4 Organisational Types

If your organisation is designed for the world of 1910, no digital strategy will save it! But redesigning how it works can.

This chapter examines one of the most important and fascinating themes for implementing strategy in a digital world: how organisations are designed and how they behave. The content is based on the thought provoking work of Aaron Dignan, from his book Brave New Work (2019). This chapter and the next are my summary of the key points from Aaron’s book. I hope they inspire you to read the original.

Even the smartest strategy will fail if it sits inside the wrong organisational system. This is magnified in a digital world. Many firms still operate according to management principles created at the birth of industrial manufacturing — with rigid hierarchies, rule-driven behaviour, and permission before action. These ‘Legacy Organisations’ persist even as the world around them becomes faster, more complex and more unpredictable.

By contrast, ‘Evolutionary Organisations’ have totally different assumptions about people, complexity and work. They treat organisations as living systems, not machines. They assume the best of people, embrace complexity rather than deny it, and use flexible structures such as self-organising teams.

To support leaders understanding these realities, we cover three topics:

1. Legacy Organisations: their characteristics, challenges, and the systemic patterns that hinder agility.

2. Evolutionary Organisations: an alternative organisational paradigm built on people positivity and complexity consciousness.

3. The Operating System (OS) Canvas: a practical framework for diagnosing where an organisation is stuck and structuring its strategic implementation.

Together, these topics help leaders understand not just what must change, but how to design an organisational system capable of realising strategic intent. The change-journey will continue as we move into Chapter 5, which will explore practical, pragmatic techniques to adopt Evolutionary Organisation principles and practices.

4.1 Legacy Organisations

4.1.1 Rigid Hierarchy

How many times have you heard colleagues saying:

‘I don’t have enough time to do my work, but  my days are packed with endless meetings’.

‘I don’t have the information we need to do my job, but  I’m drowning in emails, documents, data’.

‘My boss wants speed, innovation and agility but  I’m subject to so much process and bureaucracy’.

‘We work in teams but  the team members don’t trust each other’

Or, do you recognise colleagues who follow one of more of these instructions?

You may be interested to learn that these instructions are part of a WWII Document The Simple Sabotage Field Manual (1944)  (Jones, 2015) which humorously highlights behaviours that block organisational effectiveness. And many are shockingly recognisable today. Excessive rule-following becomes a form of organisational self-sabotage.

Or do you recognise this form of organisation chart?

Although this is typical of many so organisation charts today, it’s actually from the Organisations of the Union Pacific and Southern Pacific Railway Systems, 1910!

Aaron Dignan explains that Legacy Organisations (‘L-Orgs’) are structured around strict hierarchies. Authority flows downward, tasks flow upward for approval, and managers act as controllers rather than enablers.

Classic L-Org signs include:

1. Long chains of command

2. Narrow decision rights

3. Layered approvals

4. Command and control-oriented management

This design is a product of early industrial-era thinking, where the primary assumption was: ‘Managers think, workers do.’ Sadly, this mindset persists today despite radical changes in work, technology and expectations.

4.1.2 Rule-Driven Behaviour

Let’s think about how we cross the road in a car.  Trust me – this is relevant.  Traffic lights are the first alternative. These assume that people cannot be trusted, they need telling. This results in an elaborate rule set and complex optimising technology. And we (attempt to) plan for every possible scenario.

The alternative is a roundabout. These assume that people can be trusted and will trust each other, and that complex problems can be solved with simple agreements and by applying judgement. Social coordination is sufficient to address even the most complex scenarios.

This leads us to ask ourselves which one is safer? Which has higher throughput? Which is cheaper to build and maintain? Which one works when there is no power? The roundabout wins hands down on all points!

Legacy Organisations are governed by traffic light-like rules, usually thousands of them!  These are intended to regulate behaviour and remove uncertainty.

This results in a situation where there are:

1. Traffic-light-like systems for every process

2. Policies written for rare edge-cases

3. Committees are constantly formed for ‘further study’

4. Compliance-heavy workflows that slow decision-making

4.1.3 Permission Before Action

In Legacy Organisations, employees must ask permission before acting.

How many times have you heard:

‘We need a meeting to decide whether to have a meeting.’

‘We must escalate this because no one here has authority.’

‘Let’s wait for guidance before doing anything.’?

Legacy culture rejects autonomy, slowing everything to a crawl.

The organisation doesn’t trust individuals to exercise judgment, so it insists on complex, hard to understand approval processes, multi party sign-offs, complex committees and meetings to align the view of different stakeholders.  The net results is that minor decisions take days or weeks; major decisions take months.

4.1.4 Challenges and Consequences

Key structural challenges include:

Bureaucracy costs:

Hamel and Zanini (2016) estimate that 12 million management roles in US are unnecessary. Cutting managers by 50% would boost productivity. Some 710 million hours each week in US are consumed on internal compliance tasks and around 50% of tasks add no value. This equates to around 2.5% of the US Gross Domestic Product or around $0.7 Trillion in real money!

Organisational debt 

When something goes wrong in a Legacy Organisation, and new policy is created ‘just to get things done’. Meeting grow as new people are invited. Starrenburg (2021) refers to these accumulated ‘workarounds’ as organisational debt. This clogs the organisation’s arteries, creating friction and slowing operations to a crawling pace.

Graceful degradation

Typical organisational responses to short-term pressures is to gradually lose capability, innovation and resilience. Viguerie (2021) report that back in 1958 a company would typically exist for 61 years. In 2015 this has reduced to 25 years. The authors report a ‘self-cannibalisation’ response to investor pressure to maintain earnings per share. This results in hollowing out of the organisation making it low on cash, short of ideas and not a good place to work!

4.1.5 Case Study (Synthetic) — AdminCore

AdminCore is a professional services organisation with eight management layers. Every client proposal requires six approvals. As a result staff spend more time navigating internal processes than serving customers.

When a team tries to implement a new digital tool, the request is sent to three committees, two risk groups, and an oversight board. Six months later, no decision has been made. Clients leave. Talented employees leave. Performance declines.

AdminCore doesn’t fail because its people are poor performers. It fails because the Legacy Organisation behaviour traps them in inertia.

4.1.6 👍 Topic Summary

Legacy Organisations rely on rigid hierarchy and are driven by rules and bureaucracy. Staff require permission before action, assuming they cannot be trusted and must be tightly controlled.  The organisation struggles to adapt to complexity.

• The Legacy Organisation is structured around a rigid hierarchy with clearly defined roles.
• The Legacy Organisation is governed with traffic-light like rules as opposed to empowering individuals to use judgement.
• Decision making is centralized in the Legacy Organisation, requiring employees to seek permission before acting.

4.1.7 Topic Quiz

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4.1.8 Reflection Questions

1. Research similar organisations to yours, in the same industry / sector in any geography. What examples of Legacy Organisational behaviour can you find? Use GenAI to assist your research, noting its helpfulness, or otherwise.
2. Use your analysis at (1) to build three practical advisories for your organisation to avoid legacy organisation behaviour.

4.2 Evolutionary Organisation

4.2.1 There MUST be a better way . . .

Let’s dig deeper into what Aaron (Dignan) refers to as the Evolutionary Organisation (E-Org). This organisation is better suited to today’s fast moving digital world. The Evolutionary Organisation has developed the three core capabilities shown in Figure 4-2.

Let’s unpack these capabilities in the following sections.

4.2.2 People positive

Self-Determination Theory (Ryan & Deci, 2017), specifies that high-performing people need autonomy, competence and relatedness. When people have clear purpose and freedom to use their judgment, performance increases. This contrasts directly with the L-Org assumption that people need controlling.

This is not new, and is totally consistent with the Human Side of Enterprise (McGregor, 1960) which analysed human behaviour and motivation relating to work. McGregor’s work raised two competing theories as shown in Figure 4-3.

Dignan explains that if the organisation is people positive – by assuming the best of everyone – it will grow and thrive.

4.2.3 Complexity Conscious

Complicated

and complex are two words which get used interchangeably but have radically different meanings. Complicated systems are deterministic, predictable and solvable. Complex systems are unpredictable and adaptive – hence not solvable.

A car engine is complicated: it has many moving parts, but its operation is known, causal, predictable. We know how it works.

Our brain is complex: we can’t be sure how it works, what it does, and it can’t be ‘solved’. We can nudge the complex and observe how it reacts. But we can never control the complex.

Figure 4-4 contrasts the two complementary worlds of systems thinking (dealing with the complicated) and complexity science (understanding the unpredictable).

The problem arises when organisations are assumed to be complicated. This is the case with Legacy Organisations. We assume that compliance drives performance, e.g., do as we say, and we will achieve our goals.  This leads to an ever growing set of ‘governing constraints’ (policies, procedures, rules) to cope with every scenario. These are traffic lights in action!

But in reality, complexity is all about relationships and interactions. These are at the core of every organisation. Realising that an organisation is complex causes us to realise that it will respond in an unpredictable way to stimulus. This makes a mockery of statements like do as we say, and we will achieve our goals.  Having so said, component systems (e.g., our accounts receivable process) can be complicated, or not depending on the degree of judgement needed.

The consequence of all this is that Evolutionary Organisations treat strategic implementation including operations as adaptive processes, not engineering problems. Aaron describes this as being complexity conscious.

4.2.4 Self-Organising Teams

But can an organisation really run itself? E-Orgs adopt flexible, self-organising structures that shift as needs emerge. This replaces the rigid traditional, multi-level hierarchies of the Legacy Organisation. They emphasise:

This creates a “dynamic network of teams” to replace the rigid hierarchy.

4.2.5 Case Study (real but rewritten) — Buurtzorg

As documented by deBlok (2021) Buurtzorg, the Dutch community nursing organisation, demonstrates E-Org principles at scale:

1. Self-managing care teams

2. Minimal hierarchy

3. High autonomy

4. Deep trust in frontline judgment

The organisation produces 20–30% lower costs while offering high-quality patient care — and does so without a traditional management structure. This shows evolutionary principles are not idealistic — they are practical and effective.

4.2.7 Topic Quiz

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4.3 Operating System (OS) Canvas

4.3.1 What Is the OS Canvas?

The OS Canvas is a logical model of the organisation. It is also ‘value agnostic’ meaning that different organisations will get different value from analysing the different domains. It covers twelve domains as shown in Figure 4-5.

Complexity science guards against reducing the organisation into logical components, so the OS Canvas should be regarded as a pattern, as opposed to a process. The difference is profound and best illustrated by a quote from Dolly Parton:

‘I never offer advice for people wanting to get into the music industry, I just tell what’s worked for me, that could be interesting / useful to them’.

A pattern is a framework showing what works over many years of practice offered as guidance. In contrast, a process is an ordered set of mandatory steps to achieve a specific goal. The OS Canvas is very much a pattern to highlight areas where an organisation may be stuck. The core capabilities of ‘people positive’ and ‘complexity conscious’ can then move the organisation forwards.

4.3.2 Legacy or Evolutionary?

The contrasting way that the organisation operates in each domain can help diagnose legacy or evolutionary behaviours. These contrasting behaviours are summarised in Figures 4-6 to 4-8 below. The figures draw on and synopsise information contained in Part 2 of Aaron’s (Dignan) excellent book.

Purpose – Strategy – Workflow – Membership

Authority – Resource – Meetings – Mastery

Structure – Innovation – Information – Compensation

4.3.3 From Stuck Practices to Authentic Change

The OS Canvas helps diagnose where an organisation is stuck in Legacy behaviours. These could be

Authority: even the smallest of decisions require permission from above.

Meetings: used for briefings or control rather than cross organisational coordination

Workflow: work hand-offs between different silos slow or stop operations.

Compensation: rewards individual performance over team success

These ‘stuck practices’ often totally contradict the organisation’s strategic trajectory hence undermining strategic implementation and anchoring the organisation in the past.

The OS Canvas offers the opportunity to structure strategic implementation by:

The OS Canvas can form a common language for strategic change.  Of course, the effective use of the OS Canvas requires exercising the core capabilities

People positivity: trusting people’s capacity to act responsibly

Complexity consciousness: accepting uncertainty and ‘nudging’ or experimenting rather than directing.

Experimentation: small, safe-to-try OK-to-fail tests within and across domains

The Canvas becomes a tool for continuous participatory change — not a one-off assessment.

4.3.4 Case Study (Synthetic) — FinServe

FinServe uses the OS Canvas to diagnose why their ‘agile transformation’ failed. They discover:

• Decisions are still centralised (Authority domain)

• Meetings consume 60% of staff time (Meetings domain)

• Information is locked in departmental systems (Information domain)

• Strategy is communicated annually, not iteratively (Strategy domain)

With these insights, FinServe designs targeted experiments, starting with transparent decision-making protocols and cross-functional team pilots. Within months, performance and morale improve.

4.3.6 Topic Quiz

Please complete this anonymous knowledge check by scanning the QR code. The quiz app tells you the right answer once you have made your choice.

4.4 Chapter Summary

Chapter 4 explores how organisations are designed, how they behave, and what it takes to modernise them for strategic success. Legacy Organisations rely on hierarchy, rules and permission thus limiting their ability to adapt. Evolutionary Organisations assume the best of people, embrace complexity, and operate through flexible, self-organising teams.

The OS Canvas provides a practical tool for diagnosing organisational realities, revealing where Legacy patterns persist, and structuring participatory change. Together, these concepts lay the foundation for implementing strategy through organisational design suited to the digital age.

The following action plan may help put Dignan’s excellent advice into practice

1. Spot legacy behaviours: identify where hierarchy, rules and permission-before-action are slowing decisions and blocking strategic intent.
2. Shift assumptions about people: replace control and compliance by encouraging autonomy, trust and people-positive design.
3. Embrace complexity, don’t fight it: stop treating the organisation like a machine; adopt adaptive, experiment-driven approaches suited to today’s environment.
4. Encourage dynamic, self-organising teams: distribute authority, smash silos, and empower teams to act quickly where the work happens.
5. Use the OS Canvas to drive real change: diagnose stuck practices across the twelve domains and run small, safe-to-try experiments to modernise how the organisation actually works.

4.5 References

1. de Blok, J. (2021). Jos de Blok on Buurtzorg… Leadermorphosis.

2. Dignan, A. (2019). Brave New Work. Penguin.

3. Ryan, R.M. and Deci, E.L. (2017). Self-determination theory: Basic psychological needs in motivation, development, and wellness. New York: Guilford Press.

4. Hamel, G. and Zanini, M. (2016). Excess Management Is Costing the U.S. $3 Trillion Per Year. Harvard Business Review.

5. Jones, J. (2015). Simple Sabotage Field Manual. Open Culture.

6. MasterClass (2021). Understanding Taylorism.

7. McGregor, D. (1960). Theory X and Theory Y  Thinker 026  [online] CMI. Available at: https://edisciplinas.usp.br/pluginfile.php/7496611/mod_folder/content/0/SEB_LYO_McGregor_Thinker.pdf.

8. Starrenburg, S. (2021). Why ‘Organizational Debt’ is Such a Powerful Concept.

9. Viguerie, P. (2021). Corporate Longevity Forecast. Innosight.