“Strategic Synergy: Designing Organizational Structures for Optimal Execution”

If executing our strategies, projects, budget plans, and goals were intuitive, then every organization would achieve its strategic objectives yearly. 100%, no questions asked, no one would fail or fall short. Ever.

It would be great if businesses could function this way. However, the grim statistics kept for strategy execution tell us differently, that annually, all strategies either fall short or fail 60 to 90% of the time.

Rather than dwelling on old news and in the interest of getting better at execution, what can we do to change this? What are the secrets to unlocking the challenges of strategy execution?

There are two critical elements needed for the effective execution of an organization’s business strategy. They are:

  1. Actionable Intelligence
  2. An organizational structure and communication process that allows leadership to manage their people individually

Without either of these, strategy execution becomes similar to a game of 301 in darts. We consistently hit on 16, 17, 18, and 19, yet rarely strike the bullseye.

Why the Right Organizational Structure Matters

The dynamic nature of every business makes it difficult to “pin down” the efforts required to produce consistent results. Because of this, we must begin our process by better understanding a significant element of effective strategy execution—the Organizational Structure.

This one critical factor profoundly influences effective strategy execution across any organization. How a company is organized and communicates shapes how information flows, decisions are made, and teams collaborate. For organizations to execute their strategy effectively, they must emphasize regular communication between a manager and each of their direct reports. Capturing those resulting conversations becomes critical to execution success.

Secondarily, yet still in alignment with organizational structure, is what we expect to receive from managing those conversations—gaining “actionable intelligence” from team members—defined as the information or data that is specific, reliable, and useful enough to support practical decision-making and prompt action. This intelligence is the collective knowledge and wisdom in your people’s hearts and minds. As leaders, we need to know what they know, data, and information from the business that we can’t see or possibly understand until it’s shared. We need this to make better decisions and act on key initiatives effectively.

Gaining actionable intelligence goes beyond being provided with raw data, insights, and the context for how we would use it. In simpler terms, actionable intelligence helps us make more informed choices and guides our steps in directing individual goals that support the chain of success, leading to a more straightforward path to help deliver an organization’s overall strategic objectives.

Understanding Organizational Structures: Foundations of Strategy Execution

Organizational structure refers to how a company arranges its people and resources to achieve its goals. There are various organizational structures, each with strengths and weaknesses, and the choice of structure can significantly impact how we execute. The most common structures include functional, divisional, matrix, and flat organizations.

  1. Functional structure—team members are grouped based on their specialized skills and functions. This type of structure promotes efficiency in task performance but may hinder cross-functional collaboration, which is often crucial for comprehensive strategy execution.
  2. Divisional structure—organizes team members based on products, markets, or geographic locations. A divisional structure allows more flexibility in responding to specific market demands but can lead to redundancy in functions and a lack of centralized control.
  3. Matrix Structure—combines elements of functional and divisional structures, enabling team members to report to separate managers simultaneously. This structure fosters cross-functional collaboration but can lead to power struggles and cause confusion regarding reporting lines.
  4. Flat structure—fewer hierarchical levels promote quick decision-making and a more open communication flow. However, this can often lead to a lack of clear direction and accountability, with different team members performing the same tasks simultaneously.

Selecting the best organizational structure requires carefully analyzing your organization’s size, goals, and industry dynamics. An effective structure must align the daily tasks and activities of everyone on a team with the company’s strategic objectives. The proper structure facilitates strategy execution by optimizing communication channels, focusing on collaboration, and empowering individuals.

The Connection Between Organizational Structures and Communication

Communication is the lifeblood of every organization. The flow of information impacts decision-making, problem-solving, and overall organizational performance. The chosen organizational structure profoundly influences how communication occurs within an organization.

  • Functional Structure and Communication—Communication follows a vertical path in functional structures, flowing up and down the hierarchical levels within departments. These can result in effective communication within each functional area but may hinder inter-departmental information exchange, potentially impeding the alignment of actions and goal setting within the overall strategy.
  • Divisional Structure and Communication—Divisional structures encourage horizontal communication within divisions but may limit upward communication up to and through the senior level. Clear communication channels between different divisions are essential to ensure that each division aligns its activities and outcomes with those of the leadership team above them.
  • Matrix Structure and Communication—Matrix structures emphasize cross-functional communication but can also lead to confusion. Without clear boundaries and communication protocols, team members may report to multiple managers, potentially resulting in conflicting directives and disparate goal assignments. Specific goals may need to be shared or grouped in teams to eliminate confusion.
  • Flat Structure and Communication—Flat structures promote open communication due to fewer hierarchical layers. However, this can lead to information overload or the potential dilution of goals and objectives. Leaders must ensure that critical messages are effectively communicated throughout the organization and end up being the responsibility of the right team member(s).

Direct Reports: Striking the Right Balance for Leadership Effectiveness

Once we have established the best working organizational structure, our attention needs to turn to reporting responsibilities. The number of direct reports a leader or manager oversees is critical to enhancing a workable organizational structure. This concept, known as the span of control, influences the leader’s ability to coach, guide, and ensure effective strategy execution.

  • A narrow span of control. Leaders have few direct reports, which leads to more personalized attention but slower decision-making and communication.
  • A wide span of control. Leaders overseeing many direct reports can enhance efficiency but strain communication and hinder their ability to provide individual guidance.

An optimal number of reports depends on many factors, such as the complexity of tasks, team member competence, and the leader’s style and influence.

It is crucial to strike a balance between care and discipline. Both parties must be invested in successfully executing their assigned initiatives first. A reasonable range of direct reports is four to six. This range can guarantee the personal attention and support required for individual goal achievement.

Managing Execution Success Individually

Leaders must carefully select an organizational structure that aligns with and facilitates achieving their key initiatives and strategic objectives. They must do this understanding that there is no one-size-fits-all solution. If success with execution is going to happen, it must happen individually.

Everyone on the team must understand the strategy, providing meaning for everyone at every level. The strategy must be effectively translated so each team member knows how they contribute to organizational success.

Leaders at every level must work with their reports to develop well-written goals, ensuring appropriate actions support higher objectives. These results must flow seamlessly throughout the organization, informing leaders of progress.

Accomplishing this requires consistent, two-way, candid dialogue between a manager and each direct report. Within this interchange, they work together on developing responsibilities, goals, and tasks for the direct report. This process must happen collaboratively and empower each direct report to do what is necessary to execute their commitments successfully.

Everyone must be active in the process and provide continuous, documentable feedback to leadership outlining their progress.

At this point, collaboration and teamwork, facilitated by “line of sight” decision-making, can transform strategy from a visionary or lofty goal state into actionable steps.

Breaking down silos, encouraging cross-functional communication, and building a culture of ownership is essential to ensure your organization collaborates on its strategic objectives.

Leaders and managers must also consider their span of control. It’s important to recognize the delicate balance that exists between personalized attention and efficient communication. Understanding the optimal number of direct reports required must be made considering the organization’s unique dynamics.

A well-crafted organizational structure acts as the backbone of effective strategy execution. It provides the framework for cultivating actionable intelligence to drive an organization toward its strategic objectives successfully.

This is how we create “strategic synergy.”

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