When organisations contact us for help with their target operating model or organisational design, we always ask what has made them contact us. We hear plenty of reasons that justify the time and cost of organisational design and operating model changes.
Some companies will tell us they know they are late on the agile journey. Others say there is some successful agile delivery happening in a small area and the company now has an appetite for more.
Organisations sometimes tell us they are going through a tech-focused transformation and are changing the operating model before, during, or after a major technological investment. Other companies with global capability centres are consolidating back-office functions and capabilities from a regional to a global model. Companies that outsource work or move offshore, contact us for help and others simply want to reduce the layers of hierarchy that slow down decision making.
Whatever the reason companies get in touch, they are always keen to hear about the advantages of working on their operating models. Here are some of the benefits that companies will see:
Six benefits of operating model transformation
- Cost saving: The business case will need to show a bottom line cost saving since many reorganisations cost a lot and are disruptive. Frequently, companies will consider a reorganisation if they are planning a divestment to make the numbers more attractive to investors or if they are concerned about becoming a target for M&A.
- Revenue generating: An agile transformation that speeds up delivery of go-to market changes allows organisations to be more responsive to rapidly changing customer needs.
- Boost competitiveness: Newer, leaner organisations are a cause for concern when they can move at pace.
- Reduce hierarchy: By reducing hierarchy, an organisation can speed up decision making and become more agile.
- Career progression: Consolidating key functional capabilities into a global capability centre allows individuals working in that location to have more career opportunities. It also helps to attract top talent in hot (previously developing) markets where people are demanding career progression. This also adds to the employee value proposition.
- Enables more focused investment: A singular global Business Intelligence & Analytics function, for example, allows investment in tooling, automation, and more sophisticated delivery.
Key takeaways from our transformation, operating model and organisational design work with clients
If the origin of the change has been digital transformation (tech-led), we find that most of the focus ends up on the tech and process, and the people element gets left behind, or delayed until after go-live. This is perhaps unsurprising since changing roles and responsibilities can be disruptive and businesses are reliant on experienced members of the team to support the transition and keep everything running smoothly during what is often a protracted, disruptive period. The sad reality is that actually what’s happened is the people factor of the change is deprioritised relative to the shiny new tool or the challenges of delivering more streamlined, global processes. By the time the people are considered, budgets are running out and it becomes a cost efficiency exercise. Where this is the case, you either get the ‘fool with a new tool’ situation or employees who feel deeply disappointed that their hard work and commitment to the transformation hasn’t been rewarded with a promotion, improved ways of doing things or, as is often the case, a job in the new organisation.
For operating model-led transformations (defined here as a ‘re-org’ with limited tech change), we typically see 80% of the discussion ends up focused around the organisational design of the target organisation, and the project becomes a ‘deckchair moving exercise’. Getting this right for your people is crucial, but expecting the same or fewer people to achieve the benefits of the change without really doing anything different is like trying to lose weight without changing your diet or exercise routine. Many organisation’s fail to clearly defined new roles and responsibilities, processes and behaviours, and ways of working).
So what does a better way look like?
We firmly believe that to deliver the results you’re looking for, alongside the tech or the org design, it’s imperative to ensure a balanced, focused investment in the processes as well as targeted cultural and behavioural change.
This means proper consideration for who is going to do what in the new org (roles and responsibilities), the skills they will need (competencies/learning and development investment), how they’ll work with others in the team/other teams/the technology (processes), and, most overlooked of all, the desired behaviours of this group – whether that’s being more customer-centric, data-driven, or trusting one another. This is particularly true if the change involves limited redundancies where roughly the same people are expected to work and act in a fundamentally different way.
The process
Before you start moving the deckchairs, if it’s a product transformation, decide what needs to happen to shape initiatives in the pipeline into value streams and run those value streams. What rituals or ceremonies will you need to establish and reinforce the change, and what’s the cadence, how do you budget, and what architecture do you need to enable that?
All of this takes time, involves detail, and frequently involves the experts who may be the people you’re about to reshuffle. But this process is crucial and those employees who will run the organisation after the change will be glad this investment was made. This process also allows you to fix the things that are really causing issues; it allows you to design roles that are exciting and career-progressing for the people that remain in the team; spot capability gaps; identify opportunities for automation or any required tech changes as you go; and understand the time zones that the team will need to be available in.
Consider whether you have all the answers internally and tap into external expertise or market insights to deliver something genuinely innovative in this phase.
The (desired) behaviours and culture
A few years ago, I helped a telecoms IT organisation make its first venture into being product-led. The leaders spent more than 70% of the time wanting to do organisational design and debate who was the better fit for a given role, worried about what it meant for someone else if they didn’t get the role they wanted.
We had focused workshops on process, which helped the team think about what the changes would really mean for their teams, and started identifying the capability gaps that would be key to delivering the benefits case. This helped leaders to start getting excited by the change. But it still wasn’t going to be enough. The change was aiming to minimise redundancies or relocation, but even if the new processes worked, we were concerned that the culture of the department was going to inhibit the change landing.
We reminded leaders they had agreed to a focused workshop on target behaviours and avoided it being deprioritised in favour of yet another org or process workshop. We started with a blank sheet. If we could (incrementally) change and/or focus on four to six behaviours in the new organisation, what would they be? Having agreed these in principle, we explored each in turn, asking how does this behaviour ACTUALLY show up in this new organisation. And then, the hard bit, what stops people from behaving in this way now? What are the barriers, and what could we do, in a focused but sustained way over the next year, after the dust has landed on the announcement, to drive this?
We came up with a roadmap with the extended leadership team, which focused on behavioural nudges that were rooted in practical actions people could take on a daily basis.
The tech
In operating-model-led changes, technology change is often an enabler rather than front and centre. As new structures or processes are introduced, associated wraparound technology governance may need to be adjudicated accordingly. Alternatively, distinct tech-enabled processes that previously served the needs of discrete workstreams/functional teams may be perceived as redundant or duplicative in the new operating model, which may present opportunities for streamlining or automation. For example, this may include configuration of existing software to support the process changes, some access rights changes to support the role changes, and changes to the HR system to reflect reporting line changes. This was the case for this client, albeit the broader organisational context was one of constant technology change.
What happened?
The changes went live, role titles changed, different responsibilities were agreed with people impacted and the new processes were launched (do this instead of that).
A year later, we spoke to the client about how the changes were delivering benefits. We asked if they felt like they were genuinely working in more agile ways, if their working practices felt more customer-centric and if they were making better use of data to make decisions. They responded that it felt better, employee engagement had improved as people were more engaged with the career opportunities available in the new organisational structure, and the day-to-day grind was feeling easier. It wasn’t all perfect but they were working on areas they could improve and getting support to do that. Hurrah!
Most interesting and reassuring of all though was that most of the conversation was about how they were still using the behavioural change ‘nudges’ roadmap to embed the change. The six target behaviours remained front and centre and were instilled through town halls and team meetings, learning and development programmes, and comms campaigns. These behaviours, and the visible commitment to changing these, and in doing so the department’s culture, had been the legacy of the change and it was still the thing they focused on, using it to embed the new ways of working in a meaningful way, which every single employee could contribute to.
In essence, identifying and enacting the requisite behaviours aligned with a given change remains at the very foundation of successful transformations – to new ways of working, new organisational structures, or shifts in policy, technology, or procedure. Through proactively engaging and equipping teams on the behavioural change journey – by assessing what successful change looks like from an individual engagement perspective, and how it shows up in day-to-day operations – organisations, as living breathing entities, will be better prepared to adopt change, and with it, realise the full spectrum of benefits intended with the change. Even better, they will have inculcated the principles of an adaptive learning organisation, adept at recognising and embracing the evolving strategies and behaviours needed for a thriving workforce and exceptional customer experience.
Do you need help with transforming your operating model or organisational design? Our people and change management services may be able to support you. To find out more, please get in touch.
