mcccd hr professional development series on organizational ... design... · mcccd hr professional...

2016 ON THE MARK | www.on-the-mark.com

Presented by Jaimie Mudd of ON THE MARK

MCCCD HR Professional Development Series on Organizational Design

March 29, 2016

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Objectives

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Solving Real Business Challenges Applying Organization Design Solutions

a) Solve both strategic and operational business challenges.

b) Gain answers and solutions to real organization design and/or transformation issues you are facing.

c) Gain tools and a disciplined, step-by-step approach leading to realtransformation.


Outline

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Welcome and OverviewWho are we and what is One Maricopa, One

HR?What is Org Design (1 Hour)

I. ‘Fit for Purpose’II. Integration vs Separation

Customer FocusOur Challenges ?


1. Welcome, Intros, Overview

Name, Role, CollegeWhat does One Maricopa, One HR mean for you?What do you want to learn during our session today?

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About OTM

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OTM is a leader in collaborative organization design and business transformation. Now in our 25th year of operation, with offices located on both sides of the Atlantic (Phoenix and London, UK), OTM is recognized by many as their preferred vendor in providing substantive yet practical organization design and lasting change. Our passion is for collaborative business transformation and our work is guided by research, evidenced-based and established best practice and emerging methodology.

Organisation Design and Business Transformation – Concept through Implementation

Change Readiness – Planning through Implementation

Capability Building – Assessment, delivery and support

Business Integration – Due diligence “fit predictor” through implementation

Decision Making, Planning and Problem Solving – Issue identification through implementation, resolution and follow-up support

Our Solutions:


About OTM

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Sectors Functions GeographyAerospaceDefenceLogistics & DistributionFinancial ServicesTelecommunicationsFMCGIT Software & ServicesManufacturingRetail

Human ResourcesSupply ChainManufacturingOperationsFinance, ITRegulatorySales, MarketingEngineeringOutsourcing – BPOSkunk works

North AmericaWestern EuropeScandinaviaEastern EuropeLatin AmericaMiddle EastSouth East AsiaSouth Pacific

Other OTM Offerings:

OTM offers services supporting organization design and business transformation solutions including a) in-house executive development, b) internal or external multi-day, hands-on skill building workshops using real projects, c) support and guidance, d) conference presentations and TED Talks.

Our Experience:

With our experience of delivering close to 400 organization design and transformation projects, across 30 countries and countless industry sectors, OTM offers the most disciplined, integrated and comprehensive Organization Design and transformation solutions.


Practical Challenges

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1. Organizational challenges.

2. Current operating model isn’t fit for purpose.

3. Moving from site-based/local to global operating model.

4. Moving from product to solutions focus.

5. Real business integration rather than bolt-on.

6. Putting the customer at the center of a business.

7. Large technology changes. CRM, ERP

8. Implementation challenges.

9. Organization boundaries/integrate v. separate.


2. Organization Design Defined

What is it and Why does it make a difference?

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OTM’s Applied STAR Model

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Rules of the OTM Enhanced STAR

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Rule 1: Form follows function ALWAYS. (Strategy drives all design choices)Rule 2: Value stream is core work only (value-producing activities). Comes before structure.Rule 3: Structure is organizing people around core work. Structure choice must best align with strategy. (Value stream + structure = definition of work).Rule 4: Management is neither core work nor structure yet necessary.Rule 5: Rewards/remuneration/compensation and benefits plus people processes are reinforces and enablers, not drivers.’Rule 6: Organizational and social renewal can be achieved through a redesign and transformation.Rule 7: Culture change is the result of an entire design and operating model, not a separate process or activity.


1. Business Direction

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The most important element of the OTM STAR as it is where the business strategy is formulated and competitive difference is decided. This determines distribution of power in a business model. We call this “gravitational pull.” In addition, this element includes the customer experience, products and services offering, customer demand, company values/social attributes and ways of working are examined and defined in future terms.


Examples of Companies by Competitive Advantage

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Customer IntimacyCustomer intimate => Segmentation, Strong Brands

ProductInnovation & Leadership

⇒ Deep specialism, functional structure, Pricing higher,

“PUSH”

Operational Excellence

=> Service delivery is common, flatter/ horizontal

E2E structure, Strong Brands

Ultimately: Only one can be King/Queen


2. Value Stream

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Consists of all tasks and activities that transform raw materials and information into an output, product or service. Value-creating work! It is the end-2-end process without being concerned about where it is done and who does it. This element also identifies big decisions, inputs, outputs and inter-dependencies and linkages internal and external to the unit of service.


Step 1.0

Level 1 Process Step (7-9 Steps)

Activity Output

Decisions(Big 3-5)

Metrics

What

From who

What

To who

Inputs Output

Step 2.0

Step 3.0

Step 4.0

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Value Stream Overview

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Talent Acquisition Value StreamMCCCD HR

1.0Identify Need

2.0Develop Solutions (Explore, Analyze)

3.0Develop Plan

4.0Implement Plan

5.0Evaluate

6.0Celebrate


3. Structure

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Structure is organizing people around core work and must best align with strategy.

Thinking beyond roles and jobs, structure consists of 6 different features: 1. Boundary location2. Departmentalisation, 3. Specialisation, 4. Shape, 5. Distribution of Power6. Vertical/Horizontal Coordinating and

Integrating Mechanisms or what is commonly called “glue.”


3. Structure

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Departmentalisation is the way we organise people within boundaries. There are 6 ways to organize people around work. Organisations typically default into functional structures due to not knowing the options and trade-offs. Each option has a very real business advantage and disadvantage:1 Functional - Expertise. 2 Product - Product knowledge, focus, resources. 3 Segment - Channel, customer, demographics.4 Geography - Location, region, division. 5 Horizontal – Process or end-2-end value stream. 6 Hybrid - A combination of 2 or more of above.


3. Structure

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Front-Back Hybrid Dimension• Market structure front-end • Product structure back-end• Where are you in relationship to your

competition?• Where do you need to be in the next

12 to 24 months?• Does your current structure match

your strategy?

Cost

Process/Horizontal

• Potential for new processes and radical change to processes• Reduced working capital• Need for reducing process cycle times• Maximum efficient scale across P/Ls through leverage

Product Dimension• Product focus• Multiple products for separate customers • Short product development and life cycles• Minimum efficient scale for functions or

outsourcing

Geographic • Low value-to-transport ratio• Service delivery on-site• Closeness to customer for delivery or support• Perception of the organization as local• Geographical market segments needed

Functionality ServiceFunctional • Small-size, single P/L• Undifferentiated market• Scale or expertise within the function• Long product development and life cycles • Common standards

Market • Important market segments• Product or service unique to segment• Buyer strength• Customer knowledge advantage• Rapid customer service and product cycles• Minimum efficient scale in functions or outsourcing


3. Structure

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Vertical/horizontal coordinating and integrating mechanisms or glue is used to align and connect work, people, structures and levels within and across the boundaries of a business. Vertical glue: cascading of goals and objectives. Horizontal glue: matrix roles, meetings and councils, shared objectives across units/departments, etc.

OTM Wisdom: Glue mechanisms are commonly used to offset the inherent disadvantage of boundary locations and departmentalisation choices.

OTM Wisdom: The more boundaries in an organisation, the more fragmented an organisation becomes, increasing the risk of over-specialising; Keep in mind that the more you fragment and specialise the more co-ordination/glue is required; the more glue required, the more people expend the vital resource of time and effort co-ordinating and integrating.

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4. Management Mechanisms and Systems

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Management mechanisms consists of: • Management Roles• Information flow, • Governance,• Risk and Compliance,• Metrics/scorecards and reporting• Decision Making,• Reporting structures and org charts,• Technology.


5. Reward and Recognition

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Rewards include reward, compensation/benefits or remuneration, recognition and as well as the leadership style that is desired in the business. Sometimes referred to as a “Total Rewards Policy.”


6. People Processes

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People processes consists of all aspects of the employee lifecycle including:• Recruiting,• Onboarding,• Performance management/development,• Most engagement activities. • All processes and mechanisms geared towards

developing, growing and engaging employees can be considered.

OTM Wisdom: It is quite a common to insert more robust people processes and engagement tactics to compensate for unaligned, disconnected and/or unfit organisation designs or change cultures.


7. Organisational Renewal

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Organisational renewal is the last part of the OTM enhanced STAR and is a direct consequence of HOW the Organisation Design is completed.

OTM Wisdom: The greater amount of people [management and employees] involved in the design process itself, the greater opportunity for positive organisational renewal occurring simultaneously. This is known as “Design Compatibility.


Definition of Organisation Design – Fit for Purpose

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The aligning of all parts of a business to succeed in the marketplace.

It is the deliberate process of configuring the informal and formal… including value stream, structure, technologies,

management mechanisms & systems, rewards, and people processes and social systems to create an organization

capable of achieving its business strategy.


Complexity: Complexity is the natural consequence that occurs at the intersection of a business’ product and service offering, plus its customer mix and their varied demands, magnified by the speed of response required.

VS

Complication: Business complication is the self-made processes, boundaries and structures, practices, mechanisms, protocols and norms embedded in an operating model and organization design that makes up HOW a business manages and copes with its complexity. It is OTM’s experience that nine times out of ten a business over-complicates its organization design and operating model.

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Disciplined phases.

Each phase has a set of concrete outputs and key decisions that must be made BEFORE proceeding to the next Phase of work.

Decisions made in each phase become the basis for the next phase of work.

Completed work associated with each Phase must pass through an approval gate by the sponsor team and key stakeholders before advancing to the next one.

Each Phase allows for significant participation and involvement from key stakeholder groups.

APPROACH & METHODOLOGY OTM’S DESIGN CYCLE

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Customer Focus vs Customer intimacy

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Traditional – “Customer Focus” Customer Intimacy

Customer ExperienceFocus on customer satisfaction; being nice Focus on customer engagement; deepening

relationship

Takes customer feedback and acts on complaints rapidly solving problems

Designs business to minimise complexity for customer.

Customer Feedback Uses research to understand customer preferences

Uses total feedback to drive customer insight and drive product/service and process innovation

Customer Communications

‘Push’ traditional communications Multiple communication channels – using every point of customer interaction to systematically gather, analyse and generate customer insight

New channels for communication, create choice and options

In-source complexity from customer experience

Innovation Use customer research and focus groups to drive product/service development

Create solutions to needs that customers don’t even know they have

Customer Service Transactional – build good customer service at ‘moments of truth’

Good Customer Service is a given – focus on end to end customer experience


Customer Ecosystem – Case for Change

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Drivers So What?Why Important? What was our response?

Financial

• Transparency into business line P&L’s• To drive growth (lack of current growth)• Need for clearer Portfolio management

• Wasted investment• Spend on wrong items• Missed opportunities

• Increased executive capacity focused on growth

• Created self-contained business groups

Customer

• Expansion of customer base• Reduced influence of standards• Ecosystem / customer interaction / work

flows more complex and varied• Markets we serve are more distinctive and

independent

• Lose relevance andinfluence

• Keep selling existingproducts

• Dilute long-term opportunity

• Increase affinity to the customer/market

• Moved engineering and product marketing closer to the ecosystem / customer

Growth

• Existing growth drivers + sources of growth flattened out

• Needed to focus on growth • Needed to create multiple sources of growth• Need for faster process for growth

• No growth• Missed opportunities• Fewer bets

• Created 6 Ecosystem segments reporting to CEO, each with a growth charter

• Each group has a different growth responsibility

• Created a laboratory for incubation projects

Cultural

• Lack of focus / visibility / control in businesses

• Lack of speed• Lack of sufficient cross functional

communication & alignment• Lack of clarity for employees between what

they do on a daily basis and driving growth

• Poor execution • Flattened leadership structureo Fewer Approvals

• Improved quality of decision making


Implementation Challenges

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Change Impact Analysis

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Star Aspect Change Impact Rationale

Strategy 3 MWB remain the same, but the way of presenting them are different.

Products and Services 3 Products won’t change. Services and way of presenting them will be modified.

Core Business Processes 4.5 The entire interdependencies will be modified / new responsibilities.

Structure 4.5 The whole reporting line will be impacted.

FTE of Work 3.5 4% additional FTE (without support).

Management Mechanisms 4 New objectives / roles / system / process / alignment needed.

People 3.75 Specific functions will be more impacted (Sale & care).

Leadership 4 Strong leadership skills needed for this modification (new reporting lines).

Culture 3No modifications of values/Socialattributes. Culture/mind-set might be altered.

Customers 4 Big positive impact on our consumers.

Customers and Suppliers 3 Positive impact on Customers and Suppliers.

Average 3.66

0

1

2

3

4

5Strategy

Products andServices

Core BusinessProcesses

Structure

FTE of Work

ManagementMechanismsPeople

Leadership

Culture

Customers

Customers andSuppliers

Change Impact: Avg. 3.66

The Change Impact is on a rating is rated on a scale of 1 = low impact to 5 = high impact. While this rating does not correlate with negative or positive impact, it does highlight the level of change to be considered while planning the transition to the new design and operating model


Internal and External Drivers Causing Change

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Some external drivers causing change

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External Pressures Examples

CustomersLoss of customers, changing expectations, evolving needs, customer experience

Demand Changing, evolving, trends

Products & Services Lifecycle (New, harvest, etc.), cannibalization

Pricing Commoditization, pressures

CompetitorsNew entrants chipping away at market share; offering of cheaper services

Legal/regulatory Changing requirements

Time Pressure, Time window to “catch wave”

Social/Political Turbulence, stability, predictability, maturity, war, poverty

Talent Available labor pool, skillset demand, wages

Climate/Environment Climate change, drought, famine, etc.


Some internal drivers causing change

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Internal Pressures Examples

Internal Improvement efforts Lean, customer experience, efficiency, restructure, compensation

Engagement & Retention Low scores, difficulty attracting and/or retaining talent

Complications & Quality Fragmentation, response time, over-matrixed, silos, errors, timeliness, speed

Growth M&A, new products/services

Innovation R&D, setting up, managing, process/product/business model

Costs Declining margins, large overhead, efficiency

Value proposition & competitive differential

Moving from Product to market or solutions, low price vs. customer excellence, etc.


Gravitational Pull

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Characteristics of Customer Intimate Organisations

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Goal/Focus: Share of customer’s businessValue Proposition • Personalized solutions

Customer Experience• Complexity ‘insourced’ from customer • Easy to do business with• ‘Premium’

Core Capabilities• Segmentation• Customer insight – ability to systemically gather, analyze and

generate insight for solutions

Organization Features • Customer/Market focus• Multi-disciplinary customer teams

Risks • Duplication of resources (inefficiencies)• Sharing information across teams

Examples

• Pampers• Ocado• First Direct Bank• Nordstrom


Characteristics of Product Innovative Organisations

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Goal/Focus: Market share/market penetrationValue Proposition • Product features

Customer Experience• Customer has choice• Higher cost• May have good customer service as ‘product surround’

Core Capabilities • Innovation • Market knowledge (customer preference/competition)

Organization Features• Product/Category or functional organization• Specialists• ‘Internal’ competition (different generation teams)

Risks • Product ‘silos’ • Duplication and hoarding resources

Examples

• Apple/Samsung• BMW• Starbucks• Bose• Lego• ARM


DIRECTIONS: Three restaurants…

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a. Customer Intimate

b. Product Innovative

c. Operational Excellence

Time: 50 mins


DIRECTIONS: Using the OTM Applied STAR Model as your guide…

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a. Describe your menu offering/food and service [product/services]

b. Describe the E2E customer experience [from the outside-in]

c. Simply illustrate the E2E value stream

d. How will you organise people around work? Key Roles needed?

e. What skill levels will you need?

f. What would be key management mechanisms including: metrics, decision making,

governance/compliance, information flow…

g. What would be your key R/R and People recruitment processes

h. Name of the restaurant/location/hours

Time: 50 mins


Definition of Work

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Business Environment

ORGANISATION


Definition of Work

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InputsRaw materials & information

OutputsProducts and/or Services

ORGANISATION

IN OUT

The value creating process



Definition of Work

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People

People

OutputsProducts and/or Services

ORGANISATION

IN OUT


InputsRaw materials & information

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