Excellence in service innovation
CBI/QinetiQ report on innovation in
UK service sector businesses
Report sponsored by
Excellence in service innovation
CBI/QinetiQ report on innovation in
UK service sector businesses
Report sponsored by
Excellence in service innovation 3
1 Setting the scene 8
2 Innovation case study themes 22
3 Policy issues 44
4 Conclusions and recommendations 49
Arup 14 Legal & General 52
AVIVA – Norwich Union 16 Loch Lomond Seaplanes 54
Benoy 18 Magic Lantern 56
BT Wholesale 20 Muckle 58
Clarks 36 Newcastle International Airport 60
Fujitsu Services 38 NIKE 62
HSBC 40 Steria 64
KPMG 42 Texperts 66
Excellence in service innovation 5
A radical transformation of the global economy is taking place with the emergence of new economic
powerhouses such as China and India. Global competition is intensifying across every market sector.
In this world of rapid economic change innovation is fast becoming the most important aspect of
competitiveness among nations.
Traditionally in the UK innovation has been synonymous with R&D expenditure. However with
more than 75% of the UK economy based on a diverse range of services including retailing, financial
services, business services, leisure and tourism, it is timely to refresh our views and widen our
understanding of innovation in the service sector.
R&D does have an important role to play in innovation but alongside other factors such as investing
in design, marketing and training as well as innovation-related capital expenditure. By integrating
innovation in new technologies, products and processes with innovation in business models and
market positioning, organisations build and maintain their competitive edge.
This point is very well illustrated by the innovative application of technology around the internet –
coupled with the adoption of new business models – which is underpinning the delivery of added-
value services to customers. Over the last decade we have seen this innovative approach to service
delivery to meet customer needs resulting in a revitalisation of the travel industry through low cost
air travel, the growth of online delivery of public services such as filing tax returns and licensing of
vehicles, and a huge surge in online retailing, to name a few examples.
This latest research into innovation in the service sector, which has been a joint CBI-QinetiQ
partnership, has given us valuable new understanding of innovation practices and culture in some
of the leading service sector companies in the UK. For me the over riding message is that innovation
plays a crucial role in meeting customer needs, a message which I believe will be applicable to
enterprises in every market sector. I am sure that you will draw other valuable messages from this
very insightful report.
6 Excellence in service innovation
Our highly diverse service sector now accounts for three quarters of the UK economy in terms
of gross value added and its importance is growing. Innovation is critical to this growth in the
face of increasing competition and more demanding customers.
This report showcases innovation in some of the UK’s leading and high-growth service sector
companies. Our intention is to raise awareness about service sector innovation and what underpins
it, to highlight best practice and ideas others may use, and to identify where further support from
government could help to improve the environment for service sector innovation in the UK.
Company culture and market issues emerge as the main company one of the best places to work. The key is that
drivers of service sector innovation, while a range of companies make a conscious decision on what works best
regulatory problems – and difficulty in accessing skills for them – and are always willing to learn.
and timely finance – often create barriers to innovation.
Service sector companies appear to be most successful
Barriers to change within companies themselves also when innovation is championed by key individuals in
have the potential to derail or slow down innovation. the organisation who have the drive and ambition to lead
Companies overcome this by developing new processes change – developing and implementing new ideas.
and structures to keep the flow of ideas fresh. Online
Significant amounts of intellectual property and know
collaborative tools are increasingly being used as part
how are usually entrained in service sector innovations,
of the ideas generation and management process.
but protecting this IP formally is often either difficult
Building trust with customers and engaging with them to or impossible. Yet this limitation creates more of an
understand their real needs is often the starting point for opportunity than a barrier – as companies seek to bring
service innovation, although companies also place great new innovations to market quicker and more frequently
value on ideas generated internally or in collaboration with to gain first-mover advantage.
a range of partners, including universities.
Our findings indicate that two underlying themes link the
While process is important to innovation, on its own it companies in this study. First, that they all invest for the
is not enough. Company culture is clearly a major factor long-term (eg in training, new technology, building their
in success. Service innovators place a strong emphasis culture and processes) so that any short-term set backs
on creating the right environment for innovation and become part of the learning process. And, second, that
developing a positive attitude to creativity, risk and they are successful because they strive to differentiate
failure. But the approaches to this are diverse: from themselves in the market place, seeking to delight their
focusing on innovation and service improvement targets, customers with their service offerings and always aiming
to being more relaxed about these while making the to keep ahead of the competition.
Excellence in service innovation 7
Companies must invest in developing their own service innovation culture and market presence,
but there are many ways in which government can support this. The public sector as a whole can also
help to catalyse business investment in service innovation by becoming lead customers for innovative
new solutions. To build on the current base and make the UK the best place for service sector
innovation to thrive, we make the following policy recommendations to government:
1. Raise innovation-related skills levels in the UK
2. Ensure IP protection options remain appropriate to service sector firms
3. Make the tax system more competitive, forgiving and flexible, using
it as a tool to provide short-term liquidity support to innovative companies
4. Improve general financial support for innovation and ensure service sector
innovators are not disadvantaged
5. Improve demand-side pull for service innovation – particularly in the
procurement of public services
6. Identify innovation champions to lead public sector culture change
7. Support firms in sharing non-confidential data with researchers
8. Support networking and knowledge sharing specifically among
service sector innovators
9. Develop innovation measures for the UK to capture culture and behaviour
factors that appear critical to successful service sector innovation.
8 Excellence in service innovation
1 Setting the scene
Innovation keeps businesses competitive – it is widely recognised as providing a real impetus
for growth and is at the heart of corporate strategy in many of the world’s leading firms.
In the CBI’s innovation surveys over nearly 20 years we where it is design-led, where the focus is on brand and
have focused on innovation as being more of a process marketing, or on process and organisational development
than an end in its own right (Exhibit 1 provides our – or even around creating a new business model. In
definition of innovation). We have found there is no one many cases it is a combination of these. However, it is not
simple way to be innovative, no one-size-fits-all solution necessarily the innovations themselves that are of interest,
and nor is it a one-off ‘fire and forget’ activity. Instead, it but how the company innovates. We also asked a service
requires ongoing investment, a diversity of inputs and a innovation and design consultancy firm – Engine Service
change in organisational culture for innovation to make Design2 – to share its perspectives on service innovation
an effective, sustained and positive impact on business as an expert in advising and helping companies with their
performance. innovation processes.
In partnership with QinetiQ, we have focused in this report Not all of the businesses are at the same stage in
on innovation in the service sector side of the economy. developing their approaches to innovation, but all are
While we have always examined issues affecting service willing to share their ideas and learn from others. From
sector businesses as a core part of our surveys, we have the case studies we have picked out a number of important
never before focused a piece of detailed case study work and recurring themes providing insights that should be
just on this area. We do so now for three reasons: applicable to all service sector innovators. Explored in
detail in chapter 2, the key themes are:
n To raise awareness of service sector innovation in the UK,
its diversity and its importance to the economy n Innovation drivers and barriers
n To highlight drivers and barriers to service innovation, n Innovation processes
identifying any policy issues that government or other n Engaging with customers
stakeholders should address to make the UK the best
place in the world for service innovations to be developed
n Openness and collaboration
and deployed n Creating an innovation culture
n To share best practice among businesses across the n Intellectual property
service sectors with the aim of starting a dialogue on n Other factors influencing innovation.
effective routes to service innovation that businesses
can follow. In chapter 3, we examine some of the policy issues arising
from the case study themes and our analysis of other
The 16 businesses showcased (Exhibit 2) were chosen recent work on service sector innovation – by academics,
because we were aware of their innovation activities either the government, the European Commission and other
through personal experience or on recommendation from organisations. Based on this review, a number of issues
other companies. They were selected from a much longer emerge, on which we make recommendations for action
initial list to ensure the case studies were spread across in chapter 4.
the service economy (from retail to finance, business
services to new media and architecture to transport), Before considering our case studies and innovation
covered a wide range of company size (the 16 range themes in detail, it is useful to start with some background
in size from 12 to 300,000 employees) and displayed on the service economy to understand its diversity and
different ownership profiles1. We also selected on the type scale in the UK and why innovation is so important to its
of innovation exemplified, so the case studies include long-term future. Also in this introductory section are some
innovation where new technology is a core component, observations from service sector innovation research and
how the UK compares internationally.
Excellence in service innovation 9
Exhibit 1 Innovation defined
The CBI defines innovation broadly as the successful And the ideas do not have to be quantum leaps in
exploitation of new ideas. The same definition is also technology or understanding – they can just as easily
used by the government, although this deceptively be ideas for incremental improvement.
simple definition requires some unpacking:
Successful exploitation – innovation involves novelty,
New ideas – innovation is not just about R&D, risk, experimentation and failure and how these are
new ideas can involve design, marketing, brand managed is a key part of the innovation process.
development and many other factors. New ideas and Successful exploitation means useful ideas have been
concepts can come from a wide range of sources (eg developed and taken through to implementation –
from patents, customers, staff, designers, academics, though along the way many other ideas will have either
competitors, other markets and even from nature). failed, been parked or put aside.
Ideas do not have to be entirely new – they may be
Taken together, these elements of the definition
new to your business or new to your market, but they
provide a short-hand description of what is a
may already be well established in other sectors.
continuous and dynamic process in which ideas
are transformed into value.
Exhibit 2 Case study companies and the innovation
types that they exemplify3
Innovation type Technology Design-led Brand or Process or Business
driven innovation marketing organisational model
Case study company innovation innovation innovation innovation
Arup n n n
Aviva – Norwich Union n n n
Benoy n n
BT Wholesale n n n
Clarks n n n
Fujitsu Services n n n n
HSBC n n n n n
KPMG n n
Legal & General n
Loch Lomond Seaplanes n
Magic Lantern n n n
Newcastle International Airport n n
Nike n n
Steria n n
Texperts n n n
10 Excellence in service innovation
“Innovation isn’t anything until it becomes
part of your everyday business”
Carina Kemp, Head of Insight and Planning, HSBC.
Services and the UK economy engineering activities and legal services – all of which
are represented by case studies in this report because of
Officially, services now account for around 76% of the UK
their importance to the sector overall5. Within the business
economy in terms of gross value added (GVA4, Exhibit 3).
services category, the more knowledge-intensive business
This is greater than in any of the other leading industrialised
services (KIBS) in the UK account for 9.3% of total GVA –
nations with the exception of France (which has a large
the highest proportion in any EU nation6.
public sector) and the US.
The other star performer on GVA growth in the UK over the
The contribution of services has increased steadily over
last five years has been financial intermediation (banking,
time as the relative contribution from manufacturing has
insurance and other financial services etc), covered in
declined (Exhibit 4). Although there has been some
our case studies with HSBC, Legal & General and Aviva.
growth in the manufacturing sector, the rate of GVA growth
This sector has seen an average annual growth of 8.2%
in services has been significantly higher (Exhibit 5).
over five years and 13.2% in the year to the end of 2007,
Over the ten years from 1996 to 2006, the share of GVA despite the ‘credit crunch’7.
from manufacturing output fell by 7.9 percentage points
The importance of services to the economy is further
(ppt), effectively reducing the contribution of manufacturing
highlighted by the growing number of manufacturers
to GVA by nearly two fifths. At the same time, most areas
who are now offering services around their manufactured
of the service economy have seen their GVA shares grow.
products in order to realise additional value. Indeed,
For example: hotels and restaurants by 0.4 ppt, social and
the boundary between manufacturers and service sector
personal services by 1.1 ppt (a one quarter increase in the
businesses is becoming increasingly blurred by such
contribution from this sector), financial intermediation
by 2.9 ppt (an increase in its contribution of over two
fifths) and real estate, renting and business services by With services dominating the UK economy and employment,
5.7 ppt. The growth in importance of business services and their share of GVA continuing to grow steadily, fostering
has been particularly marked. These now represent 14% innovation within the service sectors becomes increasingly
of the economy, up from just 4.5% in 1980. Employment important. If UK service businesses are not innovating,
in this sector has also grown significantly to over 3.6 their offerings will soon be matched or surpassed by the
million people, which is more than the total employed in competition. To stand still is not an option.
manufacturing, agriculture, fishing and the other production
As with manufacturing and production previously, the
sectors put together.
competition is global and many services, including most
Business services covers a wide range of activities of the high-value business and financial services, can now
including software consultancy and supply, accounting, just as easily be delivered across international borders. This
business and management consultancy, architectural and creates a threat to the UK, but also significant opportunities
to take our service expertise to the rest of the world.
Excellence in service innovation 11
Exhibit 3 The shape of the UK economy
(GVA share, 2006)8
24% Fisheries, agriculture, manufacturing,
Business services 14%
production & construction
Wholesale and retail trade 12%
3% Hotels and restaurants
5% Public administration and defence Real estate & equipment rental 9%
5% Other social & personal services
5% Education Financial intermediation 9%
7% Transport, storage & communications Health and social work 7%
Exhibit 4 Percentage contribution Exhibit 5 Percentage annual GVA growth
to GVA in the UK over time over the year to Q4 2007
60 Total GVA
1980 1990 1996 2003 2006 0.0
Total services Manufacturing Source: Office of National Statistics
12 Excellence in service innovation
Where the UK stands on service The UK’s ranking is eighth out of 37 countries in the
sector innovation study, and scores significantly above the EU average.
But, in a separate EU study on innovation in the service
The last main UK innovation survey (conducted by the DTI
sector – the Service Sector Innovation Index (SSII) – the
in 20059) found that a significant proportion of companies
UK’s performance was only marginally better than the EU
consider themselves to be ‘innovation active’ and there
average11. Slightly ahead of the UK on SSII scores were
has been a substantial increase in this proportion with
countries such as Romania, the Czech Republic and Latvia.
time: up from 45% innovation active in 2001 to 57% of the
This may reflect rapid catch-up efforts in these countries,
sample in 2005. Innovation activity levels have increased
while the UK services scored poorly on ‘sources and
across companies of all sizes and across all sectors.
diffusion of knowledge’, ‘innovation demand’ and ‘human
Within the service sectors of the sample the proportion of
resources’. For example:
innovation active firms in retail and distribution increased
by more than a half to 61%, knowledge intensive business n Customer responsiveness for new services in France,
services by over a third to 69% and ‘other services’ to 53%. Germany and Italy were almost twice that in the UK
This compares to just over 70% of manufacturing firms that n Lack of qualified personnel was seen as hampering
identify themselves as being innovation active.
innovation efforts by 50% more service firms in the UK
The extent to which this reflects real change, or improving than either France or Italy
business awareness and understanding of innovation is n Almost twice as many German service firms indicated that
unclear. While improving ‘innovation literacy’ among businesses universities are an important source of information than
can in itself be seen as a good thing, this might offset some of UK, French and Italian firms.
the reported improvements in innovation activity.
The findings suggest that the UK might be disadvantaged
In terms of world standing on innovation, the UK has by a lack of demand-side pull for service innovation. This
recently been assessed as an ‘innovation leader’ with an is something we have previously highlighted as a general
overall innovation performance similar to that of Germany innovation issue which the government could and should
and the US and only slightly behind Japan – and with its tackle as a matter of priority: using its £150bn per year
performance still improving10. The UK performs strongly public procurement muscle to commission and procure
on input measures such as the provision of early stage innovative solutions. Acting as an intelligent lead customer
venture capital, life-long learning, ICT expenditure and in this way it can create demand and new markets, meeting
SME collaboration, and an analysis of innovation efficiency its own needs while at the same time catalysing additional
suggests the UK is above the EU average in transforming business investment in innovation12 13.
innovation inputs into applications.
Excellence in service innovation 13
“Innovation is what we do all of the time
– we never make a product twice”
Anthony Lilley, CEO, Magic Lantern.
The SSII conclusions also suggest that the UK still has be required, for these to be weighted according to their
ground to catch-up on delivering appropriate training for importance to different service sector sub-divisions, and for
the new knowledge and service-based economy and that them to be weighted again based on the GVA share of these
more could be done to attract service sector businesses to sub-divisions to the overall economy. Later this year, the CBI
engage with the university base. will be joining with NESTA and other partners to take the first
steps towards creating a new Innovation Index that should
However, there are many problems in trying to understand
begin to meet this challenge.
service sector innovation at this macro level – not least
because it is still not clear what are the most useful metrics Until then, this case study report adds some real life
(or best proxy measures) for evaluating service sector examples to our understanding of service sector innovation
innovation. For knowledge intensive businesses, spend in the UK.
on technology and R&D may be useful measures (as
they are in manufacturing and production), but in other
service sectors it might be more appropriate to evaluate
brand value factors, investment in training or the depth of
Interestingly, only five UK companies featured in this year’s
top 100 BrandZ survey published by research company
Millward Brown14, but all of them are service sector
companies: Vodafone (11th), Tesco (25th), HSBC (35th),
Marks & Spencer (60th) and Barclays (93rd). Nike, one of our
other case study companies, also makes it into the top 100
at number 53.
Looking at the importance of R&D, only 16% of the top
1250 global companies by R&D investment are in the
service sectors, whereas in the UK, service sector firms
make up 28% of our top 800 by R&D spend15.
Before a true comparison of service innovation performance
can be made within and between countries it is likely that
a basket of quantitative and qualitative measures may
www.arup.com Excellence in service innovation
Arup is a global design and business consulting firm. Its strengths lie in the structural design and
engineering of buildings, bridges and other physical infrastructure. Many of its projects are world-
renowned signature pieces, including: the spectacular Bird’s Nest stadium and Water Cube aquatics
centre for the Beijing Olympics, the Millennium Bridge and 30 St Mary Axe (‘the gherkin’) in London
and the Channel Tunnel Rail Link.
Arup believes that it stays ahead of the competition due A number of major universities are involved in this project,
to its technical excellence, quality, reputation and brand. including UCL, Imperial College, Southampton, University
of New South Wales and Tongji, Shanghai. The EPSRC has
Arup was formed as a partnership in 1947 and became
contributed £1.5m to create a UK Sustainable Cities Network
a trust with a charitable element in the late 1960s. The
among academics as part of this work, while Arup is
trust board comprises mostly retired Arup employees and
contributing its services pro bono because it believes
provides governance for an executive board of senior Arup
it will generate ‘pay back’ in the long term.
directors. Its aim is to nurture public good and achieve
‘reasonable prosperity’. It is a fast growing company with Arup has a core innovation group which leads
close to 10,000 staff and a turnover of £750m. Profits are intra-company collaboration and corporate ‘ideation’.
reinvested in the form of bonuses to staff and in ‘buying’ It is structured around three strategic themes: ‘Now’ (skills),
time to complete pure research (ie research that isn’t ‘New’ (R&D) and ‘Next’ (foresight) – see page 26. It also
part of existing client-related projects). Reinvestment in takes input from business and consults widely to generate
business development is approximately £18m a year. road maps for research and technology. Approximately
80% of Arup’s time is spent on projects relating directly
The company has set up a Design Technology Fund to
to business need and 20% on emerging opportunities.
support its internal research. There are currently around
The concept of ‘open innovation’ has been embraced by
100 critical external collaborative projects in progress, in
Arup and is championed by its Director of Global Research,
such fields as mechanical and structural engineering, fire
engineering and acoustics. It also has a global research
fund of £6m, leveraged with regional and government Historically, Arup has not worried too much about
money. This fund is primarily used to connect up the work patenting or copying by others as almost everything it
of its 92 overseas offices in 37 countries with skills and does is a one-off. With some outputs now becoming more
knowledge from universities in the UK and elsewhere. Work modular – eg desalination methods or oil platform set up
with universities is principally in the area of engineering – Arup is trying to make staff more mindful of intellectual
and is mainly directed at real world challenges such as the property (IP).
design of ‘sustainable cities’.
In addition to their collaborative research activities, Arup
Arup is currently working as master planner and designer has helped small companies take products and services
on Dongtan, the world’s first eco-city project, for the to market by investing in their IP.
Shanghai Industrial Investment Corporation. The project
The company’s innovation culture stems from the founder
provides many research opportunities in human behaviour,
of Arup who expressed the importance of quality and
water, waste, energy etc and results are being shared with
innovation in what has become known as ‘The Key Speech’,
parallel activities to create a new zero-carbon development
delivered on 9 July 1970. These principles are still at the
– including an Institute for Sustainability with university,
core of the company today:
industrial and public partners – in the Thames Gateway
area of London.
Excellence in service innovation 15
Arup’s core values maintain the vision established by its founder,
Sir Ove Arup (1895-1988):
n We will ensure that the Arup name is always associated with quality
n We will act honestly and fairly in dealings with our staff and others
n We will enhance prosperity for all Arup staff.
Our priorities are:
n Our clients and our industry
n Our creativity
n Our people
n Sustainable development.
We shape a better world:
n To enhance prosperity and the quality of life
n To deliver real value
n To have the freedom to be creative and to learn.
The Trustees underpin the innovation culture in Arup. They organisation’. The net gain in knowledge from this approach
run the company like a family and you are answerable to is extremely important to Arup: they look at the bigger picture
the family. Productivity is not an explicit focus of attention, and take a long-term view.
but it occurs as a consequence.
For the UK, Arup sees strategic procurement as being a
Critically, Arup recognises that it is inevitable for some projects major driver of innovation. Done in a whole-hearted way
to go wrong initially or become unprofitable, but these are by government and other major customers, it can stimulate
seen as part of the overall challenge when innovating – it activity throughout the supply chain by creating demand
shows that they are prepared to take more risks than some for innovative solutions.
of their competitors and allows the company to be a ‘learning
16 Excellence in service innovation
– Norwich Union
Norwich Union is the largest provider of insurance services in the UK and is part of Aviva, the world’s
fifth largest insurance group. Their core business is about risk – and claims resolution constitutes the
bulk of the costs of running the business.
In the 1990s traditional insurance business models started to the first pay as you drive product, aimed at ‘young drivers’
evolve rapidly. Companies like Direct Line altered the insurance (aged 18-23), was launched to great media interest. A
market for good, while the broker market also changed with the package for other drivers then followed.
likes of web-based moneysupermarket.com enabling customers
Norwich Union has now used this expertise to create a
to compare quotes from hundreds of insurers online, very rapidly.
telematics product for the commercial fleet insurance market.
Norwich Union quickly realised that it had to change. Throughout
the 1990s they had grown the business through acquisition and Managing risk is a key part of any insurance business and
now realised it should focus investment on innovation. this responsibility extends to customers, with increasing
focus being given to Duty of Care. ‘Fleetwise Care’, Norwich
It was recognised that detailed analysis of data trends using
Union’s Telematics-enabled fleet product, is targeted at
the latest technology could transform the underwriting
this. The system presents information on journeys such as
business, providing them with a real competitive advantage,
duration, speed, road types covered and claims information.
and so they set about developing and protecting innovative
This enables an assessment to be made on such things
algorithms to analyse data.
as driver fatigue and the exact timing and location of any
At about the same time, car manufacturers were focusing incident involving that vehicle. Fleet managers can also look
on technologies to improve car safety. Telematics was one back at historical driver data to try to understand more about
such technology, which involves capturing and analysing journey and driver behaviour or why a driver may have had
data from vehicles. It seemed to offer great potential for several accidents. The fleet-side system also has a sensor
insurers and Norwich Union discovered that other insurers fitted which can provide an immediate alert if the vehicle
internationally were already trying it out. Following the has been in a serious accident.
success of Direct Line, Norwich Union understood the
Norwich Union believes that, in the future, telematics
importance of first-mover advantage and provided an
boxes will be built into all cars as standard and that this
R&D budget for the development of a pay as you drive
will help to reduce accident rates. Recent changes in Health
telematics product for the UK insurance market.
& Safety policy associated vehicles, and also changes in
The telematics offering was initially piloted with 5000 corporate manslaughter legislation, increase the focus
volunteers from its own customer base and the trial proved that businesses need to place on Duty of Care. Telematics
to be a great success. It also attracted far more interest technology is an enabling technology to help.
from customers than they could possibly imagine. In 2006,
Excellence in service innovation 17
far more interest from
customers than they
could possibly imagine
www.benoy.com Excellence in service innovation
Benoy was founded 60 years ago in Newark, Nottinghamshire, originally designing agricultural
buildings. It is wholly owned by the entrepreneurial Chairman, Graham Cartledge, who joined the
company 30 years ago. Benoy now offers its customers a full architectural design, visualisation,
interior design and master planning service – specialising in big retail projects and mixed use.
Its work includes the Bluewater retail complex in Kent, the Bullring shopping centre in Birmingham
and the re-design of Manchester city centre.
Benoy has grown rapidly over the last 10 years, increasing Known as ‘the circle of trust’, it has the Chairman at its core
in size from 100 people and two offices in the UK, to over and then moves out in a concentric pattern with a number
450 people and five offices, worldwide. Throughout this of ‘spokes’, each representing a different ‘department’ –
growth period, Benoy maintained the same organisational although these can be quite virtual and each may contain
structure, but quickly anticipated that it would not be people from different locations. They are perhaps better
suitable to meet their aspirations for the future as it could described as ‘bubbles of activity’. Two broad overall
soon become too restrictive and inflexible and inhibit themes are also present:
their ability to be creative and respond rapidly to internal 1. Geographic – for winning business and designing
and external forces. Such challenges may be familiar to 2. Operational – for completing the work and being
many companies: an inappropriate management structure paid for it.
can become hierarchical, inward looking, provide little
The structure is designed to maximise the efficiency of
opportunity for ‘joined-up’ decision making in an enlarged
information flow both for internal purposes and external
organisation and create a tendency for staff to work in
customers. The people at the outer ends of the spokes may
isolation, with little sharing of information across, and even
well be more senior than those in the middle and some
people are listed in more than one area to create elements
In December 2007, Benoy’s senior management team of a matrix management approach. The structure is also
(who had all worked for the company for many years) very flexible, easily accommodating new areas of activity,
concluded that things must change, not least because ensuring that Benoy stays nimble.
some of them were also approaching the end of their
Infrastructure was also put in place to support the
careers. They needed to consider succession planning and
reorganisation including state of the art video conferencing
delegation of responsibility to the wider staff to run and
facilities so that teams in different locations can
develop the company as it continued to grow.
communicate regularly and effectively.
In just three months, but after much consultation with staff, an
The reorganisation has had an immediate benefit on the
innovative new organisational structure was developed and
business, enabling more effective transfer of customer
implemented. No longer flat and hierarchical, it is now circular!
enquiries to the right people, improving internal
communications and freeing up time for leaders of the key
sections to concentrate more on design and architecture,
rather than administration.