It seems that so many changes, at the level that Enterprise Architecture is involved, trigger changes to the people element of capabilities that all Enterprise Architectures should have a very good understanding of the Organisation Model. The term ‘Organisation Model’ can be used to cover many different things so, for this post, I’ll restrict the definition to be ‘Organisation Structure’: things like teams, reporting lines, employee measurements. It’s always easier to change technology and processes than it is to change people. People change takes so much longer than swapping out a particular technology but is an often forgotten component of ‘Change’. The Organisation Model is one of the first documents that is drawn up, either conciously or unconciously, when a new Enterprise is being created and, arguably, remains the most important during the life of the Enterprise.
How do you design a whole organisation, a complete Enteprise ? Which teams do you need and what should their reporting lines be ? How should they be incentivised and what’s best for the Enterprise as a whole ? This article discusses whether Enterprise Architecture models can help build an Organisational Model. There’s not always an Enterprise Architect at hand to assist at the very beginning of an Enterprise so EAs are usually involved when an Enterprise changes.
There are several different organisational design models; models that are used to create an Organisation Design. (examples include the McKinsey 7S model, Galbraith’s and Burke-Litwin) Many of these use the tenets of Business Architecture such as Vision, Goals, process and systems. I’ve previously written about the capability model, the capability value chain and the relationship to high-level processes. These are part of the Business Architecture and parts of the Business Architecture seem to assist or maybe replace other organisational design models.
The capability model shows the whole Enterprise laid out in a page as a set of ‘things’ that the Enterprise needs to be able to do. The capability value chain organises those capabilities into a high-level process and shows which are the main capabilities and which are the support acts. Putting logical breaks between those main capabilities is the first step to building an Organisation Structure. With a set of breaks in the value chain, there’s now a rough set of departments that are necessary in the enteprise. A different department would be responsible for all of the value chain capabilities between the breaks. Each break though, causes tension in the Enterprise because two departments have to interact. This tension can be eased by describing clear interfaces and agreements between the two departments.
This way of building an enterprise does create a very mechanistic, rather than organic, organisation but I’ve encountered more mechanistic organisations than I have organic. It also leads to a functional (e.g. marketing, sales, delivery, finance) organisation, rather than, for example, a product or customer focussed one. Those different types need to be borne in mind when putting breaks between the capabilities and deciding whether there should one or multiple instances of the capabilities. Once the splits have been put in place, the supporting capabilities, need to be grouped into departments too. However, one supporting capability can support multiple main capabilities and so these could be modelled as shared services.
Once the departments have been created, the measures and incentives need to be added too. To reach these measures and incentives, each capability can be analysed to determine a set of sensible KPIs. Whilst I say ‘sensible’, experience is necessary in drawing-up KPIs that are transparent and measure the enterprise correctly without creating perverse incentives. However, once the KPIs have been reviewed, the can be turned into measures for the department and incentives for individuals.
From a capability value chain, I think that technique gets us to a rough sketch of an organisation, doesn’t it ?