Leaders need to personally craft and fine-tune an organisational design, which is execution friendly and in alignment with the company’s business strategy
I recently took a snap poll among a group of senior executives on their choice of top three greatest companies in the world. An overwhelming number of responses included an Apple or Google. Some also said Samsung, Facebook, Amazon, 3M and such. If the same poll had been taken a few years ago, the preference would have been more towards companies such as Sony, Xerox, Microsoft, Dell, Ford, and IBM.
I have often wondered, what makes these companies so great? Do they make the best, most affordable products/ services? Do they have a strong focus on innovation? Do they have the best talent, and more importantly, are they able to retain the talent in their organisation? Or, do they run the leanest and the most efficient organisations? Certainly, most great organisations have a combination of these factors working for them.
I am not a management guru and certainly not a researcher. I am a practitioner, a professional entrepreneur and in my experience of having established a bank with an outstanding team over the past 10 years and having closely evaluated 1000s of organisations as a banker over the past 34 years, I am increasingly convinced that business excellence is an outcome of a three-step virtuous cycle:
Visualising: The organisation’s long term vision
Strategising: How the organisation plans to achieve this vision, and how it gains access to capabilities to achieve the vision
Actualising – Rigorous execution of the strategy, each day.
In my opinion, while vision and strategy are important, they are just the tip of the ice-berg, and can be replicated. But then, we don’t have an Apple or its equivalent in every industry, in every country. Hence actualisation or execution becomes key. This brings us to the next question. How are some organisations able to actualise better than the others? I believe the answer lies in how well the organisation is designed.
An extremely inspiring book which I read recently, called “A whole New Mind: Why Right Brainers will rule the future” by Daniel Pink, expounds the design approach in every aspect of institution building. By design, I don’t mean the visual or aesthetics of the products, but design thinking for business innovation. In other words, how businesses think, innovate and operate.
Let me take the example of Apple. Jony Ive, in his book, The Genius behind Apple’s Greatest Products, recalls how Pre Steve Jobs, the Industrial Design Group (IDG) at Apple was dispersed across various unrelated functions. The designers had to negotiate with manufacturing, accounts, engineering and such. As a result, the end-product was more often than not, compromised and diluted. Pre-Jobs, Apple had no distinct organisational design to support innovation. It’s likely that design would have never become a strategic capability at Apple if Jobs hadn’t re-designed the company after returning in 1997. He made innovation and design the principal focus of the company. He gave the design team the authority to produce their designs without making trade-offs. He led it from the front, by being most demanding when it came to simplicity and elegance of design.
While product (or service) design is a key focus area for all successful organisations, most organisations themselves are not the product of a deliberate and calibrated design. It is not surprising that an HBR study notes that organisational design rarely results from systematic and methodical planning. Rather, it evolves over time in fits and starts, and becomes more and more complex over time, thereby stifling innovation and execution capability. Resultantly, the HR function, the de-facto custodian of organisational structures and development in most organisations, cannot orchestrate any significant design re-alignments in the absence of deeper appreciation or the mandate.
CEOs, be it founders of new-age startups or of more mature organisations, need to ask themselves at least once every year, “Are we designed for success?”. He/she needs to personally craft and fine-tune an organisational design that is execution-friendly and in alignment with its strategy. No other intervention of the CEO would impact the long term success of the organisation more than this.
Rana Kapoor is the founder and CEO of Yes Bank. The above article is the first of his three part series column on Business Excellence through Design Driven Innovation.