Interviews
- »One on One with KPMG's Koecher & Rodriguez
KPMG’s Restructuring Services group just got a lot stronger. On July 16, KPMG acquired Grant Thornton’s supply chain advisory practice, effectively doubling the size of its core restructuring team and broadened its service offerings.
- »One on One with Ed Hess
Grow or Die. It’s probably the most common business axiom, and the least accurate, according to the new book “Smart Growth: Building an Enduring Business by Managing the Risks of Growth” (Columbia Business School Publishing). To better understand the book’s implications for firms, Consulting’s One-on-One sat down with the book’s author, Ed Hess, a former Arthur Andersen strategy consultant and current professor at the University of Virginia's Darden Graduate School of Business.
- »One on One with Summit's David Litherland
When prospective employees interview for a job, they obsess over making a good, lasting impression. Firms should do the same. To learn how firms can avoid typical pitfalls, Consulting’s One on One sat down with David Litherland, managing partner of Summit Search Group, an executive search firm specializing in placing professionals within professional service firms.
- »One on One with PwC's Tom Craren
Senior executives are becoming immune to traditional marketing. Marketing consultants tell us that to pierce through the white noise of corporate communication, firms should consider “content marketing”. Instead of more traditional marketing, providing valuable insight and perspective in a blog or electronic newsletter can serve as a more effective door opener. One of the best examples is PricewaterhouseCoopers’ “10-Minute” series. For almost three years, PwC has boiled down complex thought leadership into small electronic pieces an executive can read in about ten minutes. To learn more about PwC’s marketing efforts, Consulting’s One-on-One sat down with Tom Craren, the firm’s brand strategy and thought leadership leader. His team of 20 writers produces between two to three 10-minute pieces each month, along with more detailed white papers.
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»Consultants on Consulting
Consultants on Consulting gives management consultants the chance to share their views, expertise
and insights into topics they feel passionate about. Each consultant's piece outlines ideas and
strategies for change, and further enhances the author's role as a thought leader in the profession.
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2008
»An Argument for Strategy-Driven Organizational Design
By Matt Gurin
 Cookie-cutter McMansions with beige façades, two-story foyers and postage-stamp lots are as ubiquitous to our suburban sprawl landscapes as Starbucks and McDonald's. On the one hand, these harmonious developments are evidence of a period of remarkable economic prosperity. Conversely, they could be viewed as the homogenated detritus of a feast of conspicuous consumption. Regardless of your politics or aesthetics, it is reasonable to argue that the hangover has been more memorable than the meal.
But have we consultants, in our zeal to ride this epic economic wave, perhaps created an eerie, parallel universe…a corporate–sprawl of McOrgstructures, properly benchmarked, adorned with change management and paved with glossy PowerPoint decks? All kidding aside, it feels as if the pace of organizational change and restructuring this decade has equaled the feverish pace of suburban development.
So, if the '80s was the decade of quality and the '90s were all about technology, then this post-Y2K era seems to be all about structure.
In October of 2007, Deloitte reported that the top challenges affecting organizations (e.g., leadership changes, M&A activity and cost reductions) prompt more than 25 percent of companies to respond with an organizational change.
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.
So, while everyone agrees that structural change is an appropriate—or at least prevalent—response to business challenges, we also agree that it is not as effective a tactic as it should be.
At Hay Group, best known for our expertise in the human capital disciplines, we have found that one of the failings of many organization design approaches is that they are carried out as analytically based, reactive exercises. Call it an institutional bias toward process, but we have developed a strong conviction that—just as there is no ideal strategy prescription—neither is there an analytical or off-the-shelf answer for how to organize an enterprise.
Most of us can agree that just as growth is not a strategy, benchmarking, delayering or process mapping are not effective organizational design approaches. At Hay Group we have a difficult time understanding those who assert that all organizations need to adopt adaptable, matrixed or networked designs, or worse yet, that they require a particular type of leader. So, while organizational theories and cookie-cutter solutions abound today, all of our experience and research tells us that effective organization designs must be custom-built by a process that is above all else strategy driven.
Shouldn't the outcome of our organizational design work with clients be to create competitive advantage? Shouldn't a client's structures, roles, decision processes and people—its culture—be greater than the sum of those parts? So, while any given bit might be benchmarked and copied by a competitor, we as consultants have the opportunity to help clients construct an organization that actively and explicitly supports their unique strategies.
That is why we believe effective organization design requires an approach similar to the architect's process—it is a function of planning, long-term thinking and arriving at holistic solutions specific to an organization's current and anticipated work processes, activities and future challenges. To a large extent, it needs to be a creative, human process that cannot be reduced to a set of statistics or algorithms.
Echoing this design sentiment, one of renowned architect I.M. Pei's grown children once said, "If you need a label to explain something, the design may already have failed.” And in his seminal Concept of the Corporation, Peter Drucker also argued strongly for this holistic design aesthetic when he said, "…it is the first job of leaders of a free society to go back to the concept of harmony and to a philosophy of society which is neither monolithic nor pluralist but which sees the one and the many, the whole and its parts, as complementing each other.” Sermonizing aside, the point stands that organization design should be a creative, human process, not a pragmatic exercise in functional efficiency.
To that end, at Hay Group we work with our clients to bridge strategy, organization structure and culture with an Operating Model process that informs how the business should be framed to deliver products and services within the context of the company's value drivers. It's basically a set of controlling design principles—the outcome of the Operating Model does not tell you how to build anything, but it does make clear what the organization will look like and where the fundamental parts should go.
What differentiates this Operating Model process from other consulting approaches is that it is both strategy driven and management led. These two precepts are as critical to success as the steps in the process. Why? Well, we believe the logic is fairly intuitive. If a strategy essentially is a plan that defines how a company intends to create value in the market, then it follows that the organization of the company's resources and decision making needs to be closely aligned to those unique sources of value. And secondly, if a primary role of any leadership team is to make resource allocation decisions, then it stands that this team needs to be included in the design process. While the consultant can help to support the team, the client team owns the solution.
As it relates to the process itself, what we believe differentiates our design process is that it first focuses on work, activities and processes—not lines and boxes. This is a disaggregation exercise that also helps to remove the temptation in design to focus on jobs and people. We believe it helps the leadership team to frame or ground their organization design by answering a number of fundamental questions about which activities and processes need to be performed in order for the company to deliver value to customers, partners and other key stakeholders. It also addresses where these activities should be performed, and how they should be managed and controlled.
And by applying the simple Shaker-style design aesthetic, for example, we believe one can diagnose the need for organization change by grappling with six key questions:
6 Diagnostic Questions
• Are we clear about our strategy and how we create value today and how we will do so tomorrow?
• To what extent are the ways we organize the basic units of our business aligned with the need to drive growth in our key markets and client segments?
• Do we know which functions, processes and capabilities should be centralized to achieve synergies and satisfy the needs of those segments?
• What role should management and the board play in managing these units and processes?
• Does our organization design help to clarify governance and decision making?
• How well defined are accountabilities for jobs and inter-accountabilities between jobs?
What we have learned in working with clients, by conducting Fortune's Most Admired survey for over a decade and by working with researchers at Harvard is that there are no off-the-shelf solutions or silver bullets for building an effective organization. This is real work that takes commitment, discipline and sponsorship at the top.
That's why we insist on working collaboratively with business leaders to build a strategic and inspiring design for the organization and then help bring that concept to life. We expect senior executives to directly shape the organization design, get buy-in from their leadership team, and accelerate implementation.
Five years ago, in this magazine, professional services guru David Maister provided the following advice:
"Remember that people are motivated more by meaning than by money. Help them find the drama, the excitement in what they do…and never lose sight of the meaning in what you're doing.”
Well said.
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