Organization design - AWS Cloud Adoption Framework: People Perspective

Organization design

Assess organization design for alignment with the new cloud ways of working, and evolve as you progress through your transformation journey.

Organization design is the process of modifying organizational structures to better enable the coordination and implementation of strategy. As strategy and priorities change, structures or organization design may need to change as well. The ultimate purpose of organization design is to improve business outcomes by influencing what people do to achieve those results. For more information, refer to the Failing & Creating a Culture of Learning blog post.

Organization design is simply one of the formal levers for improving business outcomes. Other formal levers include mission, values, strategy, goals, work processes, technology, measurement and information processes, recruitment and training, performance management, recognition and compensation, and so on. The inter-relatedness of these formal levers is characterized simply by McKinsey’s 7-S Framework.

As you use cloud to digitally transform, ensure that your organization design enables your core business strategies, processes, people, and operating environment. At some point in your cloud journey, it is assured that you will need to change many levers, including organization design, to put yourself in the best position to achieve desired business outcomes.

Start

Start by assessing your current organization design and determine how it can enable or hinder your cloud strategy. This assessment should include key characteristics that are instrumental to your cloud and digital transformation, such as innovation, customer-focus, experimentation, autonomy, and collaboration. This assessment can also be done in conjunction with value stream mapping that depicts how you deliver value to your customers, which often illustrates how the value stream may be complex and inefficient due to multiple organizational units and silos. Use your consulting partners or HR organization to conduct this assessment. For more information, refer to the Go Faster! But How? How mapping your product-development process can help you build a high performing organization blog post.

Early in you cloud journey, AWS recommends that you begin forming cross-functional cloud teams (Two-Pizza Teams), often as part of an initial CCOE or initial migration teams. For example, AWS recommends that the initial Cloud Foundations Team be comprised of cross-functional representation of cloud leader, product owner, financial analyst, organizational change acceleration, training, cloud architect, platform engineers, and security. This represents a self-contained product team that can deliver cloud solutions without needing to flow work across organizational units or silos.

Advance

Begin experimenting with product teams more deliberately. Relative to cloud, a product team is an organizational structure with formal or informal reporting lines that consists of individuals with skill sets that represent the lifecycle of a digital product. With the business or product owner defining the desired outcome of the product, the product team has the requisite skills and authority to build and operate the product without needing work processes to extend outside of the product team, thereby avoiding hand-offs and other, non-value-adding activity.

The typical product team usually consists of six to eight individuals. The creation of the product team structure is only one of the levers for improving performance and outcomes. Ensure that other best practices are followed, including establishing a single-threaded leader, business outcome focus, accountability, and empowerment.

As you prepare to scale up your cloud journey, consider conducting a Cloud Operating Model (COM) assessment. The needs of a team will be shaped by their industry, their organization, the makeup of the team, and the characteristics of their workload. It is unreasonable to expect a single operating model to be able to support all teams and their workloads. A COM is a collection of capabilities that are required to build, mature, and optimize one or more cloud environments. Different capabilities are required at different times in your cloud journey; you do not have to do everything at once, but you do have to be deliberate about the capabilities and how they are organized.

The COM assessment consists of:

  • Review the current state using the COM framework.

  • Understand current operating model.

  • Assess operating model and identify what is necessary to achieve desired business outcomes.

The COM assessment can provide recommendations for future operating models and playbooks for increasing maturity. Based on where you are in your cloud journey, beginning testing new operating models at a small scale.

A diagram that depicts cloud operating model maturity.

Cloud operating model maturity

Excel

Continue to actively monitor and obtain feedback on friction points as it relates to organization design. Iterate and refine your cloud operating model by conducting quarterly checkpoints. These checkpoints should also address other performance levers, such as goals, work processes, technology, measurement and information processes, recruitment and training, performance management, and recognition and compensation.

As your external environment and business strategies change, continue to assess and adjust your organization design. For example, if your company has gone through a merger, acquisition, or other transaction, the organization design needs to be reevaluated. Additionally, if there have been significant leadership changes due to re-organizations, retirements, leavers, or joiners, then the organization design in alignment with the business strategy may need to change again.

There is no such thing as a perfect organization design. Inherent in any design is the pressure to change it, especially when the rationale for choosing the current design becomes outdated. When you do significantly change your organization design, ensure that you follow a change acceleration framework to communicate a compelling rationale for the change.

Effective organizational design and planning must keep pace with fast moving workforce trends and must address five key components, including:

  • Size — The right number of people in the right roles, spending the right amount of time achieving given outcomes.

  • Shape — Identify duplication and inefficiency to establish the right balance of administration to professionals, junior to seniors, experienced staff to new hires, spans, and layers of management.

  • Spend — Benchmark pay and reward to pay the right price for required skills.

  • Space — Ensure the required staff resources are available in the right location to meet the current and future workload.

  • Skills — Assess the gaps in the competencies and skills that will be needed to meet future goals.

If the path to ensuring that the five key components above are addressed is too time consuming or expensive, consider using AWS Managed Services (AMS) as a potential solution. AMS helps you adopt AWS at scale, and operate more efficiently and securely. It uses standard AWS services and offers guidance and implementation of operational best practices with specialized automations, skills, and experience that are contextual to your environment and applications.

AMS provides proactive, preventative, and detective capabilities that raise the operational bar and help reduce risk without constraining agility, allowing you to focus on innovation. AMS extends your team with operational capabilities including monitoring, incident detection and management, security, patch, backup, and cost optimization. By using AMS operators to handle the undifferentiated operations work, you can free up their time to focus on enterprise self-service deployments and business outcomes like accelerated cloud migration, application modernization, and long-term cost optimization.