In my experience, nothing causes more angst, discussion, and hand wringing in a business organization than an organization chart. Don’t believe me? Leave a blank org chart template on a table in the cafeteria and see what happens.
Theories on optimizing organization designs come and go like fad diets, but they all boil down to a choice between one of two basic strategies - the “Talent” approach (get the best people and fit the organization to maximize their talents) versus the “System” approach (figure out the best organization and processes and find the right people to run them). One useful way to illustrate these two alternatives is the examples of two legendary football coaches – Don Shula and Chuck Noll
Don Shula was a very successful coach for many years, and his approach was to find the best players and athletes he could get and then design the plays and formations to make the best use of their talents. In 1982-3, Don Shula had a quarterback named David Woodley. David was no star, but he could scramble and throw on the run. Shula designed an offense to make use of that and the team went to the Superbowl that season. The following year, Don drafted a rookie named Dan Marino, whose style was the classic “statue” type quarterback. He threw out the old playbook and started over with a new one. They won many games together.
By contrast, Chuck Noll had a system at Pittsburgh and drafted players to fit into it. He found a guy named Franco Harris who was passed over by all the other teams, but who flourished in Noll’s scheme. And the Pittsburgh defense was very successful year after year, even after Noll left, with a varying cast of players but essentially the same scheme.
Both coaches were successful, and both strategies can be equally effective. There is no one best system. The two systems do, however, tend to fall in and out of favor over time. The system approach was all the rage in the early days of “management science” and business thinking. The late 1980’s saw a distinctive shift toward favoring the talent approach – a situation that continues to this day.
And some strategies tend to be more prevalent in certain industries. Talent based approaches tend to dominate with internet companies, app writers, biotechs, and the like for obvious reasons. But system approaches are still found in many industries where standardization is critically important like fast food, chemicals, accounting, and many others.
Each approach has its own advantages and challenges. Talent based organizations tend to change the org charts a lot and move people around within the company extensively, creating a constant churn of change. System oriented companies are more likely to have turnover, with people entering and leaving the company often and movement across the company tends to be less frequent.
So neither system is perfect. This explains why whenever I ask an executive which system his or her company uses, the answer I hear most often is “both”, or “we are a hybrid”. And that is the one sure way to create an organizational mess.
Hiring people for raw talent and then trying to force fit them into a fixed structure is usually a disaster. Most will chafe and fight the system for a while, and then leave. Putting people accustomed to a system environment into a talent based organization creates “lepers” or outcasts who typically find ways to carve out roles for themselves and then hang on until they can find some other place.
Large organizations can have both approaches under one umbrella – maybe one division operates on a talent basis and others on a systems set up, or sometimes manufacturing is systems but marketing is talent. That can be workable, but in the end, one has to dominate. A look at the last few CEO’s – where they come from, how they got to the top – will tell you all you need to know.
So the best run companies are those that pick one organizational strategy and stick with it. Both Chuck Noll and Don Shula were very successful coaches for many years.