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Harnessing
Process™
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Organizational Architecture
The Breckenridge Institute’s model of Organizational
Architecture is broader than the traditional notion of organizational
structure and design, e.g. what’s in the boxes and the
lines that connect them. Organizational Architecture includes
the formal organizational structures, functions, processes,
and the informal structures, functions, and processes,
e.g. how things “really” get done in the organization.
Using this broader model reveals how the underlying patterns
of belief and unquestioned assumptions of an organization’s
culture are often concretized into its architecture.
This becomes evident when we ask questions
like, “Does
the organizational architecture allow the right departments,
teams, and individuals to work together on the right tasks
to get the results they want? What is the rationale for this
specific organizational architecture? Are the organization’s
functions isolated in silos? Are enterprise-wide business processes
clearly identifiable, or have they been fragmented and marginalized
by an excessive number of hand-offs as work flows through functional
silos (see diagram below)? Does the Organizational Architecture
align structure and strategy to create the synergy needed to
achieve the company’s goals and objectives?”
The practice of designing organizations
around functions is so ingrained in our culture that many
leaders and managers mistakenly believe that organizations
and functions are synonymous - but they’re not. An organization is a structure
for grouping people and other resources to achieve a common
purpose. A function is a field (a discipline or kind
of work) that involves similar professional skills and tools.
Sometimes functions are concentrated into departments, e.g.
the R&D department, marketing and sales, production, business
services, and the shipping and receiving departments.
These are often pejoratively called, “functional silos” -
vertically oriented structures through which the work of business
processes flows horizontally (see diagram). When business processes
are fragmented they have to be “glued” back together
at each organizational interface with expeditors, supervisors,
managers, vice presidents, meetings, e-mails, forms, and different policies
and procedures, or corporate-wide systems that are implemented
differently in each department. When functional silos
excessively dominate the horizontal flow of work, business
processes become so complex and fragmented that they are no
longer visible. But if a business process cannot be defined
and mapped, neither can it be measured or improved. As a result,
the diseconomies of scale and cost are not normally in direct
labor, but in the overhead costs related to ineffective or
redundant Organizational Architecture, so the “glue” costs
much more than doing the real work.
Another key element of Organizational Architecture
is the “shape” of
an organization, e.g. the number of people forming departments
at each hierarchical level. The size of an organizational unit
matters much more than most leaders and managers suspect. Research
has shown that in work groups larger than 150, people don’t
have enough work in common to understand the entire business
process, so leaders and managers have to impose larger and
larger hierarchies of rules, policies, and procedures to try
to: a) glue business processes back together again and b) obtain
some semblance of loyalty, social unity and purpose. British
scientist Robin Dunbar calls this natural limitation to effective
group size the Law of 150.
In addition, when an organizational unit
has more than 150 people, different sub-cultures (ways of
working) spontaneously emerge, often times around “strong personalities,” who
clash across organizational or disciplinary boundaries squandering
enormous amounts of time and energy. These “soft” sociological-psychological
issues are often tolerated or ignored as long as possible,
making horizontal workflow exponentially more complex and difficult
to accomplish. A systematic understanding of Organizational
Architecture is a necessary first step to harnessing the invisible
power of organizational culture.
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Personality in Context™
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