NDMA Home Page
Index of topics on this NDMA website
Search this NDMA website on Google
© 2024 N. Dean Meyer and Associates Inc.
Excerpt from www.NDMA.COM, © 2024 N. Dean Meyer and Associates Inc.

Executive Summary: Five Organizational Systems

the components of an organizational operating model

by N. Dean Meyer

Your organizational operating model sends signals that guide people day by day. Organizational transformation is a matter of "reprogramming" these signals.

So, where do those signals come from, and what can executives "program" in organizations?

The Five Organizational Systems

Signals come from five organizational systems:

  • Structure: the organization chart that determines people's specialties and the reporting hierarchy; and the workflows that draw those specialists together onto teams to produce results.

  • Internal economy: the resource-governance processes that decide budgets (business planning); align resources with business priorities, approve projects, and manage demand (governance); set rates; and report on resource consumption (accounting).

  • Culture: the patterns of behavior generally manifested throughout the organization.

  • Processes, methods, and tools: the cross-boundary processes, procedures, methods, skills, and technologies that enhance people's competence. Methods include best practices and traditional process engineering. Tools reinforce methods and extend people's capabilities.

    "The integration of financial processes founded on market economics, a principle-based organizational structure, and a behaviorally-based culture can drive sustainable outcomes and scalable companies."
    Joe Morgan, CEO of siY and serial entrepreneur

  • Metrics and rewards: the dashboards people use to monitor their work and adjust their behaviors accordingly; the performance metrics (KPIs) that their managers use to judge their work; and the consequences associated with performance metrics, including incentives for improving performance and performance deficiency management processes. Metrics also include benchmarks, which define what "good" is on a metric (the "green range" on a meter).

These are all attributes of the organization (not the people currently in it, nor the work they do).

What's not on the list and why: people and strategies....

Many leadership frameworks include people and business strategies. While these are very important, not every important issue is an aspect of organizational design.

Organizational systems have three qualities:

  • They are stable.

  • They are pervasive, and influence everyone's performance.

  • They are controllable, and can be deliberately designed.

Talents and skills are certainly a leadership challenge, but not an organizational design issue. People live within the organizational ecosystem, and their work is guided by its signals. But people are not something that leaders can "program." And they take their talents with them when they leave; they're not an attribute of the organizational system that lives on without them.

Strategies are also not an attribute of the organization. Customers' strategies are an input; and the organization's strategies are an output. But neither meaning of the word "strategy" is an aspect of the design of the organization.

In fact, well-designed organization continually align themselves with customers' strategies, and continually define and execute their own strategies.

This framework of five organizational systems refers to the organizational ecosystem, not the people who live within it or its inputs (e.g., customers' strategies) and outputs (including its own strategies).

The Organizational Operating Model

"Goals are about the results you want to achieve. Systems are about the processes that lead to those results."
James Clear, Atomic Habits

These five systems within an organizational operating model are used in two ways:

  1. In diagnosing the root causes of your concerns, ask, "Why would our good people cause this problem?" Keep asking why until you drill down to one or more of these five systems.

  2. Redesigning these five systems are the initiatives that comprise a transformation road-map.

By redesigning these five organizational systems, leaders can permanently modify the character and performance of an entire organization.


Free library


Speech abstracts

NDMA coaching/consulting services