Imagine you’ve built the perfect organization, everything is running smoothly, processes are well designed, the right people are in the right seats, and the company is highly profitable. Then at some point something changes in the outside world that makes it necessary to adjust the organizational structure. What often happens next is that organizations find it very hard to adapt their structure. Inertia sets in, and adapting to external change becomes a serious challenge. This is a common issue, and in software development there’s a concept we can borrow to address it: refactoring. In software, refactoring means changing the inside of a program, improving and modernizing it, while keeping the outside interface intact for the customer. That same principle can be applied to organizations.

Organizations are often too slow to refactor. Yes, structures are meant to provide stability, we don’t want to change them every two weeks, but keeping the same structure for 20 years is not realistic either. We need a balance, stability that gives us strength, but also flexibility to adapt to new circumstances. In many workplaces, governments, or personal interactions, you can observe how slow organizations are at adapting.

There’s a real cost to not refactoring. When organizations fail to adapt internally, they lose opportunities and waste resources. Think of legacy products that are only marginally profitable yet consume 20% of your engineering talent. These products have no future but still drain capacity that could be used to build something new and impactful. Another example, being late to market. If you have a great idea but can’t adjust your organization fast enough to act on it, competitors will. In many industries today, thanks to network effects and the winner takes all dynamic, being late can mean missing the entire market.

You need an organizational operating system. Just as your computer has an operating system, your company needs one too, an operating system that allows you to refactor quickly. Without it, your organization will always lag behind and won’t be able to adapt fast enough to external change.

Keep the concept of organizational refactoring in mind. Over the next week, observe your workplace or the organizations you interact with. Ask yourself, where is the organization too slow to change, where could you free up resources, where could a more nimble structure help capture new opportunities.

If you’re interested in topics like this, I teach regular seminars on Scrum at Scale and business agility. You can learn more at teamflow.de.