Is strategy still relevent to organization design?

Nov 1, 2020

Is strategy still relevant to organization design?

The axiom has always been to start with a clear strategy if you want to design a sound organization. But, is detailed strategy work even relevant in a world where the external environment is continually changing, requiring companies to regularly shift direction and priorities? 

On the contrary, we believe strategy is more important than ever. Both strategy and organization have to be dynamic. The companies that were able to quickly shift direction in 2020 have been least impacted by, or even profited from, the pandemic. But, being adaptive isn’t just about quickly deciding to change course. It is about having a flexible organization model that allows leaders to redirect resources, shift management attention, and accelerate change. This requires strategic boundaries to have been communicated in a way that empowers leaders on the ground to rapidly make tradeoff choices and act on them. 

We recently worked with a high-tech instruments company focused on growth. When we asked about strategy during our diagnostic, interviewees were enthusiastic about the $3B revenue goal and the 16% operating margin target. However, we quickly discovered that leaders were overwhelmed and exhausted by a set of uncoordinated activities all with equal priority. The chaos of the external environment had only exacerbated issues that already existed. For example, the lack of project prioritization and ineffective allocation of engineering and product development resources resulted in late and over-budget products, which were now in high demand.