So what have we learned from organizations we've worked with? Many of the companies we work with have been larger, more complex organizations. And I think that skews a little bit of the best practice. But what we've learned is that flatter, simplified structures, works better for execution. This is pushing decisions closer to the action, empowering managers to make those decisions on their own rather than deferring to someone at the top of the organization. Here's an example of a company that I think it's very interesting how they've just restructured. Now this is Google, that now has turned alphabet. And prior to this Google ran all of it's activities through one functional structure. But recently what they've done is they created alphabet which has Google. You can see in the bottom left part of this, Google still exist but they have other business units that take care of some of the other things that Google has gotten into, like Calico. Calico is a biotech firm that's focused on life issues and health issues. It's very specific to this particular segment. There's Nest, which focuses on home security and the technology of a smart house And there's number of business units, they're not even all represented here on the far right. We see Google+ or GoogleX, and that's one of my favorite businesses. This is all the top secrets stuff, like driver was cars and the flying car and different kinds of things that they're working on. And Larry Page said when asked why change the structure, why go from Google to Alphabet, there were a series of things that were happening to Google. It had become too big and too complex and unwieldy. They had a consensus approach to decision making, they just frankly took too long in a large complex organizations and they weren't agile enough. There was a lack of transparency or visibility or even how these decisions were being made. So if you look at that, they needed a different way of clustering the activities in the organization that was cleaner and more straightforward. And if you think about the international growth of this company and the cultural differences It really became a challenge as well. And so they had a lot of inefficiencies. They had duplication of effort, poor execution, and it was hamstringing the company's ability to perform. So the new approach to structure, and in fact the new organization. Larry Page, the CEO, said the goal is to make a cleaner and more accountable organization, improve transparency and oversight of what we're doing. This is an interesting element of the way Google is going to market the way they're organizing their businesses. Now, so, flatter, simplified structures, empowering decisions close to the action But the second is streamlining processes and work flowing. Getting waste out of the system and improving value add, so the company is moving quicker with fewer defects, higher quality, and more efficiency. And the third key thing is improving access and connectivity. These are investments in technology that give people the data they need right away, real time, so they can make decisions. One of the things we've learned is that often times, information systems are used to report data higher up the organization. But it's the reverse that's necessary for execution. That data has to inform decisions in the business units. And so these are three of the key things that we've seen that, in terms of the architecture of the organization, are representing best practice for many firms. So if we review this, what can we take away? Architecture can be a help, and it can be a hindrance. Strategy execution means getting the right design for your strategy. The effect is rarely neutral, it can help you and propel you or the architecture can hold you back. Most elements of organization design help manage this uncertainty to give you the information that you need to make decisions in a clean way. And execution depends on proving that clarity. Continually focusing on taking complexity out of the business, helping the organization focus, and the information to flow.
