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Emerging Innovative

Organization: How to create organizations that win in the new era of disruption

SUMMARY OF THINK TANK SESSION #3 | HONG KONG | JUNE 2017

© 2017 The RBL Group, Inc.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or using any information storage or retrieval system, for any purpose without the express written permission of The RBL Group, Inc.

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Playbook: Emerging Innovative Organization 1

TABLE OF CONTENTS

Section 1: Executive Summary…………………………………………………………………………. .......................................................02

Section 2: The Changing Business Environment …………...………………………………………………………..……... ....................04

Section 3: Requirements of The New Emerging Organization …………………………………………………...……………….. .....08

Section 4: Domains Of Market Oriented Eco-Organizations……………………………..…………......................................... ..14

Section 5: Six Steps Of Market Oriented Eco-Organizations...…………………………………………………….…………..……… ....18

Section 6: Change Management Actions...…………………………………………………….…………..……… ....................................30

Section 7: Conclusion...…………………………………………………….…………..……… ....................................................................34

PREFACE

The purpose of this playbook is to provide an outline of the key concepts from the RBL Institute Think Tank ses-sion called, “Emerging Innovative Organization: How to create organizations that win in the new era of disrup-tion” held on June 27-28, 2017 in Hong Kong. This document is written as both an organizational resource and training guide for HR and leadership teams, and is the central reference point for a variety of resources and tools located in the RBL Institute’s library (http://rbl.net/index.php/institute). We encourage RBL Institute mem-bers to use this as a resource to train individuals, teams, and organizations to use the tools outlined herein to drive change and create sustainable business value.

2 TheRBLGroup ©2017

SECTION 1: EXECUTIVE SUMMRY

As environments and strategies rapidly change, organizations also have to adapt. The traditional model for organizations has remained relatively stable for many decades. The traditional, or bureaucratic organization, fo-cuses on control through levels of management with varying accountabilities, control through roles or positions with responsibilities, and choices or routines to govern what and how work is done.

In recent years, the traditional organization model has come under criticism. Bureaucracy creates excess man-agement that costs the economy trillions of dollars (see work by Gary Hamel). In addition to economic costs, bureaucracy increases specialization that tends to socially isolate people rather than connect them. Consistent-ly lower employee engagement scores indicate that organizations may demoralize rather than inspire employ-ees. While people spend an increasing amount of their time in their organizations, they find less meaning and purpose from doing so (see Dave and Wendy Ulrich, Why of Work). Also, role clarity and specialization often impedes agility and the capacity for change, so bureaucratic organizations don’t adapt as required by a chang-ing environment.

Many leaders are attempting to pivot from this traditional organization logic. We see experiments in new or-ganizational governance, including: circular organization, high-performing and self-managing teams, holacracy, boundaryless organization, ambidextrous organization, learning organization, private equity partnerships, par-ticipative management programs, and so forth. It is time to pull together these organizational innovations into a new and emerging perspective of how organizations innovate to respond to changing market opportunities.

We call the emerging organization Market Oriented Eco-organization (MOE). This emerging organization form starts with market oriented opportunities and works to position itself to define and access market opportunities by understanding the environment and strategy, which set the context for organization. The eco-organization refers to a redefinition of how to organize resources and people to win in the marketplace.

We have identified six steps creating the Market Oriented Eco-organization (MOE), each of the steps have lead-ership actions and questions along with tools for improving as summarized in Table 1.


Table 1: Overview of the Market Oriented Eco-organization (MOE)

Domain Leadership Actions and Question Tools

Environment Appreciate and anticipate

Do you understand and anticipate the forces for change facing your industry and organization?

• Business context (STEPED)

• Business change (VUCA to DRET)

Strategy Clarify and Facilitate

Do you have a clear strategy for growth and a pathway for making the strategy happen?

• How we will grow? (where do we play)?

• How we will win? (pathway to growth)

Morphology Design and Deliver

Do you have the right organizational form or structure to enable your growth strategy?

• Platform

• Business Team (cell)

• Strategic partner (ally)

Capability Diagnose and Embed

Have you articulated and implemented the capabilities that will leverage the market oriented eco-organization?

• Customer anticipation

• Innovation everywhere

• Agility or speed in all things

Governance Architect and Implement

Have you designed and delivered the practices in the six governance mechanisms that will make your new organization (consisting of platform, business team, and strategic partner) work effec-tively for market success?

• Collaboration

• Culture

• Idea pipeline

• Talent flow

• Performance/rewards

• Information sharing

Leadership Be, coach, and build

Do you have individual leaders at the top and a shared leadership brand throughout the organi-zation to ensure success?

• Top individual leader

• Collective leadership through-out

In the pages to follow, we discuss the changing business environment, the requirements of the new emerg-ing organization, the six domains of Market Oriented Eco-organizations (MOE), and the steps to designing and delivering the MOE.


SECTION 2: THE CHANGING BUSINESS ENVIRONMENT

At the outset of the RBL Institute’s Think Tank session in Hong Kong, we asked the participants in the room a series of questions to understand how organizations are responding to trends and changes in the business context.

Group Question: How much is your business environment (the context of your business/the world around you) changing on a scale from 1 to 10, with 10 being a large amount of change?

Selected Responses:

• Hilton: 5, 6, 7

• Hyatt: 8, 10

• MGM Resorts: 8, 8

• Air New Zealand: 9, 10 (e.g., autonomous aircraft, digitalization of the industry, customer knowledge)

• Yum! Brands: 8 (e.g., customer experience, how customers interact with the brand, digitalization, innova-tion).

Group Question: How well has your organization responded strategically (e.g., where we play and how we com-pete) to the changing environment on a scale from 1 to 10, with 10 being extremely well?

Selected Response:

• Fletcher Building Limited: Environment = 6; Strategy = 4

Group Question: Have we put in place an organization that allows us to win? Are we organized to win on a scale from 1 to 10, with 10 being organized for to win?

Selected Responses:

• Air New Zealand: 5

• Credit Suisse: Environment = 8; Strategy = 6; Organization = 6

Group Question: What are two trends affecting your world? Refer to Slide 16.

Table Responses

• Table 1: Technology (e.g., big data, robotics, AI, augmented reality, digitization).

• RBL’s 4 Phases/Levels of Technology• Level 1: Efficiency

• Level 2: Innovation

• Level 3: Information

• Level 4: Connection

• Table 2: Social and political trends (e.g., nationalism).

• Table 3: Regulatory changes.

• Table 4: Climate change/environment (e.g., the triple bottom line).

• Table 5: Changing customer behaviors (e.g., less loyalty).

• Table 6: Communication (e.g., everyone is connected, people are in different locations).

Key Point: My job in HR is to identify and understand the STEPED changes in Slide 16.


Changes we see in the world

• The largest taxi company . . . owns no taxis (Uber).

• The largest accommodation provider . . . has no real estate (Airbnb).

• The largest telecom company. . . has no infrastructure (Skype).

• The most popular media company. . . does not create content (Facebook).

• The largest software vendors. . . do not develop apps (Google and Apple).

• The biggest movie seller . . . owns no cinemas (Netflix).

Key Points: Organizations that don’t change, fail. For example, the survival rate of large organizations is sur-prisingly low. Of the original Fortune 500 in the United States, only 60 companies still exist. This 87% “failure” rate implies that large complex organizations are not responding to their environment. Estimates are that 50% of today’s largest 500 firms will not exist in 5 years. As Slide 20 shows, 7 of the 10 world’s most valuable firms by market cap have been formed in relatively recent years.

Hong Kong / © The RBL Group June 2017 / Emerging Innovative Organization

16Content:Changes in the world we live in…

CategorySTEPED Trends and Examples Implications

Social• Changing lifestyle (family, urbanization, religion, well being)• Working with diversity •

•••

Technical• Increasing digitalization • Using technology for efficiency, innovation, information, connection

Economic• Competing in global markets with new competitors• Managing across the economic cycle

Political• Facing political unrest• Adapting to regulatory shifts

Environmental• Increasing sense of social responsibility• Building a community reputation

Demographic• Adapting to the changing workforce (age, education, global,

expectations)• Managing millennials


20World’s Ten Largest Firms by Market Cap# Firm Market

Cap (31/5/17)

Year founded

1 Apple 807.9 19942 Alphabet 671.7 19983 Microsoft 544.1 19754 Amazon 473.6 19945 Facebook 439.2 20046 Berkshire Hathaway 406.9 1839

(1962)7 Johnson & Johnson 350.6 18868 Exxon Mobil 337.6 1999

(1870)9 Tencent 328.9 199810 Alibaba 306.8 1999


Beyond VUCA to DRET

The world continues to change, dramatically at times, with the half-life of knowledge and the time allowed for organizations to adapt getting ever shorter. To keep up with constant social, technological, economic, political, environmental, and demographic (STEPED) changes, VUCA needs to evolve to the next phase, as displayed in Slide 21.

• Volatility to Discovery: Change happens; now it requires discovery that comes from reinventing, seeking a share of opportunity (not market share), and managing the expectations of continual change.

• Uncertainty to Risk: With an inability to predict the future comes a requirement to understand and man-age risk. Managing risk includes increasing predictability, reducing variability, and creating control mecha-nisms.

• Complexity to Ecosystem: Complexity is about confusing multiple streams of activity; anticipating this means shifting to an ecosystem logic where the focus is on partnership, differentiated teams, paradox navigation, and networks.

• Ambiguity to Transparency: Reality is now played out in public forums where access to information becomes ever more present. Because of this, we must sense both structured and unstructured data to find trends.

When leaders recognize not only the increasing pace of change (VUCA), but how it shapes discovery, risk, eco-systems, and transparency (DRET), the pace becomes less daunting and more manageable. Demystifying the pace of change into specific responses helps leaders anticipate and respond to change.

Key Point: In a VUCA world, small and fast is better. Be agile and nimble. VUCA has to update around Discov-ery, Risk, Ecosystem, and Transparency (DRET).

Key Question: How do we in HR respond to this changing context?


21Beyond VUCA (VUCA+): VUCA now requires …

DISCOVERYSpeed of reinvention, share of opportunity,

managing expectations

VOLATILITY Pace of change

RISKIncreasing agility, reducing variability,

creating controls

UNCERTAINTY Can’t predict the future

ECO SYSTEM Leverage partners, enable differentiated

teams, navigate paradox, shape networks

COMPLEXITY Playing chess on five levels

TRANSPARENCY Better sensing of ext. changes, access to

information and data, open communication

AMBIGUITY Unclear where threat comes

from


The context of change (digitalization of technology, demographics, political shifts, environmental sustainability, and globalization) and the increasing pace of change facing businesses today are well documented and expe-rienced by those in our session. Strategic responses to these forces for change include new types of growth, sources of value, and forms of advantage. To realize these emerging strategic opportunities, models for and definition of organizations also have to evolve.

As environments and strategies rapidly change, organizations also have to adapt. The disruptive environment and strategy requires innovative organizations.

Key Question: How can organizations innovate to respond to changing market opportunities?

© 2011 The RBL GroupHong Kong / © The RBL Group June 2017 / Emerging Innovative Organization

15Evolution of competition

CONTENT(STEPED)

Social, technological, economic, political,

environmental, demographic

PROCESSVUCA pivots

(Volatility to discovery;;Uncertainty to risk;;

Complexity to eco system;;Ambiguity to transparency

Context:External setting, business environment

Response:Internal organization requirements

CAPABILITIESCustomer (external, outside in)

Innovation (everywhere)Agility (change, speed)

ORGANIZATION FORMFrom morphology to alignment to

capability to network

GOVERNANCECross-unit collaboration

Innovation & experimentationShared culture & values

Talent movementPerformance & reward

Transparent information sharing


SECTION 3: REQUIREMENTS OF THE NEW EMERGING ORGANIZATION

Key Question: How can HR design and deliver the right organization to become more competitive in the changing business context? (Refer to Slide 23)

Competitive Assumption #1: Organization matters. Firms will compete on organization.

People or the organization, which matters more for business performance? Divide 10 points. Results: 80/20 organization. The whole is more than the parts. Organizations produce more than individuals operating by themselves. The value of teamwork shows up in sports (effective teams outperform all-star teams), music (bands sell more music than individual artists), and movies (actors or actress of the year are in the movie of the year only 20% of the time). You can have individual stars, but it takes a team (a culture) to win.

Competitive Assumption #2: Organization isn’t structure, but capability. We don’t admire organizations be-cause of their structure or morphology, but what they are known for and good at (capability).

Critical Capabilities in an Era of Disruption

In our research on 1,200 business units (See Victory Through Organization), we found 4 organization capabilities that delivered the most value. Slide 29 shows the results from the 2016 HR Competency Study (HRCS). Note that customer responsiveness, innovation, external sensing, speed/agility have the highest business impact.


23Requirements of the new organizationCompetitive Assumptions Traditional Emerging

1Organization matters (Sources of uniqueness)

Firms compete with their ability to:• Access financial capital• Create unique strategies• Build operational platforms

• Firms will match competitors on financial, strategic, and operational and technological processes;; defined as platforms

• Firms will compete on organization

2Organization capabilities

Capabilities represent what the organization is known for and good at going

Key capabilities emphasize customer (outside in), innovation (of all types), and agility (speed and experimentation) across the eco organization

3Organization form

Organization is defined and designed around shape (hierarchy) and alignment

Organization eco system is defined and designed around platform, business teams, and strategic partners

4Governance mechanisms

Leaders make govern through rules, routines, and responsibilities

Governance choices exist around:• Cross-unit collaboration• Investment & resource allocation• Shared culture & values• Talent movement• Performance & reward • Transparent information sharing


• External sensing (or information)


• Innovation throughout

• Agility in everything

Competitive Assumption #3: Organization form will evolve to a Market Oriented Eco-organizations (MOE) defined and designed by platform capabilities, business teams, and strategic partners.


29

Lo6.58%

Hi11.26%

EffectivenessM

ean

Prioritizing Organization Capabilities: Based on Current Effectiveness and Business Impact

Hi4.29

Lo3.86

Business Impact

4.3

4.2

4.1

4.0

3.9

3.86-

6.58 7 8 9 10 11.26

Knowledge focus

Talent

Accountability

Leadership

Operational Efficiency

Customer responsiveness

Speed/Agility

External Sensing

Innovation

Leverage Technology Shared mindset/

cultureAlliances

Human capital Speed/Agility


30Assumption 2: Capabilities Critical in Era of Disruption

Customer anticipation

Innovation throughout

Agility ineverything

•Focus outside in•Shift from serving to anticipating customers

•Deep understanding of customer pain points or needs

•Co create with them

•Focus on possibilities enabled by technology

•Innovate products, services, business model, channel, operations

•Constantly improve

•Focus on what’s new•Fail fast with little costs•Scale up quickly for successful experimentation

•Fluidity in resource allocation

External Sensing:Ability to access, analyze, apply information


Organization Thinking Evolution

In the world we live in, a new organization model is emerging, which we refer to as the Market Oriented Eco-organization (or MOE for short). Think of your organization as a platform with business teams/cells that act autonomously but leverage a common platform. It’s analogous to living in an apartment where you use the resources of the city (the platform), but you still have autonomy.

Some characteristics of the MOE include:

• Beyond a hub-and-spoke structure. The key is connecting the spokes with one another and the hub.

• Teams/cells are independent but connected by capabilities around sharing information on customer antici-pation, innovation throughout, and agility in everything.

• The teams/cells and allies are connected to each other and to the platform (the hub) to build an ecosystem.


As Slide 37 illustrates, the Market Oriented Eco-organization (MOE) has three elements:

1. A platform that represents critical resources and professional support that are common to all business teams.

2. Cells (teams) that represent customer-facing teams that provide product/service offerings (e.g., product design, product development, testing, operation, etc.).

3. Allies that represent outside business partners.

A major difference of the hub-and-spoke, small elite teams organization is that the cells (teams) are connected to the platform and to other teams (lines in Slide 37). These connections make the independent cells into an eco-organization where the whole is stronger than the individual parts. When organizations access information on these three capabilities, they are more likely to be successful:

1. Customer anticipation: Each cell exists to anticipate, shape, and respond to current and future customers. These cells are not about market share but market opportunities.

2. Innovation: Each cell is driven by what’s next or new, not what has been. This represents discovery and risk.

3. Agility: Each cell moves quickly and transparently into (and out of) new opportunity spaces.

Organizations used to compete on cost, quality, etc. Customer anticipation, Innovation throughout, Agility in everything are the key capabilities to excel today.

What organization form makes sense given the capabilities? Two extreme forms are illustrated in Slide 35.


Key Points:

• Control-Oriented Hierarchy (e.g., follow the rules, standardization, process driven) is too slow in a VUCA world. In order to respond to a VUCA world and changing business context, you need a Market Oriented Eco-organization (MOE).

• Production based work is declining (due to automation) and knowledge-based work is on the rise. Talent is more critical (knowledge-based work). So how do we create an organization form to unleash the creativity of talent?

• Form into teams (like special forces) that are self-contained teams/self-dependent teams. You want all the critical functions in the team so that they can act fast. To do this you need clear accountability based on customers, cost, etc. The team is fully empowered and owns the decision rights. There is clear alignment for accountability and authority. Make them think like business owners.

• As with the US special forces, the platform in the MOE provides support to the team on the front line. The platform provides critical resource support (communications, technology, etc.). For example, it could be logistics that are shared by US special forces.

Slide 41 provides a systemic depiction of Market Oriented Eco-organizations (MOEs).


• Structural form: core business support (e.g., R&D, supply), technology support (e.g., IT infrastructure, code, tools, AI), functional support (e.g., HR, finance, strategy, business development), business teams/cells, and strategic allies ( strategic partners to help).

• Market-Oriented: How do we make sure different teams in the platform/alliance create synergy? Market-ori-ented governance: collaboration, idea pipeline, talent pipeline, shared culture/values, talent, performance/reward, transparent information sharing. In order to capture external market opportunities, different parts of the eco-organization stimulates market mechanisms internally in order to be efficient in resource alloca-tion and responsive in serving internal customers.

• In the MOE, the business team leader is the CEO of the teams. The platform provides resources based on the success of team. Using a supermarket analogy, it’s akin to providing shelf space in a supermarket. Do I waste my shelf space on this product? Does it sell? The focus is on winning in the external market.

• The MOE is designed around the connecting capabilities of: Customer anticipation, Innovation throughout, Agility in everything.

• Corporate headquarters sometimes has a strategic initiative that requires coordination. Limitations of the model are that it is more short-term focused, more focused on your own unit, and good at micro-innova-tion.

• No organization form is perfect, but this form fits the market better.

Competitive Assumption #4: The creation of organization capabilities requires strategic context, the right structural form, governance mechanisms, and leadership.

Capability Building Blocks

• Strategic Context: Directions and pathways of growth.

• Structural Forms: Business Teams, Platforms, Strategic Partners.

• Market Oriented Governance (How do they work together?): Collaboration, ideas, culture, talent, re-ward, and information.

• Leadership


SECTION 4: DOMAINS OF MARKET ORIENTED ECO-ORGANIZATIONS

To create and implement a new organizational logic, we have synthesized the emerging organization innovation literature and research, and explored case studies with organization innovations with some of the most innova-tive organizations in the world: Amazon, Facebook, Flex, Google, Huawei, Supercell, Tencent, Alibaba. Slide 44 provides an overview of the research and methodology.

Table 2 summaries the case study research on Facebook, Huawei, and Amazon and how each company ap-proaches strategy, morphology (business teams and platforms), market driven governance, and leadership.

Table 2: Case Study Summary


Based on the synthesis, research, and advice, we have identified six steps creating the MOE, each of the steps have leadership actions and questions along with tools for improving as summarized in Table 3.

Table 3: Overview of the Market Oriented Eco-organization (MOE)

Domain Leadership Actions and Question Projected Tools

Environment Appreciate and anticipate

Do you understand and anticipate the forces for change facing your industry and organization?

• Business context (STEPED)

• Business change (VUCA to DRET)

Strategy Clarify and Facilitate

Do you have a clear strategy for growth and a pathway for making the strategy happen?

• How we will grow? (where do we play)?

• How we will win? (pathway to growth)

Morphology Design and Deliver

Do you have the right organizational form or structure to enable your growth strategy?

• Platform

• Business Team (cell)

• Strategic partner (ally)

Capability Diagnose and Embed

Have you articulated and implemented the capabilities that will leverage the market oriented eco-organization?


• Innovation everywhere

• Agility or speed in all things

Governance Architect and Implement

Have you designed and delivered the practices in the six governance mechanisms that will make your new organization (consisting of platform, business team, and strategic partner) work effec-tively for market success?

• Collaboration

• Culture

• Idea pipeline

• Talent flow

• Performance/rewards

• Information sharing

Leadership Be, coach, and build

Do you have individual leaders at the top and a shared leadership brand throughout the organi-zation to ensure success?

• Top individual leader

• Collective leadership through-out


Slide 3 provides a visual illustration of the six domains of the MOE.

Overview of the 6 Domains of Market Oriented Eco-Organizations

1. Environment: Do you understand and anticipate the forces for change facing your industry and organization? The business context (STEPED) and business change (VUCA to DRET).

2. Strategy: How do we grow? Where do we play? How will we win (pathway for growth)?

3. Morphology: Market Oriented Eco-organizations are structured around the Platform, Business Team (cells), and Strategic Partners (allies).

Key Points:

• The goal is to make the whole greater than the parts. It is the capability of the ecosystem that drives value.

• The purpose of the platform is to empower teams/cells. They are not independent cells – they are con-nected to one another. The connective tissue is the capabilities.

• In a multidivisional firm, corporate has power because it can influence. Power is redefined in the MOE. The ultimate power is the ability to empower somebody else. When you empower someone else your power is magnified.

• The platform of the MOE is not an absorber of power, it distributes power. The people in the platform of the MOE empower someone else. The platform is not a corporate head that amasses power.

• Power in MOE is distributed based on market opportunities and external business conditions. For example, finance gives resources to help people win in the marketplace. The decision rights are simple. The MOE is similar to a private equity firm today. Private equity firms fix the organization and leadership to sell compa-nies at a profit. Small cell/team with autonomy. This is about creating new market opportunities.

• The MOE structure is not a holding company because the pieces are connected and it’s not a matrix. It is a market oriented organization focused on the changing external context.

4. Capability: The critical capabilities that connect the pieces in the MOE include:

• Customer anticipation• Innovation throughout


• Agility (speed) in everything

5. Governance: Key market oriented governance mechanisms in the MOE include:

• Cross-unit collaboration• Shared culture/values• Idea pipeline• Talent pipeline• Performance evaluation and reward• Transparent information sharing

6. Leadership: The top individual leader and the collective leadership brand throughout the organization.

Slide 5 illustrates the flow of logic for the six domains of a Market Oriented Eco-organization (MOE). Note that Morphology and Capability can be interchanged in Slide 5.

In the pages to follow, we review each of the six domains of the MOE and highlight the key issue/question for each domain along with case study examples of innovative organizations.


SECTION 5: SIX STEPS OF A MARKET ORIENTED ECO-ORGANIZATION

STEP 1: ENVIRONMENT

Key Question: Do you understand and anticipate the forces for change facing your industry and organization?

Key Point: As we noted earlier, the disruptive environment requires innovative organizations. HR has to appre-ciate and anticipate the business context (STEPED) and business change (VUCA to DRET).

Slide 8 summarizes the outcomes, activities, tools, and HR’s role in the changing business environment.

STEP 2: STRATEGY

Key Questions:

• What is our strategy for future growth (customer connection, product innovation, geographic expansion)?

• How will we accomplish our growth strategy (buy, build, borrow)?

Case Stories on Growth Strategies (Customer, Products, and Geography)


Case Stories on Growth Paths (Build, Buy, Borrow)

Slide 9 summarizes the outcomes, activities, tools, and HR’s role in strategy.


STEP 3: MORPHOLOGY

Morphology: Business Teams

Key Questions:

• What are the key focus of business teams (efficiency, delivery, innovation)?

• How do we structure the teams (closed-loop, size, hierarchical/cross-functional/flash)?

• Are business teams aligned in accountability, authority, reward, and competency?


Morphology: Strategic Partners

Morphology: Platforms

Key Questions:

• What core activities and resources can be shared and grouped under platforms? What activities should be distrib-uted in business teams for a closed-loop?

• How do we make sure platforms (business support, technological support, functional support) are capable in professional expertise and responsive in services?


Key Points:

1. Platform people need to be world class. If not, people will go outside.

2. Mindset – organizations need to be more customer responsive.

Slide 10 summarizes the outcomes, activities, tools, and HR’s role in organizational morphology.

Note that the outcome is to help make sure that our structure matches the strategy. Determine the boundary of the business team and the platform. When the platform is strong you give the business a recipe. When cells are strong you give ingredients.

Business Lifecycle

• High growth mode – resources in team/cell.

• Mature market – more resources in the platform.

Group Question: What is one thing you can recommend to your business about morphology?

• Our CEO needs to clarify the strategic direction. Facilitate clarity on the structure.

• Give advice to transform the platform (business imperatives, technology, and functional excellence) to help the cells/business teams be more customer focused.

STEP 4: CAPABILITIES

The critical capabilities that connect the pieces in the MOE include:

• Customer anticipation• Innovation throughout• Agility (speed) in everything

Group Question: Which capability area are you more focused on? How do you help make that capability happen?

Customer anticipation responses:

• Net Promoter Score (NPS) measures can help.


• Tip: Make sure you track NPS over time, compare it with others in the industry, and identify causes.

• NPS Drivers: Product/Services, Brand, and People.• Getting to know customers more deeply (empathy).

• The customer relationship should shift from transactional to service to partner to anticipate. The higher up you go, the more you know the customer.

• Connect with customers: co-create with strategy, technology, HR, culture, and leadership.

Innovation throughout

• Identifying the drivers of innovation and how you reward for innovation.

• There is both individual and organizational innovation. Do I have an innovative system?

Agility in everything

• Communication: transparency around information, approvals, how ideas bubble up, etc.

• Allowing failure and the importance of experiments. Celebrate failure.

• Simplification: can we simplify processes to drive agility? Tips: Trust and transparency can help. Shift the focus from the process to the solution. What is the solution we are trying to create? Start there.

• Growth mindset of individuals. Accept failure and use it as a learning opportunity.

Slide 11 summarizes the outcomes, activities, tools, and HR’s role in organization capabilities.

STEP 5: GOVERNANCE

Key Questions:

• How do we ensure business teams and platforms can work together to succeed and grow in the marketplace?

• How effective are our governance mechanisms in facilitating collaboration, encouraging new ideas, defining the right mindset, moving talent in/around/out, assessing & rewarding talent, and sharing information?

Market Oriented Governance


• Cross-unit collaboration

• Shared culture/values

• Idea pipeline

• Talent pipeline

• Performance evaluation and reward

• Transparent information sharing

Cross-unit Collaboration

Shared Culture/Values


Idea Pipeline (how you generate ideas)

Talent Pipeline


Performance Evaluation and Reward

Transparent Information Sharing


Governance Exercise: Pick one area in Slide 116 where HR can add value.

Selected Responses:

• Collaborating around a customer solution (bring customers in, co-create with customers).

• Idea system collection – no idea is bad idea. HR’s role is to build out the mechanics and recognize the ideas. Allocate time for new ideas (20% of time at Google).

• Talent: Intel has systems that allow people to move but don’t have the supporting behaviors. Hoping for A but rewarding for B (Steve Kerr). You can’t reward hoarding talent.

• Rewards: Need to simplify the assessment of talent. Too much process around it.

• Performance Management: Help me understand the data so that we can fix the problem.

• Sharing information: identify target audience and appropriately disseminate information.

• Information: 3 Steps - acquire, analyze, and apply. 20% structured and 80% unstructured data.

Slide 12 summarizes the outcomes, activities, tools, and HR’s role in governance.


STEP 6: LEADERSHIP

Key Question: How can leaders send consistent messages and build the right mechanisms to enable custom-er anticipation, innovation, and agility?


Top leadership focuses on culture, vision, and balancing the short term and long term.

Slide 13 summarizes the outcomes, activities, tools, and HR’s role in leadership.


SECTION 6: CHANGE MANAGEMENT ACTIONS

Exercise: Using Slide 6, rate your organization on the 6 domains on a scale from 1 to 10, with 1 being low and 10 being high.

• Environment: Do we understand and anticipate changing environmental conditions that will shape our future?

• Strategy: Do we have a clear strategy for growth and a pathway for making it happen?

• Morphology: Have we designed the right organizational form or structure to enable our growth strategy?

• Capability: Have we articulated and implemented the capabilities that will leverage the market oriented eco-organization?

• Governance: Have we designed and delivered the practices in the six governance mechanisms that will leverage the MOE?

• Leadership: do we have individual leaders at the top and a shared leadership brand throughout the orga-nization to ensure success?


HR’s Role in each dimension (Slide 7)

Managing Change

Implementing a MOE requires the ability to manage change across all six domains of the MOE and at three levels of change (refer to Slide 2).


At the top of Slide 2 is the new organization, the Market Oriented Eco-Organization. The bottom part of the slide illustrates the need to drive change across the 6 domains and 3 levels of change.

The Three Levels of Change

What is one idea you would like to take home? In order for your idea to happen: It should fit with the culture.

Question: How do you kill the virus that might get in the way of the idea you want to implement?

Use the virus detector tool in Slide 123.


Slide 125 is the Pilot’s Checklist tool, which identifies the 7 things to manage in a new initiative.

Sustaining Change

Slide 131 highlights the 7 items to sustain change.


SECTION 7: CONCLUSION

Key Question: How do we build an organization to compete and win?

Control-Oriented Hierarchy (e.g., follow the rules, standardization, process driven) is too slow in a disruptive world. In order to respond to a disruptive world and changing business context, you need a Market Oriented Eco-organization (MOE) defined and designed by platform capabilities, business teams, and strategic partners.

Summary Points:

• The goal is to make the whole greater than the parts. It is the capability of the ecosystem that drives value.

• The purpose of the platform is to empower teams/cells. They are not independent cells – they are con-nected to one another. The connective tissue is the capabilities.

• In a multidivisional firm, corporate has power because it can influence. Power is redefined in the MOE. The ultimate power is the ability to empower somebody else. When you empower someone else, your power is magnified.

• The platform of the MOE is not an absorber of power, it distributes power. The people in the platform of the MOE empower someone else. The platform is not a corporate head that amasses power.

• Power in MOE is distributed based on market opportunities and external business conditions. For example, finance gives resources to help people win in the marketplace. The decision rights are simple. The MOE is similar to a private equity firm today. Private equity firms fix the organization and leadership to sell compa-nies at a profit. Small cell/team with autonomy. This is about creating new market opportunities.

• The MOE structure is not a holding company because the pieces are connected and it’s not a matrix. It is a market oriented organization focused on the changing external context.


The 6 Domains of Market Oriented Eco-Organizations (MOE)

1. Environment: Do you understand and anticipate the forces for change facing your industry and organiza-tion? Appreciate and anticipate the business context (STEPED) and business changes (VUCA to DRET).

2. Strategy: How do we grow? Where do we play? How will we win (pathway for growth)? Clarify and facilitate the pathways for growth.

3. Morphology: Market Oriented Eco-organizations are structured around the Platform, Business Team (cells), and Strategic Partners (allies).

4. Capability: The critical capabilities that connect the pieces in the MOE include:

• Customer anticipation• Innovation throughout• Agility (speed) in everything

5. Governance: Key market oriented governance mechanisms in the MOE include:

• Cross-unit collaboration• Shared culture/values• Idea pipeline• Talent pipeline• Performance evaluation and reward• Transparent information sharing

6. Leadership: The top individual leader and the collective leadership brand throughout the organization.

© 2017 The RBL Group, Inc.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or using any information storage or retrieval system, for any purpose without the express written permission of The RBL Group, Inc.

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