How do you respond to the mounting internal and external pressures on your organisation? Gary Ashton describes three response mechanisms to help you cope with the ever-changing rules of the business game.

One aspect of good leadership is the ability to know what to change, when to change and how to change. Which is really difficult with the pressures that businesses now face. Pressures like growing global competition, increasing regulation, greater competitive focus, rising customer demands, and the dynamic impact of the knowledge economy

Drivers for change
The balance of these pressures is different in every business, requiring each leader to devise the most appropriate solution. But where do you begin to translate such ambitions into a realistic change programme that gives you the chance to succeed and make the change stick, whilst minimising the risk of taking your eye off your core business?

Typically, we see organisations responding by delivering one of three levels of change.

At an incremental level, the focus is on changing operational processes and redesigning jobs. At the functional or unit level, change focuses on redesigning management processes and integrating work across functions. At the enterprise-wide level, there is a more radical reshaping of the business. See diagram 2, below what does this link to?. But how do these three levels differ in need and approach?

Level 1 – Work process and job redesign

From time to time, businesses suffer from deterioration in performance. This may be part of a bigger problem requiring one of the more radical solutions outlined below. But if the overall shape of the business is sound, then the problem might revolve around weak work practices, which could take the form of blurred accountabilities and decision-making between jobs, and an increase in both staff numbers and management layers.

Potential Reward

There is also growing evidence to suggest that in their quest for greater efficiency at a corporate level, some businesses have been drifting towards greater functional specialisation, leading to jobs with increasingly narrow remits, which in turn lower job satisfaction and consequently lower the quality of customer service.

But the new generation of employees seek challenge, variety and career aspirations that these types of jobs simply cannot offer. In both of these situations, an overhaul of work process and job design is needed, with changes to the operational processes and job descriptions, providing jobs with clearer accountabilities and decision-making authorities, and minimum layers of management. See Level 1 case study opposite What does this link to??.

Level 2 – Functional or Unit change

How do Functional Heads gain significant performance improvement?

Beyond strong performance management or incremental job redesign described in Level 1, there is the opportunity to more radically redefine how a function or unit operates and how it interfaces with other functions.

One Supply Chain Director recently observed that restructuring his function would be simple were it not for the demands of those with whom his team interfaces, namely Sales, Marketing and the Customer. He realised the need to look outwards before changing anything internally. Looking outside the function before making internal changes can help you best examine the way in which the business makes its decisions.

We recently created a commercial management process for a retail client that cut across a number of departments. The real challenge was creating a shift of power from the buyers to the brands. This required us to closely facility the process of determining the decision-making authorities between brand management, product management and buying.

When implementing cross-functional solutions to rationalise systems and processes, eliminate duplication and reduce costs, another challenge occurs. Here there’s a risk that cost savings will not be delivered and old ways of working becoming ‘locked in’ by the new technology. This can happen if the
re-engineering project is only considered from one perspective – usually the IT solutions provider. Beware of falling into this trap. See Level 2 case study opposite what does this link to? See my note before the case study section at the end of this article.

Level 3 – Enterprise-wide change

There are times when every business needs to respond to competitive forces and redefine its value proposition. Decisions about where a business derives its value have an impact on how it organises itself. The business needs to reshape its organisational model to reflect its people, systems and process capabilities. This can be a difficult process for many teams, as they grapple with a change in strategic direction and the power-shifting consequences on the top table. It can lead to a stalemate, delaying the necessary changes. See Level 3 case study opposite. I’ve cut this para as there was a lot of repetition

To ensure you don’t fall into this trap, we help top teams engage with and assess different options, discover which new model fits, and identify how to manage the transition.

Top Tips

At all levels of organisation change, keep your focus on aligning the organisation to the strategy, creating clear accountabilities, and building in adaptability to the final solution. Tips for each level of change include:

Level 1: Work process and job redesign

Identify clear accountabilities and decision authorities, and pressure-test the value of each management layer. Balance efficiency with job satisfaction in the creation of whole, meaningful roles.

Level 2: Functional or Unit change

Start by understanding how your function needs to interface with the rest of the organisation. Avoid technologically-driven process change locking in old practices by providing both a top-down, strategically-driven view of the organisation, as well as the process-driven bottom-up view.

Level 3: Enterprise-wide change

Major reshaping of the business requires working with your top team to identify where value is created and building the organisation around that. It not only requires clear analysis, robust testing of different organisational options and good judgement, but also involves ensuring your senior team contributes to building the new organisation.

Case studies in three levels of organisational change

Level 1 – Work process and job redesign

We use a robust organisational audit that quickly determines what needs to be changed to gain greater efficiency. We helped a high-tech business improve the efficiency of its product design process through reducing the number of management layers, removing duplication of activities, and clarifying the decision-making authorities.

With a cleaner structure and process in place, fewer managers getting in the way, and more accountable, rewarding jobs, the designers were able to achieve faster product designs at lower cost.

Level 2 – Functional or Unit change

We work alongside technical change teams to design new processes, roles, teams and functions. Before a fast-moving consumer goods (FMCG) business implemented SAP, we helped devise a future-proofed supply chain process and organisation that took account of the Europeanisation of the business, and the growing demands of retailers.

The outcome was a more adaptable, faster supply chain organisation that could operate with 15% fewer employees.

Level 3 – Enterprise-wide change

An industrial products manufacturer had grown through the acquisition of businesses managed as separate operating companies. However, they had overlapping customers. And as it became harder to reduce costs within each individual company, they needed to move towards a single integrated business.

External facilitation was vital in unlocking the individual positioning of each MD and we supported the testing and creation of a business with a set of market-facing business units with an integrated supply chain. Over three months, the MDs transformed from defending their own turf to proposing a new business model that they all bought in to.

Organisation Effectiveness

If you are looking for a short, sharp, intervention that measures your organisation’s effectiveness, look no further.

We have developed a great diagnostic tool that evaluates organisational effectiveness.