Healthy Org Design Culture ft. Don McKenzie (Tribe Ventures)

Tim Brewer (Functionly) chats with Don McKenzie (Tribe Ventures) about his experience growing organizations across Australia and the US. Don covers the PAEI principles and making sure you have a "christmas tree" style org. Then most importantly, the need to create a positive and healthy org design culture that results in the team being excited about org design projects and not fearful.

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Tim Brewer: [00:00:00] Hey everyone. Welcome to the Org Design podcast. For this pod we have Don McKenzie joining us. We are here to talk all things org design. Don is from Tribe Ventures in Queensland, Australia, and he's got a, a rich history in helping organizations from dysfunctional org design through to functional.

Don, maybe start by telling us a little bit about your background. Tribe Ventures, what are you doing right now? And tell us about how you've become, so active in helping people work through changes to their organization structure.

Don McKenzie: Thanks for having me, Tim. So yeah, Tribe Ventures is a, B2B focused sort of venture capital firm. So we're looking for companies that have a B2B product, generally technology that's looking to then scale into the US and the UK. So have got product market fit locally in Australia, New Zealand, customers love them, and now it's time to sort of scale up and we're that hopefully [00:01:00] that capital that can come in, and then why, I appreciate the time to chat is that we, we then bring money, but also some expertise, a la org design, and all of those kinds of things that often get in the way of companies growing, growing rapidly.

Tim Brewer: Cool. So that's Tribe Ventures, but I know you've had a long history with Org design. Maybe tell us a little bit about, your early story, your first experience.

Don McKenzie: Well, when, when you've presided over a number of dysfunctional orgs of your own making, you, you learn a few things, but I, I, I got a lucky break, got into business, young, grew, acquired, did all those kinds of things and then joined a, a US based institute called the Adizes Institute.

Founded by a very clever gentleman, Dr Ichak Adizes, who I would consider as one of the world's leading geniuses in in org structure, org design, and spent time in US, Mexico, different parts, taking my experience and then learning, you know, some theory and some stuff that I then worked with companies on [00:02:00] locally and, always been active in investing and, it's a real passion.

And where I think org design, it's sort of the point where rubber hits the road because it, it's the organization of the human resources. And whilst People are often a product of their environment. That environment often is partly due to the structure. Now, if I can define where we see structure, we're probably a little bit broader cause a lot of the time people see structure as roles and responsibilities and a general chart.

We talk about the power structure, which is both roles and responsibilities, but it's also authority, alright? If you hire someone to do a role, and they don't have the authority to do what they need to do, you will actually find that that is a structural problem. And then the third part is, is things like information flow.

Information is actually power. Do I know I'm doing a good job? Do I know my subordinates doing a good job? That is actually a structural thing. Then reward systems, right? [00:03:00] Organizations can, can be, very problematic if there are reward system issues that are getting in the way.

So when, when we use the word structure, if you will, it's very much like a, a skeleton kind of thing that has lots of different parts and often you can have a really great org chart from responsibility point of view, but that place is dysfunctional because lack of info, lack of authority, reward systems driving the wrong behavior.

So I just try and define what, what I mean by structure.

Tim Brewer: Yeah. I think that's good for the people listening in. Tell us, you said you'd gone through buying, merging a lot of those, very, very large shifts in an organization structure. Is that what kind of volume of headcount were involved?

Don McKenzie: Well, on my direct basis of buying stuff I think the largest was 500. Around that, 480. And then smaller ones at sort of 50. And then in the consulting side, probably, I mean, being part of the Institute, the largest group, the [00:04:00] Institute has applied some of these things to was I think 1.3 million people in, in, in Australia sort of 20,000 and, and there is, there are just some principles, whether it's 30 people or 30,000 people. The way we sort of look at structure a little bit is if, and, and Ishak himself often talks about it. It's, it's, there are some principles like building a house or building any structure.

Like the first thing we gotta know is what are we gonna build? Are we building a commercial building? Are we building a house? And then there are some rules. You, you're not gonna put the toilet in the, the kitchen. You shouldn't, right? You're not gonna put. You know, the garage on the second level, if you can't get there, and often organizations don't have some of those principles and it looks like a really good org chart, but the toilet's in the kitchen and it smells like shit, and it's not that functional and so whether it's 30, 30,000, you've gotta start to understand, you've gotta start by understanding what, what are we actually seeking to build here? And either if we're building something from scratch, that's one thing, but if we are needing to change it.[00:05:00] , this, this was a, this was a house and now I needed to be a commercial building.

Well, actually there needs to be some principle changes, design changes, a few different things that happen. And so starting with that in mind and then understanding that structure is also a life cycle thing as well. It is absolutely functional and required.

The businesses start with their founder in the center. And I know all founders will do a nice little chart and it all looks like the triangle, but that's rubbish. All roads leads back to that founder, and that is normal and it's desired, but then there becomes a transition point where it actually becomes abnormal. And, it's the transition point , that's actually quite painful because responsibility and authority and rewards we're all in the one founding individual or founding team doesn't really matter. Individual or team. And then we then start to change the organization, but we start with responsibility. We start by changing those, but the authority often stays with the founder. The rewards often still float to the founder. The information flow [00:06:00] is often still being held by the founders, and so we change the role and responsibilities, but we don't change the other stuff.

And suddenly, why isn't it working? Why do we have all these new skirmishes? Why is there all this destructive conflict? Why are people coming and going? Often you see with these businesses trying to go through that structural change, a lot of staff turnover, and often it's because, you know, good fences make good neighbors and we haven't built those fences properly.

And we come in and we've got all these turf skirmishes and people go, bugger it. We're out. And whether that's 30 people or 30,000, it's the same thing that happens. It just happens at scale.

Tim Brewer: Yeah, I think that's a really good segue to talk about we observe with customers that we see, that if you're just given time, if you do nothing, organizations will slowly drift out of alignment.

You talked about mergers and acquisitions and other things you've done where that happens very, very quickly. Or we've just seen a period of time in the world where Covid has hit and organizations have had to change structure or maybe interest rates change and capital's not as available. And so they've got all this [00:07:00] compounding pressure and external forces that force them into a need for change.

And the further they drift out of alignment, the more dysfunctional they get. And you kind of touched on that before. Can you kind of reflect on some of those organizations that you've gone in and provided advice to or worked with as they've gone through change. What do those symptoms look like? If I'm a CEO of an organization and I, you know, I've grown it as a founder, I've got three or 400 people, I'm thinking, man, something's just not right.

How do I know, I have an org structure problem or an org design problem at hand?

Don McKenzie: Generally, I find. A huge volume of issues come back to structure. So how do you know, one, you gotta start with a structure has to be perfectly tailored to you, too often people look at other organizations, see them really successful and say, I'll copy what they're doing.

And it's a bit like then buying that organization's suit. And then you trying to squeeze into the suit, it's either gonna be too big or too small, or too constricting. You've actually gotta tailor that [00:08:00] suit to fit you perfectly. And so you've actually gotta start with understanding what your mission and your vision is and whether that needs to change,

and so, too often structure is done as an isolated thing away from vision and mission. But if our mission is to go and do X, Y, and Z, And often missions are all about change, right? I'm here today and, and my vision and mission is to be somewhere different tomorrow. Well, we've actually gotta change our structure to achieve that.

So one of the reasons, one of the times you'll know that you've got a structural problem is that day in, day out, I, I just can't achieve the change I want. I just, I'm not moving towards this mission. I'm just constantly in this, the day-to-day that normally is a signal. We have a structural problem. Now it could be role and responsibility based, and I've got a tool that I can share.

Could be authority based, it could be reward systems weren't updated. The mission changed and I had to go, now we're going in this direction, but we haven't changed the reward systems to drive that behavior. Okay, well we've gotta go and do that, or we don't have the information flow. The other area is conflict.

Conflict is you can't choose whether you're gonna have conflict, you're gonna [00:09:00] have it. Most people try and ignore it, but there is a big difference between destructive conflict and constructive conflict. When you have an organization that is totally, aligned in flow, whatever, whatever buzzword you want to use, it's generally when mission and structure are perfectly integrated, we're moving in the right direction cause we're structurally able to do so.

Conflict starts to creep up and become destructive, because often people are in the wrong roles, people are incentivized to now start fighting with each other. People don't have the right sort of authority to go and do those things. And suddenly a culture that was, constructive and functional starts to become destructive and dysfunctional and often it is actually an organizational structure issue.

And so we will normally get a call, when I say we, in my previous life, I would normally get a call when good people have left and we're not hitting our mission, we're not hitting our goals. There's a lot of disfunctional behaviors going on. Everybody's fallen out, and [00:10:00] when you actually come back, and have a look.

We've actually got some structural issues. Now, you need to be able to diagnose that first, and there's a process to how do you actually get your team to diagnose themselves. Most companies don't need to be told what their problems are. They know what their problems are. What they lack is a process to align all of them, so they're all seeing the world the same way.

Then once we can at least see the world the same way, then we can say, okay, which direction do we want to go in now? Okay, and what structure do we need to achieve it? So often, as an example, if I see that sales and marketing are in the same person, S comes after M in the alphabet, and we are taught that you're supposed to do it in order, but I've never heard of a marketing and sales manager.

It's always sales and marketing. Why is that? Sales are the most important. If I don't have sales, I die. Sales is short term orientated needs to happen, marketing is long term orientated, creative, harder to measure. [00:11:00] So we hire these people to do sales and marketing roles. We then drive them to do sales.

They don't get to the marketing, they don't get to the time to go and do it. I'm not getting my marketing, which affects sales. That person's an underperformer. Get rid of them, I'll bring in a new person. That's a structural problem. We always split it. I'm you know, same president, right? But as long as the VPs, there's one for sales and one for marketing.

So coming back to that conflict point, the organization starts conflicting cause we're not getting the marketing or we're maybe not getting the, the sales, our new products,

new product development and operations are often together, but that's how you get faster machines because the operations people are saying, I've got a problem here, I need you to go and fix this. So we try and separate out those energies as an example. But it still comes back to that mission bit. If your mission and vision is to bring new products, and bring new development and change the way you communicate or whatever else, you've actually gotta bring those things up in the org chart,

sunlight solves a lot of problems. They've gotta have their own [00:12:00] light away from the day-to-day demands. And what you then find is you have people that are running races but a little bit more focused on what they need to do, rather than being tucked away underneath something, where marketing gets a bit of energy, when sales have time or have the resources, and it's those kinds of things that you gotta sort of get to the bottom of.

Tim Brewer: So particularly in new industries, we would call those energy areas, functions that need to exist in the business and different types of business need a different mix of those energies. Going into a company that's really well known, like something that's very common in the world, I guess you've got other models of how that works. How do you help an executive team think through what's needed in a company that's in a new industry, or if you are working in a company that you've seen before?

Don McKenzie: Yeah every organization has its nuances and everything on one hand will be the same, and everything on one hand will be [00:13:00] different.

Doesn't matter what size your organization and whether you're new or old, and again, people can look this up, it's from Adizes, but there's four roles.

Four energies, and it's a simple model. P A E I, you gotta produce results that your customers are happy with, you gotta get sales, you gotta create product. That's the P energy.

Then the A is administration. You gotta administer systems, process controls. Then the E energy is new, it's the entrepreneurialism, new products, new markets, you know, new ideas.

And then the I energy is integrating, that's the people, the culture, bringing it together.

P A E I, Produce, Administrate, Entrepreneur, Integrate. And, and what we have to do from a structural point of view is we've gotta make sure that those energies are in balance and done.

And so if you think of an early stage business, the most predominant energies are P produce, E entrepreneur, new products, and what's the lowest? Generally, I, like the systems and processor controls are just a disaster zone behind the scenes, and the integration isn't there yet because it's one or two founders [00:14:00] calling all of the shots. In big organizations that have survived some of that, it's the opposite.

The P is too small. The E is too small, but they got massive, a massive systems and processes and it's, it's constricting. The thing is, at that level, every organization has to balance P A I you've gotta be able to produce administrate, entrepreneur and integrate. But the problem is they're all in conflict, right? Producing results is in conflict with setting up systems and process.

Now, if we spent all day setting up systems and process and controls and whatever else, we'd have great systems and process controls, but we wouldn't produce anything. If we spent all day entrepreneur, new ideas, new products. We don't get time to go and do the other, the other bits and pieces.

And so what a CEO and a management team have to balance where they are in that kind of thing. And first, some organizations we're just, we're just too low at the moment.. So we've gotta put some energy structurally into bringing up A, so maybe accounting, finance, systems, process has to find a higher place in the organizational [00:15:00] chart energy, quite often to be given the opportunity to go and develop that stuff. But sometimes we might go too far, so we need to bring the sales side up. Or maybe in a lot of organizations we've lost our entrepreneurialism. We've lost the ability. We've lost the E. Alright, so from a structural point of view, we are gonna bring the E rolls from out of operations, from out of them, and we're gonna give them their own divisions.

In Adezis, it's called the Christmas tree, where the organizational chart is colored. Greens are profit centers, so we make money. Yellows are sort of service centers, it does stuff, and the reds are the support centers. And you want an organization as green as possible. You want as many profit centers as possible. Any opportunity to turn something into a profit center, the more people losing sleep at night worrying about profitability, the more profitable your organization will be.

Early stage businesses, it's the, it's the founder. They go to bed at night, where am I gonna get the cash? And, and everybody else sleeps wonderfully. So one of the things in early stage business we'll often do [00:16:00] is how do we get more people losing sleep at night?

Now, sometimes in larger organizations, it's just too many. We've lost control. It's like a, a tree, sometimes you, you gotta go and cut the branches, you gotta bring it back to get some of that health going, but again, it's all in balance.

And so I don't care whether you're 30 people or 30,000 people and whether you're in high change or low change or whatever else you've got to produce, you've gotta administrate, you've gotta entrepreneur and you've gotta integrate.

And your org chart and your org structure will often be the vehicle as to whether that's going to actually happen. And that's why it's so important.

Tim Brewer: Don coming back, you said something really interesting there, to make a little bit more practical for our users, you talked about giving those things more energy in the org chart.

By that, do you mean their place in the layers of hierarchy?

Don McKenzie: Yes. Correct.

Tim Brewer: Do you mean the amount of headcount, effort that you allocate to those things, or is it a combination of

Don McKenzie: All of the above. So what we've often seen is that a board of directors or or CEO will say, I [00:17:00] want more energy in in this new product development team.

So we're gonna give it more resources. But it's actually sitting underneath the umbrella of something very day-to-day orientated. Well, we would actually say, make that its own profit center. Put it up. So we, we, when we do org design, we don't start with people. People are always last in the model.

We say, well, what are the profit centers to achieve our vision? So if we wanna bring in a new division and a new product where we need to add a profit center there right now, is it gonna own its operations, this new profit center, is it gonna have people directly report or will it use a service center from the organization to support it? Those are like really interesting questions.

And so once you've, you've, you've got it and said, okay, well we, we created this little product down in this part of the organization. I'm now gonna bring it up and make it a profit center, that is going to now start to give it its own life. It's gonna start to get its own, its own air. You still gotta resource it [00:18:00] correctly.

What authority is this new profit center gonna have? Is it gonna have the authority to go and just make all of its decisions straight away? Well, if we come back to what I mentioned about the life cycle before, when you sort of, you know, bring a new child into the world. Do you give it full control and autonomy early on? No. You control it. You've gotta be a benevolent dictator about it. It's gotta earn its stripes, it's gotta earn its rights. Those are the kinds of decisions. Now what happens is in organizations, there's a strategic offsite occurs, and we decide we're now gonna go in a new direction and we're gonna bring in a new product and a new market and a new service, and they don't make those structural changes. To be able to bring that thing to life. And again, it's not just about resourcing or whatever else. If you don't give that division the authority to go and make some changes. If you don't give them the rewards, if it doesn't have the information systems, you're gonna be in trouble.

Tim Brewer: Don, you've obviously [00:19:00] got to see a lot of inside, a lot of different organizations, and we are often when talking to leaders in organization, they kind of say change is really hard, like changing the structure takes time, takes effort, takes energy.

But you talk about actually sitting down and being able to think more fluidly with the structure and keep it aligned with what the business is doing and as the business needs to change. Why do you think it's so difficult for, for operating leaders and strategic leaders to make changes to their organization structure.

Don McKenzie: So we would never advocate going in and changing organizational structure as step one. If you think, of what's the most sensitive part of the human body? The wallet. Got you there. Changing, reward systems, changing structures, they're really high conflict potentials.

They're really challenging and too often if you don't have the trust and respect in the team yet, if you don't have the organizational capability to go and do it, it, it becomes [00:20:00] too heavy and it blows the place up. So we say never start with structure. You've gotta sort of, if you are in a real pickle, and you actually need some surgery.

You may start with structure, but hopefully people listening to this haven't let their companies get so bad that the thing's gonna fall off a cliff.

We always start with diagnose all issues within the company.

Structural will always be one of them. Either not enough people, roles and responsibilities are unclear. Don't have decision making authority, reward systems aren't right, but there's often a lot of other little problems that you can actually use to build the muscle. As a team to build that trust and respect, to build the capability to go and then make the big structural changes.

I carry a, a few additional kilos that I don't, I don't enjoy carrying. Now I could jump on the scales and say it's time to lose 10 kilos and cut off a leg I could do that tomorrow and I would be under my goal weight. But I would be unable now to do a whole lot of the other things I wanna do. Now if my [00:21:00] mission is to be a one-legged dude that hops around everywhere. Perfect Structural change. I sort my weight and I set myself up for a life of hopping. If my mission, however, is to be a functioning healthy male that can still run and do all those things. That is not a good structural change, even though you know I've gotta put less stuff in in my mouth and not be influenced by people like yourself with the amount of calories that we consume on these trips.

And that often is what happens. We go too big to try and achieve the result. So we always say, start with the small stuff. It's a bit like gonna the gym. If I was to go to the gym tomorrow, I've gotta start with weights that I can reasonably lift. Otherwise, I'm either gonna give up or I'm gonna hurt myself.

And organizational structure changes are often a 500 kilo weight, but if I can start with 20 kilos, get my teams working a little bit, the website's outta date, and we've never been able to agree on what changes we need to do, let's go and get those sorted. Now we make some process changes internally.

Now, what we're doing is we're building up trust and respect [00:22:00] in each other, in as a team. And then when we get to, hey, we've gotta redo structure. Right now start with a methodology. Don't start with the people. I've given some ideas. You can structure your organization using P A E I because what you do is you clump all your P roles, sales, ops,

you can clump all your A rolls together, accounting, legal, process control, or your E rolls marketing. I always lose this fight with CFOs cause they love to build their own little fiefdoms. But accounting is A. Financing, debt markets equity, raising capital is E. And then I is human, you know, culture development.

So there's a tool, suddenly the team, instead of warring with themselves, say, okay. Our mission is to now expand into a new market. P A E I. Right. So I'm gonna need my producing roles, administrating roles, entrepreneurial roles, integrating roles. So you can then draw that out. Founders often will keep P and E like when in the back of my head, when I'm [00:23:00] analyzing a company and, and they're going to expand.

What roles are the founders gonna have and what roles are they gonna have to hire in? And then by then, what we're doing is we are depersonalizing the whole thing. Suddenly we've got an org chart that is now emerging, who's sitting around this table is best place to have to take these roles. Now we want it to be musical chairs, but each time we play musical chairs, new chairs get added.

Restructuring needs to become a really positive. Word of, oh my God, a restructuring is happening. That means new opportunity is opening up because I know with the process, new roles come available if you need to shrink your organization, downsize it, use that word for there.

And so suddenly you get an organization that's constantly. Always changing a structure, and it's really excited because I know this is my time for growth. Now, a fast growing company never has enough resources to hire everyone in their org chart. That's fine. People wear multiple hats for a while, but the hat is clear with role and responsibility, what [00:24:00] authority they have. What's the reward system that they're gonna get and what information are they gonna have? And to begin with, I'm wearing two hats. They're clear now, never give someone conflicting roles. Give them two P hats, or two a hats, or two e hats. Where you see it falling down is you give someone a P hat and an E hat.

Now, which one wins? P, Producing, keeping the lights on. Then they don't get to the E then we get really upset with them. They're an idiot. I'm gonna hire someone new. And then the whole thing implodes.

That's super, super interesting. I, I think we're so aligned, actually hearing you talk and, and reflecting back on what we hear from operators within businesses and the challenges they're having, particularly not thinking about being able to change those hats so easily and just taking the friction and the tension away from those conversations.

And, and it's the process underlying that's gonna take away the friction. And that's too often human. It's too personal. It's, it's, there's no rails to run on.

So before starting this, lay your rails that you're gonna run on. I've given some [00:25:00] ideas. There's others. You can bake a cake 50 different ways. I would humbly submit there are some recipes better than others, but I don't care. Just choose a recipe.

Tim Brewer: Yeah, but it's the outcome needs to be like, it's a super high stakes game, so don't just, like blindly walk into it and think you'll be okay. Cause the stakes will take over.

Don McKenzie: Massive, and the stakes are destructive, conflict. And any company that's fallen apart. If you analyze it properly, there was destructive conflict that started to kill the place, and often it's around restructures.

Tim Brewer: So one of the observations we've made, I'm really interested to hear your thoughts on it, is it's easier to change a role or, or a position when someone's not in the position. Right. If there's a, a person in a position.

Don McKenzie: Depends on your culture. If you've invested in the rails to run on the create-a-culture where in this place we, we look forward to restructuring time because it means growth and new and whatever else. I promise you it's not, it's not a challenge at all. Like that, everybody looks forward to it in an organization where restructure [00:26:00] comes with fear and pain and whatever else. Sure, what do you talk about.

And that's why we advocate, don't start with structure straight. Start an organizational culture that can handle these things and then teach a process that people can use where structure becomes positive musical chairs, where growth means adding new roles. The first stage, we can never afford everyone.

It means that I'm gonna get a new opportunity, new rewards. And so again, building that culture is the first step. There are processes, there are rails to run.

Tim Brewer: It's so interesting to think about having a positive org design culture cause so many organizations and employers don't.

Don McKenzie: Sure. But it's been hijacked by the consulting industry people that, I'll come in, I'll find you efficiency, structure is something that's often done to others. The process that, that I love and, and that I learned through my experience and through the Adezis Institute structure has to be something that people do to themselves. And we need to give them, my role in my previous life was just giving people the rails to run on. [00:27:00] If you give them those rails to run on and you understand why people fall over quite often and this conflict happens, then suddenly they're starting to do it to themselves.

Oh, I went to this conference. There's a new opportunity. There's a new market. I can see it. Okay. Well we have a process to unpack it as a team to align. Then to prioritize. Then that turns into some kind of really clear strategic direction, strategy, vision, mission. I really don't care what word you want to use. Change in whatever. Then embedded in the culture, we then go to structure.

And we know that we gotta go to structure and we know how to go to structure and there's that last dance, Michael Jordan doco, and it's a wonderful documentary and it's, it's about Michael's vision and passion and mission, and he never gave up and all of that stuff. I would just humbly submit that if Michael was born, four foot two, missing a foot, I don't really care what vision, passion, energy you've got, you ain't being the world's greatest basketballer.

His structure allowed him to [00:28:00] overlay the vision and the passion. And all of those kinds of things. And that's what organizations have to do. There's this, there is this dance. Here's my vision and mission. Now, do I have the structure to achieve it? Oh, I don't, can I? Can we make the structural changes?

Oh, I can't afford it. Oh, okay. Well maybe I'll come back a step. What if we did this bit first? Okay, great. You're creating a bit of a ladder to it. But too often we get told vision and passion and strategy and all of these things are what's required. They are required, but they're not sufficient.

What is required is alignment between structure and vision emission and an organizational culture that can dance, and it depends on how fast your industry's changing. If you're in the fast moving consumer goods, you probably need to update your org structure and your strategy every three months.

If you are launching satellites, maybe it's every two years, you've gotta sync your organization to that, and therefore you've gotta really make sure you've got rails to run on and whatever [00:29:00] methodology people choose, again, I advocate that there are some better than others. You have to have something that has an an ability to traverse the common conflicts that are gonna come, and you've gotta make sure your organization can do it to itself.

And, and a lot of the stuff that I used to do in a previous life and what we do with our investments in Tribe, is it's not really consulting, it's more therapy. Now, when I use the therapy word, a lot of people get a little bit uncomfortable, but if you were talking to a therapist and said, I've got this client base that's been with me for 30 years, like that's a pretty shitty therapist.

Like a therapist is supposed to help you unpack stuff, sort shit out, and then you go off into the world, then you have a life event. You're having trouble processing it, come back to me and we'll unpack it. But, but becoming dependent and that's what we see with consulting a little bit.

Becoming dependent, I can't function unless I've got my biweekly session there. That's not, that's not helpful. But with the [00:30:00] organizations we invest in and the stuff, the people that I played with, come back to me when you've got something that I can help you work through. But the goal is for you to sort your shit out, as an organization, not for me to try and fix it for you.

Tim Brewer: A couple of final questions.

One, I'm an organization, I've never really been through healthy org design before or have a framework for thinking about that. How long does it take to develop a healthy org design culture? Is that a month long? Expect to do that next week's executive meeting? Is that something we should invest over a six month period? What, what's the kind of cycle that you'd typically see companies need to invest into that to get healthy.

Don McKenzie: So a bit like a human right, if you fundamentally invest in health and say, I'm gonna try and keep myself physically and mentally healthy. At all points in time, so I'm best placed to, to sort of deal with whatever life throws at me. We tend to find that we, we perform better when we have that approach and mindset. And it's the same with orgs. It starts with, I want to have a healthy [00:31:00] organization, and if I focus on being a healthy organization, I'll be able to sort the other stuff out. So the answer to your question sort of starts with what is your baseline?

If you are totally dysfunctional and just everybody's fighting with each other and high staff turnover and financial problems or whatever else, it could take years. If you are actually pretty good, just carrying a little bit of weight here and there, maybe you need to adjust a little bit of the, the calorie intake. Maybe it's a hell of a a hell a lot quicker, but whatever your decision is, you gotta, you gotta sort of make sure that there is absolute alignment with the team, and again, you just, you've just gotta make a start. And so I try and get people to not worry about the time or in 12 months time, what I'll look at.

No, let's get together, let's diagnose the issues first. Right now, when I, when I work with teams to diagnose, we never get less than a hundred problems. The record is, is like 500 Jack Cowen of Hungary Jack's, and Domino's, which we've done some stuff with, was [00:32:00] very disappointed that he only got to 420 or something. There's a video of me and Jack and I talking about some of the, that he has built cultures that revel in going and solving problems. When is the only time you have no problems, there's one time, when you're dead. So as long as you're alive, you're gonna have problems. And if, if you're planning on growing, what you're actually saying is, next year I'm gonna have more problems.

So, you actually want to be in a situation where you're not trying to say, oh, in three months I'll be at the top of the mountain, or in 12 months. No, the world that we live in and the universe that we live in is just moving from one series of problems to another, and if your organization can get really positive about that and really understanding of that and understand that in my humble opinion, a lot of the problems come from structure, then you, then you get yourself better, better prepared. So don't concentrate on the time, concentrate on the journey.

Tim Brewer: Don, I got functional five questions to ask. More relating to you, what [00:33:00] keeps you functional?

Don McKenzie: What keeps me functional? Well, this is, it would be, it would depend on who you would, but you're asking me, so that's a, what keeps me functional? That's a good look, I, I enjoy reading, listening to podcasts, doing different bits and pieces and you know, just trying to, trying to balance, the interesting shit that goes on in your own mind that seeks to constantly make you unfunctional, then you've gotta try and defend against.

Tim Brewer: Yep. And in org design, who, who inspires you?

Don McKenzie: Well, obviously Ishak Adezis is a genius and there's plenty of stuff online. Yeah. So there's, there's videos, there's some, there's some stuff I've done that people can find of, of some interviews with Ishak. There are books. I started with Mastering Change was one of the great books then into Corporate Life Cycles and probably the, and probably the best one that I've found.

Tim Brewer: Yeah. What's your favorite org design hack? What, what's the one thing. That someone listening to the podcast can go and take action on.

Don McKenzie: For me, it's P A E I. I don't care whether you are, even if you're a sole founder with no [00:34:00] staff. If you still go P A E I and say, right, well, what do I have to produce, administrate, entrepreneur, integrate, write down those different things. Then get your calendar to say, okay, this is my P time, A time, E time, I time. Then when once you've got two people or 10 people, or 30,000, it doesn't matter. What are our P rolls, our A rolls, our E rolls, our I rolls, and then it just depersonalizes it. Because then you can build out your different structures and then you add the names, and it just removes so much conflict that comes out of these things because it's like, oh, I need Jenny from accounts to now go and do this thing.

And, and it's, it's like, no, no. Start with what you need. Then map the individual.

Tim Brewer: You've obviously had lots of good experiences and a, a bunch of things that have been more challenging in your career. If you could start overall again, What experience would you want to come first?

Don McKenzie: Oh, it'd be nice to have all the fuckups all the, if, if you could sort of have all the failures in the first couple of years. I'd just get 'em all, all done and dusted and whatever else.

Tim Brewer: All the learnings early.

Don McKenzie: Yeah, but you can't, right? [00:35:00] The, the reality is you have to walk all of those paths, and you have to, you, you don't know the value of something until you've lost it. So you have to have had it, and then you need to lose it, and then you can, then you can value it.

And so, I don't know. You just, you've just gotta find a way to get a good perspective and accept that that shit's gonna happen, and, and learn from it. And try and fail well, where you don't lose your rep.

Awesome. Look, Don, it's been an absolute pleasure having you on the org design podcast.

Tim Brewer: Probably my highlight today is actually thinking about a healthy org design culture cause so many people have had such disastrous experiences that even the, the mention of changing org structure seems to kind of cause like a pretty visceral reaction from people.

Don McKenzie: And, and if that reaction is in your organization, that is a sign not to start with structure. Start with processes that will lead to a culture that can handle change. Start with little things and then work out, and then one day it's a bit like a flywheel. It's like, oh, [00:36:00] we could restructure this thing over, I have seen some big organizations restructure themselves as in thousands of people, in minutes because the trust and respect was unbelievable. The direction was aligned and clear. They've done this before. You know, when you buy a big plant, it didn't just grow right? They plant it and then they dig it up a year later and replant it. Then they dig it up a year later and replant it.

They're constantly getting those roots ready to handle that shock and that change. And, and, and if you can do that with your organization, you're gonna grow like a weed.

Tim Brewer: Yeah. Oh, and the, the second thing I think was really interesting is DIY. Like leaders know what's going on in the organization. Like helping them with a framework to do it themselves, or design I think is super interesting.

Don McKenzie: And by all means, bring people in. I'm not, You know, the most functional thing you can do is work with people. As long as it's gonna leave you with the abilities to sort stuff out, not somebody coming in and doing it to you when they leave, you're in trouble.

Tim Brewer: Awesome.

Well thanks for having us along. [00:37:00] We'll pop a bunch of, just so many goodies there that I'll grab off you and we'll pop the links.

Don McKenzie: Thank you for having me, Tim.

Tim Brewer: Thanks for joining us on the org design podcast.

Don McKenzie: Congrats with what you've built, and I mean, why I'm passionate about that kind of thing, that if you can help people visually get it up there, and again, have a tool that allows a team to align themselves, the more alignment you can get, the more trust and respect that's likely to happen.

And the more success you can get. So tools that really drive that I'm a big advocate for and, and, and well done to what you've built.

Tim Brewer: Thank you, Don.

Don McKenzie: All right, thanks mate.