Organisation design questions, answered
These are the questions we get asked most by leaders who are redesigning part of their organisation, or about to. The answers come from more than fifty years of organisation design work between us, from consulting and from inside.
Organisation design and operating models
What is organisation design?
Organisation design (or organization design) is a deliberate process of making sure all the parts of your operating model are aligned and set up in a way that optimises your ability to deliver your strategy. It covers the work, the end-to-end processes, the structure, the people and capabilities, the culture and the measures. We describe it as a series of well-framed questions that deal with competing tensions, such as what to centralise and where to place scarce resources, and the methods help you answer them.
What is an operating model?
Your operating model is the whole system that turns your strategy into results: the work, the capabilities, the end-to-end processes, the structure, the culture and the measures. We think of it as the engine. Most of the time the engine needs recalibrating, tuning, or one part upgraded or replaced, and rarely you need to take it off the road and redesign it from the chassis up and then get back in the race.
What is the difference between an operating model and organisation design?
The operating model is the thing, and organisation design is the work you do on it to keep its parts aligned with your strategy. A restructure is a third thing again: it moves the boxes on the org chart, which is one part of the operating model and the last part we would touch.
What is the difference between organisation design and organisation development?
Organisation design is the hard wiring: the work, processes, structure and roles. Organisation development is how you build the leadership skills and the culture the design needs to work: the culture, skills, mindset and leadership behaviours. The two sit together and we treat them as one conversation, because a brilliant design on old behaviours is just a pricier version of where you started.
What is a target operating model?
A target operating model, or TOM, is the future version of your operating model: the one you are designing towards, usually captured on a single page alongside your design principles. Your current operating model is the one you have today, whether or not anyone designed it on purpose.
Running an organisation redesign
How do you run an organisation design process from start to finish?
An organisation design process is a sequence of eight questions, answered roughly in order, that take you from why you are changing anything at all to how you will know it has worked. We call them the Circle Line, the eight-step method created by Jill Foley:
Purpose and ambition: why are we doing this, and what's the case for change?
Outcomes and benefits: what does good look like, and how will we know?
Future work: what's our most value-creating work, and what just keeps the lights on?
Processes: how well do our end-to-end processes actually run?
Structure: what's the shape of the future organisation?
Capacity and capability: who do we have, who do we need, and how do we match talent to value?
Culture and behaviours: what has to shift in how we work for the design to hold?
Measures: how do we hard-wire it, and lead people through the human side of the change?
Answer them on purpose and you save yourself a world of grief.
What is the Circle Line?
The Circle Line is an eight-step organisation design method created by Jill Foley. It runs from the strategic to the tactical and from the external to the internal, and it puts the work before the structure. It is the method behind The OD School and all of our consulting work. You can watch Jill walk through it in five minutes here.
Why should you design the work before the structure?
The work is what drives performance. The org chart is weakly correlated with how well a business performs, while end-to-end workflows, systems, data and technology are a far stronger predictor. When you start from the work the future needs, the structure becomes an answer to a question you have actually asked, so we use the org chart as a diagnostic and come to it fourth: the work, then the processes, then the resources, then how you organise them.
What is future back organisation design?
Future back is a way of designing from the future you want. Stand in the future, define what success looks like there, ask what would need to be true for that to happen, and only then ask what work that implies for process, people, skills and technology. If you stand in today and ask what to improve, you will only ever get incremental ideas, because if it were that obvious and that easy, you would already be doing it.
How do you align your organisation structure with long-term goals?
Start with just enough strategy: which parts of the business are growing, declining or need to change; whether you want incremental improvement or wholesale transformation; and how much risk the leadership team really has appetite for. Then design the future work that strategy needs, and let the structure follow from it. The moment a redesign goes wrong is usually the moment it turns out the top team would answer those three questions differently, so that conversation comes first.
How long does an organisation redesign take?
It depends on scope and on whether you pay now or pay later. Paying now means a collaborative, slower design that builds ownership; paying later means a fast design by a small team, and settling up afterwards in rework. A functional redesign can move from case for change to a tested blueprint in a few months, an enterprise operating model redesign runs longer, and the implementation always takes longer than the design.
How do you make a reorganisation stick?
Plan for the delivery as carefully as the design, because that is where most redesigns come apart. Plan for the performance dip, keep your sponsor close and re-make the case in their numbers, sequence the change, and leave the last ten or twenty per cent of the design to the teams who will live in it. Hand people the last stretch and you've handed them something to believe in.
How do you build a cross-functional design team?
Bring together people who know the detail of the business today with people who can think differently about it, and give them a clear brief: the case for change, the outcomes, and the design principles the leadership team has agreed. Those principles do a lot of the work later, because when a leader starts to defend their patch, the team can ask how a proposal fits principles everyone signed up to. The leader who owns the area stays accountable for the design, and the team does the analysis, the options and the testing with them.
Knowing when and how much to redesign
How do you know your organisation needs redesigning?
Organisations redesign for one of three reasons: an opportunity, a threat, or organisation debt. The first two come with a story and a deadline. Debt is the one that is always there underneath, and it is often why the redesign you plan for the opportunity or the threat turns out bigger than you expected.
What is organisation debt?
Organisation debt is a bit like technical debt. It builds up over time if you don't invest in updating, improving, upgrading and fixing your operating model as you go, and you end up in a place where you've accumulated debt that needs to be paid off. In most organisations it looks like roles, bits of process or little bits of system bolted on as new needs emerged, until the whole thing is a bit clunky, it's slowing you down, performance is drifting and it feels harder to get things done than it used to. Organisations are living things and their context changes constantly, so it is building all the time, and it is present in every engagement we have worked on.
How do you spot organisation debt?
Count the layers between the chief executive and the most junior frontline role: six is reasonable, eight is clear work to do. Highlight every one-to-one reporting line, look for roles that have had so much bolted on that only one person could hold them, and for accountabilities quietly shared between two roles. Then ask whether anyone can say why the structure is the shape it is.
Do you need a full redesign?
Almost never. After a good diagnosis you can usually name the two or three places where you will get the biggest impact, and leave the rest alone, checking the knock-on effects because every part of the operating model is connected. There is always a reason to delay dealing with organisation debt, and the pattern that produces is an enormous restructure every five or six years that tries to sort out everything in one go. Our belief is that organisation design ought to be a continuous part of how you manage and govern the business, in the same way you manage the finances monthly and quarterly, like a Formula One pit stop.
What should a leader know before leading a complex organisational transformation?
Treat leading the redesign as a role you step into fully, with the power and accountability that come with it. Get the top team aligned on the strategy before anything is drawn, agree design principles together, and choose on purpose whether you pay now or pay later. Expect competing tensions at every turn and plan for the human side from the start, because organisations don't transform, people do.
How does AI change organisation design?
AI changes the work, so it is an organisation design question as much as a technology one. Unless you are an AI business, AI is rarely your value-creating work itself, but it can take on a lot of the work that only keeps the lights on, which changes processes, roles, spans and skills. It is also exposing the operating models that were never consciously designed in the first place. You can read more here.
Learning to lead organisation design yourself
Where can I find an online course in organisation design?
The OD School is our ten-week online organisation design course (organization design course) for leaders redesigning part of their organisation, run live by Carla Henry and Jill Foley and guided by the Circle Line. It brings together six two-hour live workshops, three one-to-ones with us, a weekly applied exercise of about an hour, and all the tools, templates and frameworks to keep. Each participant works on a live business challenge from their own organisation, in a small group from different industries, continents and roles. You can find out more here and download the brochure here.
Who is The OD School for?
It is for leaders who know there's something about their operating model that isn't working as well as it should, and the time has come to figure out how to fix it. That might be because you are thinking about a redesign and not sure where to start, you are in the middle of one and want it to go better, or you have been asked to help guide the business through it. Our participants include CHROs, HR business partners, heads of strategy and transformation, organisation design consultants and senior leaders running a redesign.
How can I build my organisation design and operating model design skills?
The fastest way is to learn a method and apply it to a real redesign with support. On The OD School you learn the Circle Line step by step, hear case studies from our own work, look at what it all means for you as a leader, and apply it each week to your own challenge with feedback from the group and from us. Our free guide, 10 things we wish we'd known earlier in our careers about organisation design, is a good place to start, and you can download it here.
How can I develop my organisation's internal capability for sustainable change?
Build organisation design into how your leaders lead, so it becomes a leadership skill used continuously, with smaller design choices made often between the big moments. We run The OD School in-house for leadership and HR teams, working on their own organisation's challenges, and we train and coach your own facilitators to run design work with our method, so they can run it again for the next project without us.
Does The OD Collective provide coaching for internal teams?
Yes, and it is at the heart of how we work, because our philosophy is that organisation design is a leadership capability and it belongs in house. On a redesign we look after the method, the process and the plan, and build your team’s capability as we go. We train your facilitators in the Circle Line, coach them one to one through every phase, brief and debrief every design sprint, run a weekly clinic, and help your senior leaders with their role as sponsors and with the difficult conversations along the way. Every OD School participant also has three one-to-ones with Carla or Jill, and at the end the method, tools and trained team stay with you for the next redesign.
About The OD Collective
Who are The OD Collective?
The OD Collective is a boutique organisation design consultancy and community, founded by Carla Henry and Jill Foley and built around a wider network of practitioners. We help leaders design and refine high-performing organisations, and we teach them to do it for themselves. The OD School is our executive education arm, and we are based in London and Singapore.
Who are Carla Henry and Jill Foley?
Carla is an organisational psychologist who has spent twenty-eight years redesigning organisations, from consulting at Unisys, BT Global Services and PwC, from inside at Vodafone and SAB Miller, and for ten years at BRIDGE as APAC Managing Director. Jill has spent more than thirty years in organisation design, including eight at PwC and three as Head of OD at Nortel, founded On3 Partners, which she now chairs, created the Circle Line and teaches at the London School of Economics. They have worked together for sixteen years. You can read more here.
What services does The OD Collective offer?
We offer The OD School, our ten-week course for leaders redesigning part of their organisation, run as open cohorts and in-house. Our consulting starts with the OD Health Check, a facilitated diagnostic of your operating model across the eight steps of the Circle Line with a leadership team session, and continues with OD Full Circle Support, phased consulting through a redesign. Let's Circle Back is our monthly series of live conversations with leaders redesigning their organisations, starting with themselves. You can read more about our consulting here.
Where can I find examples of The OD Collective's work?
Our Library carries examples from our work, anonymised so clients can speak freely, and each Let's Circle Back episode tells the story of a real redesign from the person who led it. Between us we have led organisation and operating model redesigns in aviation, telecoms, consumer goods, shipping, financial services and foundations. If it would help to talk through an example close to your own situation, you can book 30 minutes with Carla here.
What is Let's Circle Back?
Let's Circle Back is our monthly series of live conversations with leaders redesigning their organisations, starting with themselves, part podcast style and part webinar. Each month we sit down with someone who has led a real organisation redesign, be that with their clients or as the client, and ask them the things people rarely get asked in public. You can register here and watch past episodes on our YouTube channel.