designactivity flow - university of southern california

| 1Copyright © 2020 University of Southern California, Marshall Center for Effective Organizations. All rights reserved.

Design Activity FlowTools, Examples, and Design Activity/Tasks

Key to shaded pages:Tan = ToolsBlue = ExamplesGreen = Design Activity/Tasks


Table of Contents

Laying the Foundation …………………………… 4StrategyValued OutcomesDiagnosis

Criteria …………………………………………….... 14

Capabilities and Work Processes ……….......... 22

Designing Core Structures …………………....... 33

Lateral Approaches …………………………........ 47

Designing Management Processes ……........... 58


The ReDesign Flow and the Star

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Strategy

Laying the Foundation

Valuing

Learning Diagnosing

Designing

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Implementation& Assessment

Valuing

Learning Diagnosing

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Laying the FoundationStrategy

Valued OutcomesDiagnosis


StrategyStrategic Challenges, Example

From: To:

Long term customer relationships Competitive bidding

Customer pays for product and technology development Business invests strategically and recoups investment

Customer driven requirements Anticipate customer needs to develop marketable systems

Homogeneous business model New/multiple business models

Business comprised of a few very large programs/products Business comprised of a few large programs and a large number of diverse small programs

Valued Outcomes

DiagnosisDiagnosing: Systematic data gathering and analysis:

• What is the strategy? Is it clear enough to guide design?

• What changes in organizational performance, capabilities and competencies are required?

• Organization elements that need to change? Framed by a systematic organization

framework. Leaders and other stakeholders discuss and

interpret the data and use it to guide the

Valuing—Determining the outcomes that will underpin the design.

Sources of values: Company strategy, values and vision Employee values Customers Society and natural environment

Performance trends

Interviews

Focus Groups

Surveys

Social media/other input mechanisms

Customer ratings/perceptions

Sources of Diagnostic Data

Strategy is how the organization positions itself in its chosen environments and applies its resources to accomplish its mission and goals. Focuses on delivering value to customers and other stakeholders.


Strategy and Valued Outcomes

• …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


FROM TOU.S. based and dependent organization Truly global organization

Revenue growth from known markets and channels

Revenue growth and replacement comes from new markets and channels

Predominately cost and productivity focused Elevate Consumer focus while maintaining cost/productivity

Large scale “big company” model More adaptive, agile to consumer needs and competitive threats

U.S. centric talent base Globally diverse mobile talent

Strategic Challenges: Global Foods Organization


( AA) Aerospace & Defense: Strategic Challenges (e.g: from Executive Team)

From: To:Long term customer relationships Mostly competitive bidding

Customer pays for product and technology development

Business invests strategically and recoups development through product sales

Customer driven requirements Anticipate customer needs and develop and sell products, systems, and services

Homogeneous business model New/multiple business models—e.g.,COTTs—rapid insertion, continuous upgrades and tech insertion

Business comprised of a few very large programs/products

Business comprised of a few large programs and a large number of diverse small programs—growth largely in small programs and new products


Laying the Foundation: Valuing

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• The nature of the work• Employees

Sources:


AA Valued Outcomes: Example

• Energized• Agile, nimble

Excited Workforce

• We do what we say. Reliable• Meet requirements at lowest cost (for government customers)

Flawless Performance

• Growing in new directions and marketsInnovative and Entrepreneurial

• Addressing business problems for various types of customers—outpacing the competition.

• Customers delighted with solutions that exceed expectations

Solutions Oriented

• Capable of reconfiguring to meet changing environments Organizationally Adaptive


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


Diagnostic Feedback Format: Where are the Gaps?

How is market context changing?What new value will be delivered to customers?“From To” Articulation

Talent gaps? People processes to enable strategic capability?

What should be rewarded and how to foster strategically important performance

Report on all elements in relation to strategy!!

What core units are needed to achieve focus on strategic deliverables? What lateral structures?

What capabilities/work processes are critical to strategy?

How do the management processes need to change to achieve focus on strategy?

Strategy

Rewards

PeopleCore and

LateralStructure

ManagementProcesses

Capabilities/Work

Processes


• Enterprise strategy not clearly defined, actionable, or inspirational; no clear "north star" to guide priorities in today’s competitive environment

• In the absence, functions pursue excellence against perceived business objectives which are too numerous and ever-changing, causing misalignment between functional priorities / incentives and business needs

• Key Work Processes have become over complicated and slow – E2E, NPD

• Digital and pricing capabilities needed• Brand building and innovation capabilities

under developed

• Structure limits US from holistically managing the portfolio as a single, integrated business

• Marketing and marketing support function structure creates duplicative work and at times competing objectives, lack of clarity on who owns marketing talent and organization

• Divisional fragmentation leads to lack of scale, coordination costs, and duplication of efforts

• Consensus-based / risk-sharing culture with unclear decision rights slows decision-making and competitive response

• Preparing arguments, materials and data for executives (and functions) to make decisions consumes a huge amount of time and energy—detracts from ability to manage the business

• Little sense of people at lower levels being empowered to make decisions

• Internal customization is rewarded, firefighting glorified (cause a problem, fix a problem)

• Lack of accountability

• Lack of external and global thinking, capabilities needed for the future

• Matrixed individuals need to be more directly linked to business performance—not just functional performance

• Narrow and deep skills

Example: Star Model Diagnostic Summary

Strategy

Rewards

People Structure

ManagementProcesses

WorkProcesses/Capabilities


Criteria



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Valuing

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Developing Criteria:

Organization Design Criteria:

ARE• Statements of what the design should accomplish in terms of observable/measurable

operating capabilities. • We’re going to build an organization that can …… (do what?) • Derived from the foundation—the strategy, valued outcomes and diagnosis of what will

have to change to implement the new strategy.

ARE NOT • Descriptions of how to organize or the design features you prefer, such as “centralize support services” or “create an architecture group”.

• Goals, such as “implement BPO” or “double our market share”

Examples of Criteria:To Perform, Win and Grow – the company must: Be ambidextrous—efficient operating model and new business incubation. Enable leadership, ownership, and accountability at all levels. Deploy people and investments across the enterprise with speed and agility. Compete with multiple business models.

Criteria

The Foundation Developing Criteria to Guide Designing1. Building on the foundation: Individuals develop criteria2. Small groups generate an integrated list of 5-7 criteria3. Large group: discuss and debate and distill to 4-6 recommended criteria4. Review with leaders, get broader organizational input, iterate5. Finalize the criteria in priority order.


Organization Design Criteria

Organization Design Criteria are:

• Statements about the future design’s ability to do or accomplish something --observable/measurable operating capabilities – necessary for success• Completes the sentence: We’re going to build an organization that can (do what)?

• Derived from “Laying the Foundation” activities, the implications of the (new) strategy, and new performance requirements

Organization Design Criteria are not:

• Descriptions of how to organize or statements of specific design features, such as “Centralize Support Services” or “Create a digital services group”

• Goals or objectives, such as “Increase spans of control” or “Be more customer centric”


Developing Criteria

• Valued Outcomes• Knowledge of

Alternatives• Diagnosis

STRATEGY

CAPABILITIES & COMPETENCE

THE FOUNDATION DEVELOPING CRITERIA TO GUIDE DESIGNING

1. Provide a short lecturette. 2. Ask each person to develop 4-5 criteria:

• We want an organization that can (do what?)…

3. Share in small groups; develop a list of 3-5 criteria.

4. In the large group, create a master list of all proposed criteria (no duplicates).

5. Give each person 6 votes and identify the top 6 criteria.

6. Give people a chance to bring up concerns and try to influence the others.

7. Prioritize the criteria – what’s most important?


Sample Design Criteria—to Perform, Win and Grow (AA)

The company must be able to:1. Improve productivity, drive out cost and deliver greater value

to our core customers while promoting growth in new areas.2. Empower leadership, ownership, innovation and

accountability throughout the organization at all levels.3. Deploy and access appropriate resources (people and

investments) across the enterprise with speed and agility.4. Build capability and competence to compete across multiple

business models and markets.5. Implement a diversification strategy.


Design Criteria Examples and Worksheet

Example Criteria1. Facilitates fast reaction to market changes2. Increases manager accountability for XYZ3. Enables effective information exchange between

ABC and 1234. Moves decision making out to those interfacing

with customers5. Speeds the creation of new products6. Supports integration of products and

services/bundling of services7. Satisfies stakeholders through coordination and

collaboration across the organization8. Fosters the development of strong customer

relationships9. Optimizes resource allocation – people and

systems10. Anticipates future needs and proactively puts in

place talent/resources11. Facilitates the customization of products/services

for customers12. Maximizes collaboration to foster sharing of best

practices and development across brands13. Enables institution of repeatable processes

Design Criteria for Your Organization

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WORKSHEET/TOOL

Module 2 (Week 2 – Monday, 9.28)



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Valuing

Learning Diagnosing

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Capabilities and Work Processes


Star Model

Adapted from: Galbraith™ (1994)

Strategy

Rewards

People

ManagementProcesses

Capabilities/Work

Processes

Core and Lateral

Structure


Organizational Capabilities are its “know-how”: Composite bundles of work processes, competencies, skills, and

technologies Embedded in the design of the organization

Design each element of the star to support these strategic capabilities.

Identify major work processes that underpin these capabilities

Identify organizational capabilities required to carry

out the strategy

Capabilities/Work Processes

Work Processes examples: Flexible manufacturing Three horizon planning Product and service development Flexible resource deployment

Capabilities to Enact Strategy, examples: Manage a portfolio at 3 time horizons Leverage core capabilities across businesses Crafting and executing a technology strategy Manage a dynamic network of teams


What are Organizational Capabilities?

Organizational Capabilities are its “know-how”: Composite bundles of work processes, competencies, skills,

and technologies Embedded in the design of the organization


Capabilities and Work Processes–Design Activity

Design each element of the star to support these strategic capabilities.

Identify major work processes that underpin

these capabilities

Identify organizational capabilities required

to carry out the strategy


Capabilities and Work Process Examples

Work Processes examples: Flexible manufacturing Three horizon planning Product and service

development Flexible resource deployment

Capabilities to Enact Strategy, examples: Manage a portfolio at 3 time horizons Leverage core capabilities across

businesses Crafting and executing a technology

strategy Manage a dynamic network of teams

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Manage a dynamic network of teams

Flexible resource deployment; Lateral alignment and update processes; communication and situational

awareness building

Leverage core capabilities across businesses

Core Product and Service Modular Development/Local Adaptation

Manage a portfolio at 3-time horizons

Three horizon planning: future sensing, competitor and customer analysis,

strategizing, aligning accountabilities and resources, testing and learning

Capabilitiesto Enact Strategy, examples:

Work Processesexamples:

Capabilities and Work Process Examples


1. What capabilities and key work processes are required to carry out your strategy?

2. How strong are these capabilities and work processes compared to what’s needed?

Rating: + = Strong- = Weak compared to what’s needed

Capabilities Rating Key Work Processes Rating

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Organizational capabilities are its “know-how”:

Composite bundles of work processes, competencies,

skills, and technologies that allow the organization to

deliver its intended value to its stakeholders

Embedded in the design of the organization

List of capabilities:

1.

2.

3.

4.

5.

6.

Etc …

WORKSHEET


Star Model


Strategy

Rewards

PeopleCore andLateral

Structure

ManagementProcesses

Capabilities/Work

Processes


Structural Design Guidelines & Principles

• The criteria are the major “north star” for the design.• Design the core structural units of the organization to

carry out the key work processes and house the core capabilities of the organization. Where ever possible, try to self-contain key processes in a core unit.

In a complex organization, many capabilities require cross-unit coordination and collaboration:• Design the lateral connections (structures and

processes) required to operate effectively across the core units where core capabilities require cross-unit coordination and collaboration.

• Be explicit about the accountabilities and metrics of each unit and of each lateral mechanism that is defined.

Strategy

Rewards


Structure

ManagementProcesses

Capabilities/Work

Processes


Designing Core Structures


Determining Core Units:Key Dimensions of Performance and Contribution to the Business

Contributions to Strategy Performance Expectations

Products/Services

Customer

Channel (e.g., retail, wholesale, digital)

Geography

Functions

Other

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Determining Core Units: Alignment with the Business Model

Organizational Form: Core Units

FROM THE STRATEGY, BUSINESS MODEL: HOW DO WE MAKE MONEY?

Functional

Geography

Product

Process

Customers

Front/Back

Matrix

Network

What are the core capabilities required? e.g.• Innovation

• Efficiency/low cost and leverage

• Agile customer-centric value delivery

• Globally integrated service to global customers

• Speed of addressing customer needs

What are the key work processes required to deliver value to the customers? e.g.

• New product and service development

• Flawless transactional service delivery

• Customized service and product co-development

• Solutions and systems development and integration

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An Example of Core Unit Decisions

Organizational Form Core Business Units Product Divisions

Core capabilities required?• Innovation: market preferences changing• Defining and marketing value to customer• Global growth into new markets with

different local preferencesKey work processes required to deliver value to the customers?

• Innovative product development for health, convenience and indulgence

• Regional/local adaptation capabilities --Trade-off analyses and decision-making

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Another Example of Core Unit Decisions

Organizational Form Core Business Units

Industry Business Units / Front Back Form

Core capabilities required?• Defining business value to customer and

developing solutions• Integration of products and services from

IBM and other companies• Managing an eco-system of partners and

customersKey work processes to deliver value to the customers?

• Designing and delivering solutions to solve customers’ business problems

• Co-development

Front/Back HybridFront end units organized around customer sets and individual accounts

are organized for responsiveness to and integration of activities for the customer. Back end units are operating units, organized for efficiency and leverage.

Manager

Customer Set AService Unit

Customer Set BService Unit

Customer Set CService Unit

ProcessingUnits

Product/ServiceDevelopment

Units

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Core and LateralStructure

Structural Design First Principles

Self-contain key work processes in a core unit when possible. Design lateral structures for

capabilities and work processes that require cross-unit coordination and collaboration. Charter each core and lateral

structure All designs are trade-offs

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Generic Divisional Structure

CEO

General ManagerDivision B

The“Center”

General ManagerDivision A

What goes in the Center?

LOB Head LOB Head LOB Head Function Head

Function Head

Function Head

Function Head

Function Head

Function Head

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All Designs Are Trade-offs

Centralization, vsself-containment and

decentralization

All Designs are Trade-offs

The advantages of speed, ownership, focus and

accountability that accrue to

self-contained units

The advantages of leverage and ease of cross organization

coordination that come from sharing, integration,

commonality, and lateral links

VERSUS

Specialization vs Generalist Based, Multi-Functional

Designs

All Designs are Trade-offs

The advantages of organizing around highly

specialized units with deep, state of the art competencies

The advantages of organizing around

generalist/multifunctional units

VERSUS


When to Centralize and Decentralize

Centralize if …The benefits to the corporation of leverage and commonality outweigh the benefits to the corporation of allowing local control and variation.

Decentralize if …The benefits to the corporation of allowing local control and variation are greater than the advantages to the corporation seeking leverage and commonality.

Conditions: Resource leverage gives market

advantage and/or is necessary to compete.

Operational effectiveness, value proposition, and innovation and growth in strategic areas depend on collaboration across the organization.

Conditions: Local resource control and tailoring

practices to business units give advantage in key markets.

Businesses operate with different value propositions and business models, and their operational effectiveness and growth and innovation do not call for integration.


All Designs Are Trade-offs

The key ongoing trade-off decision:

The advantages of speed, ownership,

focus and accountability that

accrue toself-contained units

The advantages of leverage and ease of cross organization

coordination that come from sharing, integration,

commonality, lateral, and matrix relationships

VERSUS


Organizing For Multiple Dimensions Through Core Units

The top level units cluster activities to achieve key strategic focus

Other key dimensions can be addressed through the next levels of the organization

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Multi-Dimensional Design – Product Line Self-Contained BU’s

Eng SalesMfg Mktng

Product 1

Eng SalesMfg Mktng

Product 2

General Manager

Customer Set A

Customer Set B

Customer Set C

Region A

Region B

Region C

One approach is to manage complexity by focusing on different dimensions at different levels in the organization


Generic Divisional Structure

CEO

General ManagerDivision B

The“Center”

General ManagerDivision A

What goes in the Center?

LOB Head LOB Head LOB Head Function Head

Function Head

Function Head

Function Head

Function Head

Function Head


Design Task: Core (Hierarchical) Units

In order to house the capabilities required to implement the strategy, what core units are needed?1) Have each individual think about the criteria, capabilities, and key work

processes, and the needed contribution from different dimensions. Generate the first three levels of the organization.

2) Share the models and identify the different approaches that people have taken and how well they address the key capabilities and design criteria.

3) Divide the group into 2-3 teams and have each generate a core structural design.

4) Share and evaluate each design according to each criterion.5) Iterate, share and evaluate, and converge on a design choice, and/or on two

options to be explored going forward.


Lateral Approaches

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Limitations and Intent of Core Structural Units

Ideally, core structural units are optimally designed to have responsibility for key strategic outcomes.

This is never fully possible – processes cut across units—often not linearly opportunities for synergy reach across the system

Thus the core structural units are not sufficient. The operating structure requires the ability to operate across units.

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23 45 E.g., The customer journey often goes

through multiple units.


Star Model Showing Lateral


Lateral Organization

Strategy

Rewards

Core andLateral

Structure

ManagementProcesses

Capabilities/Work

Processes

People


Lateral Approaches

BUSINESS UNIT

MATRIX ORGANIZATION

MANAGEMENT POSITIONSLeaders, Project/Program Manager

FORMAL TEAMS

LATERAL INTEGRATING ROLESLiaison Roles, Mirror Organizations, Overlapping Membership

ELECTRONIC COORDINATIONProject-Ware, Group-Ware, CRM Systems, Social Media

INFORMAL LATERAL FOUNDATIONPersonal Networks, Co-Location, Rotations, Interdepartmental Events, IT Connections

ALIGNMENT PROCESSESStandard Processes, Goals, Measures, Plans & Reviews


Defining Vertical and Lateral Work for Each Unit

VerticalWork

LateralWork

LateralApproaches

Style & Design

Supply Chain

Retail

Marketing

Channel Team

Region Team


Work Processes – Example from Foods IndustryBusiness 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


Defining Key Lateral Mechanisms

Processes Being Integrated Laterally

UnitsInvolved

LateralMechanisms Accountabilities Leadership/

Ownership

* Processes can address needs for integration for purposes of governance, task interdependence, resource leverage, and learning.


Defining Key Lateral Mechanisms—Example from Foods IndustryProcesses being

Integrated Laterally

UnitsInvolved

LateralMechanisms Accountabilities Leadership/

Ownership

Forecasting

Category Team Customer Team Distribution Finance Operations

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.

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Lateral and Core Design Retail Fashion Organization Example

Marketing Network

General Manager

Finance ITStrategyHR

Product Development RetailMarketingProduct

Marketing and Consumer

Insights

Upscale Commodity Children’s

Region A Stores

Region B Stores

Region C Stores

Region A Stores

Region B Stores

Region C Stores

Supply Chain

Region C

Region B

Region A

Logistics and Distribution

Region A

Region B

Region C

Brand Management

Market Intelligence and Analytics

Consumer Marketing

Region B Stores

Region C Stores

Product Class A (Upscale)

Style and Design

Region B

Region C

Product Class C (Children’s)

Product Class B (Commodity)

Region A

Region A Team

Region AStores

Upscale Channel Team


Core Design Grid plus Lateral Structures, Fashion Industry ExampleKey Accountabilities Indicators of Success

Product Development

Product Marketing and Consumer Insights

Style and Design

Supply Chain

Retail

Consumer Marketing

Upscale

Commodity

Marketing

Brand Management

Market Intelligence and Analytics

Region Teams

Channel Teams

Marketing Network


Design Task: The Lateral Organization

In order to house the capabilities required to implement the strategy, what Lateral approaches are needed?1) With the criteria and the key work processes in mind, identify the key lateral

linkages needed across the core units of the organization. For each:a. Identify the purpose of the linkage and the elements that need to be linked.

What processes need to link across units?b. Design the linkage mechanisms that are needed

(Divide the group into 2-3 teams and have each generate a linkages mechanisms for one or more key linkages)

2) Share and evaluate each linkage design according to the criteria3) Converge on design choices, and/or on two options to be explored going

forward.

NOTE: Linkages can’t be designed by people from only one part of the link -make sure there is participation from both elements being linked


Designing Management Processes


Star Model


Strategy

Rewards


Structure

Capabilities/Work

Processes

ManagementProcesses


Star Model with Lateral


Lateral Organization

Strategy

Rewards


Structure

ManagementProcesses

Capabilities/Work Processes

KEY PRINCIPLE: As lateral becomes more

Important, the organization relies increasingly on

management processes to ensure alignment.



Direction-Setting

Decision-Making

CLEARDIRECTION

Goals/Metrics

Strategy

Rewards

Planning and Review

To enhance speed and effectiveness of decision-making and enable agility and innovation, Key decision-making focuses are: Decision logic to support the strategy Decision authority and needed input Process to gather input and make key decisions.

ManagementProcesses

Communication

Design-Task: Decision-Making Identify the critical decisions that have to be made in the

organization and fill out the decision grid:• Small groups list the main parties down the left and the

decisions on the right—fill out the grid• Large group shares, consolidates, discusses and iterates

Design any needed decision forums (teams, boards, councils) and create a decision chart that includes them.

Design Task: Communication Identify vertical and lateral communication

flows that will be required:– for internal and external alignment– so each part of the organization has needed

information to carry out its mission Decide standards for the flow of information:

media, protocols, accountabilities, and timing.

Example of Decision-Making Responsibility Chart: Design Communication Processes & Systems

Communication & Information Sharing Information processing in complex organizations

requires:— Big picture widely understood— Shared information, common understanding

and protocols— Multi-directional information flow Digitalization requires new communication

norms, approaches, and responsibilities

Design Task: Direction-SettingTo align the parts of organization to support the strategy and business model, design: Top down, lateral, and bottom up processes

to align the strategy and objectives of the organization and its component elements Metrics to measure strategy and objective

accomplishments. What should be rewarded? Cycles/triggers for review and adjustment of

strategies and objectives?


Direction-Setting Design Focuses

What are the top-down, bottom-up, and lateral processes for determining and aligning the strategy and objectives of the company and its component elements?

How are the dimensions aligned? (products and services, geographies, functions, customers, etc.)

What metrics will be used to measure strategy and objective accomplishments?

What is the cycle for review and adjustment of strategies and objectives?


Direction-Setting

CLEARDIRECTION

Goals/Metrics

Strategy

Rewards

Planning and Review

Prioritization


Direction-Setting Worksheet

Direction Setting

Changes in Org Design That Will Have an Impact This Element of the Current Direction Setting

Process

Specific Changes Required to the Direction Setting Process in Order to Fit the New Design

Strategy

Prioritization

Goals/Metrics

Planning & Review

Identify specific areas where changes need to occur in the current direction setting processes in order to fit with the new design.


Strategy Process (Company Example)

Leadership Team

(Strategy Team?)

ELT

TheCenter

Regions Operations Products

STRATEGY INPUTS STRATEGY OUTPUTS

Environmental Trends

Global Projects &Exploration

Regional

Business model, requirements

and opportunities

Valuesand commitments

Current performance

and capabilities

Intended positioning

Initiatives to enhanceperformance and external capabilities

Focus areas for greaterbusiness and societal impact

Changes to business model


Direction-Setting Design Task

Design the vertical and horizontal strategy setting process and identify any lateral mechanisms needed (e.g., cross unit planning meetings).

Identify the metrics to measure how successful the organization is at achieving its strategy and specify targets.

Design the flow down process of strategy into the objectives of the organization and its component elements.

Determine the review processes and mechanisms that will be used to: track progress; identify changes in the environment and adjust plans and targets; identify mid-course corrections in the assignment of resources and

operational strategies to achieve various elements of the plan. Identify accountabilities and what objectives and aspects of

performance—organization, team and individual—should be recognized in the reward system.


Direction-Setting

Decision-Making

CLEARDIRECTION

Goals/Metrics

Strategy

Rewards

Planning and Review

To enhance speed and effectiveness of decision-making and enable agility and innovation: Key decision-making focuses are: Decision logic to support the strategy Decision authority and needed input Process to gather input and make key decisions.

ManagementProcesses

Communication





Design Task: Communication Identify vertical and lateral communication flows

that will be required:– for internal and external alignment– so each part of the organization has needed




Communication & Information Sharing

Information processing in complex organizations requires

— Big picture widely understood— Shared information, common understanding and

protocols— Multi-directional information flow

Digitalization requires new communication norms, approaches, and responsibilities

Design Task: Direction-SettingTo align the parts of organization to support the strategy and business model, design: Top down, lateral, and bottom up processes to

align the strategy and objectives of the organization and its component elementsMetrics to measure strategy and objective




Decision-Making/Governance in a Multiple Dimensional Organization

Cannot rely on uni-dimensional hierarchical authority.

Councils, boards and other representative forums (with clear charters) be established to make strategically critical decisions that commit multiple units to integrated action.

These decisions provide the framework for lateral processes, structures and alignment.

The executive team is the highest level governance forum and escalation path.

Goals and objectives and rewards along all vertical and horizontal chains should be aligned with these decisions.


Decision-Making Focuses

How does the changed strategy and core and lateral design impact the decision-making logic of the organization?- Decision logic to support the strategy- Decision authority and needed input- Process to gather input and make key decision

Purpose: To enhance speed and effectiveness of decision-making and enable agility and innovation:


Move decision-making rights closer to the work. Seek appropriate input before making decisions. Decisions should be made within a timely manner. Make sure people who need to know are aware of the decisions being made and

seek input before a decision is finalized. Respect and support decision rights – do not go around the decision makers. People have responsibility for knowing their decision rights and those of others. Trust that people will make good decisions. Coach and ensure there is a mechanism for learning from decisions. Respect multi-cultures and different perspectives in the decision-making process.

Guiding Principles for Decision-Making - EXAMPLE


Decision-Making Principles Worksheet

Decision-Making Principles

Develop a list of 6-8 key decision-making principles that should guide decision in the redesigned organization


Partial Decision-Making Responsibility Chart Example

KEY: E=Escalation Path; D=Decision Authority; R=Recommend; I=Input;N=Need to Know; U=Uninvolved

Parties to Decisions

New Product Investments/

Portfolio

Organization-wide Initiatives

Customer Segment Targets Pricing

Product LineTeam I I I D (target)

Operations Council I I N IPortfolio

Board D I I U

Functions I I I(marketing)

D (sales)D (sales)

Investment Team N R N NExecutive

Team E D N U


Decision Rights KEY

E=Escalation PathIf a decision can not be reached it should rapidly escalate to the party/parties who can make the decision in a timely fashion so work can continue.

D=Decision AuthorityParty who has the final authority to make the decision.

R=RecommendParties who are tasked with working through a process in making a recommendation to sponsors, who are the ultimate decision makers.

I=InputParties who have expertise or authority that materially impacts the quality and outcome of the decision.

N=Need to KnowParties that will need to know the decision because they need to be involved in executing or their work will be impacted by it. They will not need to be involved in making the decision

U=UninvolvedParties that do not need to get involved in the decision.


Decision Grid VS. RACI – What is the Difference?

RACI A RACI describes role

accountabilities along a process that delivers valued outcomes for the organization. It will include parties who carry out

tasks as part of the process including providing information to inform the decisions that are made, and who is ultimately accountable for the effectiveness of the process.

Decision Grid A Decision Grid identifies the

parties who are involved in making decisions because:• The decision is material to their

ability to carry out their role in the organization and

• Their input has material impact on what will be the best decision for the organization.

It also identifies which party has the final decision (the big D).


Decision-Making Responsibility Chart

KEY: E=Escalation Path; D=Decision Authority; R=Recommend; I=Input;N=Need to Know; U=Uninvolved

Decisions

Parties to Decisions

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Copyright © 2020 USC Marshall Center for Effective Organizations All rights reserved.

Decision-Making Design Task

Develop a set of decision-making guiding principles. Identify the critical decisions that must be made in the

organization and fill out the decision grid: Small groups list the main parties down the left and the

decisions on the right—fill out the grid Large group shares, consolidates, discusses and iterates

Design any needed decision forums (teams, boards, councils) required for cross organizational decision making, and create a decision chart that includes them.

Identify decision domains where decision-making can be built into digital platforms.

TOOL


Direction-Setting

Decision-Making

CLEARDIRECTION

Goals/Metrics

Strategy

Rewards

Planning and Review

To enhance speed and effectiveness of decision-making and enable agility and innovation: Key decision-making focuses are: Decision logic to support the strategy Decision authority and needed input Process to gather input and make key decisions.

ManagementProcesses

Communication





Design Task: Communication Identify vertical and lateral communication flows

that will be required:– for internal and external alignment– so each part of the organization has needed





Information processing in complex organizations requires

— Big picture widely understood— Shared information, common understanding and

protocols— Multi-directional information flow


Design Task: Direction-SettingTo align the parts of organization to support the strategy and business model, design: Top down, lateral, and bottom up processes to

align the strategy and objectives of the organization and its component elementsMetrics to measure strategy and objective





Information processing in complex organizations requires:— Big picture widely understood— Shared information, common understanding and protocols— Multi-directional information flow



Guiding Principles for Communication - EXAMPLE

• Transparency wherever possible• Easy and accessible communication across levels and functions• Respect workflow process communication agreements--avoid

premature escalations or end runs • Predictable cadence of information from leadership• Proactive 2-way communication • Use communication approaches that are appropriate to the situation • Consistency of approaches for sharing workflow and project

information• Develop shared e-mail norms


Communication Principles Worksheet

Communication Principles

Develop a list of 6-8 key communication principles that should underpin the redesigned organization


Design Communication Processes and SystemsContent of Information

CommunicationMedia

Accountabilities-who, for what? When?

Ongoing Tactical Coordination

Performance Related Goals, Feedback, Reporting

Learning and Improvement

Strategic Environmental Scanning and Planning


Design Communication Processes and Systems—Examples

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 management groupware

Functional team members By Friday AM prior to end of work team meeting

Learning and Improvement

Strategic Environmental Scanning and Planning

(CC Example)

83

Copyright © 2020 USC Marshall Center for Effective Organizations All rights reserved.

Communication Design Task

Develop a set of communication principles.Using the worksheet, identify and design new vertical and

lateral communication flows that will be required for the various parts of the organization to carry out their mission effectively.Which communication flows can be handled digitally?Identify minimal standards to enable needed flow of

information throughout the organization and with stakeholders: media, protocols (if any), applications, accountabilities, and reciprocal expectations.


Star Model


Strategy

Rewards

People Structure

ManagementProcesses



New strategies, business models, and organization and work designs require new competencies, contributions, and motivations: Strategic reward frameworks reinforce team and individual contributions to strategy. People systems access, develop and deploy a skilled and motivated workforce.

REWARDS AND PEOPLE: Begin with the end in mind…


Strategy

Rewards

Structure

ManagementProcesses


People

The first three star points identified the structures, connections, accountabilities, and management processes that underpin the organization capabilities needed to carry out the strategy.

The rewards and people elements align behavior with the way the organization is designed to operate and with its cultural values.

Rewards and People Should Support the Way the Organization is Designed to Operate


The changes in strategy, and the redesign of the organization to develop the capabilities to deliver value differently often require changes in the rewards system and in the way people are managed. List the major ways in which the strategy and organization are changing that will have implications for rewards and people.


Changes in the Operating Design that call for Aligning Rewards and People Practices: Example

Clearly defined accountability of the product units for planning, the integration of the value stream, and Enterprise profitability. Clear accountabilities of all other functions to support the product

plans. Lateral connections and accountabilities have been clarified and are

an increasing element of many jobs in the organization. Cross-functional teams have been formalized, including their

collective accountability for business results. Solving problems and making decisions lower in the organization. Many new and often more complex roles and competences. Emphasis on multiple stakeholders, integrity, and brand.


People and Talent Management Systems

What changes do you recommend for…

Recommended specification of systems to support performance requirements, strategy and

criteriaRationale

Systems for attracting,hiring, and retaining key talentDeveloping skills, knowledge, and competenciesCareer pathsLeadershipdevelopmentOtherOther


Reward and Appraisal Systems

What changes do you recommend for the reward

system

List high level specifications to align to or support design criteria, or other design features (How can NA ISC use these processes more effectively to

support the strategy, criteria, operating model and culture?)

Appraisal process

Base/Incentive pay

Types of rewards used

Units that are rewarded (individual, team, business unit or organization)

Non-financial rewards

Other


Implementation & Assessment

Charters communicate how the parts of the organization are intended to operate:

Each unit (even existing ones) should have a charter. Charters should be shared so that people know how the organization is

designed to operate.

Charters

Charter elements for each unit

Mission/strategic contribution Goals Stakeholders:

– Customers:– Managers:– Co-Performers:

Resources

Decision authority Requirements for integration

with other groups Communication responsibilities Escalation paths Review processes

Implementation & Assessment Tasks • Detailed design of new core and lateral units and new roles and processes.• Develop shared understanding of strategy, business case and organizational model.• Staffing and start up of key elements of organization.• Competency development – skills training and experiential learning.• Rapidly test, learn and iterate.• Assess and adjust.


Charter Format

Team mission:Team goals: Stakeholders: Customers: Managers: Co-Performers:

Resources:Decision authority:Requirements for integrationwith other groups:Communication responsibilities:Escalation paths:Review processes:

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