Build #64 - Organisational design that actually works

Hey,

I spend a lot of time working on organisational design projects for clients.

To be honest there are times I end up waking up at 4am with my mind racing through permutations of structures and roles.

And I've realised that all too often founders think about structure backwards.

As their businesses scale they build elaborate hierarchies to flatter egos.

They create departments based on traditional assumptions rooted in their early careers.

And then they wonder why nothing flows smoothly once they've put the structure in place.

Reflecting on my experience of these situations, I've come to realise that most people start with the wrong question.

The question they ask is "What should our structure look like?".

But what they should be asking is "How does the value actually get created here?"

Take a moment to indulge me in a little thought experiment.

Think about a customer placing an order in a production-focussed business. What actually needs to happen?

Information flows from a sales lead to design, then to production, then to delivery. Materials need to move through different logistics stages. Decisions have to get made at various points. And inevitably problems need solving along the way too.

That's your value stream - the actual path that work needs to take to become something useful for your customer.

Everything else is just overhead that exists to support that creation of value.

That's all fine and good. But then when you look at org charts, they rarely reflect this reality.

They show neat boxes and reporting lines that often cut right across the natural flow of work.

By designing structures we create opportunities for work to get stuck, delayed or lost in translation between teams.

We all know water flows downhill. It finds the most efficient path around obstacles. What if we could design organisations so that work flows the same way?

When you think about designing your business around flow, you start to ask different questions.

People stop obsessing over who reports to who and think more about how do we get the job done best for the customer.

And this usually means you end up designing structures that have less managers and more people in roles that facilitate low friction flows of work.

They have less hierarchy and more networks. There are fewer gatekeepers and more enablers.

My theory on this is that most organisational problems stem from one place: the artificial barriers that work has to cross in its flow through a business. Yet often founders create these barriers through their organisational design decisions.

Traditional structures are rooted in a flawed belief that you can predict and control everything. But that's not the real world we work in. Markets shift, customer needs evolve and technology disrupts.

The unexpected happens everyday, but we design rigid organisations on the assumption that tomorrow will be the same as yesterday.

Rigid structures break under pressure while more flexible ones bend and adapt.

Savvy founders build flex into structures rather than optimising for too much efficiency.

They create multiple pathways for flow instead of single points of failure. They empower people to make decisions close to the action rather than escalating everything upward.

And smart founders also recognise that people aren't chess pieces to be moved around a board. They see the relationships, knowledge, and insights that don't show up on any org chart.

They understand the informal networks - who actually talks to whom, who knows what, who trusts whom. These often matter more than the formal reporting lines. To create organisational designs that work they use real influence patterns, not just the official ones on the chart.

The best organisational design projects start with your customers' most important outcomes. Trace them backwards through every step, decision and handoff needed to deliver those outcomes. Look for bottlenecks, pointless steps and gaps.

Then ask yourself what would an organisation look like if it were designed specifically to make this process smooth and fast for customers?

The answer probably won't look like your current org chart. In fact it might not look like anyone's org chart. And that's exactly the point. Structure should serve the purpose of your business. When you get this right, work flows naturally, your people feel empowered and customers get what they need.

Everything else is just bureaucracy.

best,
-sw

ps I'm really excited because next week's the start of the Build Summer Series 2025. Throughout July and August I'm delighted to have a fascinating range of guest authors joining the newsletter. Keep an eye on your inbox on Wednesday 2nd July for the first one.