Org Charts: Do they Matter Still?

Thornton A May is a longtime industry observer, management consultant, and commentator.

Before the financial meltdown, were the organizational charts of Lehman Brothers and Bear Stearns (both now extinct) noticeably different from the organizational arrangements at Goldman Sachs (whose brand and revenue are now ascendant)? Not really. The fact that similar organizational charts can lead to fundamentally different business outcomes prompts one to ask whether org charts still matter. Do they convey the information we need?

Org charts are maps, of sorts. There is a passage in Shelby Foote’s masterful history of the US Civil War describing Robert E. Lee poring over a map of the Virginia countryside in preparation for the battle at Chancellorsville in 1863. Lee, according to Foote’s account, “kept peering at a map spread on his knees; he peered so intently, indeed, that he seemed to be trying to make it give him information which it did not contain.” That, unfortunately, describes too many of today’s business leaders bent over their org charts. They are trying to make those ‘maps’ give them information that they do not contain.

But org charts can be devised such that they contain far more relevant information. The org chart was invented, not long before Lee camped at Chancellorsville, to help the trains run on time. The world has changed much since the early days of the industrial revolution. The organizational charts of most corporations have not. Thus, it’s not surprising that the key elements of 21st-century value creation are not depicted on most org charts.

At an abstract level, organizations can be conceptualized as amalgams of responsibilities and accountabilities (what specific people are supposed to do); knowledge (what people know); processes (how things get done); interactions (the combination of people, knowledge and process); and futures (what comes next).

Traditional org charts depict only the first element of organizational design -- responsibility and accountability. Think what you could do with one that depicted some of those other elements.

Take interactions and knowledge, for example. Corporate anthropologist Karen Stephenson, a frequent contributor to research being conducted at the IT Leadership Academy in Jacksonville, Florida, has rightly been recognized as a pioneer in the science and practice of social networking. Among her accomplishments, she has developed complex mathematical algorithms to assist in our understanding of the interactions that are critical to value creation.

This means it’s possible to devise mathematically derived social network maps in your enterprise. You can go beyond an org chart of the visible organization to a map of the more important, informal organization, which is really a complex web of interactions: face-to-face and device-to-device exchanges of data, information, knowledge, intent, aspiration, and angst. Using the tools of social networking renders these interactions more understandable and more manageable.

And ‘how things get done’ and ‘what comes next’ are also not out of reach of organizational maps. Take, as an example, what’s happening in the innovation department at McDonald’s. Informed by senior management, the innovation team has created an ‘organizational/operational’ spreadsheet that assembles a portfolio of possible futures. These futures, termed ‘restaurant concept cars’ by observers, are carefully vetted by franchisees and rigorously stress-tested to make sure they will work in the real world.

Without a doubt, this puts the people who invented the quick-service restaurant industry ahead of the curve in how they think and pre-live the future. How far ahead of you will you let them get?