Structure and Strategy: A Symbiotic Relationship

by

Wendy Helmkamp is a boardmember of ODF from West Hartford, CT

In 2010, I wrote about “Structure as Strategy,” a thought piece published by my firm, The Clarion Group. The main premise of that piece is provided in the excerpt below (and the full version can be accessed by following this link: http://www.theclariongroup.com/insights-events/72-insights ) Today, in a world of increasing complexity, thinking about structure and strategy as two discreet elements of value creation seems insufficient.

From “Structure as Strategy”: Good organization design – aligned structure – is often viewed as an enabler of strategy. While this (and its converse: the wrong structure can disable strategy) may be true, we believe that structure can be seen as somewhat more powerful, as part of the strategy itself.

Most leaders embarking on changes in strategy and structure ascribe to the adage that “form follows function.” In other words, executives deliberate over their strategy and then determine how the organization’s design needs to change to execute the strategy. We believe that making changes to an organization’s design is as integral to strategic decision-making as choosing which market segments to pursue. Changing an organization’s design includes such things as how work is organized into groups or roles, who makes what decisions, processes for running the business and even how physical space is arranged. Consider how intertwined strategy and organization design are on a football team, for example. The game plan is generally contingent on players filling specific roles, the communication that happens between coaches on the sidelines and players in the huddle, and reading the formation of the other team. The “design on the field” is more or less the strategy in action.

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Today, I would push this position even further and argue that organization design and strategy are symbiotic – they are one system. Given the complexity of our environment, where the degree of uncertainty around financial markets, regulatory impacts, the influence of technology on behavior, etc. is high, and where there are so many variables to weigh in deciding how to grow, a new strategy-organization relationship is coming into view.

In complex environments, strategy emerges from deciphering patterns of information or from a series of experiments to see what products and services “stick”, or by partnering with consumers or other entities to co-create value. All of these paths (and numerous others) require different ways of organizing people, processes, roles, and decision-making. All of these paths help the leaders of an enterprise decide which way to go next, which in turn has implications for design, and the cycle continues. Business theorist, David K. Hurst, tells us to “think of organizations as movements, rather than structures.” It is this fluidity and adaptability that becomes the overarching design principle for both strategy and structure in the 21st century.