Stop Chasing New Tech. The Real Transformation is Your Org Chart.

Your company is designed to produce exactly what it currently makes. To change the output, you must first redesign the machine.

These last few weeks, I’ve been thinking more about Conway’s Law and its implications on how we design, build, run, and modify our businesses. As a quick reminder: A few weeks ago, we touched on Mel Conway’s seminal article “How Do Committees Invent?” and his insight that your product ends up shaped like your org chart. Conceived in the late Sixties to describe the then-nascent software industry and its products, you can see his observations play out in many other industries across the spectrum.

“I can’t help you with this, let me connect you to a colleague in another department” is the classic manifestation of a company shaping its process (in this case, it’s customer support interaction) after its org chart. Tony Hsieh’s Zappos turned this approach on its head, offering exceptional customer service by ditching the org chart and empowering its CS agents to make decisions and act on them in the moment, and, in turn, create a beloved ecommerce giant in a notoriously hard-to-operate industry.

I discussed this idea in my recent podcast conversation with John Fallon, former CEO of the world’s largest learning company, Pearson PLC. John led the highly complex transformation of Pearson PLC. He turned a diversified media company – owning giants like Penguin Random House and The Financial Times alongside its traditional textbook business – into a digital-first company focused solely on learning and education. In our conversation and his excellent new book, “Resurgent: How Established Organizations Can Fight Back and Thrive in an Age of Digital Transformation”, John points out how much this change requires you to rethink your organizational structure. As Conway said, “You ship your org chart.” Want to change what your product is, how it looks, and how you market, sell, and service it – you have to change your org chart. Not as a consequence after the business change, but as a necessity before you even think about changing your product.

“What you find is that a lot of large incumbent organizations are probably a strong mix of bureaucracy and meritocracy, and they don't have a lot of adhocracy in them because that's not the way that sort of decisions have been made.”

And here is where this all becomes (even more) interesting: Scott Brinker recently coined “Martec’s Law” – and if you’re skeptical of yet another business “law,” think of it as a crucial observation. It states that technology changes exponentially, while organizations change logarithmically. And it matches something many of us have seen play out in the wild many, many times: A significant gap between the capabilities offered by new technologies and a company’s ability to absorb and leverage them.

Consider that today many of our companies are pulled forward into change due to technological advancements – from IT infrastructural changes, to robotics, AI, and everything in-between and further afield. It’s a lot. And it’s (seemingly) coming faster and faster. This leads to a quintessential question: How to adapt organizational structures and strategies to keep pace with rapid technological advancements? Especially when you take into account that your organization can only absorb so much change?

My conversation with John crystallized a key insight: when tasked with transformation in an uncertain environment, a leader’s first move must be to address the organizational structure. It’s tempting to spend your limited “change tokens” on more visible initiatives. After all, redesigning an org chart is rarely glamorous – it’s fixing the plumbing, not picking the faucet. But this foundational work is what actually delivers results. Before you can chase the next technological wave, you have to build an organization that can surf it.

@Pascal