In theory, structure always follows strategy, according to Alfred Chandler and Henry Mintzberg. In practice, however, this is certainly not always the case. Organizations regularly define a new strategy, for example when appointing a new CEO or in response to changes in the outside world. But that does not automatically mean they subsequently change their structure as well. In fact, this often does not happen, even when it is necessary. This leads to all kinds of friction, ambiguity, and additional complexity, causing strategy execution to fall short. In this article, Casper Hendriks, management consultant, and Dolf L'Ortye, one of the founders of Summiteers, emphasize the importance of regularly assessing whether your organization is still optimally equipped to execute its strategy.

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The structure tells the story (at least, it should)

If a company has its structure properly aligned, you can infer the strategy from the structure. If an organization is clearly organized around customer groups, its strategy is probably aimed at serving those customer groups and their specific needs as effectively as possible, for example across certain geographies. Conversely, a company focused on an innovative product will have a structure organized around that product. Take an organization like Tesla: it produces cars in several countries, including Germany. Customers order online, there are no traditional dealers, and it does not really matter whether a German, Dutch, or Norwegian customer drives a Tesla. The experience is the same. For Tesla, a country-based structure is therefore less relevant. The focus is on the product, and that is reflected in the structure of the organization.

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Have the courage to change the structure

Your structure is a tool, an instrument, and that instrument needs to fit. After all, you would not use a hammer to drive a screw into the wall. Yet many companies struggle to adapt their structure, even when they know it is necessary. This is because adapting the structure involves a lot of work, such as designing the new structure with the associated responsibilities, roles, and positions. You may even need to go through employee participation processes. Another important reason is that the structure directly affects the influence of current management. Are they waiting for that? Changing the strategy is fine, but does that immediately have to affect my role? These processes can be time-consuming and complex, so people tend to leave the structure untouched. But without these adjustments, effective implementation becomes very difficult. Ambiguity arises around who is ultimately responsible for certain tasks, because the old responsibilities no longer match the new direction. Imagine a director of operations operating at the same level as the director of customers or the director of products, while under the new strategy it would actually make more sense for operations to be subordinate to product groups. After all, creating a strategy does not stop at defining the direction. It should also say something about how you will move in that direction. This means involving the right people and ensuring that your organizational structure supports that direction. Only then can a strategy become workable and successful.

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The need for regular structural review

Our advice to organizations is therefore to test more often whether their structure is still optimal for executing the strategy. This does not necessarily mean that a major reorganization is needed. It does mean making regular, targeted adjustments to ensure that the structure remains aligned with the strategy. This helps reduce complexity and increase the effectiveness of the organization.

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Need help with strategy and execution?

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