We have been in the habit of seeing our organisations as either a set of functions (HR, IT, Marketing, etc), a set of markets, or a set of product lines. All organisations structure themselves in one or more of these ways.

When businesses scale into various regions this of course impacts structure but is rarely fundamental to the structure unless each region runs a fundamentally different business (either intentionally, or as an acceptable side-effect of structure) and your operating model is *diversification (*under this model).

Each of these types of structure has issues - briefly:

• Functional organisation creates bureaucracy as each function tries to optimise in isolation
• Market-based organisation is hardly organisation at all in that the deeper into the organisation you go the less clear the structure becomes
• Product-line -based organisation systematically forgoes efficiencies as cost optimisation interferes with governance

The answer to all of these challenges is capability-based governance.

Capability-based governance is a separate topic but it's important to acknowledge that capability-based governance should be addressed before anything that follows.

This post is about core capabilities or orientations that all organisations have; and that to a lesser extent each capability in a capability-based governance approach must both contribute to and inform.

Think of these as the 3As:

• Agility
• Awareness
• Alignment

Agility

Agility is the ability to respond. It can be a prime mover, and an innovator, when it’s set free - but it’s typically about reacting and changing efficiently. However, when all of the focus is on Agility (and not Awareness and Alignment below) we can expect diminishing competitive advantage and convergence within industries.