Across organizations of all sizes, I hear the same concerns. They are all expressed different but the common theme is:
- “Won’t embedded specialists be underutilized?”
- “Isn’t decentralization too costly or inconsistent?”
- “Shouldn’t we have one standard way of working?”
- …
These aren’t complaints, they’re tradeoffs. And tradeoffs only make sense when you’re clear on what you’re optimizing for.
The Nature of Tradeoffs
Optimizing for one strength often means compromising on another. That’s not a problem, it’s the essence of good design. But how to decide? Don’t begin with structure. Instead, begin with a far more important question:
What capabilities do we need to excel at in order to deliver our strategy?
Structure is secondary. First, you must define what “great” looks like for your organization.
The Tools to Answer That Question
Creating Agile Organizations (CAO) provides a practical toolkit to move from confusion to clarity. Here’s how:
1. Value Chain & Value Stream Mapping
Mapping how value flows through your organization helps identify:
Bottlenecks, Delays, Reword etc. But more importantly, it helps identify which units have which capabilities and which of the desired capabilities are missing or need to improve. Based on that you can identify the gaps and which units needs to be worked on from improvement to redesign.
This tool is key when assessing where misalignments exist between your intent and your operations.
2. The Star Model
Capabilities are build and strengthened through alignment between five interdependent elements:
Structure, Processes, People, Metrics, Rewards.
If any of these are out of sync, you’ll face capability gaps that slow you down or pull you off course. So, map your current capabilities using the Star Model and then map your desired capabilities to identify the gap. You then know what needs to be redesigned.
3. Strategic Focus
Your competitive edge might come from innovation, operational efficiency, or deep customer intimacy. Each of these requires different organizational capabilities and demands different tradeoffs.
You can’t be world-class at all of them. So determine your dominant strategic focus for your group, unit or org, then design to support it.
A Quick Example:
A fintech company wanted to scale its lending product. Its strategic priority? Speed to market, but of course with localized compliance!
However, their compliance teams were centralized, optimized for efficiency, not responsiveness. We mapped the value stream and ofcoruse :), we found delays at every legal handoff to local markets. Using the Star Model, we uncovered deep misalignments:
- Structure: Legal teams were centralized and disconnected from regional teams.
- Processes: Standardized, slow review workflows.
- Metrics: Focused solely on accuracy.
- Rewards: No incentive to accelerate time to market.
The fix wasn’t just “go agile.” The real solution was to embed legal partners in product teams, adapt their review processes to be in iterations, and align metrics with the strategic goals.
Yes, it sacrificed some efficiency, but it closed the real capability gap: speed. (Okay, to be complete, the compliance metrics stayed heavily towards accuracy 😉)
When Tradeoffs Become Strategic
Once you’re clear on what capabilities truly matter, the tradeoffs become obvious:
- Autonomy vs. efficiency
- Speed vs. reuse
- Local agility vs. centralized control
You can’t optimize for everything. Try to, and you’ll become mediocre at best. But when your design choices are driven by strategy, and supported by tools that expose capability gaps. You stop guessing and you start designing.
Concluding
Organizations benefit from clarity on strategy and clarity on capabilities. This gives clarity on the tradeoffs they’re willing to make. Good design isn’t about minimizing tradeoffs. It’s about making the right ones.
Learn More?
Visit Creating Agile Organizations.