The 3 Key Questions for Organizational Design

To start designing an updated structure and operating model, you could begin by focusing on three key questions for designing delivery organizations:

1. What is your “product”?
2. How do you handle Business As Usual (BAU) work?
3. Do you need two layers of governance?

First, a quick clarification: the term "product" here is used broadly to describe the value teams deliver, not necessarily a physical or digital product. For example, in an HR team, a "product" could be the employee experience. Clearly defining this helps teams understand their purpose and priorities.

Once your organization grows beyond 20+ people, defining your product’s scope becomes more complex. You essentially have two options:

Option A: Small, Independent Products

• Advantages: Each team is fully dedicated to a specific product, reacts quickly to information, and avoids context switching, increasing efficiency.
• Disadvantages: Teams may focus on less strategic work and risk misalignment if their product is part of a broader customer experience.

Option B: One Product, One Team

• Advantages: The entire organization aligns around a single set of priorities, ensuring collaboration and focusing on the most valuable problems.
• Disadvantages: It requires a senior product manager to prioritize a larger backlog and demands time to build multi-disciplinary teams that can handle different types of work.

Every organization has ongoing work such as maintenance, small requests, customer support, and reporting. How you manage BAU work is crucial for long-term efficiency. There are two primary approaches:

Option A: Dedicated BAU Teams

• Advantages: Delivery teams remain focused, and BAU teams develop efficiency handling recurring tasks.
• Disadvantages: There is less incentive to reduce BAU workload since a separate team manages it. This can lead to inefficiencies and lack of ownership.

Option B: Integrated BAU & Delivery Teams

• Advantages: Encourages ownership and continuous improvement, as teams manage both delivery and BAU, motivating them to minimize BAU workload.
• Disadvantages: Requires balancing priorities between delivery work and unexpected BAU tasks, which can slow down development.

Organizations must decide between a flat structure (fewer governance layers) and a more hierarchical approach (more layers for alignment). The choice impacts adaptability, efficiency, and decision-making speed.

Option A: Autonomous Teams (One Layer)

• Advantages: Faster decision-making, high adaptability, and direct stakeholder interaction.
• Disadvantages: Difficult to track organization-wide progress, and there is a risk of duplication if teams work on similar problems without coordination.

Option B: Aligned Teams (Two Layers)

• Advantages: Ensures work aligns with organizational strategy and enhances collaboration across teams for large initiatives.
• Disadvantages: Requires additional governance structures, slowing adaptability and increasing process overhead.

With these three key questions in mind, organizations can design structured change experiments. The approach should consider the organization’s appetite for change. Startups may favor rapid, radical changes, while large enterprises may require incremental improvements. Focus on solving core challenges and gradually testing improvements to refine your organizational design.