Managerial overload and elsevier organization design_5 pot

■ strategies for achieving the objectives ■ boundaries ■ principles ■ skills and competencies needed ■ reward and recognition systems ■ new ways of working ■ market proposition and customers ■ processes ■ communications ■ culture ■ technologies and systems. Step 2: Plot these (together with any other critical elements) on the ver- tical and horizontal axis of a grid, to form a matrix (Figure 8.7). Step 3: Assess the extent to which these are internally consistent (logically related to each other) and externally consistent in aiming to produce the performance necessary for the effective implementation of your strategy. You can do this by answering the following question: ‘Does each elem- ent of the organization fit with each other element to make all work in the best possible way? (And how do you know this?)’. You can use a simple rating scheme for this as there may not be clear-cut yes/no answers. For example – a strategy based on fast cycle times and being first to market with new products or services requires from employees a sense of time, urgency, and ability to innovate. Your reward and recognition systems therefore must specifically reward people for demonstrating these competencies. Your new ways of working must encourage people to be able to use these competencies in the workplace, and so on. Phase Three – Creating the High-level Design and the Detailed Design 151 Purpose Objectives Strategy Etc. Purpose x Objectives X Strategy x Etc. Figure 8.7 Alignment matrix Step 4: Where there are indicators of misalignment, break down the elements into more specific components and identify where the mis- alignment is. For example, you have noted that your reward and recog- nition systems do not square with your strategy of fast cycle times. You need to find out where the problem lies. Ask what skills and behaviours are needed to deliver fast cycle times. On a second matrix (Figure 8.8) list these out. Note where (and where not) the reward and recognition system supports those skills and behaviours you need. Having identified, perhaps, that the reward and recognition system does not support teamwork (which you have identified is required to deliver a strategy of fast cycle times) you might then ask what other elements of the re-design do (or do not) support teamwork. Step 5: Continue the diagnosis as far as you need to uncover the major elements of misalignment. Tool 2: Inventory of Change Follow this process to align the range of changes that are happening outside the scope of your OD project. Do this in order to gain additional leverage for your project and to ensure that changes are co-ordinated wherever possible. Process to follow: 1. Identify other planned or happening changes where the implementa- tion of these will impact your project and stakeholders. 2. List the purpose and objectives of each of the other projects looking for conflicts and overlaps with yours. 3. Run workshops or focus groups for the sponsors of existing initiatives encouraging them to align with each other’s (and your) projects, remove conflicts, minimize duplication, and co-ordinate implementation. Organization Design:The Collaborative Approach 152 Teamwork Problem solving Caring Flexibility Etc. Reward and recognition Figure 8.8 Alignment specifics 4. Review implementation timetables for each initiative and produce a matrix that shows when they will affect particular groups or locations. Where the timetables are unknown make some assumptions and plan for best and worst case impacts. 5. Look for instances of potential overload or things being delivered in the wrong order. For example, national installation of new procedures preceding some locations having the equipment installed to make these work. 6. Recommend ways of aligning, channelling, or integrating activity in the interests of the whole organization. 7. Log and circulate the overall implementation timetable highlighting any assumptions of critical dates. 8. Review this timetable regularly. Tool 3: Alternative Scenarios (From http://www.mycoted.com) Scenarios are qualitatively different descriptions of plausible futures. They give you a deeper understanding of future environments that you may have to operate in. Scenario analysis helps you to identify what environmental factors to monitor over time, so that when the environ- ment shifts, you can recognize where it is shifting to. Thinking through several scenarios is a less risky, more conservative approach to planning than relying on single forecasts and trend analy- ses. It can thus free up management to take more innovative actions. Develop scenarios for your particular re-design. To begin developing scenarios: 1. Paint the specific vision of the future state. 2. Identify the major internal and external environmental forces that impact your product, service, or customers in the future state. For example, suppose your service is investing R&D funds. You have decided to position your organization for opportunities that might emerge by the year 2010. The major external environmental forces might include social values, economic growth worldwide and inter- national trade access (tariffs, etc.). 3. Build four scenarios based on the principal forces. To do this, use information available to you to identify four plausible and qualita- tively different possibilities for each force. Assemble the alternatives for each force into internally consistent ‘stories’, with both a narra- tive and a table of forces and scenarios. Build your scenarios around Phase Three – Creating the High-level Design and the Detailed Design 153 these forces. For instance, a mid-western bank used scenarios to stimulate new ideas for maintaining a strong consumer-lending busi- ness in upcoming deregulation. Scenario story lines emerged for ‘As at present’, ‘Heated’, ‘Belt Tightening’ and ‘Isolation’. 4. With the scenarios in hand, identify business opportunities and design options within each scenario. 5. Examine the links and synergies of opportunities across the range of scenarios. This would help you to formulate a more realistic strategy for investment and an organization design that fits your purpose. Organization Design:The Collaborative Approach 154 Self-check By this stage, you should be feeling confident that you are at the end of the design phase and are ready to move into handling the transition. Read the questions below (adapted from Senge 1999). When you can say ‘yes’ to the majority of them you have completed the design phase. Are you certain of the results you want the new design to produce? Have a clear vision of the changed organization and what you want it to deliver. Ensure your stakeholders and your sponsor share this vision. Check that it aligns with other initiatives current or planned. Do you know how the new design will make your business per- formance more effective? Specify what it is you are planning to make more effective, for example turnaround time, ease of custo- mer use, or innovative product. At a time when many global companies are hunkering down and retrenching, BMW is moving forward, placing a big bet that it has a winning design for future growth. Companies typically take risks because there is no other option: Their backs are against the wall and there’s no choice but to change. BMW is making bold moves at the very peak of its success. ‘Carmakers are running up against a very tough choice,’observes brand analyst Will Rodgers, cofounder of SHR Perceptual Management. ‘Either they protect their market share and play not to lose, like GM and Toyota, or they go all out, place some big bets, and play to win. BMW is playing to win.’ Breen, B. (2002). BMW: Driven by design. Fast Company, September. Phase Three – Creating the High-level Design and the Detailed Design 155 Do you know how the new design will benefit your customers? Focus on your customers and their needs to get a design that works. There is a wonderful (perhaps apocryphal) story about London Transport who designed a system guaranteed to get the buses to operate on time. Managers implemented the new systems and were delighted at the way drivers got to the depots on time. Passengers were less delighted. Investigation proved that bus drivers no longer stopped to pick up the passengers as getting to the depot on time had become the objective. Do you know what values and attitudes might have to change to make the new design work? Changing values and attitudes is a long and tricky process with no guarantees of success. Aim to keep value and attitude change to a minimum. Focus instead on behaviour change and hope that any needed values and attitude change follows. Do you know what effect the new design will have on aspects of your current work and practices? If you recognize the impact, you will be able to handle it and communicate it effectively. British Airways appeared to mishandle a situation with check-in staff when it tried to introduce swipe cards. Are you confident that people are expressing their doubts, concerns, and issues honestly and openly so that the new organization is not sabotaged? This may be difficult to judge (as British Airways man- agers found). Keep your ear to the ground and be alert to rumours and sudden ‘noise’ in the informal communications channels. Ensure The scenes of chaos at Heathrow have prompted pundits to complain about British Airways’ poor response to the walk-out. Yet while airlines can plan for official strikes, a spontaneous action by a few hundred workers irritated at having to clock on and off with electronic swipe cards is hard to predict. British Airways is introducing the computerised swipe-card system so that it can switch staff more quickly to where they are needed, e.g., when queues lengthen in some parts of a terminal. The Economist (31 July 2003). One strike and you’re out. Organization Design:The Collaborative Approach 156 communications channels are kept open and people feel you listen to them. Do you know what capabilities you need to develop to make the new organization work? Analyse your current skill base against your future state skill base. This will give you the gap between the two. Ensuring you have the right supply of capability to match the demand of your business strategy is part of the people planning work that forms one of the work streams of most OD projects. It is a topic covered in more detail in Chapter 12. Are you confident that people will change enough to make the new organization work? This depends on whether you have convinced people that staying the way they are is not an option for survival. The airline industry is a good example of people changing in line with circumstances. Do you know when you must show results from the new design (and what these should be)? You may have an externally imposed timetable, or it may be self-imposed. Once you declare your plans you will have to deliver against them. Make sure that you aim for achievable stretch. Keep stakeholders informed of progress so you can regroup if necessary without causing surprise. Is your organization ready to embrace the new design? If you have done your job well to this point people will be ready (if not eager) to transition to the new organization. People ready to change have been involved, motivated, and heard. They feel there is something in it for them. The surprising development there has been that unions at United, US Airways and American Airlines – all faced with extinction – have begun to make previously unthinkable concessions. These have helped to bring high operating costs down by more than a third, to a point where they can compete with more successful low-cost American carriers, such as Southwest, AirTran and JetBlue. The Economist (31 July 2003). One strike and you’re out. Phase Three – Creating the High-level Design and the Detailed Design 157 References/Useful Reading Gleick, J. (1999). Faster: The Acceleration of Just About Everything. Pantheon. Miller, J. G. (2001). QBQ! The Question Behind the Question. Denver Press. Miller, W. C. (1990). The Creative Edge: Fostering Innovation Where You Work. Addison Wesley Publishing Company. Mills, Albert (2001). Gareth Morgan: Sociological Paradigms and Organizational Analysis. Aurora Online. Morgan, G. (1997). Images of Organization. Sage. Pfeffer, J. (1998). The Human Equation: Building Profits by Putting People First. Harvard Business School Press. Senge, P. (1999). The Dance of Change. Nicholas Brearley. Do’s and Don’ts ■ Do allow enough time to work on the organization design ■ Do work through an iterative process engaging people as you go ■ Do clarify the interfaces with service partners and/or other departments ■ Don’t get derailed because of poor communication ■ Don’t impose your design ideas – work with others ■ Don’t neglect the ‘day-job’ in favour of the design work Summary – The Bare Bones ■ Set up two levels of design team: the high level and the detail level ■ Develop several design options within the boundaries you have set ■ Get sponsor and stakeholder support for the preferred option ■ Establish teams to develop detailed design and implementation plans for each work stream key to your overall design ■ Work on an iterative basis, until you have a full system design that you are confident, will deliver your future state vision ■ Test your design for workability and alignment before going into the implementation phase This page intentionally left blank 9 Risk ‘It is not enough to identify and quantify risks. The idea is to manage them.’ Lewis, J. P. (1998). Mastering Project Management. McGraw Hill Professional Book Group. Overview You have heard the statement that ‘95% of change projects fail’. Identifying and managing the risks associated with organization design and re-design goes some way towards keeping your project out of the ‘failure’ box – a situation to avoid if you are to keep your stakeholders happy and add organizational value from your work. In any project, there is a level of uncertainty about achieving the pro- ject’s objectives on a quality, cost, time, or other basis. This uncertainty is project risk – defined variously. For example, Shell Group’s definition is ‘those factors which could influence the achievement of business objectives, either positively or negatively.’ Marks & Spencer’s definition is ‘events, actions, or missed opportunities which could impact on the project’s ability to achieve its objectives.’ Both definitions are clearly about something going wrong or right in relation to achievement of objectives and the creation or protection of value. Risk management is particularly important to handle carefully in organization design and other change projects. People have emotional Organization Design:The Collaborative Approach 160 reactions to changes that affect them and emotional reactions are hard to predict. This increases the risk for change projects if the plan does not deliver the intended benefit, or if the project planning and transition to new state seriously disrupt normal business operation, or if relation- ships are fractured or broken because of the change. Having measures of the impact risks on your project is essential. Monitor them throughout the project to help determine whether to con- tinue with aspects, identify where you have to pay close attention, high- light project improvement opportunities, and manage risk mitigation. This chapter guides you through the process of managing the business risks associated with your OD project. Presented are six steps: under- standing the context, clarifying the objectives, identifying risks, assess- ing risks, responding to risks, and sustaining risk control – the action plan. For the most part risks are not objectively quantifiable; neverthe- less, a systematic approach to managing them works well. Figure 9.1 (adapted from: Marks & Spencer 2002) illustrates the risk cycle. Risk cycle Critical Med Med Med Risk Risk Risk (3) Identify risks to achievement (4) Assess risks (6) Action plan Action plan Sign off Actions 1) Avoid risk 2) Fix, prevent risk 3) Contingency plan 4) Investigate cause 5) Monitor risk GM IT MD SD HR 3/6 5/8 5/5 7/9 9/9 Who WhoWhen When (1) Understand the context (2) Clarify objectives 3) Critical 2) Major 1) Manageable 1) Remote 2) Possible 3) Likely Likelihood Impact (5) Respond to risks Risk response Low Low Low High High Risk Risk Risk Mitigation Risk Return Figure 9.1 Risk cycle [...]... Understanding the Context, Clarifying the Objectives, Identifying Risks The work you have already done in establishing your OD project has given you a good understanding of your business context Aspects you have considered include: I I I I the nature of your part of the organization (products, services, customers, market position, and so on); the internal culture and operating style of your organization; ... affected by the change Determine actions and assign responsibilities: Identify ‘quick wins’ and changes that need to be project managed Set appropriate deliverables, milestones, and checkpoints Establish resource requirements and get commitments Implement changes: Set the wheels in motion Provide guidance and support where needed Follow-up: Measure effectiveness, and demonstrate or communicate the effect... dependable, and I am usually punctual 2 I am not likely to take chances 3 I think about the future and have long range objectives 4 I am resourceful and prefer not to plan or prepare 5 I like action, and I act impulsively at all times 6 I value institutions and observe traditions 7 I like to anticipate another person’s position 8 I work best when I am inspired 9 I am naturally curious and often ask... think abstractly and creatively and envisage the possibilities You enjoy ideas and are not afraid of change or the unknown Learning, imagining, and inventing are activities at which you excel Risk averse: You have a conservative risk attitude with a preference for secure payoffs People who are risk averse are practical, accepting and have common sense You enjoy facts more than theories and support established... different ways Clarity, detail, and precise language will assist in consistency and focus Measurable: What is the end state, and how will you know when you have reached it? A scorecard, target or other means of measuring performance will make it possible to monitor what has been done, and what has yet to be done What is not measured will probably not get done Aligned: Within and across entities, take care... internal and external risks? How does it compare with the risk lists of other similar and different projects in your organization? Does it reflect the input of a range of stakeholders? Be aware that however long you spend on generating a list it will never be comprehensive and you will never be able to assess all the risks As the context changes the risks change Shell International compares the risk landscape... landscape to a bubbling pot – always in continuous movement with some risks coming to the top and others simmering just below the surface When you have satisfied yourself that the list is complete enough you start analysing and assessing the risks At this point, you find that people’s attitudes to risk vary enormously – some people are risk averse and others are risk takers As you and your stakeholders... matrix (Figure 9.8) where the vertical axis is impact and the horizontal axis is likelihood, with a high, medium, and low ranking on each Agree with your team on your definitions of ‘high’, ‘medium’, and ‘low’ – they are relative to the scope and scale of your project The matrix becomes a very powerful visual tool for seeing the big picture of risks and their relative relationships (On Figure 9.8 the... multiple stakeholders 740 540 670 4 Organizational structure: personal agenda, bonus, and reward structure lead to political infighting 600 810 550 5 Insufficient communication planning, early enough: poor education and engagement of stakeholders 430 590 610 6 Disparity: between operating plan and strategic plan 480 520 450 High Governance structure: lack of timely and consistent decision-making 2 Critical... Sustain your risk management processes and actions by: I I I I Getting your team members and stakeholders to support them – this involves putting risk management on the agenda at each of your team and stakeholder meetings, ensuring regular reviews and re-assessments of the risks, judging the support you receive for the actions you take to mitigate the risks, and gaining the commitment of resources . Creating the High-level Design and the Detailed Design 155 Do you know how the new design will benefit your customers? Focus on your customers and their needs to get a design that works. There is. investment and an organization design that fits your purpose. Organization Design: The Collaborative Approach 154 Self-check By this stage, you should be feeling confident that you are at the end of the design. of objectives and the creation or protection of value. Risk management is particularly important to handle carefully in organization design and other change projects. People have emotional Organization Design: The