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Leadership Skills: Scaling Organizational Structure

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An organization should operate like a city. Some parts emerge bottom-up while others are designed top-down. The art of management is finding the right balance between these two approaches.

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Leadership Skills: Scaling Organizational Structure

  1. 1. Scaling Organizational Structure © Happy Melly One BV (Original Management 3.0 Foundation Workshop Material)
  2. 2. Grow Structure: 
 Many teams operate within the context of a complex organization, and thus it is important to consider structures that enhance communication.
  3. 3. What is the best organizational structure? How do we scale the business in an agile way?
  4. 4. 4 An organization should operate like a city. Some parts emerge bottom-up while others are designed top-down. The art of management is finding the right balance between these two approaches.
  5. 5. Hierarchies versus Networks In a hierarchy, rules and processes create predictability, facilitate coordination, and reduce cognitive load because people have proven responses to routine situations. In a network, there is collective intelligence. The crowd, with its many connections between members, can be smarter and more innovative than a central authority. – Hayagreeva Rao and Robert I. Sutton, Scaling Up Excellence: Getting to More Without Settling for Less
  6. 6. Knowledge work requires specialization (going deeper) but innovation requires generalization (spreading out). The economies of specialization make functional division the most common. But innovation requires 
 us to do things we’ve never done before and thus innovation is incompatible with the functional organization. – Peter F. Drucker, Management 
 – Burton, Obel, DeSanctis, Organizational Design Specialization versus Generalization
  7. 7. Efficiency versus Effectivity Efficiency is a primary focus on inputs, use of resources, and costs. Effectivity is a focus on outputs, products or services, and revenues. You can achieve efficiency only in predictable, stable environments. You need effectivity when environments are complex and changing fast.
 – Burton, Obel, DeSanctis, 
 Organizational Design
  8. 8. Centralization versus Decentralization Centralized decisions are coordinated, limit waste, and lower average costs by managing the use of fixed resources. Decentralized decisions are quicker, with local information that is probably better in ambiguous and fast-changing contexts. – John Roberts, The Modern Firm
 – Tim Harford, Adapt
  9. 9. 9 Exploitation versus Exploration Innovation is more usually successful when an autonomous unit is charged with exploring a disruptive, innovative idea. However, in the rare cases where organizations are able to combine exploration and exploitation, the successes are usually larger. – Jens Maier, The Ambidextrous Organization
  10. 10. Hierarchies Specialization Efficiency Centralization Exploitation Networks Generalization Effectivity Decentralization Exploration balance (ambidexterity)
  11. 11. Learn more about structures that enhance communicaFon at a Management 3.0 Workshop!
  12. 12. What are common patterns for balancing organizational structures?
  13. 13. T-Skilled People Hire “generalizing specialists” who go deep in one area but also branch out in other areas.
  14. 14. Value Units Organize people around cross- functional core processes and value streams, supported by shared specialist units.
  15. 15. 15 Small Teams Team members become less productive as the size of the group increases (The Ringelmann Effect). Therefore, keep teams small, but large enough to cover a value stream. – Jacob Morgan, The Future of Work
  16. 16. Semi-stable Teams The best-performing teams are those that stay intact as a group. However, a small but steady variation in membership is healthy even for stable teams.
  17. 17. Replace Job Titles The concept of a fixed job is obsolete. Instead of a steady job, expect continuous adaptation and responsiveness to meet the needs of the moment. – Tom Coens, Mary Jenkins
  18. 18. Communities of Practice A community of practice (CoP) is a group of people with a shared concern, interest or passion, who deepen their knowledge and expertise in this area by interacting on an ongoing basis. – E. Wenger, 
 R. McDermott, 
 W. Snyder
  19. 19. Open Allocation Let employees pick and choose the projects that interest them most instead of being told what to do and what teams to be part of.
  20. 20. Double Linking Liaisons are like ambassadors who serve to connect teams. Make links between dependent teams but always keep a low number of dependencies.
  21. 21. 1 2 3 Team Number One It’s normal for people not to work exclusively on just one thing. The brain needs some diversion. But people should know which team is their first priority.
  22. 22. Local Rules Every team should be allowed to differentiate themselves and operate according to their own local rules, as long as the rules are in harmony with their environment.
  23. 23. Management 3.0 is not another framework, it’s a mindset, combined with an ever-changing collecFon of games, tools, and pracFces to help any worker manage the organizaFon. It’s a way of looking at work systems. Management 3.0 examines how to analyze that system to come up with the right soluFons for beZer leadership across organizaFons. Management 3.0 FoundaFon Workshops are all about principles and pracFces. Combining the best of classical thinking with a fresh approach and new insights. All embedded in a social context and in the networked businesses we work in today.
  24. 24. Book your Management 3.0 Workshop today and improve your Leadership Skills. Visit