organization design governance · sales marketing engineering outsourcing – bpo skunk works...

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Presented by Mark LaScolaManaging PrincipalON THE MARK

Organization Design Governance An Emerging Concept and Practice

OTM Original Webinar 22rd June 2017

1© 2017 ON THE MARK | www.on-the-mark.com | Not For Distribution

This deck contains OTM IP. Use of OTM’s IP, documentation or information provided to you in this deck may not be used or copied without containing the OTM logo and copyright. Not for use or distribution beyond informing industry dialogue and discussion.© 2017 ON THE MARK | www.on-the-mark.com | Not For Distribution

About the presenterhttp://on-the-mark.com/meet-the-team

Mark LaScolaManaging Principal



About OTMUnparalleled Depth of Expertise & Breadth of Experience

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OTM has delivered over 400 organization design and transformation projects, in over 35 different countries, on five continents with every type of business function and countless industry sectors. OTM offers our customers one of the industry’s most collaborative, disciplined, comprehensive and integrated transformation solution. Trained and developed over 5000 executives and internal change agents.



About OTMOur Solution Sets

Our solutions achieve a common results footprint:Organization Design and Business Transformation Concept through implementation

Accelerated Change ReadinessPlanning through implementation

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A global business with a proven track record• In business over 26 years

• Completed over 400 redesigns

• In 35+ countries

• Across most industries

• For every type of business function

• For government and hybrid-government businesses

• On five continents

• Achieving a common results footprint

• Using collaborative methodologies from start to finish

• Trained/developed over 5000 internal change agents and leaders in our solutions (10/20/70)

• Owner of one of the industry’s most comprehensive, integrated and holistic solutions.



Webinar Overview and Focus


• Brief Organization Design overview• Organization Design Governance (ODG) defined • The need for ODG• Four Practical Examples Illustrating the without and with ODG

1. Annual business planning

2. From whole work to specialization

3. Increasing layers and shape

4. People plans

• Embedding ODG into BAU.• Real examples


Organization Design Defined

7


Organization Design

8

The aligning of all parts of a business to win in the marketplace -deliver the strategic or competitive advantage. It is the

deliberate process of configuring the informal and formal… including value stream, structure, technologies, management mechanisms & systems, rewards, and people processes and social systems to create a business/organization capable of

achieving its business strategy.


OTM’s Applied Star Model



Organization Performance Model

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1. Business Situation

2. Business Strategy

3. Organisation

Design4. Culture

5. Business Results

Source: Originally adapted by Ed Kur, PhD from models developed by David Hanna & Jay Galbraith. Further adapted by OTM 1998.

The needs which must be satisfied and the pressures which must be responded to and managed

The organization's reason for being; its basis for competing and winning in the marketplace

The way we really do things around here!

What the organization delivers

Are we fit for

purpose?


OTM’s Applied Design Cycle

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Govern the design


Organization Design Governance Defined

12


Definition of Org Design Governance It’s the deliberate, explicit process of changing parts of a business within published limits

of strategic and operational requirements, parameters and constraints ensuring alignment and fit across the entire enterprise over time.

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1. Stabilizing: a new design/operating model

2. Maintaining: holding steady

3. Future-proofing: changing in response to future scenario(s)

Said another way: it’s the deliberate, explicit process of changing parts of a business without perverting or distorting explicit design requirements, parameters and constraints over time.


1. Strategy and Principles Established in the Foundation Phase…

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Strategic Intents & Gravitational Pull Business Priorities Products & Service

Offering Customer Experience Social Attributes, Behaviors & Values

Design Criteria Performance Assumptions

Structural and Shape Features

Standardization and Integration

Requirements


Practical Elements of Organizational Design Governance1. Strategic intent and competitive advantage.

a. Gravitational pull.b. Product/service offerings.c. Customer experience.

2. Value Stream a. New, changed, technology, tools.

3. Fundamental Structure featuresa. Boundary and sub-boundary locationsb. Shape (Levels and SOC)c. Departmentalizationd. Power

4. Management mechanismsa. Governanceb. Riskc. Rolesd. Measures and scorecard

15


The Need for ODG

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Most businesses are fragmented and over-complicated* (in response to complexity)


1. Changes are made over time across the business without anyone looking at how ALL of those changes fit and align with intended strategic intents and requirements…

• Changing product/service demand• Lean/Six sigma (process map)• Technology changes & improvements• Finance, HR demands• Glue activities added – rarely stopped• Restructures; Redundancies• New roles and jobs filled• Teams, units, depts. added• Mgrs/line leaders put in place• Culture/behavior changes

2. There is an unspoken practice (norm) in most businesses about leaders only being concerned about their “vertical patch” and making changes in “their own domain”. This is fragmented thinking.

*refer to OTM previous webinar- Complexity vs Complicationhttps://on-the-mark.com/webinar-slides-recording-and-qa-log/


All the Potential Moving Parts in a Business (OTM’s Constellation of Indicators©)

© 2016 ON THE MARK | www.on-the-mark.com | Not For Distribution

1. CHANGES IN Business Direction

• Changing product and service demand

• Change in customer demand

• Acquisitions

• Evolving strategy

6. People Processes

• Finance, HR demands

• New roles and jobs filled

4. Management Mechanisms?

• Technology changes & improvements

• Finance, HR demands

• Mgrs/line leaders put in place

• Inserting matrix roles• Governance and compliance demands

• V/H glue activities added

3. Structure?

• Teams, units, depts. added

• Changes in work and boundaries

• Power/decision making

• Unclear roles and responsibilities

2. Value Stream

• Lean/Six sigma improvements

• Technology changes & improvements

• Work added but rarely removed

• Variation, difficulty, unrepeatable

5. Rewards & Recognition?• New job families

• Leadership styles7. Organisational Renewal?

• Incompatible ways of working• Inhibiting culture and practices • Legacy cultural attributes

18


Four Practical Examples Highlighting the Need for ODG

19


Example 1. Typical Annual Business Planning

20

Q2

Q3Q4

Q1

Set Budgets then execute comparing

forecasted vs actual


Example 1. Annual Business Planning with ODG (Future Proofing)

21

Q2

Q3Q4

Q1

Set Budgets then execute comparing

forecasted vs actual


Example 1. What do we mean by “fit for purpose”?

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1. Business Direction• Has our business direction changed?• Competitive Advantage?• Customer Experience?• Product/service offering?• Culture/Behaviors?

2. Value Stream•Value work?•Inputs, Work, Outputs?•Decisions & Metrics•Technology/Tools?

3. Structure •Boundary location?•Power?•Specialization?•Shape?•Departmentalisation?•Different roles?

4. Management Mechanisms•V and H Glue?•Reporting?•Scorecards?•Compliance?•Risk and/or Governance?•Management Roles?•Organization Charts?•Technology?

5. Rewards & Recognition•Rewards & recognition?•Leadership Styles•Promotion•Job Families

6. People Processes•Have the life-cycle of our people changed?•Performance/Development?•Recruiting?•Employee Brand?


Example 1. Annual Business Planning with ODG... So What?!

23

• By conducting an annual “fit-for-purpose” review, the business is required to annually revisit its purpose and strategy and operating model in light of internal and external forces at least annually.

• Acts as a proactive future-proofing vehicle.

• Think of it as a continuous process improvement aimed at both the strategic and operational levels.

• Involve a cross-functional and multi-level team from across the enterprise to complete.


Example 2. From Whole Work to Specialization Stabilize/Maintain )

24

Team 1

Before changes are made,have proposed changes

reviewed/approvedTeam 1 Team 2

Team 2 Team 3


Example 2. From Whole Work to Specialization. So What?!

25

• Before changes are made, have the proposed changes approved. Have authors of the change articulate and identify real benefits of changes against ODG requirements. Provide evidence of benefits.

• Proposed changes can be reviewed by a peer-to-peer group, a council and/or executive team. The focus of the review and approval is on stabilizing and maintaining the new operating model.

• Changing work in boundaries from whole work to specialization (Functional) has the potential impacts of sub-optimizing and fragmenting work causing internal resources to shift its efforts and focus from doing real work to doing glue activities.


Example 3. Current Shape and Org Chart

26

Leader

Team 1 Team 2 Expert

Manager Manager

3 Levels Span 1:1 - 1:6

New Leader


Example 3. Adding Layers, Changing Shape.

27

New Leader

Expert

Manager ManagerManager

Line Leader

Team 1 Team 2 Team 3

4 levels Span 1:1 – 1:7Increase in layers

Team 1 Team 2


Example 3. Adding Layers, Changing Shape. So What?!

28

• Before changes are made, have the proposed changes approved. Have authors of the change articulate and identify real benefits of changes against ODG requirements. Provide evidence of benefits.

• Proposed changes can be reviewed by a peer-to-peer group, a council and/or executive team. The focus of the review and approval is on stabilizing or maintaining the new operating model.

• Changing shape by increasing levels slows responsiveness and speed of decision making.


Example 4. Typical people planning

29

JobsSkills/

CompetenciesTalent People Plans

Hire Staff 1 Year Prior to Needing them

Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecJan Jan

Demand/Need Identified for Next

Year

Set Budgets then execute comparing forecasted vs actual

Goal Setting Execute/Calibrate


Example 4. People planning with ODG (Future proofing)

30

Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecJan Jan

Business Situation – Forces impinging on the business that

demand a response

FIT For Purpose?

Goal Setting

Budgeting

People Plans

JobsSkills/

CompetenciesTalent People Plans


Example 4. Typical people planning. So What?!

31

• By conducting an annual “fit-for-purpose” review, the business is required to annually revisit its purpose and strategy and operating model in light of internal and external forces at least yearly.

• This enables “people plans” to be fully integrated into the future-focused operating model and on talent needs 1-3 years out.

• Acts as a proactive future-proofing vehicle.


Embedding ODG into Business as Usual

1.Complete a “fit for purpose” review as part of your annual business planning process (before budgets and goals).

2.Publish Org Design Governance requirements, parameters and constraints in an operational handbook (paper or digital).

3. Include a review of the ODG requirements in all new employee/leader orientation/onboarding.

4.Diffuse and dialogue with line leaders and teams about ODG, it’s intents and implications. Strive to have each employee know.

5.Regulate changes to operating model and improvement initiatives.• Establish an operating model governance council that reviews, guides and

approves changes and improvement initiatives. Caution: choose wisely.6.Document and inventory all changes to organization design.

32


“FIT FOR PURPOSE” Critical Review

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1.0 PURPOSE

• The FIT FOR PURPOSE Review critically reviews the current organization against each point on the OTM Applied Star Model against UPDATED requirements parameters and constraints.

• Gaining a holistic and comprehensive view of the organization’s Current environment, goals, performance, value stream, structure, management mechanisms, capabilities, and culture.

• The review informs, educates and aligns leaders and key

stakeholders about the workings of their current organization and answers the question, “ARE WE STILL FIT FOR PURPOSE?”

• Creating an initial readiness psychological state (‘D’ in the D x V x F >R model.

Time Requirements: 2-3 full days


Example of an Operational Handbook

34


Sample Governance Contents

Market Segments

•Includes all roles from Sales through Job Instructions.•Broken into market segments to drive customer intimacy.•Sales, Marketing, and Business Services (LTS, BLS, Outsourcing & Paper) are cross-segment functions.•Cross-segment functions report with a solid line to 1 segment leader and with a dotted line to the 2 other segment leaders•P&L responsibility is at the segment level

35

Waseca

East Greenville

Woodstock

Publication 1

Publication 2

Catalog & ComB

usin

ess

Serv

ices

Mar

ketin

g

Sale

s

Market Segments Manufacturing & Distribution


Sample Governance Contents

Manufacturing & Distribution

•Focus is on process optimization, lean principles, standardization.•Cost, quality, and safety are key measures.•All plants are organized into one horizontal M&D operation.•Process Owner optimizes manufacturing.•Program Manager is the customer advocate.

36

Waseca

East Greenville

Woodstock

Publication 1

Publication 2

Catalog & Com.B

usin

ess

Serv

ices

Mar

ketin

g

Sale

s

Market Segments Manufacturing & Distribution


2. Integrated Business & People PlanningOperational Planning Y1 Operational Planning Y2 Operational Planning Y3

Month to Month Business Mechanisms

3 Year

Strategy

37


Global Business Strategy

Zone (geographic) Business Strategy

Market Business Strategy

Operational Planning

Strategic Ops Review Annual Business Objectives & KPIs

Monthly Ops Review

Weekly Ops

Review

3. Business Planning

Daily Ops

Review

3 Years

2 Years

1 Year

Monthly, weekly, daily…

Where does FIT for purpose planning

belong?

38


Any thoughts, questions or reflections?

39

[email protected]


2017 Annual EODF Conference

40

http://eodf.eu/2017-annual-conference/

20 – 21st Oct Germany


Open Positions at OTMPosition Job Description Link

Senior Consultant

www.on-the-mark.com/careers

Support Consultant – UK Based

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