by Lyndon Palfreman
Companies evolve
Just like people, organisations don’t stay the same. They grow, shrink and change direction, as they are impacted by both external and internal factors.
Each industry has its nuances, but customer behaviour, suppliers, costs, regulatory requirements and technology advances are all examples of external factors to which most businesses must respond.
Internal factors can affect a business’s readiness and capability to respond to these challenges and opportunities, which can see their organisational design becoming no longer fit for purpose. This can be due to a mix of reasons, including poor stakeholder ownership, lack of business vision, lack of budget, lack of internal capabilities, conflicting priorities, lack of appetite and / or capacity, long term / inflexible supplier contracts, reliance upon legacy systems, poor data and a lack of insight to inform decision making.
He who shouts loudest
Organisations are made up of people and often it is those people that influence how, if and when changes are implemented, adopted or changed. People with the greatest influence can pull organisations in certain directions, but this can be biassed towards a specific area of interest or concern – unless governance is in place to ensure some balance exists in decision making and design.
Quality vs Performance in organisational design…
A company’s risk appetite is often poorly defined and not understood, with decision making left to judgement rather than specific criteria. This can lead to a business swinging between doing everything “by the book” at the expense of efficiency or customer experience, or extreme focus on delivery and sales performance at the expense of quality – due to stretch targets and objectives to increase market share and company profitability.
Organisational change: What about our People?
In the mix of all of this, a community of people who care about people and colleagues, and their well-being and experience, can be overlooked.
Resistance to Change
Often there is a lack of appetite for change within an organisation’s culture, where things have always been done a certain way. Senior executives can be deterred by upfront cost, effort and the prospect of business disruption, especially if the longer term benefits have not been clearly defined, payback is incremental and value is less tangible in the short term e.g. customer satisfaction, loyalty and advocacy.
Indecision and failure to respond to a changing world can paralyse a business. Processes can become fragmented and inefficient through organic growth, acquisition, merger and incremental change, systems are often underutilised, people move on leaving their successors with solutions they don’t own, understand or advocate. Demotivated staff invariably leads to high attrition and a loss of key skills and experience, which compounds the issue further.
Suboptimal Organisational Design = A Broken Business
Due to a combination of these factors, many of our clients come to us with an organisational design that has become broken over time. It can be difficult for a company to establish or agree what needs fixing with such a complex mix of issues, and against a backdrop of conflicts of interest, personal objectives, emotional attachment and concerns over job security.
What is needed is a truly impartial, logical and fact based approach to make sense of the situation, understand the strategic direction of the company, inject the business with fresh ideas, disrupt the norm and establish a way forward that will re-align all areas of the business to a shared vision and objectives. This is a crucial first step towards business transformation, which provides a foundation for future service and solution design and development.
What we do
As a group of experts we initially distil the business down to a set of fundamental building blocks such as:
- What is the value proposition?
- What activities are critical to quality and delivery?
- Who/what performs them and where from?
- How are they measured?
- What capabilities do they require?
- How does Technology and Data support them?
- What is the spread of responsibility and ownership?
Reviewing an organisation and its functions, the core activities undertaken by each of them and the main capabilities required to perform them, can identify inefficiencies, overlaps in responsibility, unnecessary hand-offs and other opportunities for improvement.
It may be possible to group common activities into one place to better utilise common skills, resources and technology, driving efficiency and mitigating the impact of peaks and troughs in demand for those services. This can be particularly useful when identifying groups of activity as candidates to outsource or merge across companies within a Group.
Understanding the current organisation and how that will need to change in order to realise business strategy, will help inform a set of high level strategic requirements. These should balance regulatory, commercial, customer and colleague needs and will be used to guide transformation scoping, planning and governance.
Fig 1. Organisation Review
This assessment allows us to form a high level view of how the business might be optimised. It helps senior stakeholders to think logically about their high level requirements, what changes need to be made and the scale of the transformation ahead of them.
All of this is achieved without discussing specific individuals. Only once a logical design is agreed, should you then commence an exercise of mapping your existing resources to the skills and capabilities required within the revised organisational design.
Fig 2. Logical Organisational Design
Driving benefits through optimised organisational design
An optimised organisational design is a key enabler for achieving the following benefits:
- Process efficiency and cost reduction
- Effective and consistent spans of control
- Consolidation and reduction of tech estate
- Better data and process / outcome measurement
- Simplification and standardisation
- Reduction in hand-offs, re-work and process inefficiency
- Clearly defined ownership & accountability
Once a proposal is approved we undertake further discovery work to map business processes in greater detail in alignment to the suggested organisational model, driving improvement and identifying opportunities for automation to unlock further benefits. From the resulting requirements, we will produce a prioritised roadmap and business case for the design and delivery of a series of business improvements over multiple phases.
Taking the emotion out of the organisational redesign process
Avocado55 has a proven track record in helping companies through their transformation journeys. We are impartial and create an environment of trust and reliability between stakeholders. We do this by using evidence to inform and enable fact based decision making, taking emotion out of the process and ensuring that recommendations are in the best interest of the business and aligned to its objectives.
We’re recognised experts at service strategy and operating model design, operations and service tech optimisation, transformation design, and managing and supporting implementation.
Get in touch with us if you’d like to find out how we can help with your business transformation.
