We regularly work with leaders of complex organizations that are making changes to strategy that have organization implications. It is natural for them to want to jump right to organization charts and begin moving boxes and lines. However, we advise our clients to add two key design steps if they want to move most effectively from strategy to org chart.
The first step is to determine the operating model shift. The operating model tells you how closely related the parts of the business portfolio are and how much integration is needed.
Below is an example of a house-of-brands financial services company that has plans to leverage product development, technology, and operations across business units. Interviews with the leadership team showed agreement on the direction of change – to move towards a more integrated company – but also a fairly wide range of perspectives on what moving to the left on the continuum really means.
The framework starts the conversation on what to connect and the nature of the new power dynamics across products, markets, and functions. This “how we will run the company” alignment discussion is a critical first step in the design process.
Operating Model Continuum
The scope of the operating model shift depicted above is enormous and most leadership teams are overwhelmed by the task and unclear how to proceed. Their instinct is to start to talk about management team structures and people, but we know that is premature in the design process.
Developing an organization model is the next right step. Creating a visual picture of the future organization allows leaders to imagine the nature of the company they are trying to create together.
Below is an example of an organization model for a medical device company.
Organization Model Example
Building an organization model allows leaders to work through new accountabilities and interdependencies between groups without talking about specific jobs and people. It is true design work that promotes high engagement across the leadership team and surfaces productive debates.
Strategy, current state diagnostic, capabilities, and operating model discussion are the inputs. In addition, we find that a few questions focused on the work are excellent catalysts for helping a group develop organization model options:
1. Idea to Product: How will we develop products faster in the new model? What role does each part of the organization play in innovation and execution?
2. Demand Generation: How will the new model help us gain customers and expand into new geographies and channels?
3. Delivery and Service: How will this model help us go-to-market as one company and deliver a consistent customer experience?
Many variations of organization charts can support the same organization model. Size of leadership team, scope of roles, reporting relationships, spans of control, and number of layers are tactical decisions made after the organization model is agreed upon.
This sequence yields a creative, thoughtful, and efficient design process. To get from strategy to organization chart, be sure to take two critical steps: agree on your operating model and develop your organization model.
For more detail on operating and organization models please see:
Jaclyn Kates, Consultant