E197 | Why Redesigning your Business Structure will Help you Scale with Lex Sisney
Are you a mid to late ‘nail it’ stage business, trying to scale your company? Then you don’t want to miss Lex Sisney, business coach and author of Organizational Physics, on this week’s episode of The Melting Pot.
Organizational Physics might be an odd title for a book, but it’s memorable, and it explains the repeatable systems that all organisations have difficulties with. But more importantly, it teaches readers how to overcome their issues by redesigning their organisation’s structure.
Rather than thinking in terms of hierarchy, or thinking about your business’ org chart, Lex advises clients to think about things that need to be done in the short term and things that need to be done in the long term. Because there are things that have to be effective, and things that have to be efficient to scale a business.
So, if you’re looking for guidance about how to scale your business, or you need a new way to look at your organisational design, then this is a conversation you’ll want to listen to.
On today’s podcast:
- Why businesses need organisational physics
- Understanding corporate life cycles
- The importance of structure in a business
- How to use org structures
- Books: Organizational Physics – Lex Sisney and Designed to Scale
- Website: https://www.OrganizationalPhysics.com
- LinkedIn: Lex Sisney
Why Redesigning your Business Structure will Help you Scale with Lex Sisney
Lex Sisney is a business scaling expert and author of four books – Designed to Scale: How to Structure Your Business for Exponential Growth, Organizational Physics: The Science of Growing a Business, How to Think About Hiring: Play Smarter to Win the Talent Game, and Ready for Enlightenment? An Insider’s Guide to the Biggest Trip of Your Life.
He’s a wizard at organisational structure and design. He works with CEOs and leadership teams of expansion-stage companies who are committed to growing their business without compromising their values.
By going through the challenging process of founding and leading fast growing companies, Lex experienced first hand the need for a simple, effective paradigm to help him scale.
After years of working in this field, Lex has distilled his knowledge into simple yet powerful principles clearly explained by the classic laws of physics – laws that were true 10,000 years ago and will be just as true 10,000 years from now.
Why businesses need organisational physics
Organisational physics is a set of four basic principles that you can apply to any situation and get a better insight into what’s causing that system or behaviour. Giving you a better understanding of what to do about it to create more breakthroughs, greater ease, greater success, better team management, better strategy, etc.
The reason why it’s called physics, says Lex, is that we all have finite energy and time, and businesses are no exception.
In business, for example, if it doesn’t get sales, it dies. If we humans don’t get food, we die. This happens at all levels – the environment trumps everything. If we’re not able to get new energy from the environment, the system, whatever it may be, will perish.
Another law of physics that applies here is the law of entropy. Which says that not all heat energy can be converted into work in a cyclic process. For example, if your business is a boat and your strategy is where you want to sail, that’s fine until you get a hole in your boat, in which case, you’d be well served to plug the leak before trying to carry on.
“If you’re sincere about scaling your business, you don’t let that stuff linger. You go identify what’s causing the leak and plug it in. If you do, by law, you now have more capacity to do business expansion, innovation, and capture market share, but if you don’t, you’re gonna continue to struggle. And that’s the baseline insight of all of my work. It’s simple as it sounds.”
The problem that most people have is that we tend to oversimplify things saying we need better people, or a better crew, which of course matters, it’s a short term fix which is necessary, but it isn’t the long term solution.
Understanding corporate life cycles
Another issue that Lex sees frequently is that people don’t adapt their strategy to account for the changing needs of their business at different stages of the corporate life cycle.
“That’s the idea that just as you parent your children differently at different stages, and you’d be a really bad parent if you try to treat your three year old like they’re already 13, or vice versa, you would fail as a parent.”
But business leaders don’t think like this, and instead they apply the right strategy at the wrong stage of the business, and then wonder why it’s a disaster.
So how can you identify the different stages of the business? Easy, says Lex, for a product business, for example, they’re:
- Nail it
- Scale it
- Milk it
- Any time kill it
“There are things you can pay attention to that also reveal your execution lifecycle stage, and the market lifecycle stage… [like] market growth rate, the level of competition, the pricing structure on your core offering and net cash flow. You can pay attention to those like dials on a car.”
The importance of structure in a business
Structure is a misunderstood term, says Lex. It’s not the org chart, for example. It’s not the people in the reporting lines. Structure in a business is deeper than that.
It’s how the business is organised, how the design controls behaviour. For example, if your business is organised one way, and you’re wanting it to do something new, but you keep the old organisation in place, the inertia of the old will continue.
“In development, you have to say wait a minute, if this is a change in strategy or change in lifecycle stage, rule number one is I must change the structure to support that new strategy, or new lifecycle stage or I’ll perpetuate the status quo.”
Think of business structure as the body’s musculoskeletal system, says Lex. If your hips are out of alignment, your life is going to suck because you’ll be in pain and you won’t be very mobile. Without a circulatory system, you’ll be a dead skeleton, plus you need the neural pathways to bring you to life.
The same applies in business. Simply having a structure isn’t going to help you scale, all the parts need to be aligned to support the structure.
“Don’t let short range overpower long range, don’t let efficiency overpower effectiveness, don’t let control overpower autonomy. How you dial in control and autonomy is actually a process. The neural net is a circulatory system. And so a structure comes alive through its process.”
How to use org structures
If you need an org chart, says Lex, it should revolve around the structure, not the other way around. Take the people you have and the jobs that you have and line them up.
“Why would I ask my quarterback to play offence, run around the field and play both? At some point you have to go, okay, that worked in the earlier stage, it’s not what’s required to go to the next stage. So I’m going to have the courage and the discipline to put the right people into the right roles in this structure.”
If you want to find out more about Lex’s process, his book, Organizational Physics lays out the principles.
In his new book, Designed to Scale, he takes the structural components of scaling to a very deep dive and a new paradigm, giving readers a new way to think about the challenge and how to design your structure the right way.
His hiring book is for after you’ve designed your new structure, and you’ve recognised you’ve got a roll misfit or a gap – it teaches you the mindset that you should use to try to fill that gap.
- Marty Cagan – Inspired
- Marty Cagan – Empowered
- The Arbinger Institute – The Outward Mindset
- Shirzad Chamine – Positive Intelligence
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