Design Mistakes of IT Organizational Structure

Dateline: May 15, 2015

Welcome to our Friday WRAP – one thought-provoking idea to think about over the weekend.

In updating my textbook on Managing and Using Information: A Strategic Approach, I came across an interested blog post by author Lex Sisney titled The 5 Classic Mistakes in Organizational Structure. In this must read post, Lex shares his take on mistakes he’s seen that get in the way of high performing organizations.  He starts by reminding us that design is important.  A rocket is a rocket and not a parachute, he says, because it was designed to be a rocket and therefore it performs like a rocket.  IT organizations are the same way.  They must be designed for the desired performance or it’s folly to expect them to perform that way. His 5 classic mistakes are:

Mistake #1: The strategy changes but the structure does not–  a new strategy is created but the old hierarchy remains embedded in the so-called “new” structure. Instead, you need to make a clean break with the past and design the new structure with a fresh eye.

Mistake #2: Functions focused on effectiveness report to functions focused on efficiency-  Efficiency will always tend to overpower effectiveness. Because of this, you’ll never want to have functions focused on effectiveness (sales, marketing, people development, account management, and strategy) reporting to functions focused on efficiency (operations, quality control, administration, and customer service).

Mistake #3: Functions focused on long-range development report to functions focused on short-range results– Just as efficiency overpowers effectiveness, the demands of today always overpower the needs of tomorrow. …it’s why you never want to have functions that are focused on long-range development (branding, strategy, R&D, people development, etc.) reporting to functions focused on driving daily results (sales, running current marketing campaigns, administration, operations, etc.).

Mistake #4: Not balancing the need for autonomy vs. the need for control-  The design principle here is that as much autonomy as possible should be given to those closest to the customer (functions like sales and account management) while the ability to control for systemic risk (functions like accounting, legal, and HR) should be as centralized as possible.

Mistake #5: Having the wrong people in the right functions-
Your structure is only as good as the people operating within it and how well they’re matched to their jobs. …While we all have to play the hand we’re dealt with, placing people in misaligned roles is always a recipe for failure. If you have to play this card, make it clear to everyone that it’s only for the short run and the top priority is to find a candidate who is the right fit as soon as possible.

How can you tweak your organization’s design to avoid these mistakes?  

That’s a WRAP!  Have a fantastic weekend!

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