Why I believe you need someone in charge of overall organizational design.
How do we organize our business to achieve our strategic goals? This question is often left un-answered by many organizations. Businesses spend thousands of hours per year on strategic areas such as product strategy, customer service strategy, customer acquisition strategies, value creation strategies, and adjacent business model strategies, just to name a few. These are all great strategic areas of focus, but strangely, when it comes to pivoting from defining strategy to executing strategy, many companies stumble, or achieve less than desired. Not because the strategy was wrong, but rather because the organization was not properly organized to execute the strategy. This gap is an opportunity for organizations to improve by putting someone in charge of defining ‘how we organize’ and implementing Intentional Organizational Design. In addition, the board of directors has an opportunity to evaluate whether an organization’s structure supports executing the strategy, because the ‘very controllable’ risk of improper internal organization structure can be an impediment to strategic execution, which puts this squarely on the board’s radar.
A key reason Intentional Organizational Design is lacking at larger organizations is that we have become hierarchical, divisional, and functionally oriented businesses run by senior leaders who are focused, primarily, only on improving their area of responsibility. Who then looks across the organization to see if organizational synergies could optimize, improve efficiency, or improve customer experience? The CEO certainly doesn’t have time, since the CEO is externally focused, with time rightfully spent with customers, investors, government/regulatory agencies, business partners, the press, and their board of governance organizations.
This is why organizations need a Chief Operating Officer (COO) to drive Intentional Organization Design. This position is best suited at mid-to-large size companies to ensure the internal operations, departments, divisions, and organization structure is aligned to drive efficiency towards the achievement of business objectives. This is especially true in today’s world where companies are struggling with so many cross-division/function problems such as, how do we digitally transform our products and services to better compete and differentiate? How do we leverage innovation capabilities, such as Internet of Things (IoT), that change how we deliver service and maintenance across product lines to my customers? How do we quickly react to disruptive competition from ‘good-enough’ competitors that offer lower price products/services, and many other challenges? It is rare that the response to any of these business challenges can be dealt with within a single division or functional area. A COO, if properly positioned with decision-making authority, can quickly cut across company boundaries and deliver solutions that maximize the organizational resources required to respond to these modern-day business challenges. Importantly, the COO can do this while the CEO continues to focus externally.
Back in the day the business conversation du jour was about process-redesign and business process re-engineering. Today those concepts often receive lip service in too many organizations, right up until the time that the company experiences a business downturn and needs to cut costs. Re-actively cutting costs in the face of a downturn is not a strategy, it is an unfortunate reaction to not keeping costs as efficient as possible as you grew. What if you had someone constantly responsible for ensuring operating cost efficiency across all areas of your operation that deliver solutions to your customers? Usually your customers interact with multiple divisions or departments, and it is rare when this experience is well orchestrated. Then behind the scenes, a big area of waste is where there are hand-offs in business processes between groups or departments. Again, a COO can ensure the organization is designed properly to deliver a great customer experience while minimizing the hand-offs in internal processes required to deliver cost-effectively for the customer. The COO’s job is to constantly be looking for operational efficiency and cost improvements so that your products/services stay competitive, thereby hopefully lengthening the life cycle of your products and services.
The COO role is a solution to delivering Intentional Organizational Design primarily because your business will have someone in charge of doing so, versus hoping it will happen through some sort of vague collaboration between business unit leaders. When your business is small, the CEO designs the organization. As your business become larger and you start to have many product and service lines, multiple geographies, and likely multiple divisions, this becomes impossible work for the CEO. Worse, each slice of the organization (e.g. division) designs and improves only their area of focus. Having someone in charge of ensuring that your go-to-market business strategy can be executed internally with high levels of efficiency and speed to market…sounds like something no one would want to run without, right? In the future hopefully we will see more mid-to-large size businesses consider a COO role that delivers on Intentional Organization Design.