There are some surprising parallels between boat design-what makes boats fast and nimble or slow and stable - and organization design. This notion may seem a bit of a stretch and perhaps even a gimmick to get your attention. On the contrary, however, the advisors of The Clarion Group have found it to be a helpful analogy because designers of boats and organizations have common needs that are addressed in similar ways.

We believe that organization design is a means for, among other things, asserting control, organizing and allocating resources, managing interdependencies, and providing focus for employees, customers, and shareholders. And we know that organization design allows managers to build bridges or build walls between individuals and groups; speed up or slow down decision making; nurture depth or nurture breadth of experience; and encourage idea generation and sharing or stifle it.

Let’s look at five key boat design criteria that translate easily into organization design criteria.

• Speed, for example in decision-making, in getting product to market, or in implementing change;|
  
• Agility, for example in adjusting to changes in marketplace conditions, or modifying internal business priorities to accommodate new priorities;
  
• Stability, for example in ensuring the right balance and steadiness in the mind sets and capabilities of the business so that major threats from the environment do not overturn the business, impede its progress, or set it off course;
  
• Slice, for example the ability to cut through difficult issues quickly with the right balance of data and experience, or the clarity of form and function around who is supposed to do what;
  
• Buoyancy, for example the ability to stay afloat in spite of leaks and cracks that let undesirable distractions and threats take shape.

In the past we have referenced the notion that there are different stages of evolution that every business goes through - and that each requires a somewhat different organizational structure-or hull design-to perform optimally at that stage. Fortunately, unlike boats, organizations can change their designs as they move through the evolutionary cycle.

Let's review the stages of evolution:

It’s important to note that neither side of the curve is better than the other - nor is one structure by nature better than another. The key is to be sure that the structure is aligned with the needs of the organization.

The wrong alignment will produce negative results, for example:

• If you build a structure that favors stability for a business that is high growth, the structure will win out and growth will not occur;
  
• If you build a structure that enables speed in decision-making for an organization that is mature, an undesirably high level of risk will have been introduced.

The right alignment, on the other hand, can position an organization for success. Building a structure that favors stability, e.g., centralized decision making, could be entirely appropriate for an organization that is planfully exiting a market. Alternatively, building a structure that favors agility, e.g., decentralized decision making, can enable a growing company in a crowded marketplace to succeed.

Go to page 2 >>