Why You Want a Hierarchy of Purpose and Not Just a Hierarchy
Today, I had a matrix-like experience using ChatGPT. I was asked by a freelance journalist on LinkedIn if I had any comments to share about an article she was writing about culture and structure.
In light of ChatGPT’s recent beta release, I was curious to see how it would perform. So I asked it the same question the reporter asked me: “What are the symptoms of a company that needs a better organizational structure?”
I thought. “Not bad! There’s no indication as to why those symptoms occur, or what to do about them, but it’s not a bad summary by ChatGPT.”
I then took a flyer and asked it another question. “How would Lex Sisney redesign my organization structure?”
I think this summary captures my approach to changing organizational structures very well. But the thing is that I never used the term “hierarchy of purpose” in any of my writings. I had never heard of this term before reading this, so being called an expert was quite amusing. The concept sounded cool, however, and I liked it a lot. So I asked ChatGPT, “What is a hierarchy of purpose?”
Holy Toledo. My work has been defined by ChatGPT in a way I haven’t even articulated to myself. For years, I have been teaching a hierarchy of purpose model without ever referring to it as such. It’s kind of surreal.
After that, I wondered, “Who came up with this hierarchy of purpose concept and why hadn’t I heard of it before?” So I asked ChatGPT, “Who coined the phrase hierarchy of purpose?”
Too funny, right? Again, just so we’re clear, ChatGPT is making this interpretation of my work. Although I haven’t used the term “hierarchy of purpose” before, I like the concept it conveys. It captures the spirit of my work in a new and insightful way.
Anyway, the novelty of ChatGPT will eventually wear off and the reality of needing to design a hierarchy of purpose will remain. So how do you do that?
How to Design Your Structure Using a Hierarchy of Purpose
The most important thing to remember when designing your company’s structure is to design it to support the business strategy, rather than to satisfy perceived internal corporate needs.
For instance, in my book Designed to Scale, I share a story of a company that wanted to get my opinion on their org “structure.” They put a slide on the shared zoom […]
What is Organizational Physics? #ChatGPT
Lex Sisney is a business coach, speaker, and author who has developed a framework called “Organizational Physics” to help businesses improve their performance and achieve their goals. According to Sisney, Organizational Physics is a science-based approach to management that combines principles from physics, systems theory, and human behavior to help organizations operate more effectively.
At its core, Organizational Physics is based on the idea that organizations are complex systems that operate according to certain laws and principles. By understanding these laws and principles, businesses can optimize their performance and achieve their objectives.
Some of the key principles of Organizational Physics include:
Alignment: Aligning the goals, strategies, and actions of an organization to ensure that everyone is working towards the same objectives.
Integration: Creating a system of interconnected processes and functions that work together to achieve the goals of the organization.
Flow: Ensuring that work flows smoothly through the organization, minimizing bottlenecks and delays.
Resilience: Building an organization that can adapt to changing circumstances and remain effective over time.
Performance: Measuring and tracking key performance metrics to ensure that the organization is achieving its goals.
Overall, Organizational Physics provides a holistic and scientific approach to managing organizations, helping businesses to improve their performance, increase their resilience, and achieve their goals.
As I write this, #ChatGPT4 has just been released in beta. I am asking it questions about my work and philosophy for scaling companies. I thought you might find value in its concise responses. If you are inspired to gain a deeper understanding of the Organizational Physics approach to scaling-up, I invite you to check out my books and articles.
What is Entropy? #ChatGPT
Entropy. It’s a bitch.
According to Lex Sisney’s Organizational Physics framework, entropy is a concept that refers to the tendency of an organization to become disorganized and chaotic over time if left unchecked.
Entropy is the opposite of order and represents the degree of disorder or randomness in a system. In an organizational context, entropy can manifest in several ways, such as:
Lack of alignment: When different parts of the organization are not working towards the same goals or are not following a common strategy.
Inefficient processes: When processes are slow, redundant, or wasteful, leading to delays, errors, or frustration.
Poor communication: When information is not flowing freely or is not being shared effectively, leading to misunderstandings or missed opportunities.
Resistance to change: When the organization is resistant to change or is unable to adapt to new circumstances, leading to stagnation or decline.
Sisney argues that entropy is a natural tendency that all organizations face, and that it must be actively managed and reduced to ensure long-term success. He also emphasizes the importance of balancing the forces of producing, stabilizing, innovating, and unifying to counteract the negative effects of entropy.
In summary, entropy is the tendency of an organization to become disorganized and chaotic over time if left unchecked, and it is a key concept in Organizational Physics.
As I write this, #ChatGPT4 has just been released in beta. I am asking it questions about my work and philosophy for scaling companies. I thought you might find value in its concise responses. If you are inspired to gain a deeper understanding of the Organizational Physics approach to scaling-up, I invite you to check out my books and articles.
What is PSIU? #ChatGPT
The 4 Styles. Each of us has some combination of the Producer, Stabilizer, Innovator, and Unifier styles (PSIU)
PSIU is a personality profiling tool that is part of the Organizational Physics framework developed by Lex Sisney. PSIU is an acronym that stands for four basic personality types or “energy patterns” that people can exhibit in a workplace setting:
Producer: People who exhibit the Producer energy pattern are focused on getting things done and achieving tangible results. They are often competitive, action-oriented, and driven to succeed.
Stabilizer: People who exhibit the Stabilizer energy pattern are focused on creating stability and maintaining order in the workplace. They are often detail-oriented, process-driven, and risk-averse.
Innovator: People who exhibit the Innovator energy pattern are focused on generating new ideas and pushing the boundaries of what is possible. They are often creative, visionary, and unafraid of taking risks.
Unifier: People who exhibit the Unifier energy pattern are focused on creating harmony and building relationships in the workplace. They are often empathetic, collaborative, and skilled at conflict resolution.
Sisney argues that by understanding the PSIU energy patterns, managers and leaders can better understand the strengths and weaknesses of their employees, and can leverage these patterns to build more effective teams and organizations. He also emphasizes the importance of creating a balanced team that includes representatives from each of the four PSIU energy patterns, as this can help to ensure that all aspects of the organization are properly addressed.
As I write this, #ChatGPT4 has just been released in beta. I am asking it questions about my work and philosophy for scaling companies. I thought you might find value in its concise responses. If you are inspired to gain a deeper understanding of the Organizational Physics approach to scaling-up, I invite you to check out my books and articles.
The Second Business Unit: How to Manage It
The purpose of this article is to talk about the launch and growth of your second business unit, which could be a new product line or a new geographic market that complements the core or original product line or market.
The main point I want you to take away from this article is this: If your company is having trouble launching and growing its second business unit, then you likely need to address a design flaw in the original or core business unit first.
My own experience as a CEO was that I struggled to lead the launch of the second business unit against the incessant demands of the core business because I didn’t understand this concept well enough.
A majority of my coaching clients are looking for help with launching their second unit, whether it’s a new product or new market, while thinking that things are going pretty well in their core unit. They just need some guidance on launching the second. But after diving into the situation, the client CEO quickly realizes that for the second unit to thrive, the core unit must first evolve.
Since this issue is not well understood, I hope to shed some light on it in this article and share my approach to solving it.
The Health of the Mother Determines the Growth of the Child
Fundamentally, what you’re trying to achieve with the launch of a second business unit is to have the “mass” of the core business executing swiftly and profitably against changing external and internal conditions and with enough capacity and wherewithal to simultaneously pilot, nail, and scale the second unit.
What I didn’t appreciate fully until I had been through it as a CEO myself is that despite all our attempts to free up the second unit to be autonomous from the mothership, it is the health and capacity of the mothership that still controls the destiny of the child.
The irony is that most of us don’t realize that we actually have a design flaw in the mothership until we attempt to launch the child.
Let me give you an analogy. If there’s a crack in the foundation of a building, is it a problem? If it’s a small one or two story building, it’s probably not a big deal. Patch it up. But if it’s a large multi-story building, a crack in the foundation can be a very big problem indeed. The whole thing risks collapsing.
Similarly, the design flaw in the main business has probably been present for years. But until the second unit was added to its foundation, it wasn’t known or if it was, it wasn’t seen as a big problem. However, this hidden design flaw is now causing problems for both units and the whole thing is at risk of collapsing, or […]
A New, Revised Edition of Organizational Physics Has Just Been Published
I’m pleased to announce that a new, revised edition of Organizational Physics is now available in international hardcover, Kindle, and Audible.
What’s New in the Revised Edition
When I set out to write Organizational Physics ten years ago, I knew then that its underlying principles were sound. I had both the experience of using them as a CEO and as a business scaling coach to other CEOs. I could identify parallels spanning across disciplines as diverse as business, nature, sports, and the laws of physics. My thinking then, and still today, is that if I can spot a principle that cuts across domains, then I can take it to the bank.
In publishing this revised edition, I’m happy to say that the original principles I introduced in the first edition of this book have not changed. On the contrary, my appreciation for their pervasive power and influence over every aspect of life, business, and society has only deepened.
The primary changes between the first and revised editions are that, in addition to updating the graphics and typeface, I’ve added five case studies that provide insider accounts from other CEOs of what it’s really like to scale a business, its ups and downs, and how to leverage Organizational Physics principles to your sustained advantage.
I want to express my sincere gratitude to the CEOs who contributed these case studies, to the many others who contributed testimonials, and to all the clients I’ve coached over the past decade. You make my work possible, and it is transformative because of you.
To new readers, I hope you enjoy and get lasting value from the revised edition of this book as thousands of other business leaders have before you.
To your success,
Lex Sisney
Author and Business Scaling Coach Organizational Physics Inc.
Designed to Scale in a Borderless World
My friend @DavidNilssen has just launched his new pod cast #thefutureisborderless and I was the sacrificial first guest. 🙂 David is a perpetual learner and I’m excited for the results. In this podcast, we discuss the big ideas behind my new book Designed to Scale. You can subscribe and listen to The Future is Borderless below. Enjoy.
YouTube – THe Future is Borderless on YouTube
Spotify – The Future is Borderless on Spotify
The Cultural Problems at Coinbase Aren’t Cultural
I found the recent employee petition to fire senior leaders at Coinbase—including the President & COO, Chief Product Officer, and Chief People Officer—quite fascinating. If you haven’t seen it yet, it’s worth a quick read. There’s a hidden reason these three roles are being targeted besides their seniority.
To summarize the petition, as the crypto market has collapsed, some members of the employee base are pointing fingers at leadership and calling for the ousting of the President & COO, Chief Product Officer, and Chief People Officer as the primary culprits for the company’s issues. I am sure that there are long-held grievances behind this petition that are only now coming to light because of the stress and fracturing caused by the crypto market collapse.
Certainly, a big part of Coinbase’s problems is that they prematurely scaled and over-hired. They are now laying off 18% of their workforce and that may not be the end of it. Coinbase isn’t the first hyper-growth company to make the mistake of presupposing sustained market demand, and it won’t be the last one either. But what remains unrecognized is that Coinbase actually has some some classic flaws in its organizational structure that are contributing to its breakdowns.
The employees don’t recognize these structural flaws—only the symptoms—so they are pointing fingers at these leaders to get them ousted. CEO Brian Armstrong doesn’t recognize these flaws either, so he is pointing fingers right back at the employees to “grow up or get out.” The irony is that, if these structural flaws remain, the leaders may change but the underlying issues at Coinbase will remain.
None of these structural issues that I’m going to point out are very apparent during the good times. In fact, many of Coinbase’s structural choices seem perfectly rational and normal. But when there’s a serious crisis, like a collapse in the crypto market, the harms of having a flawed structure become impossible to hide. Warren Buffet said it perfectly: “When the tide goes out, it’s easy to see who has been skinny dipping.”
So what are these organizational design flaws at Coinbase? You can see them described in the employee petition which is targeting the ouster of the President & COO, the Chief Product Officer, and the Chief People Officer. To be fair, I don’t have insider knowledge on the Coinbase org structure so I’m making some assumptions based on a very limited data set. But if we just go by titles alone, these are the structural flaws that are contributing to its chaotic performance and angry employee base.
1. Queen of England. CEO Brian Armstrong put himself into a classic Queen of England structure by adding a President & COO beneath him to oversee multiple major areas. The intent of the Queen of England structure is […]
Subkit Interview
Subkit did a nice interview of me this week under Go Solo. One piece of advice that I would share with new aspiring coaches, and that I didn’t mention in the article, is to have a process to take clients through. Meaning, don’t sell yourself. Sell your process. Of course, having a process doesn’t mean there is no flexibility in the client engagement. Every client is unique. But the process itself provides the architecture to deliver results for each client. Anyway, having a process to follow isn’t something that I fully appreciated when I launched my coaching practice twenty years ago. It’s one of those things where the value is only fully realized in hindsight and I would consider it essential. Hope this concept helps others in their own coaching journey.
A New and Better SWOT Analysis
SWOT is a solid framework for strategic planning. The concept is pretty simple and has been around since the 1960s. The idea behind it is that, to achieve operational excellence and drive the right strategy, you should assess your organization’s internal Strengths and Weaknesses and its external Opportunities and Threats (SWOT).
I like the SWOT analysis framework a lot. However, if you’re like me, you may have found that the actual usable outputs from a SWOT analysis have not been as effective as you had hoped. The “data” ends up being bullet points. The “insights” don’t reveal the root cause. The process generates a lot of opinions but it can feel harder than it should be to align the team on concrete action steps based on a SWOT analysis.
It’s time to solve these problems. It’s time for an evolution of the SWOT. What might this look like?
After working with several hundred companies around the world, I have developed two powerful tools that you can deploy immediately to take your SWOT Analysis to a whole new level.
I call them the Entropy Survey and the Top-Level OKRs Strategy Survey. Here’s a high-level summary of what you can achieve with them and how they relate to SWOT:
- Use the Entropy Survey to better assess your company’s internal strengths (S) and weaknesses (W).
- Use the Top-Level OKRs Strategy Survey to better assess its external opportunities (O) and threats (T).
These two tools each complement the other. Using them provides three big advantages when compared to a traditional SWOT analysis:
- It allows for better and faster data gathering.
- It provides powerful mental models for your team to visualize its strengths, weaknesses, opportunities, and threats.
- It identifies the root cause of problems so that you and your team can drive continuous improvement against the right (and evolving) business strategy.
If you’d like to learn more, watch these two videos below. If you like this way of approaching a SWOT analysis, register and take both tools for a free test drive. You will experience how much more effective a SWOT analysis can be.
Assessing Internal Strengths and Weaknesses
Assessing External Opportunities and Threats
If you like this way of thinking about SWOT, register to test drive both tools for free here.
The 5 Steps to Designing a New Structure
There are 5 steps to follow when designing and implementing a new organizational structure:
Step 1. Map Key Process Cycles
Step 2. Map Functions
Step 3. Clarify & Adopt Structure
Step 4. Place People
Step 5. Plan & Execute Roll Out
Learn more:
Test Drive PSIU Assessments
Buy the book How to Think About Hiring
Buy the book Designed to Scale
Buy the book Organizational Physics
Listen to Designed to Scale on Audible and iTunes
I’m happy to announce that my new book Designed to Scale is now available on Audible and iTunes.
Before you buy, I’d like you to know that this is a VERY hard book to listen to as audio only. There are core concepts and visual images that require reading and reflection. If you prefer audio books, make sure to download the Audiobook Images PDF that is included with the audiobook to guide your listening. I’ve also been recording short videos on key concepts from the book that you can find links to here.
Cheers,
Lex
Start your new structure by thinking horizontally
When designing a structure, think horizontally instead of vertically. In this video, you will see how to lay out an ideal Customer journey, a Product journey, and an Employee journey as inputs into your new structure.
Buy the Book Designed to Scale.
How to Stack Your Structure with the Best Talent
No structure is perfect. No new hire is perfect. There are always trade offs. Be more conscious of those trade-offs upfront so that you can make the best decisions possible and stack your new structure with the right talent.
Learn more:
Test Drive PSIU Assessments
Buy How to Think About Hiring at:
Buy Designed to Scale
Introduction to the 4-quadrant Structure Map
This is an intro video to the Organizational Physics 4-quadrant Structure Map tool.
Download the Structure Map template.
Buy the book Designed to Scale on Amazon.
The Structure Map is a powerful thinking tool to deploy the 6 Rules of Structure and identify any current structural breakdowns occurring in your business, to design the right new scalable growth structure, and to have easier and more pointed structural conversations with your team.