Organizational Theory

By Mike Myatt, Chief Strategy Officer, N2growth

Since Organizational Theory, and particularly  Organizational Design are such hot topics these days, I thought I’d poke a bit of fun at that old corporate tradition that is the Organization Chart. Over the years I’ve seen every type of org chart in existence. Some have come and gone only to come again. Every year or two the latest revolutionary thinking in corporate organizational theory spawns a new form of charting. The dynamics of corporate organization are so revered by B-school professors and management consultants that an entire generation of corporate management has drunk the org chart Kool-Aid.  These managers often rush to adopt the latest thinking without any consideration for whether or not the new form of structure is even appropriate for their business. So powerful is this dynamic that entire companies and numerous products have been built to support these latest trends. In the text that follows I’ll share the truth about org charts…

So, is an org chart a corporate asset or a waste of time? The answer depends on the purpose behind its creation, the process used to create it, and the corporate purpose for the existence of the chart post creation. The following list contains my top 10 reasons not to create an organizational chart:

1. To give the CEO an opportunity to view his name at the top;

2. Because you need to beef-up your management presentation and you have room for an extra PowerPoint slide;

3. Your management consultant told you to create one;

4. The business planning software you purchased has a template for one;

5. Your CFO just read a new article on corporate organizational theory;

6. You just attended an off-site where someone drew an off-the-cuff chart on a dry erase board and it looked good;

7. When reviewing your competitor’s website you noticed they had one, and well your website needed updating anyway;

8. There wasn’t anything better for the intern to do;

9. Someone got a promotion, and;

10.  It just seems like you should have one.

Putting the humor aside, a business should in fact have an organization chart, in fact several of them. Sure, a sincerely motivated, properly constructed, and actively implemented organizational chart can in fact help refine the operational aspects of any business, but it should be so much more than that. The development of an org chart should be a serious initiative born out of solid underlying business logic, process, methodology, and creativity.  Culture and environment are considerations that are often times completely ignored in the design of and org chart while perhaps representing the most critical architectural elements. I prefer to think of an org chart as a relationship map rather than a rigid hierarchical matrix of reporting lines. People, relationships, and influence matter far more than reporting lines.

Again, organizational design is about far more than drawing circles, boxes, hard lines and dotted lines…it’s about relationships, engagement, influence and outcomes. If whatever form of schematics utilized don’t  roll-up into a representative illustration of an ecosystem comprised of communities of networked relationships that create the right outcomes, you’re missing the point. A chart is static – an ecosystem is living. Organizations that run according to static documents which reflect a snapshot in time are prone to breeding obsolescence by living in a status quo mindset. Conversely, organizations which focus on how to expand and improve relationships, influence, and engagement rather than just document it find themselves creating a culture that embraces leading change and innovation.

There’s an old joke in business circles that says “every company has two org charts…the one that’s put into graphical form and incorporated in the business plan, and the one that never gets published but is actually representative of how things really work.” The process of corporate organization is most succinctly and easily understood by using the following order of operation which I developed more than two decades ago: “Values should underpin Vision, which dictates Mission, which determines Strategy, which surfaces Goals, that frame Objectives, which in turn drives the Tactics that tell an organization what Resources, Infrastructure and Processes are needed to support a certainty of execution.” (Mike Myatt 1988)

Put simply, any analysis of organizational paradigm that doesn’t present a clear picture of who, what, when, where, why and how your organization will function to produce the designed outcomes should be immediately recognized as flawed. I have observed all types of organizational structures (in vogue, antiquated and otherwise) succeed, and I have also seen them fail. It is not the “type” or the “style” of chart used that works or doesn’t, rather it is the process of design that was used in creating the org chart that will determine its usefulness, functionality and adoption. That said, my personal view is it’s simply silly to confine someone to a box – the goal should be to expand influence not restrict it. My best advice is to build a very flat organization, and where the purpose of any framework is to expand relationships not limit them, and to drive complex decisioning down as low as possible within the organization structure.

Please feel free to share your thoughts regarding organizational theory by commenting so that others may benefit your experience as well…