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Tuesday, March 13, 2012

The Secret Is In The [Organizational] Framework

10:47 AM Posted by Deepak Nayal , No comments
When Apple crossed $500 billion market cap few weeks back, the world went abuzz with its achievements and the reasons behind success of its products (like that ever stopped). In the special memorial Apple event, held in Oct 2011, to pay tribute to the life and work of Steve Jobs, Tim Cook made a brilliant statement that sounds simple and yet holds the essence of the secret behind Apple's success. He said about Steve, "Other than his family, Apple would be his finest creation". That is so true. The reason Apple is able to make such amazing products is that Apple itself is a great product with the right framework. 

The book "Inside Apple" does a brilliant job of explaining how Apple is structured and is able to work with great secrecy, speed and tight integration between different divisions. The speed at which decisions are made and things get done is highly unusual in corporate world. It is this organizational framework, along with the cult status amongst its fans, that Apple is able to come up with such hit revolutionary products one after the other, while its competitors are struggling to follow its lead. While its competitors are trying to take a product-based view of this problem and trying to beat Apple by coming up with a better product, I believe the problem they are facing is more fundamental. They first need to optimize their own organizational framework to enable more agility and integration within the organization, and only then will they be able to come up with great i-killers. 
Financial Impact of Apple's Organizational Framework

The organizational framework provides you with the structure and processes to play with. When you put the right people in the right framework (yeah yeah, I know; way easier said then done), magic starts to happen. This magic can be seen in other tech leaders such as Google and Facebook as well. As the COO of Facebook, one of the most important tasks that Sheryl Sandberg is performing is ensuring that Facebook's organizational framework does not get overwhelmed by the speed of growth. For example, while in many companies, software release and update processes are bureaucratic and require many approvals and weeks, if not months, before any code change is made live, Facebook pushes major code changes every week. While Facebook's codebase is way more complex than average software, the company is able to constantly change and update it, because of the way the organization is structured, release processes are laid and employees are empowered. It has the right organizational framework - for its needs - that has evolved over time, and it is important that Facebook does not lose it while growing at breakneck speed. 

I have worked with many enterprises to see how companies become victims of their own growth. Initiating and delivering even a small project can take months, require many approvals and tens of meetings. The problem is not that these companies do not have the right framework; very few do anyway. The problem is that they do not try to optimize their existing framework. Senior management focuses on strategy, vision, markets, etc. and not much attention is paid to getting the basics right first. The result of this skewed attention is that a lot of strategies and plans either fail or do not take off - payback for the lack of effort that has been put in getting that organizational framework right. However, even with these inefficiencies these organization continue to survive and even grow. I believe one of the core reasons for this to happen is that once a company crosses a stage of growth, physics takes over. The huge size of such organizations allows them to keep going, on their own, without putting in too much effort. But then every once in a while a competitor comes from behind, whizzes past these slackers and forces them to think and act faster or risk oblivion. 

So what makes the right organizational framework? Well, the answer to this question is the same as any similar generic open ended question. It depends. The right organizational framework will be different for each company. There is no single universal right framework that works for everyone. There are however two principles that I believe should be built into all organizational frameworks: 1) be agile and 2) keep iterating. The reason I believe that these two principles should be part of every organizational framework is that the business environment is never stable and so no matter how smart you and your team are, you will never be able to pin the right organizational framework in one shot. By being agile and iterating, you will be building a learning process in your organizational DNA. There are problems in every company. The fact that there is a problem is not really an issue. The thing to consider is how your company is geared to handle those problems. Most of the enterprises are heavy, slow, inefficient and bureaucratic. Putting in place an organizational framework that allows company to be agile and learning will allow it to evolve with time and turn into a smart entity capable of producing successful products and services.

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