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© 2015 University of Southern California
Strategic Organization Design Workshop TOOLS
(Tan Sheets in Binder);also includes additional slides that were
not on colored paper but mentioned to be included in the tools.
November 17-20, 2015
© University of Southern California
Star Model
Adapted from: Galbraith (1994)
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© University of Southern California
Adapted from: Galbraith
Strategy
Structure
ManagementProcesses
Rewards
People
WorkProcesses/Capabilities
© University of Southern California
Implementation&
Assessment
CRITERIA
Designing
Strategy
Laying the Foundation
Valuing
AcquiringKnowledge
Diagnosing
The Self-Design Strategy
© University of Southern California
Lateral Integrative Mechanisms
LINE ORGANIZATION UNIT
MATRIX ORGANIZATION
MANAGEMENT POSITIONSDimension Champions, Project/Program Manager
FORMAL OVERLAY TEAMS
LATERAL INTEGRATING ROLESLiaison Roles, Mirror Organizations, Overlapping Membership
ELECTRONIC COORDINATIONProject-Ware, Group-Ware, CRM Systems, Social Media
BUILDING INFORMAL LATERAL FOUNDATIONPersonal Networks, Co-Location, Rotations, Interdepartmental Events, IT Connections
ORGANIZATIONAL PROCESSESStandard Processes, Goals, Measures, Plans & Reviews
© 2015 University of Southern California
Tab 3: Overview: Strategy,
Organization and Competitiveness(Sue Mohrman)
(6)
© 2015 University of Southern California
Organizational Form: Functional
SM112N (7)
Advantages /Pros Common expertise/community of
practice/critical mass
Flexibility of deployment
Ease of supervision, development
Ease of development of commonfunctional processes
Disadvantages / Cons Disconnected from value chain and
big picture
Processes cut across functions—white spaces problem
Narrow perspective—functional, not business metrics and criteria for decision making
Difficulty of developing general management capability
Motivation—may not have line of sight for contribution to the business
Core units are defined by function, sub-function, or discipline
Manager
Function /Discipline A
Function /Discipline B
Function /Discipline C
© 2015 University of Southern California
Organizational Form: Geography
(8)
Advantages /Pros Can address regional customer
bases, and regional requirements and differences
Proximity and cultural kinship Ease of access/distribution Distance from HQ enables local
adaptation and innovation
Disadvantages / Cons Difficulty of development of common
functional processes Redundancy Local perspective predominates—
suboptimization Difficulty of coordination and
learning across regions Motivation—may not have line of
sight for contribution to the overall business
Core units are defined by geography. Units contain or have access to the various elements needed to carry out business in the geography
Manager
CountryA
CountryB
CountryC
© 2015 University of Southern California
Organizational Form: Product
(9)
Advantages /Pros Focus on advancing and optimizing a
particular product’s technology, functionality, and customers
Control over resources required Ease of coordination for speed, cost
and innovation Reduces complexity
Disadvantages / Cons Difficulty of development of common
functional processes across product lines
Redundancy Local product perspective
predominates—suboptimization Difficulty of coordination, learning, and
resource sharing across products Motivation—may not have line of sight
for contribution to the overall business
Core units are defined by product or product line or by service. Units contain or have access to the elements necessary to manage the product
Manager
ProductA
ProductB
ProductC
© 2015 University of Southern California
Organizational Form: Process (Value Stream)
(10)
Advantages / Pros Cross functional collaboration and
integration: connects white spacesbetween functional contributions
Focus on customer, business outputsand clear metrics—line of sight to business
Speed, customer responsiveness Broad knowledge and perspectives
Disadvantages / Cons Internal focus of process teams Divergence of practice—difficulty
achieving common processes Difficulty of sharing learning,
developing functional skills Difficulty of supervision of multiple
functions
Core units are defined by whole processes or sub-processes that deliver value to internal or external customers. Each unit has a clear products, systems, services or solutions as their output, and contains or has access to the elements necessary to deliver that output.
Manager
WorkProcess
A
WorkProcess
B
WorkProcess
C
© 2015 University of Southern California
Organizational Form: Customer
(11)
Advantages / Pros One integrated face to the
customer Ability to customize, tailor for the
customer Customer response capability Deep understanding of customer
requirements
Disadvantages / Cons Internal focus of customer teams Divergence of practice—difficulty
achieving common processes Difficulty of sharing learnings,
developing functional skills Difficulty of supervision of multiple
functions
Core units are organized around customers or customer sets and contain or has access to the contributors and processes required to deliver a full set of services and products to the customers. Customer sets could be defined by geography, commonality of business model and/or scope, size, etc.
Manager
Customer(Set) A
Customer(Set) B
Customer(Set) C
© 2015 University of Southern California
Customer Form: Front/Back Hybrid
(12)
Advantages / Pros One integrated face to the
customer through front end units without losing cost advantages of efficiency and leverage
Maximum leverage of technology and knowledge for common product and service platforms and processes
Disadvantages / Cons Splits some processes apart that
have front and back end elements
Demands excellent and disciplined management processes
Coordination time
Frustrating to managers who prefer to control all resources they need
Front end units are organized around customers or customer sets and are organized for responsiveness to and integration of activities for the customer. Back end units are organized for efficiency and leverage. They provide processing support, supply chain, shared services, and product generation to the multiple front-end units that tailor, configure, and deliver service, products, and solutions to their customer.
Manager
Customer Set AService Unit
Customer Set BService Unit
Customer Set CService Unit
ProcessingUnits
Product/ServiceDevelopment
Units
© 2015 University of Southern California
Organizational Form: Matrix Design
(13)
Advantages / Pros
Cross functional business focus and integration and emphasis on functional excellence
Efficiency of staffing of businesses
Functional learning carried between businesses
Disadvantages / Cons
Contention between businesses and functions over methods, resources, priorities
Matrixed individuals experience role and priority conflict
Shadow organizations develop in Businesses
Business units are organized around customers or products or systems, and are most likely the P&L units. They are staffed by people deployed from functions that have responsibility for functional excellence and talent development.
Function 1 Manager
Function 2Manager
Business Unit
A
Business Unit
B
Function1
Function2
Manager
Function 1 Manager
Function 2Manager
© 2015 University of Southern California
Why is organization design important?
SM194P (14)
Resources are aligned or misaligned with strategy
and priorities.
Coordination is efficient or inefficient—resource use
is optimized or resources are wasted.
Performance capabilities are enabled or disabled—
quality, speed, innovation, growth
Work is hard or easy to do—people are frustrated or
feel well utilized.
Customer interfaces are effective or ineffective—high
value is delivered or not.
Human capital is developed, motivated, and retained
or stagnates, becomes cynical and “departs”.
© 2015 University of Southern California
High Performing Organizations
(15)
ARE MADE UP OF UNITS (at all levels) THAT:
Carry out a whole work process that delivers value to the customer, and/or are clearly connected laterally with other units that are co-performers of important work processes
Have the skills and knowledge to do this without day to day management control
Have clear responsibilities and decision making authority
Are measured and held accountable for results
Are measured and held accountable for integration with other interdependent units in the organization, and for leveraging resources and knowledge across the organization
© 2015 University of Southern California
High Performing Organizations
SM13I (16)
HAVE LEADERS WHO PROVIDE DIRECTION AND DEVELOP THE CAPABILITY OF THE UNIT RATHER THAN COMMAND AND CONTROL
Management structure is flat and lean
Lateral linkages are stronger
Lateral teams and other structures are effective at performance and decision making
© 2015 University of Southern California
High Performing Organizations
SM14I (17)
HAVE MECHANISMS TO LEARN AND IMPROVE PERFORMANCE THROUGH TIME
Measure, benchmark, share learning, apply performance improvement methods
© 2015 University of Southern California
High Performing Organizations
(18)
HAVE MEMBERS WHO UNDERSTAND AND ARE INVOLVED IN THE BUSINESS - NOT JUST IN NARROW JOB PERFORMANCE
Participate in managing the business unit and their team
Have a stake in the success of the business
Know how their work contributes to company success
Take business outcomes into account in the decisions they make
Coordinate effectively with other units
© 2015 University of Southern California
AA Strategy: Example
Aerospace Anonymous (AA) is a defense company that is adjusting to a rapidly slowing defense market by:
• Moving into white spaces and adjacencies where it can apply its technology to other government and commercial opportunities
• Funding the investment required for this expansion by greatly improving efficiency in the core defense business.
SM8Y (21)
© 2015 University of Southern California (22)
AA Strategic Imperatives: Example
Protect and grow the core
Diversify the portfolio
Establish strategic partnerships
Drive technology innovation and leverage
Optimize resource deployment for ambidexterity
Develop our people for a more complex marketplace
SM74V
© 2015 University of Southern California (23)
Strategy and Valued Outcomes
SM73V
• …addresses how the organization plans to position itself in its chosen environments and apply its resources to accomplish its mission and goals through time.
Strategy
• The design of the organization must also take into account the outcomes the organization cares about. These can be business outcomes, customer outcomes, societal outcomes, and employee outcomes.
Valued Outcomes
© 2015 University of Southern California
Laying the Foundation: Valuing
(24)
Valuing—Determining what are the values/valued outcomes that must underpin this design and must be explicitly considered:
•Delivering value to the customer (as defined by the customer)
•Employee engagement—ownership and energy
•Collaboration—internal and external
•Resource leverage and efficiency
• Innovation—embracing change in all areas
Examples:
•The environment—Societal and market/customers
•Company values and vision
•The nature of the strategy
•Employees
Sources:
SM10Y
© 2015 University of Southern California
AA Valued Outcomes: Example
Excited Workforce
• Energized
• Agile, nimble
Flawless Performance
• We do what we say. Reliable
• Meet requirements at lowest cost (for government customers)
Innovative and Entrepreneurial
• Growing in new directions and markets
Solutions Oriented
• Addressing business problems for various types of customers—outpacing the competition.
• Customers delighted with solutions that exceed expectations
Organizationally Adaptive
• Capable of reconfiguring to meet changing environments
SM75V
© 2015 University of Southern California
Laying the Foundation-Acquiring Knowledge
SM163P (26)
Acquiring Knowledge:
• Introducing new understandings into the organization about design alternatives and processes
• Learning systematic frameworks and ways of analyzing one’s organization
• Being exposed to other organizations and the design solutions that have been used
Modalities of Learning:
Exercises /
Applications
Frameworks
and
Models
Examples
© 2015 University of Southern California
Acquiring Knowledge Examples
Workshops with variety of academics and consultants – cases, frameworks, examples and applications exercises
Visits to other companies
• Processes for sharing and debriefing with a larger audience
• Applications exercises
Design teams facilitated with lecturettes, readings, and external guests
PURPOSE: To provide rich experiences to facilitate awareness and reframing
CEO: “Our investment in learning pales comparedto cost of a failed transformation”
© 2015 University of Southern California
Laying the Foundation:Organization Design Diagnosis
(28)
Gathering information about the effectiveness of the current organization design with respect to the desired future:
• Referenced to desired outcomes (strategy and valued outcomes)—aspirational
• Specifically identifying needed competencies and capabilities
• Guided by a design model (e.g., the star)
• As seen by a cross-section of participants
• Focusing on what the organization does well and what is not working well
Integrating, interpreting and visualizing the results in the context of a design framework and principles:
• Strengths, weaknesses, and challenges referenced to strategy and performance
SM11Y
© 2015 University of Southern California
Why Diagnosis is Important
Connects to desired future state
Goes beyond symptoms to root causes and enablers
Provides a picture of the system as seen from within, not just top leaders’ perspective
Enables participative input
Serves as a source of data throughout the design process
Conveys the need for change
(29)SM12Y
© 2015 University of Southern California
The Diagnosis Sequence
What is the strategy (and is it clear enough to guide design?)
What changes in organizational performance, capabilities and competencies are required to carry out the strategy?
Using an organizational framework such as the star model as a template—examine the various features of the organization (design elements) with respect to the strategy and competencies the organization needs.
Leaders and other stakeholders discuss and interpret the data and use it to guide the process
(30)SM13Y
© 2015 University of Southern California
Sources of Diagnostic Data
Performance trends
Interviews
Focus Groups
Surveys
Social media/other input mechanisms
Customer ratings/perceptions
(31)SM14Y
© 2015 University of Southern California
Strategy
SM246R (33)
Describe the goals and strategy for your
business, program or function. How does
in respond to environment or customer
demands?
Do the strategy and goals provide clear
guidance about the priorities and
success factors? What are the critical
capabilities and technologies required
for success? (Provide concrete
examples).
Is there a shared understanding of this
strategy to guide coordinated activity
across the business or functions? Is there
enough direction to effectively leverage
resources? (Provide concrete examples).
“Strategy determines direction
and priorities”
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Work Processes/Capabilities
(34)
“Work Processes/Capabilities determine
how value is created and how the flow of
information is used within and across
organizational units.”
Describe the core work
processes/capabilities (key tasks and
activities) that are key to implementing
the strategy.
Are there work processes/capabilities
that have become more (or less)
important in today’s environment and
given the business strategy (e.g., where
customer emphasis, technology, or
business requirements are changing)?
Which major work processes/capabilities
currently work well (are well integrated),
and which need to be improved? Where
does coordination/ integration break
down?
Do support processes meet the
requirements of the businesses?
Strategy
Rewards
People
ManagementProcesses
WorkProcesses/Capabilities
Structure
© 2015 University of Southern California
Structure
SM248R (35)
“Structure determines the
focus of management attention,
activities that are clustered and/or
integrated, key resources, and
decision-making power.”
How does the current structure facilitate
or impede effective management of
functions, products, programs,
customers, geographies, or partners?
How does the current structure impede
or facilitate work effectiveness/mission
accomplishment?
Are there the right kinds of connections
across units and/or with suppliers,
customers and partners to be able to
effectively and efficiently make
decisions, resolve issues and integrate
work? Where does this break down?
Are the various parts of the organization
well linked through the information
technology system?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Management Processes
SM249R (36)
“Management Processes determine the
flow of information between levels and
across units that align various parts of the
organization in pursuit of the strategy.”
How is the direction set and cascaded through
the organization? How well does it work? How
well does it help integrate the activities of the
business? (e.g., strategy, goals and objectives,
budgets, metrics, reviews, etc.)
Are decision-making processes, authority, and
responsibility clearly defined and well
understood? How do they break down? Where
is there a lack of common understanding that
may get in the way of well integrated and/or
efficient work?
Does the right information get where it needs
to be for effective performance? Does
information get shared across the organization?
Where does this break down?
Are there processes in place for learning across
the organization and improving work and
business processes? Where does this break
down?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Rewards and Performance Management
SM250R (37)
“Rewards focus attention and influence
the motivation of people to perform and
address organizational goals.”
Does the reward system motivate
and reward required individual,
team, and business unit
performance?
Does it motivate the needed
cooperation among individuals and
across various teams and units?
Does the performance assessment
process focus on the key individual
and collective performances?
Are rewards flexible enough for
diversity of business units/work –
yet foster the needed inter-group
collaboration?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
People
SM251R (38)
“People Processes define the human
capital and values of the work force.”
Have the competencies that are required
in this industry changed—and if so have
the human resources practices of the
firm kept pace?
Is there a good process for developing
needed competencies and making sure
people have meaningful and
developmental job experiences and
meaningful career paths?
Where do the established HR practices
facilitate and/or impede collaboration
and integration?
Is the firm developing the needed
leadership capability at all levels and the
lateral leadership capabilities required
for success in its complex matrix
environment?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Diagnostic Feedback Format
SM40Q (39)
Key elements – What changes and capabilities are implied? What new value will be delivered to customers?
Talent gaps? Strengths and weaknesses of current talent management / human capital model?
What is currently rewarded and how? Gaps given new strategy and capability requirements
Report on all elements in relation to strategy!!
What core units are needed to achieve focus on strategic deliverables? What lateral structures? Where is the gap?
What work processes/capabilities are critical to strategy? How does this fit with current strengths, weaknesses – what is the gap?
Current strengths and weaknesses? How do the management processes need to change to achieve focus on strategy?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Strategy
SM104L (41)
Is there a clear business strategy?
What is the strategy?
What new capabilities are required?
What are the key success factors?
What are the key technologies,
products/services, customer sets, geographies?
Processes that will be carried out in-house
Processes that will be contracted or secured
by partnerships or alliances
Activities that are no longer required
Aspects of the strategy that require differentiation and
variation across different parts of the business
Aspects of the strategy that provide opportunities to leverage
resources across the organization
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Work Processes/Capabilities
SM105L (42)
Are there work processes/capabilities that
have become more important given the
business strategy?
Which work processes/capabilities currently
work well, and which need to be improved?
Where does coordination/integration
breakdown?
Do support processes meet the requirements
of the businesses?
Key processes that deliver value to customers
Core work processes/capabilities along the value chain
Support processes: infrastructure, information and
accounting, purchasing, human resource support
Strategy
Rewards
People
ManagementProcesses
WorkProcesses/Capabilities
Structure
© 2015 University of Southern California
Structure
SM106L (43)
Core business units required
Work processes / work structures
Lateral/overlay structures to integrate acrosscore units -- Temporary and permanent
Shared service units (economies of scale, uniformity)
Centers of expertise (critical mass, strategic importance)
Central (corporate, group, divisional) functions (control, strategic direction, governance)
Leadership/management roles and structures; reporting relationships
Structural linkages to supplier and partner organizations
Information technology infrastructure
What key dimensions need to be managed (e.g. function,
product, customer, geography, etc.)?
How does the current structure facilitate or impede
effective management of these dimensions?
How does the current structure impede or facilitate
work effectiveness/mission accomplishment?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Management Processes
SM107L (44)
Direction Setting: vision, values and norms,
strategy formation
Translation of strategy into goals and objectives for various
units, levels, and dimensions—alignment processes
Control and Performance Management: Budgeting, Accounting,
Measuring, Auditing, Reviewing, Preventive and Corrective Action
Decision Making: Roles, Authority, Systematic Processes, Appeals, Documentation,
Accountabilities
Communication: Strategic, Tactical/Coordination, Customer, Business, Learning/Knowledge
Improvement/Learning Processes: Lessons learned, Documentation, Quality Improvement,
Communities of Practice
How is direction set and cascaded through the
organization? How well does it work?
Are decision-making processes clearly defined and
well understood – where do they break down?
Does the right information get where it needs to be
for effective performance?
Are there processes in place for learning across the
organization and improving work and business processes?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
Rewards and Performance Management
SM108L (45)
Reward performances key to strategy
Rewards acknowledge value contributed
Rewards acknowledge competencies required
to carry out strategy
Rewards recognize and foster interdependencies
Rewards develop desired culture
Rewards flexible enough for diversity of business units/work
Performance assessment provides individual/team review and
feedback and improvement planning.
Does the reward system motivate and reward
required individual, team and business unit
performance?
Does the performance assessment process
provide relevant feedback and include
performance improvement planning?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
People
SM109L (46)
Competencies required to carry out strategy
Competency development systems/Humanresource and succession planning
Framework for employment relationship(s)—values, expectations, obligations
Competency acquisition:-- Attracting, retaining, developing-- Contracting, partnering
Career development/human resource deployment processes
Involvement/commitment strategy
What new competencies are required to
carry out the strategy?
Is there a good process for developing
needed competencies and making sure
people have requested job experiences
and meaningful career paths?
Strategy
Rewards
People Structure
ManagementProcesses
WorkProcesses/Capabilities
© 2015 University of Southern California
General Environmental Scan
CW14P (48)
ELEMENTS POTENTIAL QUESTIONS
Social: What are the latest musical, artistic, or cultural trends that could
impact our business?
What will the impact be of a prolonged conflict in the middle east
and Iraq? Of a sudden withdrawal?
Technology: What is the short- and long-term technology roadmap?
Are there any new technologies on the horizon that could radically
disrupt the status quo?
How fast is the technology changing?
Economic: What do the top three analysts in our industry think of us?
What is the short and long term forecast for GDP and interest
rates?
Ecological: How sustainable are our activities?
Politics/
Regulators:
How aggressive are regulators?
How constraining are political forces?
Will the political/regulatory climate radically change in the near
future?
© 2015 University of Southern California
Industry Attractiveness
Question
Thinking about your industry as a whole…No, not really
Every once in a while
Yes, all the time
Are firms in your industry constantly “giving in” to demands from key suppliers and vendors ?
Are customers and consumers relentlessly pushing prices down for all competitors in your space?
Is your industry always worried that “someone else” is going to get into your business?
Is it hard for anyone in the industry to develop a consistent approach to the market because everyone is reacting to each other’s moves?
(49)
The lower the score, the more attractive the industry• You should be see relatively high margins or return on assets
The smaller the number of powerful forces, the more focused the strategy can be
CW19V
© 2015 University of Southern California
Stakeholder Mapping
Unit or Organization
Purpose
Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________
Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________
Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________
Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________
Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________
(50)CW20V
© 2015 University of Southern California
Generic Strategic Intents
Strategy Objective Breadth Aggressiveness Differentiation
Build Revenue growth through market penetration, product development, and market development
Can be broad or narrow
High: Attack, end-run offensive, pre-emptive strikes
Explicit (cost,quality, service)
Focus Profit growth through product improvement and appeals to quality or performance conscious buyer
Relatively narrow
Best for high market share products or markets with vacant niches
Attention to yields, costs,segmentation, and stage of life cycle
Defend Protect current position through blocking of rival attacks
No change Must display willingness to spend money to keep market share
Must know competition well
Harvest To generate cash flow for use in other product lines
Signaling intent, disinformation
Cost-cutting orientation
Turnaround To arrest and reverse a serious decline in profitability and market position
Narrow Focus on either costs or revenues
Business must have potential-diagnosis of causes crucial
(51)CW22V
© 2015 University of Southern California
Generic Functional Strategic Intents
Strategy Objective Breadth Aggressiveness Differentiation
Compliance and Assurance
The unit serves a risk management function that helps to keep the organization within legal and regulatory frameworks
Enterprise wide Too aggressive can be a problem –constrains risk taking
Credibility of subject matter experts
Scale and Leverage
The unit serves a forcing function that drives toward cost efficiency in internal processes
Enterprise wide Must guard against being unresponsive to businesses (shadow organizations) and not being tough on standardizing key processes
Cost/unit
Advantage Driver
The unit serves a value creation function to focus and coordinate organization resources and operations
Narrow, Focused, Strategic –Cannot do it all
Must guard against being soft on metrics of success, not leveraging horizontal (lateral) opportunities
Credibility of subject matter experts
(52)CW23V
© 2015 University of Southern California
Strategy is the key to diagnosis, design, and implementation
SM106Ta (54)
© 2015 University of Southern California
Large-group discussion
Microsoft acquired Nokia’s device business and must gain traction against tough competition. Given your experience with the iPhone, Samsung’s products, and Blackberry:
• What should the next Windows phone be able to do?
• What changes do you want to see?
Notice that the list doesn’t tell the engineers what to do or how to do it, only how it should
function when it’s done…
© 2015 University of Southern California
Good Design Criteria Are…
Poor Criteria Better Criteria
1. Specific – measureable, not too broad
Make the best products
Designs products that meet the needs of our target accounts
2. Differentiating –not table stakes
Use technology effectively
Creates technology solutions that support our clients in servicing their customers
3. Actionable –start with a verb
Be a good company to work for
Builds a reputation as a good community citizen in our key markets
4. Future oriented –aspirational
Reduce cost Operates state-of-the-art, cost-effective customer service centers
5. About Capability – not activity
Select the best people Creates a leadership pipeline to support global growth
(56)CW29V
© 2015 University of Southern California SM28V (57)
Organizational Design Criteria Examples:
1. Facilitates fast reaction to market changes
2. Increases manager accountability for XYZ
3. Enables effective information exchange between ABC and 123
4. Moves decision making out to those interfacing with customers
5. Speeds the creation of new products
6. Supports integration of products and services/bundling of services
7. Satisfies stakeholders through coordination and collaboration across the organization
8. Fosters the development of strong customer relationships
9. Optimizes resource allocation – people and systems
10. Anticipates future needs and proactively puts in place talent/resources
11. Facilitate the customization of products/services for customers
12. Maximizes collaboration to foster sharing of best practices and development across brands
13. Enable institution of repeatable processes
© 2015 University of Southern California
Organization Design Criteria
Organization Design Criteria are:
• Statements of what the design should accomplish in terms of observable/measurable operating capabilities.
• Completes the sentence: We’re going to build an organization that can ( do what )?
• Derived from the foundation that has been established—the identification of valued outcomes and the diagnosis of things that will have to change to implement the new strategy and achieve the new performance requirements.
Organization Design Criteria are not:
• A description of how to organize or the design features you prefer, such as “Centralize Support Services” or “Create an architecture group”.
• A directive goal statement, such as “Implement BPO.”
SM106RA (58)
© 2015 University of Southern California
Developing Criteria
SM86Q (59)
Valued Outcomes
Knowledge of Alternatives
Diagnosis
STRATEGY
CAPABILITIES &
COMPETENCE
THE FOUNDATION DEVELOPING CRITERIA TO GUIDE DESIGNING
1. Ask each person to develop 4-5 criteria:• What criteria should guide the
redesign?• How will you know the organization
fosters the performances required to carry out the strategy?
2. Share in small groups and come up with an integrated list.
3. Create a master list.4. Give each person 6 votes and
identify the top 6 criteria.5. Give people a chance to bring up
concerns and try to influence the others.
6. Finalize the criteria in priority order.
© 2015 University of Southern California
Individual Assignment
• Do they relate to your strategy, environmental demands, and valued outcomes?
• Are they specific, differentiating, actionable, future focused, and about capability?
Develop 2-3 design criteria to
guide your work this week
SM105R (60)
© 2015 University of Southern California
Design Criteria WorksheetExampleCriteria
1. Facilitates fast reaction to market changes
2. Increases manager accountability for XYZ
3. Enables effective information exchange between ABC and 123
4. Moves decision making out to those interfacing with customers
5. Speeds the creation of new products
6. Supports integration of products and services/bundling of services
7. Satisfies stakeholders through coordination and collaboration across the organization
8. Fosters the development of strong customer relationships
9. Optimizes resource allocation – people and systems
10. Anticipates future needs and proactively puts in place talent/resources
11. Facilitate the customization of products/services for customers
12. Maximizes collaboration to foster sharing of best practices and development across brands
13. Enable institution of repeatable processes
Design Criteria for Your Organization
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CW1W (61)
© 2015 University of Southern California
Criteria are Essential to Guide the Designing Process
SM163Q (62)
They focus leadership on what’s most important for design or redesign and improves performance
They create a framework for trade-off decisions – they articulate priorities that guide the design through conflicting needs.
They keep members focused on the same outcomes of designing
Formulating criteria enables differences to be surfaced and discussed
They can be used to evaluate different design solutions and provide measures of success
Criteria should be debated, rated, and kept prominent throughout the
designing and assessment processes!
© 2015 University of Southern California
Design Criteria for an Insurance Co.
CW30V (63)
1. Create a feeling for customers that they’ve been heard, their needs have been anticipated and it’s easy to do business with us.
2. Generate consistent, high-quality, customer-responsive, competitive products and services
3. Achieve simplicity in business processes that assure great stewardship of our policyholders’ money without compromising our service delivery.
4. Evolve our performance culture so there is a clear line of sight to the customer, strong cross-collaboration, effective execution, and clear accountability
5. Enable employees to deeply understand the customer and empower them to provide service and solutions that will foster
customer loyalty, fierce advocacy, and mutual success.
FINAL – FINAL - FINAL
© 2015 University of Southern California
Tab 6: Designing the Lateral Organization
(Sue Mohrman)
(64)
© 2015 University of Southern California (65)
What are Organizational Capabilities?
The organization’s “know-how” to achieve its intended outcomes and implement its strategy.
Composite bundles of competences, skills and technologies that together deliver valued outcomes. They are not single discrete skills, particular jobs or particular disciplines.
Embedded in the design of the organization: its work processes, structures, processes, communication channels, human resource systems, problem-solving and decision-making strategies.
© 2015 University of Southern California (66)
CAPABILITIES AND WORK PROCESSES–Design Activity
Be clear about the organizational capabilities required to carry out the strategy for the full rate
production phase
Identify the major work processes that underpin
these capabilities
As you design around the star, ensure that each element of the star is designed to carry these out
effectively
© 2012 University of Southern California
(Overlay) Matrix “Team” Strength
SM102N (68)
Program, Project or Product Team:
• Handles customer and business aspects
• Provides coordination of technical work
• Handles customer and business aspects
• Technical managers report to program (Matrix)
• Integrates the program technically and operationally
• “Owns” people operationally
• Inputs into appraisals
• Owns budget“Light-Weight Team”
“Heavy-Weight Team”
Increase “power” of team by
adding authority
PeopleTask
Budget
Members report to “home” organization for:
• Work assignments
• Technical direction and review
• Operational direction and review
“Home” (line) organization has:
• Staffing budget
• “Owns” the people and the work breakdown
• Provides supervision
Members report to “home” organization for:
• Deployment to teams/other disciplineassignments
• Career moves
• Technical processes and standards
• Development
© 2012 University of Southern California
SBU/GEOGRAPHY RELATIONSHIP (Partial)
SM102Nrev (69)
In Product /SBU
• Global product strategy and stewardship
• Customer insight integration
• New product platform development
• New product/platform roll-out x-market planning and coordination
• Provides coordination of technical work -- x market teams
• Supply chain integration
• Resource leverage
• Cross market (SBU) P&L
In Market
• Local product strategy—product localization
• Local customer and business aspects
• Local customer insight
• Product roll –out (operationally) at local level
• Local supply chain coordination/global supply chain interface
• Market level P&L
“Heavy-Weight SBU”
“Heavy-Weight Market”
Increase integration by:
Clear lateral processes
Joint market/SBU planning processes
Joint goals/shared accountability
Clear decision grid
Joint input into rewards and career moves
Joint review of projects
SBU budget to buymarket level resources
Resources:
• Staffing budget
• Dedicated SBU resources in center and in key markets
• Supervision, review, rewards
• Career input and development
• Work assignments
• Team leadership
• Operational direction and review
Resources:
• Staffing budget
• “Owns” all market personnel
• Assigns people to work on SBU activities
• Supervision, review and rewards
• Career input and development
• Operational direction and review
© 2014 University of Southern California
Center/Deployed Roles and Balance
SM102Nrev (70)
In Central Function
• Functional strategy and stewardship
• Develop common processes where appropriate
• Provides coordination of technical work -- across businesses and x-business teams
• Assigns teams/resources to businesses and projects
• Resource leverage
• Managing shared services and CEO’s
• Corporate strategic support and service delivery
In Business
• Support local business strategies and needs
• Adapt and apply company-wide processes in local context
• Develop trusted consulting/service relationships
• Develop local processes
• Manage local functional team
“Heavy-Weight”Center
“Heavy-Weight”Business
Increase integration by:
Clear lateral processes
Joint market/SBU planning processes
Joint goals/shared accountability
Clear decision grid
Joint input into rewards and career moves
Joint review of projects
SBU budget to buymarket level resources
Resources
• Staffing budget
• Dedicated resources in center and in markets
• Supervision, review, rewards
• Career input and development
• Work assignments
• Team leadership
• Operational direction and review
Resources
• Staffing budget
• “Owns” all market personnel
• Assigns people to work on functional activities
• Supervision, review and rewards
• Career input and development
• Operational direction and review
© 2015 University of Southern California
Partial Decision-Making Responsibility Chart for CC
(72)
KEY: E=Escalation Path; D=Decision Authority; R=Recommend; I=Input;N=Need to Know; U=Uninvolved
Decisions
Parties to Decisions
New Product Investments/
Portfolio
Organization-wide Initiatives
Customer SegmentTargets
Pricing
DivisionTeam R I I D/R
Operations Council I I U I
PortfolioBoard D I I U
Functions I I U/I I
ExecutiveTeam D D D D
SM7M
© 2015 University of Southern California
Decision-Making Design Task
SM33R (73)
Brainstorm the critical decisions that have to be made in your organization as it goes through changes. Which decisions are likely to be contentious (different
parties feel they have authority to make the decision?) List the main parties down the left and the decisions
on the right—fill out the grid Do you have the necessary decision forums to
make decisions that cut across parts of the organization?
Do you have a need for any decision-making boards or councils?
If so, design the forums and create a decision chart that includes them.
© 2015 University of Southern California
Decision-Making Responsibility Chart
(74)
KEY: E=Escalation Path; D=Decision Authority; R=Recommend; I=Input;N=Need to Know; U=Uninvolved
Decisions
Parties to Decisions
SM7M
© 2015 University of Southern California
Design Communication Processes & Systems
Content of Information
CommunicationMedia
Accountabilities-who, for what?
When?
Ongoing Tactical Coordination
Performance Related Goals, Feedback, Reporting
Learning and Improvement
Strategic Environmental Scanning and Planning
(75)
© 2015 University of Southern California
Design Communication Processes & Systems—Examples (CC)
Content of Information
CommunicationMedia
Accountabilities-who, for what?
When?
Ongoing Tactical Coordination
Customer issues CRM System Sales, field service managers and product team members
By end of work day
Performance Related Goals, Feedback, Reporting
Any critical path delay
E-mail and project managementgroupware
Functional team members
By Friday AM prior to end of work team meeting
Learning and Improvement
Strategic Environmental Scanning and Planning
(76)
© 2015 University of Southern California
ECC Case Study
Strategy
Structure
ManagementPracticesRewards
People
WorkProcesses
• Leverage talent• Change business portfolio• Increase consulting/ value add
component of projects• Innovate on historical emphasis on
sustainability• Enhanced intelligence about emerging
opportunities• Ability to pull talent from around the organization• Relevant innovation in business models – ability
to sell “solutions” rather than transactional services
• Project management capabilities
• From functional to regional to LOB core structures
• Lateral teaming (x-LOB then x-Regional)• Discipline chiefs for communities of practice
• From bottoms up to LOB-driven planning process• Decision rights established for “bid-teams” and LOB teams• Increased transparency of financial and operating information• Monthly call-in meetings for LOB members
CW17W (78)
© 2015 University of Southern California
People and Talent Management Systems—Design Tasks
What changes do you recommend for…
Describe the policies, systems, and procedures
Describe how they align to or support strategy, designcriteria, or other design
elements
Systems for attracting, hiring, and retaining key talent
Developing skills, knowledge, and competencies
Leadershipdevelopment
Other
CW31V (79)
© 2015 University of Southern California
Reward and Appraisal Systems—Design Tasks
What changes do you recommend for Managers
and Local Engineers?
Describe the policies,systems, and procedures
Describe how they align to or support strategy, design
criteria, or other design features
Mix of rewards
Features of the process (i.e., cycle time, transparency, differentiated or uniform)
Triggers and contingencies
Appraisal process
Other
CW32V (80)
© 2015 University of Southern California SM5T (81)
Organization Design Criteria People Processes Criteria Rewards Criteria#1 - Pursue, win, and deliver large, high-profile or strategically significant projects acrossgeographies, disciplines, and business lines.#5 - Assemble multidisciplinary teams to deploy where needed.
1. Develop internal capabilities to successfully win, manage, and deliver large, multi-stakeholder, high profile, and/or strategically significant projects.
2. Enable employees to participate in projects in other geographies and/or business units and move fluidly throughout the firm through: Processes for expressing interest in new
assignments and for loaning and transferring employees.
Processes for extrication from and repatriation to “normal” business lines.
Relocation, temporary living assistance.3. Develop internal capabilities to successfully
manage diverse, multi-disciplinary teams.4. Develop internal capabilities to manage and
work with remote teams.
1. Provide specific reward and incentive (recognition, compensation, advancement opportunity) to those employees who: Attract projects to ECC that propel the
firm forward toward the strategic direction vs. standard program for good “business as usual” work.
Successfully deliver on “challenging” projects (requiring relocation, design-build, etc.).
Successfully manage projects that propel the firm forward toward the strategic direction.
#2 - Provide clear accountability, performance metrics, and rewards for all.
1. Define performance expectations for every ECC employee linked to the firm’s strategy (via job descriptions, goal setting, performance management, and evaluation processes).
1. Reward employees (via compensation, benefits/perquisites, work/life, recognition, and development/promotion) based upon fulfillment of defined performance expectations.
#3 - Generate profit with increasing margins through selling higher-value work.#8 - Deliver increased value to our clients.
1. Provide clear definition of higher-value work to employees and include selling and delivering on such work in performance expectations for all applicable positions.
1. Provide specific reward to those employees who: Sell work defined as “higher value”. Develop and/or implement new methods
or practices that move the firm forward in providing higher-value work to clients.
Successfully deliver work defined as “higher value”.
Criteria Comparison: Organizational Design, People Processes, Rewards
© 2015 University of Southern California SM5T (82)
Design Criteria People Processes Criteria Rewards Criteria#4 - Attract, develop, and retain innovators and leaders.#7 - Attract clients who seek us out for our innovative and creative solutions.
1. Clearly articulate to external candidates how the firm’s structure, processes, and programs support innovation and leadership (recruitment).
2. Provide avenues for employees to make meaningful contributions and development for those who demonstrate innovation and leadership within the firm.
3. Enable any employee to surface and participate in innovations.
4. Define and require increased consulting value to clients as a performance expectation for all applicable positions.
1. Reward employees that make significant contributions to achievement of ECC’s strategy (innovation, leadership, creative solutions).
2. Reward those who sell work identified as strategically significant.
3. Provide specific reward for those who create new opportunities to provide increased value to clients (i.e., new ideas and solutions, converting a client relationship from transaction-based to comprehensive consultation).
4. Motivate and enable all employees to contribute to ECC’s success and achievement of strategic direction.
#6 - Balance capabilities to operate locally and nationally.
1. Identify positions requiring concerted effort to balance resources and efforts and include as a performance expectation (i.e., RM, BUM).
2. Identify local community/industry involvement as a form of desirable leadership.
1. Include both national and local work that meets the strategic criteria in incentive programs.
#9 - Manage the ECC business portfolio to achieve the strategic direction.
1. Identify positions responsible for managing the ECC portfolio and include as a performance expectation.
1. Reward management of the ECC portfolio if performance expectations are successfully achieved .
Criteria Comparison: Organizational Design, People Processes, Rewards
(continued)
© 2015 University of Southern California
Lateral Integrative Mechanisms
SM1M (85)
LINE ORGANIZATION UNIT
MATRIX ORGANIZATION
MANAGEMENT POSITIONSDimension Champions, Project/Program Manager
FORMAL OVERLAY TEAMS
LATERAL INTEGRATING ROLESLiaison Roles, Mirror Organizations, Overlapping Membership
ELECTRONIC COORDINATIONProject-Ware, Group-Ware, CRM Systems, Social Media
BUILDING INFORMAL LATERAL FOUNDATIONPersonal Networks, Co-Location, Rotations, Interdepartmental Events, IT Connections
ORGANIZATIONAL PROCESSESStandard Processes, Goals, Measures, Plans & Reviews
© 2015 University of Southern California
Team/Organization Interdependencies
SM146P (86)
Team/Org Name Team/Org Name
Team/Org Name
Team / Org Name
Team Inputs & Outputs:
Using a circle in the center of the page to
indicate your team, draw other circles
surrounding your team to represent the
individuals and groups with which your team
will have a significant interface. Use arrows
between the circles to show whether your
team/org provides major outputs to or receives
major inputs from that individual or group, and
list these inputs and outputs alongside the
arrows. Inputs and outputs can be products,
services, and/ or information.
© 2015 University of Southern California SM110T (87)
Team/Organization Interdependencies - Example
Team/Org Name Team/Org Name
Team/Org Name
Team / Org Name
Team Inputs & Outputs:Using a circle in the center of the page to indicate your team, draw other circles surrounding your team to represent the individuals and groups with which your team will have a significant interface. Use arrows between the circles to show whether your team/org provides major outputs to or receives major inputs from that individual or group, and list these inputs and outputs alongside the arrows. Inputs and outputs can be products, services, and/ or information.
Supply Chain Commodity
Team
Project“Flame” A Category
NPD Team
ConsumerInsight Small
Customer Segment
Category Finance
© 2015 University of Southern California
Defining Vertical and Lateral Work for Each Unit
SM158P (88)
Business Unit
Organizations
Vertical
Work
Lateral
Work
Lateral
Approaches
© 2015 University of Southern California
Work Processes - Examples
SM104P (89)
Business Unit - Organizations Lateral Work Vertical Work
Category Team Product Strategy Formulation
New Product Planning
Initiative Planning
Supply Chain Planning
Strategic Intelligence
Capital Planning
Product Strategy Implementation
Product Cost Management
New Product Development
Operations Efficiency Initiatives
Supply Chain Management
Customer Focused
Business Unit
Business Reviews
Initiative Planning
Customer Reviews
Customer Solutions
Streamlined Logistics Systems
Pricing
Marketing and Promotional Execution.
Customer Relationship Management
Solutions and Product Sales & Service
Customer joint value planning
Distribution Customer distribution planning
Initiative Planning
Customized distribution schemes
Inventory management
Distribution Center Management
Vendor and Transportation Management
Business Services Business Plan Deployment
Corporate Promotion & Marketing
Multi-Category Services
Customer Portal
Visual Communication & Design
(Branding)
Initiative Delivery
Work Process Development and Support
Shared Technology Development
© 2015 University of Southern California
Defining Key Lateral Mechanisms
SM159P (90)
Processes being
Integrated
Laterally
Units
Involved
Lateral
MechanismsAccountabilities
Leadership/
Ownership
* Processes can address needs for integration for purposes of governance,
task interdependence, resource leverage, and learning.
© 2015 University of Southern California
Defining Key Lateral Mechanisms—Example
SM159-A (91)
Processes being
Integrated
Laterally
Units
Involved
Lateral
MechanismsAccountabilities
Leadership/
Ownership
Forecasting
Category Team
Customer Team
Distribution
Finance
Cross functional
overlay team
Build and continually
update the dynamic
forecast.
Ongoing
communication to
key stakeholders.
Category Team
* Processes can address needs for integration for purposes of governance,
task interdependence, resource leverage, and learning.
© 2015 University of Southern California
Charter Format
SM8E (92)
Team mission:
Team goals:
Stakeholders: Customers: Managers: Co-Performers:
Resources:
Decision authority:
Requirements for integrationwith other groups:
Communication responsibilities:
Escalation paths:
Review processes:
[NOTE: See Tab 7, after page 27 for worksheet version]
© 2015 University of Southern California
Tab 12: Designing Agile “Built to Change” Organizations
(Chris Worley)
(93)
© 2015 University of Southern California
Agile Management Processes
(94)
Well-designed Management Processes
Agile Management Processes
Flexible Management Processes
Fast Management Processes
Aligns resources/
behaviors to business
strategy
Follows a continuous
improvement “plan-do-
check-act” logic
Supports and aligns with
other management
processes
Tight alignment around
the purpose and
outcomes of the process
There is a focus on
effectiveness over
efficiency – how the
process is conducted can
vary
Accepts a wide variety
of inputs and input
sources without hurting
effectiveness
Cycle times adjusted to
fit the rhythm of the
market
Simple, not overly
complex, processes that
are easily explained
Relevant information is
widely shared and
transparent