1. Success and failure in
organisation design
Sri ram. R
RA1952001020098

2. Success in
organization
design
Focus first on the longer-term strategic aspirations
 Leaders often spend too much time on the current deficiencies
of an organization. It’s easy, of course, to get fixated on what’s
wrong today and to be swayed by the vocal (and seemingly
urgent) complaints of frustrated teams and their leaders.
However, redesigns that merely address the immediate pain
points often end up creating a new set of problems. Companies
should therefore be clear, at the outset, about what the redesign
is intended to achieve and ensure that this aspiration is
inextricably linked to strategy. One retail company we know,
strongly committed to creating a simple customer experience,
stated that its chosen redesign option should provide “market
segment–focused managerial roles with clear accountability” for
driving growth. The specificity of that strategic test proved much
more helpful than simply declaring a wish to “become customer-
centric.”

3. Take time to survey the scene
 Sixty percent of the executives in our survey told us they didn’t spend sufficient time
assessing the state of the organization ahead of the redesign. Managers can too easily
assume that the current state of affairs is clear and that they know how all employees fit
into the organizational chart. The truth is that the data managers use are often
inaccurate or out of date. A high-profile international bank, for example, publicly
announced it was aiming to eliminate thousands of staff positions through an extensive
organizational redesign. However, after starting the process, it discovered to its
embarrassment that its earlier information was inaccurate. Tens of thousands of
positions, already referenced in the press release, had been inaccurately catalogued,
and in many cases employees had already left. This new organizational reality radically
changed the scope and numbers targeted in the redesign effort.
 Knowing the numbers is just part of the story. Leaders must also take time to understand
where the lines and boxes are currently drawn, as well as the precise nature of talent
and other processes. That helps unearth the root causes of current pain points, thereby
mitigating the risk of having to revisit them through a second redesign a couple of years
down the road. By comparing this baseline, or starting point, with the company’s
strategic aspirations, executives will quickly develop a nuanced understanding of the
current organization’s weaknesses and of the strengths they should build on.

4. Be structured about selecting the right blueprint
 Many companies base their preference for a new structure on untested hypotheses or intuitions.
Intuitive decision making can be fine in some situations but involves little pattern recognition, and
there is too much at stake to rely on intuition in organizational redesign. Almost four out of five
survey respondents who owned up to basing decisions on “gut feel” acknowledged that their
chosen blueprint was unsuccessful. In our experience, companies make better choices when
they carefully weigh the redesign criteria, challenge biases, and minimize the influence of political
agendas.
 Interestingly, Fortune magazine found that its Most Admired Companies had little in common
when it came to aspects of their organizational design, beyond a flexible operating model. This
finding is consistent with our experience that off-the-shelf solutions aren’t likely to work. The
unique mix of strategy, people, and other assets within a company generally requires an
individual answer to things like role definition, decision-making governance, and incentives, albeit
one based on a primary dimension of function, geography, or customer segment. The key is to
get the right set of leaders reviewing options with an open mind in the light of redesign criteria
established by the strategic aspiration.
 Take a large public pension system we know. Its leaders convinced themselves that a new
organization must be set up along product lines. Challenged to reconsider their approach, they
ultimately arrived at a functional model—built around health, pensions, and investment—that has
served the system well over the past five years and underpinned significant cost savings and the
launch of innovative new products.

5. Failure in
organization
design
No clear and compelling case for change
 When people don’t understand why change is necessary, anxiety, cynicism and resistance inevitably build. Most
major transformations are justified from a financial returns standpoint, but the rationale for large-scale change
must be clear and compelling for all of the key stakeholders. If you don’t help critical groups of people
understand why change is necessary and how it will affect them, you will never get to the rest of the story. Even
with a solid intellectual rationale for change, people inevitably want to understand the implications for and impact
on them.
 Lack of senior team alignment
 The leadership requirements of leading a transformation are quite different from those of leading a business or
function in steady-state or even a smaller, more focused change effort. By definition, transformations are
comprehensive makeovers of the way work is done. Leading such efforts involves making progress on an array
of projects or workstreams that need to be managed in a traditional sense, but that also need to be pulled
together in ways that require close collaboration and difficult tradeoffs. Only the senior leadership team can do
this work.
 Abdication of leadership’s responsibility to drive the process
 While necessary, senior team alignment is not sufficient. The team needs to remain fully engaged throughout the
transformation process, even as they continue to run the business. Given the significant competitive and
operational pressures that senior teams face, it’s all-too-easy for leaders to abdicate their responsibility for
actively directing, leading and monitoring the transformation. This often is reinforced by the organization’s
reward system, which incentivizes a shorter-term, more operational focus.

6. Insufficient focus on co-creation in design
 Given the times, organizational transformation consulting unsurprisingly is a thriving business. However, given
the high failure rates, it’s clear few actually are delivering the value they promise. This is particularly true for
consultants who use what we call the “doctor-patient model”; they diagnose the situation and prescribe solutions
without engaging the patient in deciding what is best for them, without giving them choice. “Co-creation
culturing” means building maximum alignment through the process by providing accurate and relevant data as
the basis for critical discussions, always pushing for assessment of multiple options (whether different strategic
directions or different organization designs) and reaching agreement by openly, collectively assessing the
different options against a clear set of criteria for success.
Communicating without really engaging
 It’s not enough for leadership to put substantial time and attention into articulating and communicating the
business case for transformation. They have to do it in ways that truly enlist employees in the transformation
process. Too often, however, they fail to get them really onboard, even when there is a burning platform
providing a clear and compelling rationale for change. This is because one-way communication, even with the
best of supporting materials, is not enough to win employees over to being willing change agents. To enlist
employees, leadership has to be willing to let things get somewhat messy, through intensive, authentic
engagement and the involvement of employees in making the transformation work.
Inadequate focus on culture change
 Culture change is always an essential element of transformation. Culture is “how we do things around here” –
the norms and ways of operating that underpin getting work done. If that doesn’t change in necessary ways,
then all the work to change strategy, structure and systems is likely to come to naught. Culture is, however, hard
to work on directly. It can only be changed by altering peoples’ behaviors. The first step is to clearly define what
behaviors are necessary for driving the transformation. The next is to figure out what levers are available to alter
them.

7. The END