Organizational Architecture

Organizational Architecture describes the fundamental shape and design of a company or business unit, along with the mix of people (e.g., generalists and specialists) and skillsets needed. By “shape” we mean whether it is tall or flat (i.e., how many layers, and where), and how many discrete organizational units there are. By “design” we mean:

  • How personnel are grouped — by activity or function? By process, product, customer type, geography?
  • To what degree is the organization centralized, distributed, or federated?
  • Who reports to whom? How are individual and unit roles defined?

Organizational Architecture requires consistency with strategy (including the value proposition and business model) for the strategy to thrive; and it needs to be consistent with operating governance as well (for example, decision rights and roles within the structure must mesh).

The best structure will not guarantee results and performance, but the wrong structure is a guarantee of nonperformance. All it produces are friction and frustration. The wrong organization spotlights the wrong issues, aggravates irrelevant disputes and makes a mountain out of trivia. It accents weaknesses instead of strengths.

— Peter F. Drucker, Management: Tasks, Responsibilities, Practices (1974)

Many circumstances may necessitate adjusting the organization’s architecture:

  • A change in business strategy or business models (e.g., in/outsourcing)
  • The introduction of new products, services, markets, or business processes
  • Pressure on the cost structure
  • Changes in senior management
  • Mergers or acquisitions
  • Changes in the business environment, such as new competitors, new technologies, or a different regulatory regime

And sometimes, even with no material change in the business itself, an organizational change can help re-vitalize a business (for example by re-focusing attention on customers or enabling changes in personnel).

We help our clients design organizations that most effectively support their business strategy — thus improving the likelihood of successful execution. We do so by working collaboratively with business and functional leadership to:

  • Translate the organization’s vision, strategy and goals into the requirements for organizational architecture
  • Specify the shape and structure of the organization (by business line/unit, by function, by region, etc.) based on the requirements of the strategy and the business environment
  • Define the key roles (including their scope), primary activities and/or assets and skillsets best suited for each subunit
  • Define the appropriate size and staffing model for new or restructured organizations 

In many cases, organizational change — done well — acts as a catalyst. It helps to energize personnel (especially key employees) and can dramatically improve business results.

Client Engagement Examples

Organizing for Effectiveness

This leading technology company determined that its Enterprise Architecture capabilities were one of the keys to its future competitiveness. It was mandatory that their

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