There is no one perfect way of organizing a business. Whatever method you choose, it must combine control with flexibility to be successful. Structure groups for optimum communication and balance of roles, and for maximum efficiency avoid creating too many hierarchical levels. Above all, renew the organization regularly to avert decline and fall.
Designing the set-up
Always take time and care to plan your organization, whether you are setting up a small unit or a whole business. An effective set-up greatly increases the chances of success.
Follow the Goldilocks principle - "not too little, not too much, but just right". That means having no more people than the task requires, but also building in plenty of flexibility. To help you plan the structure of the group and its personnel, make sure you know the answers to the following questions:
* What is the prime purpose of this organization?
* What are the sub-objectives?
* What tasks must be performed to meet the aims?
* What skills do the tasks require?
* How many people are needed to deliver the skills?
* What are the natural groupings of people?
* What are the desired/required results?
* What is the optimum size - that is, the minimum number consistent with obtaining the desired results?
Once you have planned the set-up according to your answers, you must ensure that everybody knows what their responsibilities are, to whom they are responsible, and who takes the final decisions.
How an organization grows
Organizations tend to grow from simple forms to complex ones. They must mutate to cope with changing demands. As an organization matures and grows larger, it passes through four distinct evolutionary phases, each ended by a revolutionary or crisis stage, which enables it to move on to the next evolutionary phase. Your organization will pass - or will have passed - through the same stages of evolution.
The Four Phases of Growth
1 Growth through creativity, ending in crisis of leadership.
2 Growth through direction, ending in crisis of autonomy.
3 Growth through delegation, ending in crisis of control.
4 Growth through coordination, ending in crisis of red tape.
Preventing stasis
During phase four more and more processes are put into place to exercise control (over everything from spending to planning), to find out what's happening, and to keep efficient records. These good intentions rapidly develop into bad practices: filling in forms, following written procedures, getting authorizations, endless meetings. The organization becomes a static bureaucracy.
To break the stranglehold of red tape and to prevent it from recurring, always remember KISS (Keep It Simple Stupid), and follow anti-bureaucratic practices at all times.
Counter Bureaucracy
Have an annual spring-clean, using the principles of zero-based budgeting: every administrative procedure and expenditure is unnecessary unless proved otherwise.
Wherever possible, use trust instead of controls.
Authorize people to miss meetings where they cannot make a contribution and to challenge the value of any forms and reports.
Reward administrative departments for task-force successes in streamlining and eliminating procedures.
Reward good ideas that cut red tape and administrative costs.
Be radical and courageous in seeking reforms.
The rule book of retailer Nordstrom begins on a single page saying "Use your best judgement at all times". The second page says "There are no other rules". Both rules are excellent.
