Welcome to leadership from the balcony. My name is Shawn Griesemer with my cohost Justin Dorroh. And each week we bring you a new leadership concept to inspire your growth and effectiveness as a leader in every area of your life.
When you're not reaching the outcomes, where the outcomes clear.
Every size organization has to constantly look at…do we have what we need to do what we're trying to do?
If people are doing lots of work, but not understanding how it's connected to the whole, they become disengaged.
On today's episode, we're discussing how to unlock your organization's full potential through the transformative power of a strategic organization development process. If you're ready to elevate your leadership and take your organization to new heights. Join us as we explore the keys to lasting success and be inspired to take action.
Thanks for joining us on the balcony. We hope you enjoy peering over the railing to gain an expanded leadership perspective.
You know, I think one of the things that smaller businesses often ask…is organizational development something we need to be concerned about? Are we big enough, if that makes sense? And I think part of that is, there's maybe a lack of clarity of what does that term even mean. If you do a quick Google search, you can find a thousand and one definitions of organization development. Or more. So, I think a helpful, simple definition is – Organization development is the process through which an organization improves its internal capacity to be the most effective. So, that's everything from systems, to leaders, to individual contributors on the team, and the skill sets or the competencies required to get your organization headed towards the direction of the vision that you have.
Okay, so back up. Make that very simple and…clear as if I know nothing. So, say that again and use very common language in explaining that. So, when you say it's a process through which an organization improves its internal capacity…we know what an organization is, but when you say internal capacity or a process through which they're doing that, kind of break those down for me.
Yeah, internal capacity would be…how much bandwidth does an individual on my team have to complete a certain level of work? How much bandwidth does a team have to complete a certain amount of work? And within that bandwidth is not just emotional capacity, mental capacity, but it might also be ability. Do they have skills? As an example, if it's a marketing team, do they know how to write marketing copy? Do they know how to put that copy into some kind of a system that distributes that copy out, whether it's email or a website or whatever it might be?
And is competency, when you say internal capacity, are we talking about skill to do or are we also talking about margin and space to be able to do?
I think it's both. I think you could have skill, but somebody is so overworked that that bandwidth is being reduced to a fraction of what that person could do if the work was distributed more appropriately. So, with that example, it might be, hey, we need to hire more people. That's part of developing that team, developing the organization. From a process standpoint, I think it's looking at the business as a whole and spending energy working on the business. Where do we break down? Where do we consistently have issues? How do we solve those problems so that we can maximize, to use a manufacturing term, the throughput of work, how much work goes through our “machine” that we are operating?
So, I'm hearing you say that organizational design is figuring out that throughput, that process, the flow of things in your organization, considering the internal capacity, which is both the skills and the abilities of the people on your team, plus the margin they have, the space they have to do what it is they need to do, to keep that flow moving forward. And the organizational design is getting all of those things lined up.
That's right. When you have that design, then beginning to execute it is the development of the organization.
Okay, going from where you are into, now we have actually designed it, let's move it forward to see that become the reality.
Correct. That's right. Even in that little simple example, it doesn't matter how big you are. Every size organization has to constantly look at, do we have what we need to do what we're trying to do?
Why does it matter what competitive advantage or what benefit does an organization obtain, work toward, in actually going through? Because these are not easy processes. They're not. What's the end result and what's the outcome they get from doing this work?
A lot of it I think ultimately lands in you build really deep trust as a team. And when there's trust, then there is the ability to add people into that environment that have skill sets that maybe that team doesn't possess. There's the ability to give feedback into that system and to identify what isn't working well. We'll just limit it to those two components. When those two components can work, then a team's ability to continue to deliver their service or deliver their product to their customer base in a timeline that is congruent with the expectation of their customer is solid. And when there's no clarity or there's no development, you start missing goals, you start missing deadlines. You start making assumptions that just because you can see it in your brain, that's going to translate to everyone understands the picture you have, and it's just going to work in this nice coordinated effort. And I would say in our experience, let alone our team, but the teams we work with, that's not the case. It takes a lot of intention and effort to create clarity and then maintain that clarity.
Clarity is the word that I was just going to say. It sounds like what you're talking about is getting a whole lot of somebody's thinking down on paper to ensure that there is clarity from the leaders in an organization into the general population of all the others working in that organization.
That's right. And so much of that is building a shared language that when we say a particular word or phrase or whatever, everyone knows what that means and it's not open to interpretation. And when it's open to interpretation, that's where you get missed from a communication standpoint all the time.
So, what type of organization or what size organization, what stage of life of an organization would you say going through a process like an organizational design process is most helpful? When's the right time? What season of the organization is the right time?
Well, at some level, so let's start with like a solopreneur type business. Even if you're at that stage, you still need to know who you're selling to, what you're selling, and how you're going to deliver that product or service, even if it's just for you. But you've got to be able to communicate clearly with your clients, customers, again, whatever type business you have. So, there's a small need for some level of clarity in an organization. You add one person to that team of one. You need a whole new organization. And you have to now set expectations in a fresh way. You add a third person, the same process happens again. And so, as you scale up the team, you are reforming, reclarifying, potentially even broadening how you define things because now you have multiple points of view. You have different skill sets and experiences coming to play and now you've got to find a way to include those or to clarify which ones get included for this stage of the business and yet you still have to help people make sense of an environment that to them may be brand new and they need a guide to kind of assimilate that information.
So, let's go macro here for a minute. If we're thinking about the organizational design process, and you're talking about it being accessible to both a larger organization as well as a small organization, let's talk through what are the components of organizational design. What do people need to consider? What do they need to actually define and where they bring in clarity? I know we've done so much work with people starting from a core principles perspective. There are so many words that people use, governing principles or your core values, and we've landed on core principles being vision, mission, and values. We've found it very important to have vision and mission delineated because they have distinctives that we think are important to bring clarity. Why don't you just kind of walk through that. If you start with that vision piece or with the values piece, what are the components that people need to consider in developing that full organizational design tree, if you will?
Like you said, we start with core principles, vision, mission and values. This is a simple way to define those. Vision is really what is that picture of a preferred future? Where are you going as an organization? Mission is what am I doing today to make that reality happen? What we like to say is…mission really starts to shape the lines of business that you have or what it is your organization sells and it helps to create a filter for decision making. Are we going to pick up this new revenue stream that is disconnected from everything else we do? Or do we let that mission help shape that decision making process?
It keeps us in our lane, if you will. A very broad lane but in our lane.
And values, what are the behaviors that we really want to promote and celebrate? And the absence of those behaviors are things that we want to make sure we're not permitting. You know, culture is shaped both by what you promote and what you permit. So those values become things that you hire against. They're things you celebrate in meetings. They're things you might emphasize and train and develop depending on how much of a skill set that behavior might actually be. That whole set becomes a way that you can build what we call mental models or just rules of thumb that help you make decisions fairly quickly, but it's overarching the entire organization. It's kind of connected, it connects everything, so to speak. From there, we look at what's a long-term target that we're shooting for. We call it the long-term leap. Yes, pun intended.
I've heard you talk about it being a long-term horizon.
That's right. It's something that's measurable, but is big enough that it's not going to be something we're going to achieve in the next couple years. It's big enough that it's going to be something we're going to lean into for probably over three years, if you're looking for some kind of timeline to put on it.
It may have some clarity, but it's not pinpoint laser-focused.
Correct. As an example, somebody might say, hey, we want to be a $10 million national brand. Okay, so $10 million, very clear. National means, okay, there's going to be a presence in, in our case, the United States. What that business is, how we're going to do that, that's not all defined at that level. The next is what we found a helpful term is the doubling time frame. And this is really, if I were to stand in today and think, what's our level, size of organization, revenue size, number of locations, number of people, whatever it might be. If we were to double and everything is 2X, how long do we think that would take us? You can look historically, how quickly have we grown revenue wise, team wise, et cetera., and then you're using those measurements to just determine how long do we think it would take to 2X that? Because what you want to start to look at is, #1 what would that organization look like? And another key question is, what would break today if we were that size?
Yeah, what a great question to ask.
Because often it can help you identify where there might be weak spots in your infrastructure today and what do you need to shore up to be able to support that level of growth?
What I like in this process, too, we've inserted between that long-term horizon and that doubling time frame, trying to help people get into their messaging. Who's your target market? What is your value proposition? Lines of engagement…what are the products or services that you're trying to offer? And even starting to create what is the personnel strategy that will be required to get at that long-term horizon? And all that vision, mission, values, as well as messaging, leads into informing that doubling time frame. So, you can build around those longer-term perspectives.
And let me just make a quick comment – McKinsey just put out a new book called CEO Excellence. If you're a small business, sometimes these big business books can be overwhelming and you think, how in the world do I glean anything from this? What I would say is, there's great principles in books like this that the applications they share may not be relevant to where you're at, but if you can distill principles, there's great nuggets of insight and wisdom. One of them related to personnel strategy, what you just mentioned, is you always want to start with what roles do we need, in my personnel design, before I ask, who do we have that could fill those roles?
Wow, that is so backwards of how so many people approach it. They look at it and say, this is a person we don't want to lose. You're like, do they even fit a role that is needed in your organization?
Correct. To your point, we often start with who do we have? What can they do? Versus what do we need? Do we have people to fill that? And if we don't, do we need to hire it? Do we need to outsource it? So that personnel strategy, that personnel design you mentioned, I think it's a really key component that's congruent or in step with the doubling time frame. Anyway, from there, we start to look at an annual horizon. Now, it's helpful to mention some people's doubling time frame may be quicker than a year, and when it is, you just compress that annual plan. So, maybe if your doubling time frame is every nine months, well, then maybe your annual plan equivalent is quarterly, you just adjust your timing, those time horizons to kind of be in line or in step with that doubling time frame.
Now people use words like agility. I know Scrum was a big deal a little while ago, and it's talking about hyper agility. Does this relate to that or what kind of the perspective with being adaptable?
I think it can. I think when your business has enough track record that you have some things figured out and more of a “proven process”, you're probably going to be less agile because you've figured a few things out and you don't necessarily need the same flexibility that, let's say, a brand new organization that's kind of, maybe they've got revenue, but they really haven't figured out who's their target market, what's their product market fit, and who are they really selling to and what's the messaging around that, you know, and a hundred other details. Or there's some kind of new initiative. Maybe you've got a certain part of the business that is locked and it's steady as she goes, but then there's new innovative things that you're trying, and that part of the business needs a little bit more flexible or agile methodology, shorter time horizons, less proven process, more milestone driven, and you're more thinking, what would success look like if this path is leading us toward success? So, you kind of determine beforehand, we're looking for these key things to happen through the execution of this idea in terms of a strategy, but then you have to evaluate it, is it getting us where we want to go? And if it is, then let's persevere. If it isn't, then we need to make a deliberate pivot. But it's not a haphazard pivot, just willy-nilly. It's got to be really thoughtful, and it's probably the subject of another podcast. I will make a recommendation to The Lean Startup. Great book, very helpful, key concepts that you can kind of wrap your head around and utilize without having to bite off the whole framework. So yes, doubling time frame, annual plan, and the flexibility there, depending on how quick that is. There is some leeway for that Lean methodology. At the annual level, I would recommend you're really trying to dial into three to five annual goals or key initiatives. Same thing, just different language, to really focus on. And I would recommend if you can get it to three, better. Three significant initiatives or significant goals that are going to take some time. It's not something you can do in a week, but it's going to take you time to really move that ball forward.
These are often the things that help people at every level also engage.
That's right. And stay aligned.
They can feel like the energy and the resources, personal as well as in their department, are actually activating towards something that goes toward the greater view of the whole organization, and people start to feel like, wow, even the work that I'm doing is playing into the success of the whole organization, not just I'm playing with my one widget day after day after day.
That's right. And you're seeing how my engagement is impacting the whole. And it also affects other people on the team or in other departments, however large the organization. I think at that point, once annual goals are set, there's probably a non-sequential order here of, we got to take those annual goals and really build out an operating process if there isn't one. Like, what are we actually going to do to operationalize and move towards this goal? And then we also have to think through, what is a quarterly amount of the goal that we're going to shoot for in Q1, Q2, Q3, Q4? And then from there, you're starting to look at not just step-by-step what needs to happen, but what are those key activities that actually drive the growth of that particular goal, whether it's revenue or retention or whatever it might be, so that you can organize those key performance indicators into some kind of a dashboard. And at an executive level, you have visibility into the performance of the organization without having to be in the weeds to ensure that every step-by-step part of that process is taking place.
And this is where organizations die.
That's right. Because it's painful.
Yeah, they don't need more vision. Generally, there's enough vision out there. It's the daily execution, the accountability, the knowing what not you as the business owner or founder, generally those folks will do whatever it takes to keep moving things forward. It's everybody else in the business being able to know, what do I do today? What do I do tomorrow? How is it aligned? What keeps me motivated? It's the work.
That's right. And I would say, so from the quarterly level, then you go down to what does that weekly cadence look like? It's the weekly level of expectations in terms of the output of a particular role, of a team, and is that output connected to the outcome of that initiative for the quarter, for the year? And the other thing that I would say is, it seems like where people can often get bogged down is…they feel this pressure that they have to design the organization perfectly to make this planning process worth its effort. The reality is, you won't. You design something, you execute, and that's when you learn, like, whoops, we made a few wrong assumptions.
It's intentionally iterative.
That's exactly right. And so, you have to stay on it and improve it and refine it so that over time you discover those proven processes that actually get you to the outcomes that you've been aiming at. But to believe that you're going to design that perfectly the first time you do it is a little bit of a stretch from my experience and my perspective.
So, that's the essentials of the steps to get through it. How does an organization know, now's the time? I need to do this. What lets them become aware? Hey, there's smoke here. I need to see if there's a fire. What's a good marker? What's a good thing to look for?
I would say anything from…You're missing goals. You set goals and don't hit them. To turnover. You have key people that historically have been great members of the team, and all of a sudden, you're turning over those roles and either you get really good feedback that is clear as to why, or you're not, and yet you still have a steady stream of an exit out your door. Sometimes it's, we're not getting the results we used to get. We haven't changed anything. Well, it might be time to inspect under the hood to see, is there something that needs to be reworked, developed, refined, et cetera. Those are a few thoughts. Anything you would add?
That's really good. I think on the clarity side, when you're not reaching the outcomes, were the outcomes clear? Why weren't they clear? You talked about engagement. If people are doing lots of work but not understanding how it's connected to the whole, they become disengaged. So, I think outcomes and engagement are huge tells, if you will, for an organization that is becoming unaligned and needing to get that kind of clarity. And culture in general, if you see a toxic culture emerging in your organization, or I know psychological safety is a big one these days, if you see that that is starting to emerge in your organization, it's probably a good time to go through a process like this because embedded in it, and really at its foundation, vision, mission, and values are the very things that help to give you the seeds to really work into your organization to create that culture. So, if your culture is going bad, there's a very good indication that there's not clarity and awareness of what are we trying to cultivate into the organization to make a healthy culture. I would add that from a culture perspective as being a huge tell into a need to do this kind of work.
Yep, I agree. In terms of like, okay, if you're a leader or a business owner listening to this and thinking, okay, how do what's a way to test how clear my organization is? Here's just a simple exercise that you could do privately, but also send this list of questions out to whomever your main team is, and then come together and talk through the answers. Because what you'll find is if you all have consistent answers, well, that's a good indicator that there's some clarity. If you have wildly different answers, that might be an indicator of there's some work to be done.
And maybe we would offer this as, this is the leadership challenge for leaders in the coming week, is go ahead and ask these questions of yourself and of your people, and then dialogue about it. Let us know in the comments, see how this process works out for you and what kind of dialogue does it generate?
So, here's just a few questions to think through.
1) What are you trying to accomplish this year as a team or as an organization?
2) Second question, what activities do you need to execute on to hit those goals that you're trying to accomplish?
3) Who is doing what part of the work outlined in the questions above?
4) From a progress perspective, how do you need to check in on and solve problems as they arise?
5) And what issues do you seem to face consistently?
Now, is that a laundry list of questions to create clarity at every level of the organization? No. But it's a starting point just to begin to surface where there might be differences of opinion.
And while we unashamedly would say we have a process that we have been working on for the last several years, that we have worked with multiple companies on, many companies, and helping them to really get this kind of clarity, and we love doing this kind of work, we would also say there are some great resources out there. Traction, by Gino Wickman has been a tremendous book. Scaling Up. The Four Disciplines of Execution by Sean Covey would be another book. And there are several others that get into what does an organizational design process look like. But we will also say that it is not for the faint of heart. That this work is not easy. It is rewarding if you invest in it. But generally, to read a book and expect that you can implement the principles found in the book in this arena, it's a tough, tough sled to push. and generally not one that somebody can do on their own.
That's right. And I know in the book Scaling Up, one of the things they say is of the millions of companies, I think that they surveyed at one point that, I want to say it was 96% were under a million in revenue. Only 4% broke through. 0.4% got to $10 million and 17,000 made it to $50 million. And the reason is, because this stuffs really hard. It's hard to create the clarity and the simplicity of roles, expectations, accountability as the complexity of the organization increases.
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