A Powerful Tool for Organizational Analysis and Design (Part 1)

Louis Sullivan: Carson, Pirie, Scott Building; Detail

The architect Louis Henry Sullivan who taught Frank Lloyd Wright and developed the concept of the tall steel skyscraper in 19th century Chicago famously coined the phrase “Form follows Function”. He tried to break free of the old school approach of making skyscrapers look like French chateaus or gothic cathedrals and believed that the design of a building should reflect its purpose and not try and pretend to be something else.

In Change Management, and particularly its discipline of Organizational Design this tenet is still eminently valuable and important. A hospital emergency room has to be structured differently from a technology company’s research and development department; a start-up will have processes and leadership practices that will distinguish it from a legacy company that has been in a specific market for half a century.

A concept that will help a Change Manager to analyze the kind of organization they find themselves in and then determine how it may need to be shifted in order to optimally serve its function is based on one of the concepts developed by the Austrian philosopher Karl Popper. In The Open Society and Its Enemies he laid out the concept of an open vs. a closed society.

Popper developed this approach for the realm of political philosophy and as a strong defense of a free and democratic society, but sociologists have since taken the concept into smaller units of human interaction, such as religious communities, organizations and companies and have developed it into a very helpful analysis tool. I came across it several years ago during a seminar in Germany held by Prof. Diether Gebert of the Technische Universitaet Berlin and have found it to be a great concept in Change Management ever since.

While Popper’s original thoughts gave the open society model superiority over the closed model the approach I have been using provides even weight to either form of organization, because in their tempered version we encounter them both every day and they each have their own advantages and flaws.

The analysis tool postulates that human beings organize themselves along a continuum with two very extreme end states. On the one side we find the open model with its extreme end state of complete anarchy where all rule of law fails, everyone looks out for themselves and we have no guiding principles that would put any curb on what people can and cannot do. On the other side we find the closed model with its own rather unlivable extreme of absolute totalitarianism where everything, including people’s thoughts is prescribed and the slightest deviation from the norm is punishable by death.

Obviously most organizations that would require the services of a Change Manager will not be stuck in these dystopian scenarios, but anyone who has worked as a consultant has sometimes shaken their head at the chaos and dysfunction of one of their clients or groaned in frustration at the complexity and tedium of some red tape they have encountered somewhere else. They have seen examples of the kinds of open and closed systems we are surrounded by every day.

If we return to our Louis Sullivan quote of “Form follows Function” we can see that each organizational model has its own strengths and weaknesses and depending on the function an organization wishes to fulfill it may have to adjust its current state from open to closed or vice versa.

In general open organizations are characterized by fairly democratic and participatory processes. Hierarchies tend to be flat, everyone is encouraged to weigh in and to a certain extent define their own job role and the work force tends to be fairly diverse. Organizations like this may also be pretty invested in encouraging flexible work hours or work by remote teams. Often “younger” or smaller organizations fit this profile.

Closed organizations value clarity of direction and clear objectives, and strong leaders or a single visionary CEO will be setting the agenda rather than all of the employees participating in this process. Roles and responsibilities are clearly defined and there are rules and processes for how to do things. Efficiency is valued above exploration. These organizations can be “older” and are generally large enough to have established hierarchies. People are encouraged to identify strongly with the organization, spend time at the office and cultivate a sense of corporate identity.

While these two ways of organization convey very specific strengths to a company they also have some down-sides – remember at their extremes they promise anarchy or total supervision and conformity. An open organization can descend into chaos. Individuals may pursue selfish goals rather than act for the good of their team members or the good of the company and it may take forever to come to consensus to make a binding decision.

Closed organizations can become very rigid and if their leadership pursues unsound goals and ideas they can fail without anyone daring to question increasingly toxic decisions. Since leaders are also unlikely to fly in the face of their own success they tend to be more focused on the status quo rather than try something new. Because of their focus on protocol and process and asking for permission rather than forgiveness they can also evolve elaborate bureaucracies that slow people down.

To complicate matters some organizations also have “micro-climates”, for example a fairly open organization in a heavily unionized market may have a very closed HR division due to the many rules and regulations that need to be observed. A fairly closed organization may still have a very open marketing  department, because they want to encourage innovation and a collaborative work style rather than top-down leadership.

What is important for a Change Manager is to try out the model to get their bearings when they start analyzing and interacting with an organization or part of a transformation. Depending on their findings they will be able to both put problems into context as well as understand an organization’s strengths. This will allow them to define levers as they begin to implement strengths and to anticipate risks or issues.

In my next article I will talk about some case studies and show how the model worked on some of my own projects by helping me first to understand my clients and then to successfully shift their “form” so it would fit their new “function”.