Some thoughts on “organizational design”.

13 April 2026

When a business is small, you don’t need a formal approach to the design of the organization. This is because you have a small number of talented people who are incredibly versatile and who can be depended upon to deploy discretionary effort to solve whatever problems arise.

But as the organization scales, it reaches a point where this informal approach to resource allocation ceases to work. Worse still, this approach actually transforms minor problems into much bigger ones!

The complexity of the organization, combined with the enormous leverage you get from division of labor, means that almost all persistent problems are now organization-design problems rather than human problems.

This change takes managers by surprise. Problems that could once be solved by middle management now must be solved by the senior leadership team. And all levels of management now require an entirely new playbook.

The traditional “optimize everything” approach is now highly destructive to the productivity and the very fabric of the organization.

Why is “organization design” not a common subject for discussion? We have valuable tools in the TOC community, but few (if any) folks use them for this purpose.

What say you?