strategic organization design workshop toolsceoprogram.usc.edu/tools_tan_nov15.pdf · strategic...

© 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


Adapted from: Galbraith

Strategy

Structure

ManagementProcesses

Rewards

People



Implementation&

Assessment

CRITERIA

Designing

Strategy

Laying the Foundation

Valuing

AcquiringKnowledge

Diagnosing

The Self-Design Strategy


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


Tab 3: Overview: Strategy,

Organization and Competitiveness(Sue Mohrman)

(6)


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


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


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


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


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


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


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


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”.


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



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



SM14I (17)

HAVE MECHANISMS TO LEARN AND IMPROVE PERFORMANCE THROUGH TIME

Measure, benchmark, share learning, apply performance improvement methods



(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


Putting Design in Context:The Self-Design Process

(19)


Self-Design and the Star

SM106Ta (20)


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


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


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


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


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


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”


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


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


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


Sources of Diagnostic Data

Performance trends

Interviews

Focus Groups

Surveys

Social media/other input mechanisms

Customer ratings/perceptions

(31)SM14Y


Pre-work AssignmentQuestions


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



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


Structure


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



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



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



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



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



Tab 4: Star Model

(40)


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



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


Structure


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



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



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



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



Tab 5: Strategy and Design

(Chris Worley)

(47)


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?


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


Stakeholder Mapping

Unit or Organization

Purpose

Stakeholder: ______________________Primary Demands: ____________________________________________________________________________________________________________________





(50)CW20V


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


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


Design Criteria

(53)


Strategy is the key to diagnosis, design, and implementation

SM106Ta (54)


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…


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


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)


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.


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)


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

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

_________________________

CW1W (61)


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!


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


Tab 6: Designing the Lateral Organization

(Sue Mohrman)

(64)


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.


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


Matrix Examples

(67)


(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


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


• Team leadership


Resources:

• Staffing budget

• “Owns” all market personnel

• Assigns people to work on SBU activities

• Supervision, review and rewards




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



• Team leadership


Resources

• Staffing budget

• “Owns” all market personnel

• Assigns people to work on functional activities

• Supervision, review and rewards




Tab 7: Management Process

(Sue Mohrman)

(71)


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


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.


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


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)


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)


Tab 8: People & Rewards(Chris Worley)

(77)


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)


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)


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


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)


Tab 9: Designing Around the Customer

(Sue Mohrman)

(83)


Crafting Lateral Approaches:Tools

(84)


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


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.


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


Defining Vertical and Lateral Work for Each Unit

SM158P (88)

Business Unit

Organizations

Vertical

Work

Lateral

Work

Lateral

Approaches


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


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.


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.


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]


Tab 12: Designing Agile “Built to Change” Organizations

(Chris Worley)

(93)


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

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