How to best structure business organizations – in terms of functions, resources, capabilities and roles – is a fundamental question for every company, regardless of whether they operate in services, manufacturing, energy or telecommunications.
The following example – from our direct experience – illustrates the competitive advantage of our organizational approach and the significant value we deliver.
In this case, the client’s main question concerned the right level of specialization to assign to their organizational functions. They believed they needed to dramatically increase specialization by creating multiple Divisions – in particular, one for each business banner.
To answer this question, we applied our organizational methodology. The results showed that the client’s assumption was largely incorrect and that implementing such a structure would have significantly reduced the overall effectiveness of the organization.
The first step in our work was to identify the key activities carried out by the client’s different Functions. This might seem straightforward, but in reality it is far more complex – for at least three reasons:
- in most organizations, people only partially do what they are formally assigned to do (a well-known definition of leadership is “the ability to make people do what they wouldn’t do on their own”)
- even when people are willing to follow instructions, it is not guaranteed that they will achieve the intended outcomes (interpretation issues, capability gaps and timing constraints often arise)
- when summing up all the individual gaps (vs. the desired model), the overall organizational gap becomes exponentially larger.
Below are a few examples of the key activities performed by the client’s Functions, as revealed by our assessment. It is worth noting how valuable these insights already were at this early stage: for the first time, the client gained a clear and detailed view of how its organization truly operated, in terms of processes (e.g. cross-functional ones), roles (e.g. accountable vs. informed) and critical areas (e.g. underperforming activities).
We then assessed the level of specificity of each Function. Two important aspects deserve emphasis.
First, our assessment was comprehensive. For instance, we conducted not only an organizational analysis but also an economic one (covering headcount, costs, etc.). Also, within the organizational dimension we examined the three most critical factors influencing specificity:
- processes
- competences
- interfaces.
Second, throughout our assessment we considered both the current situation and future needs for change. This dual perspective enabled a much deeper understanding of the optimal organizational model for the client.
Below are a few illustrative examples of summary charts from the specificity analysis we conducted.
By integrating all the insights from our analyses and applying our methodology, we were able to completely reshape the client’s initial assumptions. In particular (see the chart below):
- in most Functions (except one), the client did not need to introduce greater specialization – and certainly not to create separate Divisions
- in one Function (Sales), it was actually better to reduce the current level of specialization and adopt a more generalist model.
