What an Organization Is – and is Not
Summary: Organizations are complex, and it's easy to be misled by overly-simplistic views. An organization is NOT the "org chart", a money-making machine, a set of processes that produce value for customers, a statement of mission/vision/strategy/goals/objectives. An organization is a community with a mission, which includes all these partial views, and more.
NOTE: This paper was written to be read carefully and thoughtfully – more like a book chapter than a web article. You may find skimming it frustrating.
Let’s start by clearing up some very common misunderstandings of organizations.
- An organization is not “the org chart”.
Geoff is English, a high-level manager in the headquarters of a US-based global company, and he’s usually great fun to work with. But as he briefed me on his newest assignment, it was clear that he wasn’t having fun on this one yet. His boss’s division was in a three-way war about a proposed new computer system, involving a service unit outside his boss’s control and the corporate systems people, and Geoff had been assigned to make it all work. Since I had helped his boss clean up the mess caused by a “reengineered process” that wasn’t working, Geoff knew me and called me up for help.
A few minutes into our first discussion, Geoff spun around in his swivel chair to get at his files. “Tony, let me show you how this new organization works.” From experience I knew what was coming; he unfolded an organization chart roughly the size of a bath towel (Geoff works for a huge company) and started talking me through it. When he had made clear the structure of roles, responsibilities and reporting relationships, I jumped in. “Let me see if I’m getting the picture. These guys are the customers; these other guys are responsible for creating and filing the work orders; these here build and maintain the computer system; and these over here do the actual work. A tells B who tells C who does what A needs doing, and D makes the computer system work – right?”
Geoff nodded unhappily. “Spot on. That’s exactly how it works – on paper.”
“On paper.” That’s where the organization depicted by the org chart exists – and that’s the only place where things actually work the way the org chart says they should. Look at your own organization; think about who actually does what and with whom to get the work done. How much of that shows up in the org chart? Precious little, if any, if your organization is anything like Geoff’s. Management courses have recognized this gap by talking about the “formal organization” shown on the org chart, vs. the “informal organization” of people actually talking and interacting together. I respectfully suggest that this obscures the key point: the org chart is at best a map of the organization; it is not any kind of organization. (As a very wise man once reminded me: “Imaginary wolves are not a species of wolf, and fictional assets are not some special category of assets.”)
Why make a big deal of this? As semantic theorists remind us, “The map is not the territory”. You certainly would not expect to draw a new bridge on a map and then somehow expect the territory to change in response; instead, you would go out and build the actual bridge, and then add it to your map. But we routinely “restructure” by changing the org chart – our map of the organization’s roles, responsibilities and reporting relationships – and then expect that the organization itself will somehow change.
It doesn’t. You have to change the actual organization. Your organization is not the org chart.
(By the way – Geoff, like everyone in these pieces, is a real person. His company is real, his situation was real, and what we did together actually happened. In every case I have attempted to change or leave out enough details to make it difficult to guess who the people or company really are.)
- An organization is not a money-making machine.
Edward is a bright, hard-nosed manufacturing manager with strong views and no hesitation about expressing them. For almost two years he had been expressing his views to the marginal performers of his main manufacturing line with increasing directness and very little positive result. He set me straight about his intentions immediately: “Look, Tony, here’s the bottom line: a manufacturing organization is a dollar-bill machine. End of story. My job – hell, everybody’s job – is to get as many dollar bills as I can out of this machine, and right now I know we could be doing a lot better. I’m not sure how you work, but I’ll tell you straight out: don’t talk to me about communication or participation or any of that touchy-feely crap. Tell me how you can help me get more dollars out of this machine, or this is going to be a very short meeting.”
(Ever met a real “bottom-line” manager like Edward? Perhaps you work for one – or maybe Edward is actually you, in thin disguise. If so, you might find what I said to Edward interesting.)
“Your bottom line sounds fine to me, Edward; any organization has to make money and generally the more money it makes, the better for everybody concerned. But let me ask you one question: since you already know what you’re after, and still haven’t got it, doesn’t it seem reasonable that there may be some important things here that you just aren’t seeing? Perhaps ‘dollar-bill machine’ may not be the whole story about your organization?”
Edward is as honest as he is direct. He wasn’t happy about it, but he nodded. “Seems reasonable.”
“Fine. My job is to help you get your organization where it needs to go – more dollar bills. To do that we will need to see what you’re missing, and deal effectively with it, so you can get to your bottom line. Agreed?”
We eventually did some important dollar-bill-producing work, part of which involved communication and participation – but for now let’s nail down the key point: You can't move an organization by paying attention solely to the numbers.
Yes, the “bottom line” is crucial; yes, an organization exists to make money; yes, a manager is responsible for “deploying the assets of the organization for maximum return to the shareholders”, as they say in MBA courses. But an organization is a great deal more than its bottom line. An organization is a great deal more complex than its balance sheet. And it takes a great deal more than careful attention to costs to move an organization.
- An organization is not a set of processes that produce value for customers.
Since Hammer and Champy’s Reengineering the Corporation was published in 1993, “business process” (usually accompanied by either “reengineering” or “transformation”) has been a major topic of business discourse. Focusing on process has had some very positive effects. It put the creation of value for customers back at the core of everything, where it belongs; it helped break up our fixation on the org chart with its “chimneys” and “silos”; it helped eliminate crusted traditions and activities based on outdated assumptions; it opened the door for better answers based on current conditions and technology.
But the picture has been far from completely positive. The nasty truth is, most “reengineering” projects fell far short of their self-established goals, and some have been extraordinarily messy failures. (Two years after Reengineering the Corporation, James Champy wrote Reengineering Management; about the same time, “change management” and “leading change” became very hot topics. People were noticing that there is a great deal more to moving an organization than changing its processes.)
Process redesign is organizational dynamite. When it goes wrong, it can go spectacularly wrong! But when it goes right, process redesign offers an unmatched opportunity to move an organization in many positive ways simultaneously. For now, let’s just recognize: core processes are an important part of your organization, but they are only a part. Focusing exclusively on process will leave you blind to the rest of the picture – and unable to move your organization.
- An organization is not a statement of mission/vision/strategy/goals/ objectives, nor any particular combination of these.
Does your organization suffer from FMS (Framed Mission Syndrome?) Have you put a great deal of work into creating the strategic plan, or vision statement, or goals, etc., only to find that what people actually do bears little resemblance to what we have said they should do? (Ricardo Semler, the Brazilian business owner who wrote the provocative bestseller Maverick, routinely challenges his fellow CEOs to show him their five-year plans – from five years ago. He routinely meets with embarrassed refusal. It’s no wonder that some cynics refer to strategic planning as “the corporate rain dance”!)
I’m not suggesting that planning is a waste of time and money (although it will be if you don’t do the work required to make the plan real). I am pointing out the obvious: plans, even when they succeed in providing real direction, are only part of your organization. A new direction, no matter how well-crafted, will not by itself move your organization.
By now, I suspect you get the point:
- Our common concepts of organizations are at best partial views of a far more complex whole.
They are important and useful, if we are careful in using them; what they do not do is give us the complete picture we need.
So what is an organization? Here is the definition we work with:
An organization is a community with a mission. As such, it has all the complexity and diversity of viewpoint, motivation, knowledge, skill and experience of any community, with the addition of a shared mission that makes alignment of individuals both necessary and possible. This is a deceptively simple definition. As we shall see, it in fact contains all the complexity we need, and includes all of the partial definitions we looked at earlier.
