Why Startups Need Organizational Development
To adequately identify a 'why,' it is essential to understand what you want to achieve. Organizational Development (OD), a management process, plays many roles. OD is often seen as the process of managing an organization's transformation. Robert L. Kahn once described OD as a label for a collection of tasks that consultants perform. While Kahn's (1974) depiction of OD may seem acceptable on the surface, OD is much more focused on organizational management practices. Organizational Development intersects with the four management fundamentals: planning, organizing, leading, and controlling.
Organizational development is vital for business growth and daily operations, especially for startups. Typically viewed as a process for managing an organization's transformation, OD has transitioned from occasional consulting projects to an ongoing management practice. Approaching OD through planning, organizing, leading, and controlling offers a comprehensive way to manage startups.
1. Planning
Every business, including startups, needs a plan. According to Jones and George (2021), planning involves identifying and choosing suitable organizational goals and courses of action. Based on this definition, all startups require a plan that guides the company’s direction. The business plan should detail your company's goals and strategies for achieving them. It should include:
- The company description
- Business strategy and model
- Market forces and competition analysis
- Product or service offerings
- Funding needs
- Financial projections
Essentially, this is a blueprint of what your business needs for success. A business plan serves as your roadmap and guide for starting and growing your business. And it doesn’t have to be complex or intimidating—simplicity works best.
2. Organizing
With a roadmap in hand, the next step for a startup is to organize its resources effectively to achieve its organizational goals. Organizing involves establishing people, processes, and tasks in a structured, coordinated, and integrated manner to accomplish goals. It's a crucial business step and the foundation for all business activities. This stage involves identifying and linking the roles, tasks, and competencies needed to meet your goals with the processes, policies, and technology that support them.
3. Leading
A leader isn’t just someone who heads an organization; it’s someone who influences, motivates, and guides people toward achieving organizational objectives. Given the fragile stage of startups, especially during development, having a visionary and capable leader is critically important. Leadership serves as the core element connecting all other management principles. Effective leadership, acting as a compass for your business, is essential. Therefore, a key part of OD is equipping leaders with the knowledge, skills, and support needed to start, grow, and sustain their startups.
4. Controlling
Another vital aspect is measuring how well strategies, structures, people, processes, policies, culture, and technology are performing to identify areas for improvement, as well as strengths, threats, and opportunities for reward. Ultimately, controlling means monitoring performance to anticipate, assess, and respond to the dynamic business environment. How else can startups evaluate their growth and success other than through a robust performance management system?
Making organizational development an integral part of startups is highly recommended. Engaging an organizational development consultant can add significant value to your business—something worth considering.
Written by Tolulope Abi Rogers (Ph.D.), an educator and Organizational Development & Transformation Consultant.
October 2022.