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2. Design the organisation

Key ideas

Business organisations exist to bring together and direct the work of many people towards a common business purpose. They can be thought of as delivery systems.
An organisation's structure is part of the delivery system for products and services and defines how work functions and tasks are grouped.

Overview

Organisations exist to coordinate the work of many people towards a common business purpose (producing the organisation's products and/or services). To deliver its purpose, each organisation has a strategy, decided by the owner or the Board (as representatives of the owners), with business objectives, decided by the CEO. The work is then organised by managers and delegated to the right people, at the right level and in the right roles.

An organisation's structure helps to provide the shared understanding of the working relationships that exist between people whose work must be aligned and integrated to deliver the organisation's strategy. Issues created by poor organisational structure include:

too many divisions which creates unnecessary integration issues for the CEO and other managers
too many vertical layers of hierarchy
duplication of effort and mixed functions across divisions
unclear accountabilities and authorities for work.

The alignment of structure, functions, roles and systems of work is essential to deliver the organisation's strategy and business as usual activities.