountability. However, this advice often overlooks the hard limits on the number of deeply collaborative and trusting relationships we can realistically maintain. Our bandwidth as humans is limited. This cuts to the definition of “Team” itself. Patrick Lencioni's concept of a "first team" is valuable, but there are limits to the size of a team, and limits to the efficacy of a team if it is is one of many teams someone is a member of.

Calls for increased trust, greater flexibility, or enhanced accountability tend to ignore these human constraints and the realities of complex work environments. We expect escalating levels of 'heroism' from middle management in juggling these competing demands. Yet, as a company grows and becomes more complex, managing (and harnessing) this complexity effectively is the real challenge.

The answer?

1. Encapsulate complexity to your advantage. Make sure people can collaborate closely when the work requires it.

2. Establish clear transactional relationships and interfaces between groups that don't require intensive collaboration. Good walls make good neighbors.

3. Make sure that managers and leaders maintain relationships that mimic the relationships required by the people doing the work.

4. If possible, genuinely simplify our business processes—true simplification, not just in name.