Managing the Transformation Life Cycle

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Thursday August 21, 2008

Topic: Organization Design

Reference: Gurin, Matt. “An Argument for Strategy-Driven Organization Design”. Consulting. July/August 2008. pp.44-45.

Did you ever wonder how your organization got to be the way that it is? With the recent emphasis on the importance of structure you can’t help but think about your own organization’s structure and effectiveness. When you do, invariably you find that things are not well designed, are not best situated to enhance customer interactions and experience, don’t contribute to efficient decision making, and are not structured to address current market forces. As a result, organizations adopt change management and transformation projects to correct the problems. The issue is that these challenges take time to correct and by the time that you do new challenges arise to stress the revised structure. This creates a sort of transformation life cycle that requires constant change. The difficulty is that because of the impact of technology and information flow, the transformation life cycle has been compressed to a much shorter interval. As a result, transformation projects are seldom viewed as hitting the right marks. In the referenced article the commentator makes note of this point. “According to a PwC study, 41 percent of change projects fail, and of the 59 percent that “succeed,” only half meet the expectations of senior management.” The commentator references cookie-cutter design, poor management support, and the failure to anchor the design to the overall business strategy as prominent reasons for the failure. Simply put strategy should lead the design and not the other way around. The commentator lists six questions that should be addressed in the design process: (1) are we clear about our strategy and how we create value today and tomorrow; (2) to what extent are the ways we organize the basic units of our business aligned with growth in our key markets and client segments; (3) does our design help to clarify governance and decision making; (4) how well defined are responsibilities for jobs and inter-accountabilities between jobs; (5) where can we best obtain synergies and process improvement; and (6) what role should management play in managing these units and processes? These are great questions and the answers should allow an organization to gain additional harmony from its transformation projects. Certainly having a strategy, building on it and communicating it widely through your organization are essential to effectively managing the transformation life cycle. Question number 3 on decision making is often overlooked and is a critical issue. Having a good framework for decision making can be a competitive advantage, particularly where time is of the essence. Overall these are strategic imperatives that should not be overlooked. Let me know your thoughts on this important area.

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