Structure: The change enabler or eliminator
René Dalgas
Head of Project Management at Wrist Ship supply | Organizational Change, Strategy Execution & Transformation |
Your current structure, in which your organization operates today, is usually tied to the current state, the way things have always been done. It could be seen as a “playbook” for how your organization gets things done right now.
Every change has a desired outcome linked to a strategy working as the North Star, guiding managers and employees towards a successful change. But even the most well-thought-out change can be doomed to fail if the organizational structure isn’t fit for the future.
The famous quote “structure follows strategy,” drafted by management consultant Alfred Chandler in 1962, remains relevant, but often overlooked. Managers and change professionals often postpone the important discussions about how to anchor the change in a future structure.
Numerous studies have shown that structural misalignment is the key reason why many transformations fail. The gap between what you are trying to achieve, and the current structure will most likely cripple the best-laid plans, stifling innovation, delaying decision-making, and impeding progress.
Moving your organizational structure from as-is towards to-be requires a deliberate and informed approach. The structure should not be an afterthought but must evolve in parallel with your transformation strategy is being executed.
That’s why structure can either enable or eliminate a successful change, and why it should be one of the most important things to address early when you are planning or evaluating a strategic transformation.
Why some structures eliminate changes?
Research from the Boston Consulting Group (BCG) shows that nearly 70% of strategic change initiatives fail due to poor execution, often because the structure isn’t aligned with the strategy. When structure becomes an eliminator, friction arises, causing operational inefficiencies and changes often comes to a standstill.
The structural misalignments often occur in the organizational inner core:
Without a proper governance framework, changes suffer from ambiguous accountability and a lack of ownership. Harvard Business Review highlights that organizations with weak governance structures experience inefficiencies, as accountability is unclear, and decisions become fragmented (HBR, 2019).
In top-down oriented organizations, decisions often need to pass through multiple layers of management. This can delay critical decisions, making it harder to keep projects on track or implement changes swiftly. While a clear chain of command is important, a more streamlined and flexible approach is necessary for fast-moving projects and agile change management.
Finding the right balance between centralization and decentralization can be difficult, but important to assess and revise continuously.
A hardcore top-down approach (centralized) will slow down decision making and speed of change but make it possible to have a more consistent and aligned execution. On the other side bottom-up (decentralized) are at risk of the opposite, as frontline employees and managers may lose sight of the over all strategic goals.
Furthermore, Incentive structures will for sure make it impossible for you to succeed if they aren’t revised and changed to match the desired outcome of the change.
The quote “You get what you measure” is widely known, but having the courage deep diving into them will be a game changer for success.
If your change points towards a more centralized structure but you are measuring success decentralized, you will fail. Teams, departments and managers are incentivized to maintain the status quo, not to embrace new behaviours that support the future to-be vision.
Lack of organizational accountability is often linked to unclear roles and responsibilities. During a project or change initiative, clear roles and accountability are essential. Without a well-defined structure, employees may not understand their specific responsibilities, leading to confusion and delays.
You will often see this as stop & go changes, where you sprint towards defined goals, but need to stop and re-align roles and responsibilities and signed off by key stakeholders.
Research from Deloitte found that 87% of companies rate organizational redesign as a top priority, noting that rigid hierarchies slow down innovation and decision-making. As changes evolve, employees and managers need the freedom to pivot, adjusting the change approach (Deloitte, 2021).
This means structural re-design isn’t a one time quick fix, but needs to be top of mind of employees, managers and change professionals during the change, for structure to stay as an enabler and not an eliminator.
How to approach structure as an enabler for change
Research from McKinsey shows that businesses that restructure effectively during transformations are 2.5 times more likely to be successful and profitable.
As mentioned earlier in the article, a common principle in organizational redesign is that structure should follow strategy. This means that the way a company is organized should directly support its strategy, objectives and goals.
For example, if a business is shifting to focus more on customer experience, its structure should reflect that change by creating teams focused on customer service and interaction. Similarly, a company embracing digital transformation should prioritize roles related to technology and data.
Five Practical Steps: Making your structure an enabler for sustainable change
Successful transformation often depends on a company’s ability to adapt quickly to change, and organizational structures need to be flexible enough to support this. The concept of dynamic capabilities emphasizes the importance of being able to reconfigure internal structures and processes to meet new challenges.
A responsive structure enables companies to pivot quickly and address how to achieve the desired outcome of the change. As a secondary outcome i that your organizational change capacity will be strengthened in parallel.
1. What are we trying to achieve?
create a common understanding about what are you trying to achieve and why, by involving key stakeholders in your organization, or expressed differently, how does success look like in the future, and how could we structure it?
2. Design the structural end state
Since transformation impacts the entire business, involve leaders and key-stakeholders from different departments in designing the new structure. This ensures that all perspectives are considered and that the changes will meet the needs of various business units.
It could be defining:
It is to be seen as a draft and will for sure change along the way. It will give you the ability to navigate through the change, by having an aligned picture of the structural “to be” re-design.
3. Assess Your Current Structure
Begin by assessing whether your current structure enables or eliminates the transformational goals. Ask questions like:
4. Test New Structures
Rather than making large changes all at once, test new structures in smaller teams or departments. This helps minimize risk and allows for adjustments before rolling out structural changes across the whole organization.
5. Go do and being ready to adapt
As the headline emphasizes, go do and be ready to adapt
Structural change should not be seen as a one-time event. Instead, it’s a process of continuous adjustment. By testing it you will have real life feedback and the possibilities to refine and adjust before implementing fully in the whole organization, which will enhance the likelihood of success.
RECAP
In any business transformation, having the right organizational structure is crucial to success. Without it, companies can face confusion, slow decision-making, and missed opportunities. A well-designed structure that supports collaboration, clear accountability, and quick decision-making will create the environment necessary for successful transformation. By aligning structure with strategy and focusing on agility, organizations can stay ahead of change and emerge stronger on the other side.
By viewing structure as an enabler, not just an operational necessity, you can dramatically improve your organization’s change capacity in parallel of reaching your desired outcome of the transformation.
References:
- McKinsey & Company. (2018). "Unlocking success in digital transformations."
- MIT Sloan Management Review. (2021). "Breaking Down Organizational Silos."
- Harvard Business Review. (2019). "Why Business Transformations Fail."
- Boston Consulting Group. (2020). "The Benefits of a Flat Organizational Structure."
- McKinsey & Company Report (2021) How to Make a Company’s Transformation Succeed