22 truths about organization design - alignorg solutions · 22 truths about organization design...

Conference Keynotes 181, December 2017

INSIGHTS

SNAPSHOTS

BENCHMARKS

RESOURCES

22 Truths about Organization DesignInsights from the Organization Design Conference Transforming to Deliver Speed, Agility, Adaptability, and Accountability New York City, November 9-10, 2017

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”—Jack Welch

Organization design has never been more important to business survival. Today’s volatility and lightning pace of change mean that nothing lasts forever—not even your latest redesign. Designing for agility and digital adaptability requires leaders to embrace new ways of thinking and all employees to embrace new ways of working. It means treating newly acquired companies like your own and treating your own employees and internal teams like start-up investments. And it means knowing which values and behaviors to hold onto amid the chaos.

When more than 100 practitioners and experts met to talk about organization design, we took notes. Here are the highlights.

If you’re not in an industry that’s being disrupted, you’re in an industry that’s declining. Old ways of thinking won’t work.

The answer is to become comfortable with discomfort and to understand that in digital transformation, it’s the transformation that matters, not the digital (technology). This is toughest for those at the top of the organizational hierarchy, because it means changing the thinking that has made them successful.

1. The fourth Industrial Revolution is upon us. It is composed of a fusion of technologies—datafication, virtualization, robotization, and automation, all strengthening each other, leading to exponential and continuous change and the question: Is your organization adjusting to the pace? Can it keep up?

CONFERENCE KEYNOTES 22 TruThs abouT organizaTion Design www.conferenceboard.org2

2. The C-suite is preprogrammed to react too slowly to this revolution, due to:

• The unfamiliar fast pace of current change—you may think you have a span of time to make digital a priority, but you don’t.

• Siloes that keep departments from working in concert—do you know who owns, say, digital ethics in your company?

• Short-term orientation that values quarterly earnings over long-term innovation practices.

• The tendency of organizations to react to pain points—they fix it only when they must, and not a minute before—rather than support continuous innovation.

3. The more successful the executive—or company—the harder it is to embrace change and redesign. In a sense, success breeds failure. We fall in love with our products, and the larger we become, the more myopic we become and the more we standardize.

4. There are ways for these leaders to embrace disruption without descending into chaos:

• Create vehicles for innovation, such as an internal “skunkworks” team whose purpose is to disrupt the status quo.

• Treat internal innovation teams as if you are an investor and they are start-ups.

• Embed design catalysts with teams to enable innovation, prototyping, and iterating.

5. Leaders tend to think their new methodologies are the change they seek. But they are merely the tools of change. Change is about people, not platforms. A bank vice president said to an org design expert, “I’m working on my cloud strategy.” Her response: “Why aren’t you working on your business strategy?”

www.conferenceboard.org CONFERENCE KEYNOTES 22 TruThs abouT organizaTion Design 3

SNAPSHOT

Getting Culture Right—What Human Capital Leaders Can Do

Human capital executives can play a key role in strengthening the values that digital transformation requires. Here are specific actions they can take:

• Learn about the cultural components that companies consistently embrace to achieve digital transformation. The fact that these values and ways of behaving are so consistent across companies that lead in digital transformation lends support to their importance.

• Monitor employees’ perceptions regarding cultural values that operate at the enterprise and the work-group level, using an annual survey or more frequent polling, supplemented by focus groups. Use sentiment analysis to mine employee comments on a platform such as Yammer, Socialcast, Slack, or IBM Connections to track trends over time. This data can be aggregated and anonymized to protect individual identities.

• Support leaders’ role in shaping organizational culture. Leaders must communicate the imperative for digital transformation, a vision for the company’s digital future, and a strategy for getting there. They must model the organizational values and actions that will drive future success.

• Overcome resistance to change by helping employees understand the impacts of digital on business and exposing them to new ways of working.

• Investigate labor trends in talent segments critical to your success. Compare supply and demand for hot skills: cyber security, data science, and digital marketing. Or partner

with a vendor to gain customized workforce intelligence—which competitors are bidding against you for talent in a specific market?

• Take stock of your workforce skills and design a learning strategy to equip leaders and employees for the digital economy. GE plans to train every new recruit to code. While many may never develop software, this training will help them to see the “art of the possible” in a digitally transformed world.

• Assess current human resources practices—including performance management, career mobility, recognition, and rewards—to ensure they are aligned with the values and behaviors you’re striving for. Recommend alternatives where needed.

• Consider whether your organization’s physical workspaces are conducive to collaboration. Rather than speculate, consider surveying or polling employees.

• Equip employees with the digital tools to collaborate, innovate, and work across boundaries. An enterprise social network, for example, can enable teams and individuals to share their work in real time, solicit answers, share experience, and locate others who share a passion for a given topic.

• Become a student of digital transformation. Engage with business leaders, marketing, and other functions in keeping an eye out for disruptions in your ecosystem, ideally before they break to the surface.

Source: Driving Digital Transformation: Why Culture and Structure Matter, Mary B. Young, Sherlin Nair, The Conference Board, June, 2017.


Beware boxology, the organization change that is no change at all.

Moving from commitment to behavior is the most difficult part of organization change. You can have the most sophisticated new organization design in the world, but if you don’t bring behaviors, i.e., corporate culture, along with it, you’ll have new boxes but an old system. How do you operationalize a design? Acknowledge that some jobs will change. Apply adequate resources. And communicate the seriousness of the enterprise.

6. “At our company, we’ll hire a firm that comes in, gives us a new methodology, and leaves,” said an HR manager at an industrial manufacturing company. “But if we don’t have the work defined, it will fail, because nobody’s job will change to accommodate the new system.”

7. Define decision points as well as roles and work. A structure without defined decision points will look new but function just like the old one, where the same people continue to make the same decisions at the same times. How do you identify decision points? Some companies employ a mobile data collection technology that shows people’s activities in real time, tracking email, IMs, and other tools.

8. Organizational restructuring is not for the fainthearted. “If you aren’t prepared to design yourself out of a job, you’re not ready,” said the head of IT at a company that makes medical equipment. “Be ready for what this causes on a social and emotional level or you will fail, no matter how good the structure.”

9. “You can change every system, but if you have the same people at the top, nothing will change,” said an HR executive at a global information services company. “I’ve only seen transformation stick when the C-suite wants to move top execs either in or out.”

10. Transformation is imperfect; expect to deal with some legacy people and structures. If you know that, for instance, “Bob will lead that team,” then you work around Bob, fitting the team to match or mitigate his skill set.

11. Applying adequate resources to organizational change means applying sticks as well as carrots: accountability and governance, plus looping back in the form of performance management metrics. Make sure people have enough details and the right tools, and that they understand the new structure’s day-to-day impact, not just its theory.

12. Not every employee will be able to take the journey with you. Work with those who “get it” and those who “kind of get it.” As for those who “don’t get it,” said the medical equipment company’s IT head, “move them out.”


SNAPSHOT

Transforming HR delivery at a global company: overcoming barriers one at a time

Inefficiency and lack of accessibility were a few of the HR problems this company sought to solve. But transformation wouldn’t be easy. A survey of the company’s HR departments revealed fragmentation, duplication of jobs, and a lack of clear career paths for employees there. A voice-of-the-customer survey of all employees netted a 63% response rate (35% is typical). The respondents’ message was loud, clear, and negative: Employees found HR to be inaccessible, with hard-to-locate resources, and managers wanted more help from HR regarding people management and talent development.

As the company embarked on implementing a new and better HR system, barriers to progress revealed themselves:

• Lack of global standardized processes

• Lack of aligned leadership and US-centricity, with 80% of leaders but only 40% of workers in the United States

• A risk-averse, perfectionist culture

• Lack of trust in shared services

Each of these barriers led to a lesson for the company, a way to work through inherent difficulties in the process.

The change agents dealt with lack of global standardized processes by implementing an “80/20” rule: intentionally not solving for every possible permutation, they finalized designs once they were 80% correct, and they understood that efficiency gains will occur over time as the model is perfected. They overcame the US-centricity by meeting with global teams personally and ensuring global consistency, conversations, and representation on all design teams. To combat the company’s culture of perfectionism, the redesign streamlined processes, minimized approval steps, and clarified decision-making. To combat lack of trust in shared services, the redesign focused on change management, managing organizational and individual transitions simultaneously, with individual managers writing change management plans for specific employees on their team. Finally, they engaged a global journey management methodology that included people, work, and technology integration: in other words, employees in new roles with the tools to perform those roles.


Alliances and acquisitions pose unique challenges to organization design.

In collaborations between companies, two organizations—and two organization designs—collide. Aligning these designs can be the difference between success and failure. What makes a corporate union succeed? An understanding of the timetable of alliances, awareness of risk, and a sensitive alliance manager who understands the art as well as the science of corporate collaborations.

13. Business alliances take place in three stages: start-up, a steady state that normally lasts from five to 15 years, and an eventual wind-down. Sensitive management is required even in the early start-up stage, when the acquiring company’s due diligence on potential partners should include an examination of their corporate cultures.

14. Once the deal is signed, the alliance manager becomes a kind of ombudsman. He or she represents the alliance, not the acquiring company. That means working for both the acquiring company and the company being acquired, and understanding the flaws as well as the virtues of both. “I’m delighted to work for (acquirer),” the alliance manager may say, “but I know its warts. Let me tell you.”

15. What does it take to manage a successful alliance?

• Effective management of legal, business, and human risks

• Establishment of products and services flowing from the alliance

• Recruitment and development of qualified workers

• Optimization of inefficiencies

• Strong governance

• Conflict management

16. Managing alliances is as much art as science. Along with structure, strategy, operations, process, ownership, reporting, regulations, protocols, and other straightforward management concerns, there are more subjective, human, and artful concerns: escalation avoidance, scenario planning, plan adjustment, people commitments, and the details of roles and responsibilities shared among employees of both companies. The alliance point person should be in organizational design—that way, he or she will see the whole picture and know how to collaborate.


Tips for optimizing design implementation.

Even with vision, teamwork, and strategy in place, barriers to transformation are everywhere. Here are a few tips for dealing with inevitable roadblocks and speed bumps.

17. Having trouble generating demand for organization design? First, don’t call it organization design. Use the language of the audience you’re selling. If they care about process, talk about process. If they care about concepts, talk concepts. Share the design without owning it or inundating your audience with tools and templates. And have fun with it, which will make the change fun for your audience.

18. Having trouble financing change? When financing internal change initiatives, it pays to think like a venture capitalist. Treat internal teams as investments. Give them deadlines in the form of a “time runway.” At the end of the runway, the project will launch successfully or be disbanded.

19. Having trouble defining the parameters of your change? Use four basic questions to structure your change project: what are the problems you need to solve? What are the opportunities you need to pursue? What are the givens—the things that can’t be changed? And what are the “Don’t go theres”—the things that should be avoided?

20. When companies fail to execute on organizational change initiatives, it’s usually because they don’t link budget and/or executive pay incentives to strategy.

21. Even in a world of change, some principles are fixed. For instance, the tools you use to get alignment may be new, but the need for alignment is not.

22. When companies succeed at organizational change initiatives, it’s often because they treat their employees like they treat their clients. This is “intrapreneurship,” applying entrepreneurial skills internally. It requires visionary leaders, a culture of purpose that will challenge the status quo, and the ability to make talent feel like they own the business as much as the C-suite and board do.


These insights represent highlights from discussions held by more than 100 senior executives who attended the Organization Design Conference on November 9-10, 2017. The views expressed are those of the presenters and participants of the Conference. Presenters include executives from a cross-section of companies and industries:

Mimi BrooksLogical Design SolutionsCEO

Richard ChoiChevroletDirector, Chevrolet Global Marketing

Reed DeshlerAlignOrg SolutionsPrincipal

Scott HamiltonENP InstituteCEO

Regina HouriganColgate PalmoliveManager of Innovation Capabilities

Mike KosiarekMcDonald’sSenior Director Global Organization Design

Chris KujawaAmerican ExpressVP Human Capital Capabilities

Gad LevanonThe Conference BoardChief Economist, North America

Elaine MasonCiscoVP People Planning, Design and Analytics

Tony MatejczykAlignOrg SolutionsSenior Consultant

Ria McVeighAECOMDirector of Organization Design and Change Leadership

Alfredo MendezAECOMVP Organization and Employee Experience

Alex PhillipsPerkinElmerIT VP

Julie SalmonThe Conference BoardProgram Director

Susan SchmittRockwell AutomationCHRO

Mike SmithAlignOrg SolutionsPrincipal

Steve WalkerEli Lilly and CompanyDirector, Alliance Management and M&A Integration

Stacy WaltzRockwell AutomationHR Manager, HQ Functions

Mary B. Young, DBAThe Conference BoardProgram Director


BENCHMARKSConference attendees were polled on the following questions:

In the coming year, what is the largest area of your organization where you expect to make organization design changes?

0 100

22330

How well does the senior leadership of your organization understand how to use organization design levers to more effectively execute against new business strategies?

Very well Somewhat A little bit

99 50%

Enterprise-wide (Across all

business units/divisions and

functions)

Business unit/division (primarily

market facing units with profit

and loss accountability)

Departmental/Work Unit (e.g. departments or sub-groups within

business units, divisions or functions)

Function (e.g. Supply Chain, HR, Finance, IT)

44%

Not at all

32

Will the organization design changes be driven primarily by:

13

Innovation

1524

Digitization

13

Cost Cutting

Other Mergers /Acquisitions /Divestitures

Business model disruption

30% 6

Chart 2

Chart 3

Chart 1


BENCHMARKS

What is the biggest challenge your organization faces as it tries to succeed in the marketplace?

717 1415

Having a "change agile"

workforce

Keeping pace with technology

Competition from

unexpected sources

Inadequate resources to do

all the things that need to

be done

Having the right skill sets in the

organization

47%

Lack of clear communication

External factors get in the way (e.g.,

acquisition, marketdownturn, etc.)

What is the primary barrier in your organization to realizing the benefits oforganization design changes?

1224 12

Lack of clarity about how things should actually work at the process and job level

Lack of a comprehensive

design

Incomplete change plan

Lack of sponsorship

45% 3 3

Chart 4

Chart 5

(Continued)


Related Resources from The Conference Board

PUBLICATIONS

Driving Digital Transformation: Why Culture and Structure Matter

June 2017

Among the most critical drivers (or obstacles) to digital transformation are factors human capital executives help manage: organizational culture, structure, leadership, talent, and skills. This report, the first in a series on the human capital impact of digital transformation, explores how organizations are using culture and structure to meet digital business goals. We highlight four companies—GE, Haier, L’Oréal, and Travelex—that have made significant progress towards digital transformation. These and other examples illustrate how organizations are redesigning their cultures and structures to achieve enterprise-level digital transformation and what they have learned in the process.

Digital Transformation: What Is It and What Does It Mean for Human Capital?

July 2016

Digital transformation leverages digital technologies and the data they produce to connect organizations, people, physical assets, and processes. While many leaders believe that digital transformation should be a strategic priority, few companies have made much progress toward achieving it. Among the biggest obstacles are lack of digital leadership, no burning platform, competing priorities, and lack of familiarity with digital technologies. This report aims to address several of these obstacles by explaining digital transformation, describing its business impacts and illustrating them with company examples, and then outlining digital transformation’s implications for human capital.

Co-creating Transformation: The Power of Coaching in Organizational Change

October 2015

Every organization is different, but all need to be able to continually respond to an ever-changing environment. Well-managed coaching interventions at key points in the change management process can strengthen an organization’s ability to achieve real transformation. When coaching is truly integrated, companies are able to “co-create” transformation through greater self-awareness and purposeful action by individual leaders and teams throughout the organization. This report explores coaching as a strategic tool and includes profiles of three organizations developing this core capability: Boeing, PepsiCo, and Cargill. Each has established a strategic framework for coaching that has had a powerful long-term effect.

https://www.conference-board.org/publications/publicationdetail.cfm?publicationid=7525




WEBCASTS

It’s Time for a Second Playbook: HR’s Role in Leading Transformation

October 2017

The pace of disruption requires today’s leaders to balance what has worked in the past with what will be required to win in the future. For leaders of organizations making the transition from legacy successes to “what’s next,” or for those that need to expand their legacy business, what’s often missing is a Second Playbook on leadership. In Merryck & Co.’s work with companies over the past 20 years, this has emerged globally as one of leadership’s greatest challenges.

Driving Digital Transformation: Culture, Structure, and Leadership Matter

July 2017

Is your organization undergoing digital transformation? Organizational culture, structure, and leadership can help or hinder large, established companies’ ability to digitally transform themselves. Join this webcast as our researchers discuss key findings from The Conference Board research report Digitalization’s Impact on Talent, Jobs, Skills, People Management.

What Is Digital Transformation and What Does It Mean for Human Capital?

November 2016

Digital transformation is a strategic business imperative for many organizations. Yet most people have only a fuzzy concept of what digital transformation actually is. Business leaders say it’s a priority but often overlook digital transformation’s implications for human capital. HR leaders need to step up and become players in setting their organization’s digital strategy. This webcast will give them the knowledge and confidence to do that.

Transformation in Action: 175 Complete, Many Lessons Learned

September 2016

Why is change so difficult? Are we really focusing on the right things? The results of a recent Harvard Business Review Study, sponsored by Strativity Group, found some eye-opening truths about change. Join our conversation on what we really need to focus on for successful change programs.

https://www.conference-board.org/webcasts/ondemand/webcastdetail.cfm?webcastid=3811





COUNCILS

Change and Transformation Council

Digital Strategy Council

Digital Transformation Council

Enterprise Digital Transformation Council

Enterprise Process Optimization Council

Global Business Services Council

HR M&A Council

HR Operations Council

Internal Communications Council

Knowledge and Collaboration Council

Leadership, Talent and Learning Council

Learning and Development Executives Council

Learning, Development, and Organizational Performance Council

Onboarding Talent Council

Project Management Council

Shared Services Council

Strategic Workforce Planning Council

Strategy Executives Council

Talent Acquisition Executives Council

Talent and Organization Development Executive Council

Talent Management Executives Council

Talent Management Leaders Council

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22 truths about organization design - alignorg solutions · 22 truths about organization design...

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