As we enter 2023, businesses need to re-evaluate their position in the market and consider redesigning their organization to capture new opportunities and avoid becoming obsolete. In fact, according to recent studies, 50% of organizations have gone through a redesign in the last 2 years, and the other 50% expect to do so in the next 2 years. However, it’s important to note that less than a quarter of organization redesign efforts are successful.
It’s Time for Organization Design
So, how can organizations facilitate a successful redesign? The key is avoiding small structural changes and thinking about the bigger picture. Consider the operational model you wish to create for your organization to remain viable and productive. Identify your organization’s strengths and opportunities, and link them to long-term strategy, accountability, and organizational-wide collaboration. List out the behavioral changes required for the change to be successful and account for any barriers that may impede the redesign project.
There are several situations in which an organizational redesign may be necessary. It could be in response to a newly introduced regional-growth initiative, following a merger, or after outsourcing a function. However, sometimes the signs are less obvious. For instance, a redesign could be very useful if key decision-makers in the company find that agreed-upon ideas aren’t being translated fast enough into action. A few other indicators of growth-oriented organization design needs: sales outpace delivery of your products, fulfillment needs process, structure, and resources, supply chain management strategies offer competitive pricing and cost containment advantages and outsourcing of functions or centralized shared services support efficient operations.
To spot the signs in time, it’s important to start by identifying your current structure. Review your organization’s “state of the union,” current structure, and behavioral patterns. This will give you a sense of where your company stands, how customers perceive it, and whether a change in management style may be needed. Additionally, it is also important to pay attention to external factors such as changes in technology, market trends, and competition. By monitoring these factors, you can identify potential challenges that may require a redesign of your organization. Furthermore, gathering feedback from employees, customers, and stakeholders is essential to understand their perspectives on the organization’s current state and where improvements can be made. By taking a holistic approach to identifying the signs of a potential redesign, you can ensure that your organization is ready to adapt and evolve in a rapidly changing business environment.
Capabilities Inform Your Future State Design
To design your future state organization effectively, you’ll need to map out the key capabilities of your organization. Identify each capability area’s level of maturity and then account for operations across each region, function, and business unit. This process will clearly understand your organization’s strengths and weaknesses and help identify areas that need improvement. It is also important to consider the alignment of these capabilities with your overall business strategy and any regulatory or compliance requirements that may need to be considered.
Once you have identified the key capabilities, you can then begin to assess the resources and infrastructure required to support them. This may include things like technology, people, and processes. It is also important to evaluate the current state of these resources and identify any gaps that need to be filled to support the desired future state.
Finally, some capabilities may operate at an enterprise or a local level. It’s important to understand this impact on the overall organization and how it may affect the design of the future state. For example, a capability only required at an enterprise level may be centralized in the organization, while a capability that needs to be delivered at a local level may be decentralized. By considering these factors, you can ensure that your organization is designed in a way that is efficient, effective, and adaptable to the changing market and business environment.
Efficient Business Processes Underpin Effective Operating Models
After you map out capabilities, be certain to review the business processes that support the organization. Determine if the processes can be improved or made more efficient. A close look at capabilities and improved processes will reveal the operating model and governance structure supporting business growth and success.
Additionally, the capabilities and the improved business processes may reveal new functions, departments, or teams that need to be established to operate as the business scales. Taking a close look at the business process improvement plan to get insight into the time required to complete the process from start to finish and the number of resources required to execute it. Using the process as a guide, you can estimate resources.
As a change consultant, I have expertise in this area and can answer any questions about your upcoming redesign. Remember, the key to a successful redesign is to think big picture, identify strengths and opportunities, and create a plan for organizational-wide collaboration and accountability. By doing so, you will position your business to thrive in disruption.
Sara Sheehan, PCC, is a consultant and Executive Coach who works with C-Level executive leaders in designing organizations, developing business strategies, managing change, optimizing talent and leadership development, and solving complex human performance problems. Through executive coaching, Sara helps leaders sprint up the corporate ladder and increase their performance.
Organized office stock image Vadym Pastukh/Shutterstock
