Teaching Organization Design in the Digital Age -- Session2 | Knowledge and Skill Sets in Organization Design

Speaker A So I'm going to start this by saying this was originally meant to be Chuck Snow's teaching, doing this session. And the first thing I did was ask Chuck what it is he would teach, what's his take on this? And he very kindly offered me this description of a design workshop he does, like about a day and a half long workshop. And when I look at it, I thought this is wonderful because this is a really good example of kind of classically what organizational design includes in terms of skills. You have definitions of organization, theories about management and fit, lots of formal diagnostic frameworks and processes. Then probably a survey of traditional designs, probably going back to Minsburg and the functions in five kind of thing and all that, new and emerging forms, different ways of doing stuff. And then he adds in a session on design thinking and processes. But for me it's kind of packed on change management. How do we actually do that? And that starts to get how do we actually implement organizational design? You have change management and then let's look at some real examples. And I have to admit this is not what I include when I teach organizational design. But to go further, I think it's important to recognize what the world includes when they teach organizational design. And there was a survey that ODC, the organizational design community did on what needs to be in an organizational design course in order for it to be endorsed as a good organizational design course and producing certified qualified instructors. And you can see how important, on a scale of one to five, what the average importance was for various things. Methodology right there at the top, design principles, a framework that can strategy and design, these are classic things. This is classically what design has been and is. And there's a way in which it's a pretty well established field. And at the same time we said, how do we make sense of that in relationship to design thinking, which in the last ten years has also started to play a really important role in organizations. And I think it's useful to think about the difference between the two. And this is some work that David Berry and I have been doing, distinguishing between analytic design, which is what we consider traditional organizational design to be, and designerly design. And the analytic design comes out of a tradition that I would call engineering design tradition, whereas the designerly design comes from industrial design, more artful, maybe even graphic design, more artful, aesthetic sort of design traditions. And there's some significant differences in the two traditions that are worth noting. The analytic design tends to be a problem to be solved. What do we got to fix here? What do we have to do? Whereas the design thinking designerly mode is more like what can we dream of? It's like, what are the possibilities out there? So the analytic design tends to be based in things like efficiency. How can we do this? What's the best financial return? Classic economic models of the firm and organization? Or is designerly design coming out of that industrial product field? Think of like Apple and Frog and IDEO and this whole sense of delight and felt experience. How do we create something that's wonderful and think about what you know about organizational design. When was the last time anybody that you know, tried to design an organization was starting with what would be delightful? It's very different. And I think logically that organizational design, the engineering approach, works in a very scientific way. It tried to say we have rules. We have rules, forms and functions and fit. And we try to do this through various deductive and inductive approaches. The two kind of modes of scientific reasoning designer design. designerly approaches work in basin aesthetic approaches, aesthetic sensibilities, which if we're going to call it a reasoning, we go to abductive reasoning. This holistic felt using your whole body to go, oh, this is what it is. Again, a very different thing. There's kind of like a science art thing that happening here. But it makes these two approaches very, very epistemologically different and very hard to talk to each other. The analytic design is still interested in things like what is optimal, what is the best we can do as opposed to desirable, what is it we'd like to achieve? And perhaps the most important thing, I think, is this last one. The analytic design focuses on what can we specify, what can we define and decide? So that includes things like reporting relationships. If we start to represent most traditional organizational designs, we're drawing things like charts or process diagrams because we can define those. We define roles, we define responsibilities, we can define various rules. What can we define? That's what we design. We design what we can define. Whereas the designerly approach is tending, working on the other. The outcome, the vision, the feel of the organization. When we think about strategies, strategies and brand, those tend to be in the outcomes world. What does this place feel like? What's our vision? I don't know how we're going to get there, but what is it we're trying to achieve? And this, for me, is the fundamental design problem in organizations. These two differences what can be specified versus outcomes. It doesn't really matter which way you start from when you're designing things. Like in the industrial design world, if I'm designing a razor, the conversation between what I can specify but what it should feel like is pretty easy. But the problem with organizations and organizational design is organizations, I think, are not very thingy. They're not fundamentally things in that way. I would talk about organization as a sort of emergent phenomena that happen. And the fact that you have this emergent phenomena, this thing that Gareth Morgan would tell us could be talked about in a variety of metaphorical ways, this conversation. There's this big gap between what can be specified and the outcomes. And in some ways, this gap is what almost all organizational studies research is about. Traditional variance research is all about, well, if I adjust this thing, it produces, if I change this in terms of reporting relationship or so this aspect, I get trust or I get these other things, outcome variables, things I want. But we don't know these relationships very well. We don't know these relationships. They don't tend to explain a lot of variance. This relationship is very hard in the non thingy organizational world. So you have the designerly approaches out here worrying about the outcomes and the analytic, worrying about what can be specified. This means that we need a different set of skills for organizational design because I think we need both. We clearly need both the analytic approaches and the designerly approaches. So if I were to describe the multiplicity, the meta skills, I'd say one of it firstly is the multiplicity of understanding what an organization is. You need to understand what it means if an organization is a machine, if it's a thing, if the important parts of an organization are the reporting relationships or the processes or the roles, what does it mean if an organization is a culture? What does it mean if an organization is a political system? And for shorthand, Morgan's metaphors work is a nice way to start that. But what does it mean? How do I define? I do this with my students. I ask them to design the organization from different cultures, different definitions of organization, and we say, okay, let's design the organization as Plato's cave. It's fun.

Speaker B It's a hoot.

Speaker A So we need to understand what it is. The second thing, when I think about design, one of my favorite design theorists is Visser, which is a German woman who works in computer science, talks about design as success, as making successive representations of what it is you're designing. That's the essence of the design process. You're continuing to represent what it is you're trying to do, and you're making finer and finer representations until the representation pretty much matches the outcome. I think this is an enormous issue in organizational design. How do we represent organizations? If it's a machine, we represent machines all by drawing a drawing of them. And we do an exploded parts diagram. We do that with a lawnmower. We do that with organization, whether we explode it into different reporting units and relationships or whether we exploded in the processes. If it's not a machine, how do we represent a culture? How do we represent an organism? How do we represent organizations? I think there is an enormous area that we just haven't touched. We don't know how to represent organizations in other ways, and I think it hamstring us. And then finally, again, this what can you specify that will likely produce the emergent phenomena? You want that's the real question for organizational design, right? This is what, when three M and Google famously said, we're going to give you take 15% of your time, work on your own projects, there was a rule they specified the outcome. They're hoping to produce a creative organization with lots of innovation. Do those two work? Well, if you read sort of glorified literature about them, sure. I don't really know, but there are few thirds, there's not that relationship. What can we specify to produce the outcomes we want? To me, that's the essence of the organizational design problem. We finally get to getting where the shortage of knowledge is, but having some sensible how to do that is, again, the other skill for organizational design. So that's what I think the skills are.

Speaker C Thank you.

Speaker D And the discussion is Greg Joffen, so the word is yours.

Speaker B Hi. My name is Greg Joffey. I come at this from two perspectives. I'm a principal in a reasonable size consulting firm in Australia called Naps and worked at McKinsey before that. But I also am part time faculty at the AGSM at the University of New South Wales. I'm a big fan of the design sort of approach to how you think about things. But I must say, when I put myself either in my consulting perspective or in my teaching to MBAs perspective, what clients are really looking for and what students who are doing their MBA want to know is okay, I've got a strategy and I've got a business model. Even though the academics don't quite agree on what the definition is of a business model, and now I've got to organize my organization and the parts of the organization to come together to deliver on that strategy and try as I can. I think design thinking is a fabulous approach for some problems in business, but I don't think it's a great solution for all of the design components. So I tried to break down which parts I think it works for and which parts it doesn't. So starting at the top of this sort of pyramid with the strategy, it's clearly a great process for thinking about what could the world be rather than where are our constraints and how do we solve for them? So I agree entirely with Gene on that. I think when you move into the next stage, which is then the service delivery model, so who are our customers, what services do we want to deliver to them? It's a fabulous model because you can re envision, you can really think about a whole new way of dealing with customers and giving them fantastic outcomes. But when you move into the sort of organization part and you start to think, so how do I actually use design thinking to do this? If you take a classic process, so usually you'll agree your criteria, I'll do it this way, you agree your criteria, you think about a whole lot of different possible design ideally as wide as possible. And then you have to sort of use the criteria to think about which of those.org designs is the least bad to run this organization. I say the least bad because anyone who's worked in the space knows there's never a perfect orb design. It's always about the least bad, the least bad fit. So the areas where you could use design thinking, I think, on the criteria. So again, using that kind of empathetic approach to think about what would a fabulous organization look like for the people inside as well as for the customers, might give you some interesting perspectives on the criteria you might use for prioritizing different design. I certainly think when you get to the design actual models, one of the biggest constraints, particularly in working with clients, is they tend to sort of take the current state and then they change one box here, or they want to change two boxes here or merge these two boxes. The hard part is often to get them to think more broadly. If we were reconceiving how this organization comes together from scratch, what are the really viable and interesting opportunities? And again, I think design thinking could be a good place to use that. You could sort of use the design thinking process to get people right out of their current sort of mode to think about possible futures, and from that draw out different models. But I do think at the end, when you get down to the sort of more pragmatic part of design, you still have to then take this set of options, take that set of criteria, run the options through the criteria, come up with a model, and then possibly one last design part. You can test it, but I'm not convinced you can use all design approaches to test it because you're asking people, hey, we've got this great design. What do you think about it? And a lot of it is actually people saying, well, I'm not in the same box I was before. I don't really like that. There was a change session here before that, and we're still going on about haha changes. People don't tend to like changes in the design that impact on them. So I'm not sure a design thinking approach is great for testing that final design broadly. So sort of some thoughts on where you can use design thinking, but also that at the end of the day.

Speaker A As academics, I think it is important.

Speaker B To give your students something they can go into organizations with and actually go? I have a process. I can use it, and I can see where I can and can't leverage these different tools to get there. Thank you.

Speaker D We have time for questions from the audience. Comments.

Speaker E Jeff I work with nonprofits these days, particularly in child complex area. I would say that they cross between those two constantly. So I would agree that your meta model is really spot on. Get outside of the production material products more into the services, especially into child services. Their vision and values driven. They're not product driven. So nice presentation.

Speaker F Thank you very much.

Speaker G Thank you.

Speaker A And I wonder these organizations are fairly small or medium or small, relatively small. I don't know. But I wonder about how much scale matters. And that how I got to think it's easier when you're smaller.

Speaker E I work with large profits. Scale doesn't matter.

Speaker D Okay, Rich, I think you I like.

Speaker C This comment a lot. But just to reframe it slightly, Steve, you had contrast between the two and then your question comes out. You start with one, go to the other. You use some sort of hybrid or whatever. If I hear Greg is right, he's sort of like he was really kind of more anchored than the other with picking a few things from the right. Do you have a comment on that?

Speaker A I do. And it comes more from the industrial design world. And there's always a tendency, I think, of friends who used to work at a Gillette, I'll name them a large consumer manufacturing company before they got bought by P G. And they would talk about how the design always started with the design driven by the design. The engineers would kind of come in and make it work. The analytic design would come in and they reached a balance that was good. And then over time, there was this constant chipping away because every year the engineers had to drop off because you're making razor blades. If you can save a quarter of a cent of razor blades it's a big number given the number of razor blades they sell. So they're always shipping little things off with consumer products with shampoos and stuff. Well, can we reformulate it with just.

Speaker G A little bit less of the key ingredient?

Speaker A Yeah. Over several years, suddenly it no longer has the look and feel it did originally. So we introduced a new one that's pretty much the same as the original one. So there's this way in which analytic design, given its opportunity, given the chance, kills designerly design with the death of 1000 cuts. I think it's very difficult to manage those things because particularly within large organizations, the analytics people have a really strong presence, particularly when you get to operations and really strong there's really strong pressures because it's driven by those economies and stuff. So I think it's hard to manage that. It's hard to hold those.

Speaker D May I just commit with a comment here? Because what I hear you saying, right, is that you're sort of thinking about designing an organization in the way we are building a building. And could we say that it is the design thinking that is what is done by architects and it's more the analytic organizational design that's done by the engineering to get the building actually up and running, standing. And that's sort of the maybe we should not think about its sort of pieces. But it's sequential faces.

Speaker A Yeah, well, I think it's often sequential, but it doesn't have to be out there in design world. It's much more loopy, I think. And I think it's useful to have it be loopy.

Speaker G And I wonder, as I'm thinking of your discussion, Steve, and your points, Greg, whether there is just a reconceptualizing of this notion of design criteria. So in some ways in design thinking per se, with the emphasis on empathy and user driven design criteria, we do a lot of the problem space analysis through users. On the other hand, in any business organization there are many different kinds of criteria. Users meeting the needs of users look and feel of a building or a space is one set of criteria. But there's a set of engineering criteria which says the building doesn't fall down and we certainly can't afford to ignore those. I think what design thinking would argue is, rather than traditional trading off of the criteria, design thinking would try and get us to find higher order solutions which meet apparently conflicting criteria that we would otherwise be willing to trade off. So it would argue in management we go too quickly to the least worst, the do no harm as opposed to staying in a space where we really do try and push ourselves outside of our normal range of solutions to get to a higher order that doesn't insist on trade offs we don't like.

Speaker A And I think that's part of where the death by 1000 cuts comes because there's enormous pressure to move in and do, oh, we could just do this, we could just do these little bits and not reopen that higher space. Because that is asking for who wants to do that? Who wants to open up that question again, right?

Speaker D There was some questions on there.

Speaker G Yeah.

Speaker F I think we bring so much meaning to a land and that's something I think about within work. How can we bring that kind of level of meaning into an organization? How powerful would that be? But one of the difficulties with that is from co perception, right? So Lance is there, but now we've got an organization where we're coordinating work and everybody's got your perception on it. Balance between that incredible power of design and what it can mean to people, but also coordinating across all these perspectives that have.

Speaker A And on the plus side, question talk about bringing meaning to a lamp like industrial design. We've managed to create beautiful objects and people love their iPhones. I have some Danish chairs that I just god, I love them doing that in the organizational world. To me it opens up. The plus side of that is there is so much potential in terms of work design. We may have gotten this far and it's clear there's this much more to do. There's so much potential out there.

Speaker D There's a question down here.

Speaker H This is a very interesting question. Thank you so much. I'm struck by this. We're working a lot with corporate entrepreneurship initiatives, large organization. As these initiatives try to form and try to find their form and try to find a different way of working. I'm not seeing a lot more of these design new design processes going on as they try to form a new way of working and the power relationship in that group that they try to make longer and larger. So it becomes a tension because you try to do the things analytically for the solve orderly you get another set of criteria that influences those decisions and if you are trying to form the work around it to get the actual outcome that you're trying to achieve with a new invasion or with a new way of working in terms of service or in a business model. Thank you so much for bringing that up here. I think over time it was very much in regards to prototype because what they tend to do is try to find the former way of work and get that accepted in the larger organization. That doesn't work today but you may try something else and let's again so this whole process is a much very much different thing than what you're seeing when you work as a consultant with lot of resistance. Those things are very much.

Speaker D Okay, then we have our last question in this session and then I get interested in.

Speaker C This time in particular with this thing and the piece is that they're living, they're not things the people are involved. So I get thinking with each of them what they would be like in more of a living time sequence. Most of my doctors were in procter gamble and one of the things that happened continually in new product development is the organization continually reconfigured itself as it went through different design and response and other kinds of things like that. So in one sense they're constantly constrained. Of course that was part of the piece of it but they also had to be inspired and not cut by that constraint to the point of mediocrity or immediacy. But is it more of a time and consciousness piece to either of the models so that having some of that sentience in it would be very interesting. Is that a part of design, an ongoing design piece or not?

Speaker A It could be if it was part of the repertoire. Yeah.

Speaker G I think this question of when you stop designing, if you go back to I always loved Andy Grove's notion of strategy making at intel. It was periods of utter chaos punctuated by periods of intense single minded focus. And I think that opening up design and shutting down and opening up and shutting down. There's an interesting tension in there in large organizations about how you actually get anything done while you reconfigure and morph into something else.

Speaker C The design thinking would imply that it'd be possible to be more of a conscious heuristic about how you operate on a day to day basis because assignments rotated very quickly, right. Organizations changed, took them a long time.

Speaker E For the global climate workout, but.

Speaker C It was always happening.

Speaker A I think my take, having been trained both, I guess I have one of those unique facets. I have a bachelor's degree from MIT in Playwriting, so I have just kind of training engineering and Arts in this weird way. So to me there's a sense of time in both approaches. There's a sense of time there and it's really remarkably different. The analytic approach, there's a sense of the grinding through the process and stuff, whereas the artistic approach, there's a sense of staying with your senses and it feels completely different to me. It's there, but it just feels remarkably different.

Speaker D Now we have the final question, actually.

Speaker F Well, it's more of a comment or an argument. And so if I understood you correctly, you were saying because I'm thinking of rape or pragmatic.

Speaker B No, I was saying in particular parts of the sort of process, it's useful, and in others it's less so and that it shouldn't be seen sort of as a cure, in a sense.

Speaker F Thank you. I would argue that from a manager's perspective, design thinking is really useful as strategic thinking tools and asking simple questions like how can we make it easy for people to spend work, to use design thinking to make things easier, to make the process easier? Or even how can we make it easy for the customer to connect with us? And how can we, like Steve Jobs said for innovation, get rid of the stupid rules. So to use design thinking and apply it to processes to simplify how the work gets. So I think it can be used for I don't think it's for the deal that's the end of, but I think it can be used for almost any type of strategic thinking.

Speaker B Just to finish that, I totally agree. It could be used really well in strategy. I think it's really good for service design. I think it's really good for process solving and it's also quite good within design for thinking about criteria and also particularly Gene's point, sort of thinking about better models for the organization design. Where I find it's less useful is the actual analytics side of then having to say right at the end of the day, if we're going to have boxes, what are the boxes and how do they fit together? That's the part where I find it doesn't work well, which to me is a critical part of the design process at least. But I agree with you entirely. It's a very useful tool in many of those other places which are very important.

Speaker G If I could just add one quick thing. One of the things we teach in design thinking right up front is make sure you've got a problem that is particularly well suited to the strengths of design thinking. One of the things we would not want to use design thinking to solve is something where we have good predictive data already, because it's inherently inefficient and there's no reason to go through a relatively lengthy inefficient process if you've got good data that predicts what you're trying to do. So I think there is this notion that there are certain aspects, certain kinds of problems, that design thinking is essentially not an efficient, particularly effective tool to use, given the circumstances of the problem itself.

Speaker A I would agree and perfecting close.