Global companies are typically composed of three dimensions:
- Geographic market units (regions, countries, or country clusters)
- Global business units (products, brands, categories, or customer segments)
- Global operating and support functions (R&D, Supply Chain, Marketing, IT, HR, Finance etc.)
We are often brought in to such companies when they undertake a shift in global operating model. Leaders are working through the tension of how to compete in unique markets and deliver products, experiences, and services with local relevance and local speed, while also driving scale and efficiency through global functions and brands.
The scope of this kind of transition is enormous and executives are usually unclear on how to proceed with so many moving parts. Usually there is a logical sequence of events for staging the design work and its implementation.
We find it usually makes sense to start with the global business units and design them to compete effectively within their customer or consumer segments. Often it makes sense to design the end-to-end enterprise functions next, to support the business units, with the right balance of direction and support from the center. Finally, we focus design efforts on the geographic market units, which are the point of integration where it all must come together in the market. Of course the process is iterative and adjustments are made as you progress across the system, but the pattern tends to hold true.
An apparel and footwear company we are working with has global brands, enterprise functions, and regions. The portfolio is complex and requires a sophisticated organizational model to drive diverse global brands and go-to-market strategies. The current organization lacks ‘connective tissue’ across regions and across brands, limiting collaboration in the innovation of product assets. Metrics and reward systems are not aligned for global performance management. Additionally, there are real gaps in the talent pipeline in retail and critical functions, as well as global general management. P&Ls have a regional roll-up, independent of global brand direction. To create an organization that is agile and consumer centric, the organization needs to build stronger and more global brand business units that go to market through robust regional organizations, while operating as one organization through the support of enterprise functions. Our approach to the design work followed this sequence:
- Global Brand Teams – How do the global brands need to be uniquely designed to compete in their niche? Where do the brands need to have different structures, job profiles, and decision rights? The goal is to create as much commonality across brands as possible, with differences where it truly adds competitive advantage or benefit to the customer and consumer.
- Enterprise Functions – How can the enterprise function designs best support the global brand teams? Commonality across brands will reduce complexity of function support. However, the goal is not to make it easy for managers, but for customers. Differences in policy, systems, and ways of work that make a difference for the brand have to be recognized and designed for.
- Regions – How do we activate global brand strategies with local relevance? What markets share characteristics that make it worthwhile to create a global network for managing product creation? What functional centers of excellence and shared services should be set up in-region to optimize efficiencies?
Enterprise redesign is a major undertaking that deserves a well-thought-out process. The sequencing of the design work is essential to enabling the opportunities for global commonality, where it makes sense, while retaining the agility of effective regional market organizations and the scale benefits of end-to-end function design.