Structure Follows Strategy, and Not the Reverse

Structure Follows Strategy, and Not the Reverse

There are some very popular and valuable books and articles on getting the right people in your organization. One of the more popular comparisons involves a bus (an organization) that must have the right passengers on board to successfully reach its destination. Unfortunately, many business owners are so focused on getting the right people on board that they tend to get things out of sequence. That is, they fill the bus before determining the destination when, in fact, sometimes the skill sets of those on board are not ones needed for the trip, even though they may be very talented.

For example, consider the company who just hired a highly paid Vice President to oversee all manufacturing operations. After two months on the job, the company went through a comprehensive strategic planning process that led them to conclude they will no longer manufacture their products but will instead have them produced off-shore by someone else. Yet they had just hired a manufacturing expert whose services were no longer required. This is why it’s essential that strategy must be set first so that the company can then determine what type of organizational structure (and skill sets) will be needed to implement that strategy.

While a strong leadership team is essential in propelling an organization forward, it’s not as simple as just cramming strong leaders into various roles. It first requires a fresh look at the organization’s Vision (desired “end point” or “ideal state”), and the creation of an effective plan to reach that Vision. Only then can you identify the specific “boxes” that will be needed on the organizational chart, and the detailed description of the skill sets required for each box. That is, determining the organizational structure and required skill sets must FOLLOW the creation of the Vision and plan.

To cite an example from sports, consider a football team that, during a game, is confronted with two different situations — second down with two yards to go for a first down, versus third down with thirty-five yards to go for a first down. Clearly, the plans will be dramatically different in each of those two situations – typically a short-yardage running play in one case, and some sort of pass play in the second case. In each instance, the formation/arrangement of players on the field will be different (the organizational chart), as will the skill sets required at each position (a strong runner led by overpowering linemen, versus fleet-footed pass receivers and a quarterback with pinpoint passing accuracy).

Similarly, the “right” structure and the “right skill sets” in a business organization must be determined by the Vision and plan. In fact, to determine the skill sets of key employees who can lead an organization, those employees must be evaluated in terms of the future organization, not the one you have today. This is not an easy task. In fact, the most objective and accurate way to determine the future skill sets required is to first assume that you have no current employees. As you go through the exercise, imagine that you’ve been called-in as a consultant to create the ideal organizational chart and the ideal candidates to fill each high-level management position. It’s often easier to go through this exercise if you have some blank index cards so that you can write on them, and the arrange/re-arrange them as you think through the process.

Forget about every employee that is already part of the organization, including the leader/owner. Only after you’ve completed this exercise should you look at the “inventory” of people who already work for the organization. See which ones will fit immediately, which ones might fit with some development, and which ones will not fit as the organization changes to accomplish the Vision and plan. At the conclusion of the exercise (assuming you have truly been objective), you will have defined what it takes to be an “eagle” in each key position, including the top leadership role.

The exercise above is something that should be done at least annually as you look at the upcoming three or five-year plan, and the skill sets that will be required in each leadership position if the organization is going to succeed. It’s important that each person in a leadership role should “never stop being re-qualified to remain an eagle in meeting the changing demands of his or her job.”

Bill Matthews is Co-Founder of The WOW Business Advisory, LLC, and author of Five P’s to a “WOW!” Business. Copyright 2012-2016 by The WOW Business Advisory, LLC. All rights reserved.

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