The Intentional Organisation - Issue #47 - What happens when we don't design intentionally? (Part 2)
👉 New Issue! What happens when Leadership, Purpose, Culture and Ecosystem are not designed intentionally? With a conclusion and a link to The Law of Constrains
1. Missing Intentionality in Design (Part 2)
Last week, I started to address the question of the impact of not applying Intentional Design to the different elements of Organisation Design identified in the Organisation Evolution Framework. I covered the first four components (Business Model, Strategy, Operating Model, and Organisation Model), all through a lens of Consistency and Congruence, which I also recently wrote about.
In this issue, I will cover the remaining four elements of the OEF, the “soft” ones, and try to summarise the impacts. As with the first part, I wanted to reinforce two reminders: all the cases below are purely theoretical, as it is difficult to identify a sole element not designed with intention. Moreover, Congruence is a dynamic attribute that changes and evolves.
So, let’s see the four last elements in more detail.
1. Undefined Leadership: The Dissonant Organisation
What happens when we don’t intentionally design Leadership for our organisation?
Leadership is the attribute that defines intentionality in an organisation's design. Not explaining what Leadership means for our organisation means creating a vacuum that affects the entire system. I define this case as dissonance: the rest of the organisation's elements will probably develop through emergent chaotic processes without harmony and agreement.
Undefined leadership will affect how the organisation addresses change; people will all feel different levels of agency, and concepts like resilience, adaptation, and innovation will fail to develop as shared attributes.
But is it possible to not have a definition of Leadership? The answer is yes. Leadership is often an emergent property within an organisation, and a lot of the discussions around founder’s mindset or founder’s mentality underline exactly this: organisations often develop Leadership as an inheritance of the leadership style and attribute of its founder(s). Without an intentional analysis if the features of that style are still congruent with the rest of the elements of the organisation.
👉 Consequences: The absence of an intentionally designed leadership causes the formation of an emergent leadership that can sometime determine a level of inconsistency or incongruence:
Unclear governance: Although formal governance models are part of the organisation model, the way organisations take decisions is an attribute of leadership. A typical case that happens in organisations during growth phases is the formation of consensualism, where leaders of an organisation start confusing involvement and engagement.
Issues in Innovation and Change: one of the main territories where congruence of the Leadership model of an organisation is put to test, is its ability to steer change and innovation. An emerging leadership style that is not connected to the strategy of the organisation, may often create resistance patterns that create frictions in processing the needs for change or transformation.
Missing Intentionality: the biggest impact, though, can very well be the impossibility to drive the intentional design required by the other organisation elements. Whatever type of leadership we’ll have, this will influence directly all the other elements. It will make it impossible to intentionally design the rest of the organisation, as Leadership is the sole source of the intentionality we require.
2. Undefined Culture: The Deprived Organisation
What happens when we don’t intentionally design Culture for our organisation?
Culture is what effectively defines consistency across multiple elements of our organisation design fabric. When culture is inconsistent in its manifestations (both visible and invisible), we enter an arena where negative energy starts flowing in the organisation. This is why I call this Deprived Organisation, to underline the “missing energy” levels that drain the organisation potentially affecting its entire survival.
How often did we read about a company going bust, with dozens of people assessing this was the result of a toxic culture? These are prime examples ona radical incongruence of the culture internally to the organisation. Point is that these incongruences can be tracked and made visible well before an organisations fails completely.
👉 Consequences: the absence of an intentionally designed culture can provoke several consequences, such as:
Toxic Workplace Culture: Simply stated, inconsistencies at the culture level may immediately be visible through toxic practices that affect workplace effectiveness. Gossiping, lack of trust, poor engagement levels, high absenteism, are all examples of signals that the culture is not working and definitely not supporting the organisational effectiveness.
Unethical Behaviours: The biggest problem that can arise is when internal culture looses also the reference compass with the necessary ethical boundaries of social behaviours. Multiple examples come to mind when thinking of large organisation’s failures linked to an emergent culture that allowed illicit behaviours to propagate.
Poor Results: Incongruence in culture is immediately visible in the results of the organisation, sometimes even more than other elements of organisation design, especially if couple with poor leadership (which often is the case).
3. Undefined Purpose: The Drifting Organisation
What happens when we don’t intentionally design the Purpose for our organisation?
The concept of Purpose has gained traction in recent years, particularly as organisations started facing concerns about their global impact on environment and society as a whole. The idea of a “direction”, a “raison-d’etre” of an organisation is however rooted in the past. All the first endeavours, from guilds to commercial societies, had defined some kind of ambition, often in terms that would not be accepted today, but that where relevant for their historic period.
For a long period of time, however, the world of enterprises has been hit by the distorted idea that companies had a for-profit purpose. Which is also the main reason why a lot of companies still today do not have a formalized “purpose” (something that, instead, is more common in non-profit organisations, that need a specific definition of their core ideas to attract members, volunteers or donors).
This is why purpose is, probably, the most common element that is not intentionally designed. By not acting on this, often companies see their organisational focus “drift away” towards the default idea that profit is the main objective of organisational activities. This is why I name this The Drifting Organisation.
👉 Consequences: the absence of a formal purpose will create issues in the form of:
Short-termism: Excessive focus on profit (often measured as EPS) often leads to short-termism negavitvely affecting organisational sustainability (I recently wrote about this on the De Geus’s Law article).
Goal Divergence: Organisations might start acting in divergent ways in terms of short-term goals, business model set-ups, strategic directions. Without the unifying effect of a purpose, employees and collaborators might also start becoming “confused” in terms of their actions.
Misalignment with Employees: A company purpose also serves as a compass for employees to align their motivations. When defaulting to “profit”, engagement levels will lower, and activities will be highly dependent on rewards policies and incentives. People will often leave for higher salaries…
4. Undefined Ecosystem: The Detached Organisation
What happens when we don’t intentionally design the Ecosystem for our organisation?
It may sound weird to be able to “design” an ecosystem for our organisation. As a matter of fact, applying Intentional Design to an ecosystem means essentially recognising the role of our organisation into the web of relationships that exist around us. If the Business Model defines the relationship with Customers, it is at the ecosystem level that we define relationships with other key stakeholders.
Emergent design elements for Ecosystems are evident in many organisations. From compliance roles, to Public Affairs organisations, to lobbying participations and membership of industry groups, to occasional alliances, all these elements show that companies are aware of the need to build connections. But, is this done intentionally?
Too often organisations put themselves in a condition of “compliance”, they see themselves on the receiving end of environmental inputs. But very seldom they start a “design” of their value interactions.
Yes there are topics that are on the agenda of every organisation today (such as ESGs and Corporate Sustainability), that would require more intentional focus on this.
This is why I named this the “detached” organisation, because we assume a passive role in the definition of value added relationship.
Think just at the world of Investor Relations. Technically, shareholders should be one of the main asset for an organisation. Yet, most IR portals simply show what is needed from a compliance point of view. There is a tendency for managers to “mistrust” shareholders, instead of considering them allies in the company development. This disconnect is even more evident for those companies that have shareholder programmes for their employees. Very few have intentionally designed something for these people, who are not only working but also investing in their company.
👉 Consequences: the absence of an intentional ecosystem will create issues in the form of:
Purely Transactional Relationships: the organisation reduces its interactions with other stakeholders to mere transactions, often dictated by compliance. This is especially impactful in moments of difficulty, where the organisation might give up an important source of resilience..
Missed Networking Value: Networks within an Ecosystem are an important source of value generation. Without a clear design of its relationship, the organisation might miss all the related value creation opportunities.
Higher Transactional Costs: Organisations will have higher overall costs associated to interactions with the external environment. For example, not developing links with schools and universities might results in higher recruiting costs.
Conclusion: The role of intentionality
Read again the last issue of the newsletter.
All of the above (plus what we have seen in the last issue of the newsletter) shows once more the need to think of organisation design in terms of intentionality applied to the different organisation elements.
As things evolve for an organisation, it also shows how important it is to develop an “intentional maintenance” practice capable of verifying and updating, over time, the level of congruence of the system.
Congruence does not require for all elements to be designed. Some can emerge over time. For example, crafting Leadership will create the guardrails for a congruent culture to emerge. Developing an intentional Purpose, will allow for Strategy and Business Model to be “synched”. Designing the key relationships in the Ecosystem will allow the emergence of a meaningful value chain that spans internal and external stakeholders.
There are four further conclusions to this analysis though:
Organisation Design Elements need to be seen as a constantly interacting system. Focusing on one alone without considering the others (both in terms of design, but also simply in terms of analysis and awareness) means incurring in a high risk of failure.
Benchmarking and “copying” solutions that work elsewhere is the best way to disrupt a system, rather than help fixing it.
Intentionality means capturing the interconnectedness of the various components. This ultimately means that we don’t have to design each element to the maximum level of effectiveness but to the level that is “good enough” to ensure a proper level of congruence.
Organisation Design Elements need to be seen as a constantly interacting system. Although I presented them here one by one, issues on one of these expands as a ripple effect to all the others. I recently discussed the Law of Constraints in an article on my blog, and have proposed a formulation adapted specifically to the Organisation Evolution Framework.
The overall value generated by an organisation is determined by the weakest component of its design.
What do you think?
— Sergio
2. Site Updates
The Laws of Organization Design
I have continued publishing my articles on The Laws of Organization Design. Here is the latest articles published:
The Laws of Organisation Design
More to come in the coming weeks!
— Sergio
3. The (un) Intentional Organisation 😁
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