Kamau founded and now runs a fast-growing agritech firm out in the leafy Nairobi suburb of Karen. When customer numbers surged last quarter, he divided up his staff and placed them into new departments.
He then pushed some decisions down the chain granting greater autonomy all while quietly hoping that things would work out with the new arrangement to handle the excess workloads.
Instead, the departments just did not get their information straight. The sales team kept promising tech features that the software engineers had never actually built into the system.
The operations department spent a lot of time responding to inquiries from the sales team that never materialised into actual customer acquisition.
As a result, Kamau’s senior team started meeting more often but kept spinning their proverbial wheels without actually solving much. Even though everyone was working hard the organisation just felt out of sync within itself.
There is a helpful research-based way to make sense of the above kind of institutional mess that Kamau faces. Social scientists John Joseph and Metin Sengul reviewed two decades of research on how companies set up their internal structures, standard operating processes, and technology systems and just recently published a highly prestigious study on what happens to organisations based on how they organise themselves in prior years.
The metanalysis finds that organisational design is not a one-time organisation chart that hangs on a wall and is only revisited and revised every few years. Instead it proves to be a living dynamic set of choices that must fit together inside a firm and also fit external stakeholders keeping in mind that external relationships shift over time.
When the needs of external stakeholders change and do not match the internal structure, then organisational performance drops. When leaders notice the misfit and actively realign and therefore correct the mismatch, then performance results recover and thrive.
The study breaks down four everyday lenses. First, configuration asks leaders whether the pieces inside the firm reinforce each other and match the broader external environment.
Sadly, leaders often only notice this when something does not match correctly. As an example, a growth push can weaken training, which then can weaken quality, which then can weaken the firm’s reputation. The correction cannot be found in one cookie cutter solution.
It is usually a series of small design moves that brings internal and external alignment back into sync. Sometimes it even means separating a work team to explore new creative ideas while another team tries to exploit and strengthen what already work well within the firm. Sometimes it also can mean cycling between decentralising to find options while also centralising to unify them together.
Second, the concept of control asks a leader how they guide people to act in the company’s best interests rather than merely their own.
Key performance targets, regular reviews, and organisational culture all do matter. But a narrow span of control with fewer direct reports reporting up to each manager does help managers to coach each of their direct reporting staff better.
Wider spans tend to work only when information is easy to access and flows cleanly throughout the organisation.
In such scenarios, many human resources teams focus on bonus incentives to bring about alignment. But high-powered bonuses can push effort toward short-term wins but can quietly choke and kill off long-term exploration if human resources is not careful.
If department work is truly interdependent and it is hard to see who did what and give credit to where credit is due, then simple financial extrinsic rewards will cause underperformance unless leaders adjust the task and the metrics both together.
Third, channelisation makes leaders asks where their and their department’s attention goes. Organisational structure shapes what people notice. Headquarters tends to watch the whole portfolio.
Departmental teams tend to watch their local specific wins and losses. Managers need simple communication routines that connect the diverging views so that attention converges on what truly matters.
Framing scenarios from the top down can prime staff members’ focus, but teams on the ground in departments can also pull attention upward when they feel safe and empowered to share their voices upwards all while bringing clear evidence.
Fourth, coordination forces leaders to ask how groups with interdependent tasks can move as one. If Kamau cannot act until Mutisya acts, who himself cannot act until Achieng acts, etc, it becomes difficult to proceed forward in unison.
So, when parts of the business depend on each other, leaders will need shared departmental language, step in to provide clear project interfaces, and keep some decisions that stay centralised so the whole broader team stays coherent.
This goes against conventional leadership wisdom. In other cases, managers can break work into modules. In so doing, they can let units experiment simultaneously but in parallel while keeping shock unexpected results from experiment from spilling over and harming another part of a team.
This type of modularity is complicated to implement but can be useful if and only if it can match the real interdependence within the team.
In closing, good design is not a big grand theory. Instead, it is practical attention to honest task versus structure fit.