SDO Model of an Organization

I'm constantly looking for new ways to think about organizations. New perspectives don't always lead to insight, but without them, any insight remains elusive. To create this model of an organization I started by aggregating all of the types of activities or work that is done inside the organization into three categories. These categories are much different than you'd find on a typical organization chart. In fact, no matter where someone is on the organization chart, they will find themselves engaged at some time or other in each of these major activity aggregates.All work can be divided into strategy, design or operations. In the most mechanical of companies, the operations component is streamlined to the point where human beings simply manage exceptions or perform repetitive tasks that are not yet automated. Well executed operations yield efficiencies that are necessary for competitiveness, but all operations are basically entropic, meaning that their effectiveness and coherence decays steadily over time unless work is done on them. This sounds more complex than it really is. It means that if a company continues to produce the same things in the same ways, that it will lose competitiveness, and that loss of competitiveness, if unaddressed, leads to a diffusion of the energy in the organization, similar in metaphor to the effects of entropy in physical systems. One definition of synergy is the amount of energy in a system that cannot be used to do work. Metaphorically in organizations this is the amount of energy expended by people and systems that cannot be used to create net positive value. (see: http://en.wikipedia.org/wiki/Entropy)The work that must be done on operations to keep it from increasing its entropy and eroding its ability to create value is called strategy and design.

The purpose of strategy and design is always to provide some operational (including perceptual) differentiation in the marketplace that will yield an increase in some measurable aspect of value--price, performance, presence, scale, share, margins. Strategy tends to set direction. Even deep in the organization, people formulate local strategies as they figure out how to get work done. A local strategy might be a goal or objective, or a direction in which an individual decides to take his work or his department. Goals in this sense are the simplest types of strategies. Design is the process of translating the strategy into something that can be made operational. Design may involve the creation of a new product or service, or it may work on improving products or services. It may address the layout of the physical environment, the structue of departments, or the operating guidelines for teamwork.In the end, strategies and designs are translated and compressed into operational algorithms like procedures manuals, automated processes or rules of thumb because only a widely distributed and executed algorithm can create efficiencies. Without this compression and absorption into the culture, the strategies and designs will fail and the entropy of operations will lead to an unfavorable position in the marketplace. Even in the simplest of companies, all strategy and all design is collaborative--people must work together to achieve something because they can’t do it alone. They must decide what they want to create together. They must uncover something new or innovative about what they want to create because it’s usually been done before or has other competition for it. They must form a strategy for positioning their creation. They must make the creation understandable to the marketplace--this is the process of creating products and services. They must design the algorithms by which many people can learn to make and deliver the products and services, and useful structures to help people organize their efforts. They must also craft plans and strategies that allow for the easy adoption of what they’ve created by the rest of the organization.The sole glue that holds all of this together is that somehow, and in some way people must be encouraged to work together--to collaborate with one another. Typically, the challenges are too difficult for individuals to solve alone and more important, no one individual or even senior management team has the breadth of perspective to be able to adequately address the challenge of creating strategy and designing ways to fold it into operations. The people who have front line interaction with the customer or direct access to the manufacture of a product or the delivery of a service have a perspective that must be added to senior management perspectives in order to create a response requisite with the complexity and reality of current conditions. Without this vital competency of collaboration, organizational friction will cause damage to the company, damage to its people, or both. Our premise is that people support that which they help to create, that creativity is natural, that collaboration is natural, and that an environment can be created where creativity and collaboration are protected and where great designs and strategies can emerge and become operationalized.