Organisation Design Going from strategy to operating model

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Organisation Design: Going from strategy to operating model to organisation structure Andrew Campbell ©

Organisation Design: Going from strategy to operating model to organisation structure Andrew Campbell © Ashridge Executive Education 2015

The nine tests of good organization design Good Design Tests Fit Tests Specialist Cultures

The nine tests of good organization design Good Design Tests Fit Tests Specialist Cultures Test Higher-level Strategy test Difficult Links Test Business/Function Strategy Test People Test Feasibility Test Organization Design Redundant Hierarchy Test Accountability Test Flexibility Test © Ashridge Executive Education 2015

Two strategy tests Business/Function Strategy Test Higher Level Strategy Test © Ashridge Executive Education

Two strategy tests Business/Function Strategy Test Higher Level Strategy Test © Ashridge Executive Education 2015 Is there a “box” or powerful mechanism for each priority? Organization Design

Priorities Products Segments Countries Channels Sources of advantage or excellence Operating initiatives © Ashridge

Priorities Products Segments Countries Channels Sources of advantage or excellence Operating initiatives © Ashridge Executive Education 2015 Test Implications

Priorities Products Standard Bespoke Construction Segments Industrial Automotive Aerospace Countries. UK Germany Middle East

Priorities Products Standard Bespoke Construction Segments Industrial Automotive Aerospace Countries. UK Germany Middle East Asia Channels Sources of advantage or excellence Operating initiatives © Ashridge Executive Education 2015 Test Implications Yes Yes No No No Yes ? Do we need segment managers? Do we need country managers?

The Business Model Canvas What? How? Customer Relationships Key Activities Value Proposition Key Partners

The Business Model Canvas What? How? Customer Relationships Key Activities Value Proposition Key Partners Key Resources Cost Structure © Ashridge Executive Education 2015 For whom? Customer Segments Channels Revenue Streams

© Ashridge Executive Education 2015

© Ashridge Executive Education 2015

The Operating Model Canvas Locations Suppliers on iti e lu os Va rop P

The Operating Model Canvas Locations Suppliers on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation © Ashridge Executive Education 2015 Information

The Operating Model Canvas on iti e lu os Va rop P Value Delivery

The Operating Model Canvas on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary © Ashridge Executive Education 2015

The Operating Model Canvas on iti e lu os Va rop P Value Delivery

The Operating Model Canvas on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation © Ashridge Executive Education 2015

The Operating Model Canvas on iti e lu os Va rop P Value Delivery

The Operating Model Canvas on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation © Ashridge Executive Education 2015 Information

The Operating Model Canvas Suppliers on iti e lu os Va rop P Value

The Operating Model Canvas Suppliers on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation © Ashridge Executive Education 2015 Information

The Operating Model Canvas Locations Suppliers on iti e lu os Va rop P

The Operating Model Canvas Locations Suppliers on iti e lu os Va rop P Value Delivery Chain(s) Customer/ Beneficiary Organisation © Ashridge Executive Education 2015 Information

Enhanced Business Model Canvas Back End (operations) © Ashridge Executive Education 2015 Middle (value)

Enhanced Business Model Canvas Back End (operations) © Ashridge Executive Education 2015 Middle (value) Financial Model Front End (customers/channels)

Start by laying out the value chain(s) needed to deliver the value proposition(s) Design

Start by laying out the value chain(s) needed to deliver the value proposition(s) Design © Ashridge Executive Education 2015 Buy Make Low cost Sell Service

Choose what else to put on the Canvas based on what is important to

Choose what else to put on the Canvas based on what is important to the value proposition Low cost locations * * rce u o s Out onents p com Design Buy * Make * Low cost* Sell Service * Links the value proposition - “low cost” to the elements of the operating model that make low cost possible. Functional structure © Ashridge Executive Education 2015 * Standard applications *

Shell Global Footprint Contractors Dutch/British HQ Upstream oil Tech & Projects Downstream oil Integrated

Shell Global Footprint Contractors Dutch/British HQ Upstream oil Tech & Projects Downstream oil Integrated gas Function/Business Matrix Multiple ERP systems Engineering culture Bespoke functional applications (global) © Ashridge Executive Education 2015

Ivo van Haren l Socia a Medi rs ne Desig * e On-lin rs

Ivo van Haren l Socia a Medi rs ne Desig * e On-lin rs e retail wh*at Decide h to publis * rs Autho * Give e to guidanc authors * Founder owners Distrib utors Arrange printing * Arrangeie*w peer rev t and tex editing 7 staff * Production team © Ashridge Executive Education 2015 rs Printe * The he Net rlands near leaders of IT da stan rds and Open Group * * and Arrange esign agree d 3 Execs Marketing team * Arrange special prints and Manage k es check d top g publishin e* Arrange -books * sales Direct te websi * Ready for trainers * - ct on Sell dire line * * al Centr d rm an platfo App mer Custo e as datab kt, Price, m sell to ors distribut Reasonable prices *

IT Function for on-line retailer UK Recruiters Italy Consultants US IT function Asia BU

IT Function for on-line retailer UK Recruiters Italy Consultants US IT function Asia BU 1 Compensation and Benefits HR Stats Talent HR BPs OD HR Consulting Matrix sines Region/Bu s Specialists functions Centralised aking decision m © Ashridge Executive Education 2015 BU 3 Corp functions t in specialis HRBPs are integrators BU 2 Good HR Software

Talent: example * Build capabilities Development * ed ssess ne A * Design process

Talent: example * Build capabilities Development * ed ssess ne A * Design process Succession * Source s provider te or Nomina attract * nts participa Request o leaders t identify rs successo Get *successors onto HR system ter Adminis * delivery Lead or * attend * ev. People D s tee Commit Evaluate to Present g etin Exec Me * © Ashridge Executive Education 2015 * e Fine tun to Present Board tee Commit Improve retention * Improve * pipeline

Most organizations have multiple value chains Ashridge Executive Education à Open courses value chain

Most organizations have multiple value chains Ashridge Executive Education à Open courses value chain Design Market Deliver à Tailored courses value chain Market Design Contract Deliver à Research value chain Define problem © Ashridge Executive Education 2015 Design Research Do field work Extract learning Publish

A value chain map comparing segments All Value Chain Steps Segments Build Clients Design

A value chain map comparing segments All Value Chain Steps Segments Build Clients Design Market Quote /Sell Adjust design Admin Deliver/ do Follow up Open courses Tailored Qualifications Conferences Weddings Research © Ashridge Executive Education 2015 Issue qual + design publish

A value chain map comparing segments All Value Chain Steps Segments Build Clients Design

A value chain map comparing segments All Value Chain Steps Segments Build Clients Design Market Quote /Sell Adjust design Admin Deliver/ do Follow up Open courses Tailored Qualifications Conferences Weddings Research Issue qual + design Report by function Report by value chain and link Report by value chain keep separate © Ashridge Executive Education 2015 publish

Organisational implications CEO Marketing Design Deliver Open courses © Ashridge Executive Education 2015 Build

Organisational implications CEO Marketing Design Deliver Open courses © Ashridge Executive Education 2015 Build Clients Design/C ontract Admin Deliver Tailored development Design Deliver Quals Qualification courses

A value chain map comparing segments All Value Chain Steps Negotiate Standard - construction

A value chain map comparing segments All Value Chain Steps Negotiate Standard - construction - industry - automotive - aerospace Bespoke © Ashridge Executive Education 2015 Develop tech Buy steel Make Sell Deliver

Organisational implications CEO Finance + IT HR Standard products Bespoke Develop Negotiate Develop ©

Organisational implications CEO Finance + IT HR Standard products Bespoke Develop Negotiate Develop © Ashridge Executive Education 2015 Buy … Buy Make UK Sell EU Deliver ME

The nine tests of good organization design Good Design Tests Fit Tests Specialist Cultures

The nine tests of good organization design Good Design Tests Fit Tests Specialist Cultures Test Higher-level Strategy test Difficult Links Test Business/Function Strategy Test People Test Feasibility Test Organization Design Redundant Hierarchy Test Accountability Test Flexibility Test © Ashridge Executive Education 2015

Organisations have two kinds of work • Operating work (or value chain work) •

Organisations have two kinds of work • Operating work (or value chain work) • aimed at delivering value to “customers” • Support work • aimed at helping other departments within organisation Operating work can become support work if it is “centralised” © Ashridge Executive Education 2015

Three ways to structure the operating work Value Chain Unitised Matrix • Function •

Three ways to structure the operating work Value Chain Unitised Matrix • Function • Process • • • Geography Customer Product Project Asset Etc • Two boss matrix • Front/back © Ashridge Executive Education 2015

Four types of support work l fu r e re o M w o

Four types of support work l fu r e re o M w o p Finance ss po Key accounts we rfu l Lean/ Operating excellence HR Champion/Coordinate e. g. Policy e. g. Core resource e. g. Shared service e. g. Research Finance services Marketing HR services Operating Work © Ashridge Executive Education 2015 Le Head of structure

Strategy, business model, operating model Owners Core Employees Customer Offer Employee Offer Business Partners

Strategy, business model, operating model Owners Core Employees Customer Offer Employee Offer Business Partners © Ashridge Executive Education 2015 Partner Offer Target Customers Operations Beneficiary Offer Target Beneficiaries

ORGANISATION ORGANISATIONAL STRUCTURE BUREACRATIC ORGANISATION ORGANISATION Organisation isORGANISATION ORGANISATIONAL STRUCTURE BUREACRATIC ORGANISATION ORGANISATION Organisation is
ORGANISATION DEVELOPMENT ORGANISATION Organisation is a social unitORGANISATION DEVELOPMENT ORGANISATION Organisation is a social unit
Organisation structures Organisation structures Formal organisation This isOrganisation structures Organisation structures Formal organisation This is
ORGANISATION BEHAVIOUR ORGANISATION BEHAVIOUR Organisation Behaviour is concernedORGANISATION BEHAVIOUR ORGANISATION BEHAVIOUR Organisation Behaviour is concerned
ORGANISATION BEHAVIOUR ORGANISATION BEHAVIOUR Organisation Behaviour is concernedORGANISATION BEHAVIOUR ORGANISATION BEHAVIOUR Organisation Behaviour is concerned
Evaluation partenariat Organisation X organisation Y Atelier organisationEvaluation partenariat Organisation X organisation Y Atelier organisation
International Strategy Multidomestic Strategy Global Strategy Transnational StrategyInternational Strategy Multidomestic Strategy Global Strategy Transnational Strategy
Content Strategy Content Strategy Content Strategy Content StrategyContent Strategy Content Strategy Content Strategy Content Strategy
Ys strategy Strategy 1 Strategy 2 Strategy 1Ys strategy Strategy 1 Strategy 2 Strategy 1
Strategy Strategy Phases Strategy Plan l Strategy DocumentStrategy Strategy Phases Strategy Plan l Strategy Document
OPERATING MODEL OPERATING MODEL OVERVIEW Support process isOPERATING MODEL OPERATING MODEL OVERVIEW Support process is
Digital Strategy Toolkit DRAFT Organisation Name Digital StrategyDigital Strategy Toolkit DRAFT Organisation Name Digital Strategy
Processes and operating systems Operating systems Operating systemsProcesses and operating systems Operating systems Operating systems
Operating Systems Operating Systems Operating systems provide aOperating Systems Operating Systems Operating systems provide a
Computers Operating System Essentials Operating Systems PROGRAM OPERATINGComputers Operating System Essentials Operating Systems PROGRAM OPERATING
Operating System Operating System Operating Application Hardware SystemOperating System Operating System Operating Application Hardware System
OPERATING SYSTEM INSTALLATION OPERATING SYSTEM CLASSIFICATION OPERATING SYSTEMSOPERATING SYSTEM INSTALLATION OPERATING SYSTEM CLASSIFICATION OPERATING SYSTEMS
Introduction to Operating System Operating System Basics OperatingIntroduction to Operating System Operating System Basics Operating
Chapter 7 Operating Assets Understanding Operating Assets OperatingChapter 7 Operating Assets Understanding Operating Assets Operating
Exponential Model Logistic Model Compertz Model Bass ModelExponential Model Logistic Model Compertz Model Bass Model
Business Model Business Model Business Model Business ModelBusiness Model Business Model Business Model Business Model
ER Model KAVRAMSAL MODEL KAVRAMSAL MODEL Conceptual ModelER Model KAVRAMSAL MODEL KAVRAMSAL MODEL Conceptual Model
MATHEMATICAL MODEL Mathematical Model Mathematical Model Mathematical ModelMATHEMATICAL MODEL Mathematical Model Mathematical Model Mathematical Model
Model European Parliament NetworkOrganisation MODEL EUROPEAN PARLIAMENT ORGANISATIONModel European Parliament NetworkOrganisation MODEL EUROPEAN PARLIAMENT ORGANISATION