Performance Management vs. Digital Organizational Design

The organizational design is part of digital strategy management which needs to go neck-in-neck with performance management for improving organizational effectiveness and maturity.

Performances are not just numbers with metrics, they are numbers in context, results related to your business goals both at the strategic and operational level. Measuring and managing performance means setting performance metrics, making objective assessments, understanding results, adjusting plans & structures, and making decisions to ensure great business results. The reality in most organizations though is the performance which is forcibly jammed within an existing organizational structure with silo functions and overly rigid hierarchy, and very few companies are truly leveraging organizational development (OD) resources wisely. But due to the digital nature of hyperconnectivity and interdependence, more often, the successful performance improvement initiatives should have representation and input from organizational structure management. Organizational Design vs. Performance Management: How to take an integrated approach, fine-tune OD and improve performance management effectiveness and maturity?

The digital dimension of organizational structure is enjoying a powerful tailwind to adapt to changes and improve performance: Organizational design is part of the digital strategy management because the characteristics of the digital world are complex, uncertain, and unknowns are commonplace, you just have to prepare for the different scenario. One shouldn’t think the strategy is easy. If you don't take the time and  make the effort to get the strategy right, you could end up "doing the wrong things right." Further, strategy management and performance management need to work neck to neck. There’s no doubt that the well-defined measures and KPIs are important factors to manage performance and keep track of strategy execution effectively. Digital is all about the accelerated speed of changes, time horizons and blurred functional, and business territories with interdisciplinary digital practices. In a traditional organizational structure, the processes are more formal and rigid, that has been the past, and present for some digital laggards. When the enterprise is at risk of being defeated by smaller, nimbler, agiler competitors, then the business management with silo mentality understands it is in their own benefit to collaborate and build the “horizontal” organizational interdependencies to achieve better time to market for business exploring and expanding, to accelerate the speed and achieve high-performance business results. Digital evolution needs catalysts for change, digital means flow, mind flow, information flow, and deploy knowledge from one subsidiary to another seamlessly, to achieve digital fluency. New generations of digital technologies such as a social platform or other collaboration tools are enabling not only the structured processes of the past but also the unstructured processes of the digital normality, for enforcing cross-functional communication and collaboration, harnessing innovation, and ensure the performance of the entire organization is superior to the sum of its pieces.

The goal of digital organizational structure tuning is to strike the delicate balance between solid and flow: Compared to the traditional organization as the mechanical system to keep spinning, digital organizations today are more like the organic living system which keeps growing. It needs to be solid enough to “keep the lights on,” but also fluid enough to interact with the expanded digital ecosystem with an accelerated speed. This is the perception about the digital business, just solid enough to give some sort of form/meaning and open enough to its environment allowing the movement of people, ideas, and information in and out. Traditional hierarchical lines will phase out and a collective of business partners will emerge working collaboratively to set and achieve organizational goals as well as strategy. From a performance management perspective, the operation driven performance indicators keep track of the organizational functioning and firmness to ensure the business solidity; and the strategic- oriented performance indicators capture the flow - the responsiveness, changeability, and agility of the organization, for measuring the business’s growth potential. It is about the hybrid organizational structure well blends structured and unstructured processes to run with two speeds: industrial speed and digital speed, and to leverage the multifaceted performance measurement for assessing and improving organizational performance and maturity.

Tuning organizational design for achieving people centricity: Digital becomes the very fabric of modern business, being outside-in and customer-centric is the new mantra for forward-looking digital organizations today. Hence, it is also important to tune organization design to improve business performance from a customer perspective. Customer satisfaction is a state where the customer perceives a business experience to be positive, and customers are the key influencer of decision-making. It is also important to improve employee satisfaction as well. Digital makes an impact on the speed to run the business, the empathy to their people and the orchestration of their capability in high mature digital organizations. High mature digital organizations integrate organizational design (OD) into the process design and organizational re-engineering, to enable employees doing their work more productively. Digital favors hybrid solutions. Ideally, the physical organizational structure, relationships, and virtual platforms and social connections wrap around each other to ensure responsibility, smoothly information flow and employee empowerment, with the goal to unleash the collective human potential and achieve the high-performance result for the long run.

The purpose of organizational design is to improve the business maturity from functioning to firm to delight and ultimately achieve the high-performance business result. And the goal of performance measurement and management is to keep adapting, improving, focus on the things matter and improve overall business effectiveness, efficiency, and maturity.

Posted in: Connecting Dots,Organizational structure tuning