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Organisation Design: Going from strategy to operating model to organisation structure Andrew Campbell
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The nine tests of good organization design
Fit Tests Good Design Tests Specialist Cultures Test Higher-level Strategy test Difficult Links Test Business/Function Strategy Test Organization Design Redundant Hierarchy Test People Test Accountability Test Feasibility Test Flexibility Test
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Two strategy tests Is there a “box” or powerful mechanism for each priority? Business/Function Strategy Test Higher Level Strategy Test Organization Design
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Priorities Test Implications Products Segments Countries Channels Sources of advantage or excellence Operating initiatives
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Sources of advantage or excellence
Priorities Test Implications Products Standard Bespoke Yes Segments Construction Industrial Automotive Aerospace Yes No Do we need segment managers? Countries UK Germany Middle East Asia Yes ? Do we need country managers? Channels Sources of advantage or excellence Operating initiatives
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The Business Model Canvas
How? What? For whom? Key Partners Key Activities Value Proposition Customer Relationships Customer Segments Key Resources Channels Cost Structure Revenue Streams
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The Operating Model Canvas
Suppliers Locations S L Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary Organisation Information I O
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The Operating Model Canvas
Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary
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The Operating Model Canvas
Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary Organisation O
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The Operating Model Canvas
Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary Organisation Information I O
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The Operating Model Canvas
Suppliers S Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary Organisation Information I O
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The Operating Model Canvas
Suppliers Locations S L Value Delivery Chain(s) Value P Proposition Customer/ Beneficiary Organisation Information I O
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Enhanced Business Model Canvas
Back End (operations) Front End (customers/channels) Financial Model Middle (value)
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Start by laying out the value chain(s) needed to deliver the value proposition(s)
Low cost Make Design Sell Buy Service O I
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Standard applications
Choose what else to put on the Canvas based on what is important to the value proposition Low cost locations * S L * Outsource components * Low cost Make * Design Sell Buy * Service * Links the value proposition - “low cost” - to the elements of the operating model that make low cost possible. O I Standard applications Functional structure * *
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Shell Upstream oil Tech & Projects Downstream oil Integrated gas
Global Footprint Contractors Dutch/British HQ Upstream oil Tech & Projects Downstream oil Integrated gas Multiple ERP systems Function/Business Matrix Engineering culture Bespoke functional applications (global)
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Ivo van Haren * * * * * * * * * * * * * * * * * * * Ready for trainers
Designers Social Media The Netherlands near leaders of IT standards and Open Group * Distrib-utors * Authors * On-line retailers Printers Arrange printing Price, mkt, sell to distributors Ready for trainers * * * Decide what to publish * * * Give guidance to authors * Arrange peer review and text editing * Arrange special prints Manage and check desk top publishing Arrange and agree design * * Sell direct on-line Arrange e-books Reasonable prices * * Central platform and App * * 7 staff 3 Execs Direct sales website Founder owners * Production team Customer database Marketing team *
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IT Function for on-line retailer
Recruiters UK Italy Consultants US Asia IT function BU 1 Compensation and Benefits BU 2 HR Stats Talent HR BPs OD BU 3 HR Consulting Corp funct-ions Matrix Region/Business Specialists in specialist functions Centralised decision making Good HR Software HRBPs are integrators
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Talent: example * * * * * * * * * * * * * Build capabilities
Nominate or attract participants * Development Source providers * Improve retention * Administer delivery * Evaluate Fine tune Assess need Design process * Request leaders to identify successors Get successors onto HR system Lead or attend People Dev. Committees * * * Present to Board Committee Present to Exec Meeting Improve pipeline * Succession *
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Most organizations have multiple value chains
Ashridge Executive Education Open courses value chain Tailored courses value chain Research value chain Design Market Deliver Market Design Contract Deliver Ask them how many value chains in Aijenka. Define problem Design Research Do field work Extract learning Publish
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A value chain map comparing segments
All Value Chain Steps Build Clients Design Deliver/do Market Quote/Sell Adjust design Admin Follow up Segments Open courses Tailored Qualifications Issue qual Conferences Weddings + design Research publish
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A value chain map comparing segments
All Value Chain Steps Build Clients Design Market Quote/Sell Adjust design Deliver/do Admin Follow up Segments Open courses Tailored Qualifications Issue qual Conferences Weddings + design Research publish Report by function Report by value chain and link Report by value chain keep separate
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Organisational implications
CEO Marketing Admin Design Deliver Build Clients Design/Contract Deliver Design Deliver Quals Open courses Tailored development Qualification courses
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A value chain map comparing segments
All Value Chain Steps Negotiate Develop tech Buy steel Make Sell Deliver Standard - construction - industry - automotive - aerospace Bespoke
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Organisational implications
CEO Finance + IT HR Standard products Bespoke Develop Buy Make Sell Deliver … UK EU ME Negotiate Develop Buy
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The nine tests of good organization design
Fit Tests Good Design Tests Specialist Cultures Test Higher-level Strategy test Difficult Links Test Business/Function Strategy Test Organization Design Redundant Hierarchy Test People Test Accountability Test Feasibility Test Flexibility Test
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Organisations have two kinds of work
Operating work (or value chain work) aimed at delivering value to “customers” Support work aimed at helping other departments within organisation Operating work can become support work if it is “centralised”
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Three ways to structure the operating work
Value Chain Function Process Geography Customer Product Project Asset Etc Two boss matrix Front/back Unitised Matrix
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Four types of support work
Head of structure More powerful Less powerful Key accounts Finance Lean/ Operating excellence HR Policy e.g. Champion/Coordinate e.g. Core resource e.g. Shared service e.g. Finance services Research HR services Marketing Operating Work
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Strategy, business model, operating model
Owners Core Employees Target Customers Customer Offer Employee Offer Operations Target Beneficiaries While it is evident that organisations need strategies for each stakeholder, most strategy work in commercial organisations is focused on customers. This is because the competition for customers Is the most pressing “difficulty”. Executives often presume that, if they can attract a customer, they will be able to find money, people and business partners. Hence they focus on customer strategy and leave the interaction with the other stakeholders to those working on the “operating model”. But, maybe it would be better if strategists did a complete job of defining all the “core” stakeholders and all the “offers” to these stakeholders. Business Partners Beneficiary Offer Partner Offer
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