Linda Gardner, Paula Lee,Michael Jonckheere, Terra Stroup, Ana VillarrealJune 25, 2014

Evolving Organizationally for Strategic Growth

Presentation to: Jérôme Baudry & Yves Barnoud

“All organizations are perfectly designed to get the results they are now getting.

If we want different results, we must change the way we do things.” - Tom Northup

Author and Management & Strategy Coach

Agenda

• What We Heard From You• Research Findings• Ladder of Org Design• Readiness for Change• Recommendations• Appendices

What We Heard From You

Where you are

Slow & reactive

Information pulled

Current product

portfolio

Local mindset

Where you want to be

Agile & proactive

Information pushed

Broader product portfolio

International mindset

Evolving organization to double revenue to € 400M and grow employee base from 640 to 1000 in 2 years

Research FindingsIndustry Competitor moved from FO/BO to Matrix in 2012• Goal: Increase customer service• Expensive• On-going investment needed for training, development and

managing complexities

• Complex• Struggling with the ambiguity• Dual reporting

General Challenges with Matrix Structure*• Role confusion• Complex communication• Frequent escalation of conflict resolution• Incentives difficult to design• Confusion on processes

*Galbraith, J. R. (2013). Matrix Management: Structure is the Easy Part. People & Strategy, 36(1), 6.

10 Growth Challenges for ETI’s

1. ‘Our meetings are a waste of time’

2. Too much time ‘putting out fires’ 3. The organization continues to

grow in sales but not in profits4. ‘I have to do it myself if I want to

get it done correctly’ 5. People feel that ‘there are not

enough hours in the day’6. Little follow-up to plans, so things

just don’t get done7. Teams are not aware of what

other teams are doing8. Lack of understanding about

where the firm is headed9. Too few good managers10.Uncertainty about people’s

contributionSource: Flamholtz, E 2002, 'Strategic Organizational Development, Growing Pains and Corporate Financial Performance: An Empirical Test', European Management Journal, 20, 5, p. 527, Business Source Premier, EBSCOhost, viewed 25 June 2014.

EBIT

EBIT & Growth Challenges Score

The more growing pains a company experiences, the less earnings realized

Foundation for Change

• Use caution in moving to matrix structure• Model used to• Analyze readiness • Reduce growth challenges• Stage approach

Matrix Organization

Hire Locally

Cross-functional Teams

FO/BO Integration

Information Systems

Building People Capability

Organizational Processes

Increasing

Decision-making Power

More Robust

Linkages

Infrastructure Elements

More Expensive

Matrix Organization

Hire LocallySupport Local Country Managers, Leadership Development

Cross-functional TeamsParallel Structures, Task Groups, Steering Committees

FO/BO IntegrationLiaison Roles, SLAs, Responsibility Charting, Shared KPIs

Information SystemsCommunication Technologies, eg.: Intranet, Webinars, Social Networking

Building People CapabilityJob Rotations, Cross-functional Events, Incentives

Organizational ProcessesStandard Processes, Shared Vision, Goals, Measures, Decision-making, Plans & Reviews

Increasing

Decision-making Power

More RobustLinkag

esInfrastructure Elements

More Expensi

ve

Ladder of Org Design

Source: Adapted from Center for Effective Organizations

Steps to realize your desired future

What are the key work processes required to deliver value to the customers?

Shipment tracking

Contracting

Customer escalations

What are the core capabilities required? Innovation

Efficiency/low cost and leverage

Scope and sense of value to customer

Quality

Agility

Local to International Mindset

Strategic Design Questions

Organization Structure

Commitment to change requires progression through a change curve, can you identify where Clasquin employees are?

Are You Ready to Change?

Recommendations• Leadership addresses infrastructural elements of the ladder

first

• Establish FO/BO cross-functional teams to drive implementation of: • SLA’s• International staffing• Product offering expansion• Information system innovation• Shared metrics

• Assign managers & executive sponsors responsible for each team

APPENDICES

SLA’s-A written agreement used to define the level and quality of a service that exists between internal departments. -Frames the relationship between two parties: The supplier and customer. -Defines and identifies customer needs at the same time controlling their expectations of service in relation to the ability of the supplier, provides a framework of understanding, simplifies complicated issues, reduces areas of conflict and encourages dialogue with the dispute. -May include the availability of the service, the performance of the service, how it will operate, priorities, responsibilities of involved parties, guarantees and warranties.

SLA Template - http://www.slatemplate.com

http://www.gsx.com/blog/bid/43737/The-challenges-of-managing-SLA-s-Service-Level-Agreementshttp://techexcel.com/resources/whitepapers/SLA.pdf

KPIs Standard KPI’s utilized in the Freight Forwarding Industry

• Strategic objectives• Why the service exists and what it seeks to achieve

• Costs/efficiency• The resources committed to a service: the efficiency with which they

are turned into inputs • Service delivery outcomes

• How well the service is being operated in order to achieve the strategic objectives

• Quality• Explicitly reflecting user’s experience of services

• Fair access• Relating to case and equality of access to service

Responsibility ChartingProject: Create and implement a communication plan to increase employee awareness and involvement in the corporate recycling program.

Tasks Lead Engineer HR Manager Facilities Lead IT Professional Sales Executive

Example: Research communication strategies in best-in-class corporate recycling programs. I C R A I

Legend:R = Responsible: The person who is ultimately responsible for completing this task.A = Accountable: The person who is accountable to ensure that the commitments are followed through on and completed.C = Consulted: Individuals who have subject matter expertise and should be consulted to benefit from their knowledge.I = Informed: Individuals to be kept in the loop, but they have no authority or responsibility for this task.NA= Not applicable: This individual is not involved in this task.

Organizational Design Models

PROS CONS

Front/Back •One integrated face to the customer through front end units without losing cost advantages of efficiency and leverage•Maximum leverage of technology and knowledge for

common product and service platforms and processes

• Splits some processes apart that have front and back end elements

•Demands excellent and disciplined management processes

• Coordination time

• Frustrating to managers who prefer to control all resources they need

Functional • Common expertise/community of practice/critical mass• Flexibility of deployment Ease of supervision,

development• Ease of development of common functional processes

•Disconnected from value chain and big picture• Processes cut across functions—white spaces problem•Narrow perspective—functional, not business metrics

and criteria for decision making•Difficulty of developing general management capability•Motivation—may not have line of sight for contribution

to the business

Geography • Can address regional customer bases, and regional requirements and differences• Proximity and cultural kinship• Ease of access/distribution•Distance from HQ enables local adaptation and

innovation

•Difficulty of development of common functional processes• Redundancy• Local perspective predominates—suboptimization•Difficulty of coordination and learning across regions•Motivation—may not have line of sight for contribution

to the overall business

Organizational Design ModelsPROS CONS

Product • Focus on advancing and optimizing a particular product’s technology, functionality, and customers• Control over resources required• Ease of coordination for speed, cost and

innovation• Reduces complexity

• Difficulty of development of common functional processes across product lines• Redundancy • Local product perspective predominates—suboptimization• Difficulty of coordination, learning, and resource

sharing across products• Motivation— may not have line

of sight for contribution to the overall business

Process • Cross functional collaboration and integration: connects white spaces between functional contributions• Focus on customer, business outputs and clear

metrics—line of sight to business• Speed, customer responsiveness• Broad knowledge and perspectives

• Internal focus of process teams• Divergence of practice—difficulty achieving common

processes• Difficulty of sharing learning, developing functional skills• Difficulty of supervision of multiple functions

Customer •One integrated face to the customer•Ability to customize, tailor for the customer•Customer response capability•Deep understanding of customer requirements

• Internal focus of customer teams• Divergence of practice—difficulty achieving common

processes• Difficulty of sharing learnings, developing functional skills• Difficulty of supervision of multiple functions

Matrix • Cross functional business focus and integration and emphasis on functional excellence

• Efficiency of staffing of businesses

• Functional learning carried between businesses

• Contention between businesses and functions over methods, resources, priorities• Matrixed individuals experience role and priority conflict• Shadow organizations develop in Businesses

Source: Flamholtz, E 2002, 'Strategic Organizational Development, Growing Pains and Corporate Financial Performance: An Empirical Test', European Management Journal, 20, 5, p. 527, Business Source Premier, EBSCOhost, viewed 25 June 2014.