Excellence in service innovation


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Excellence in service innovation

  1. 1. Excellence in service innovation CBI/QinetiQ report on innovation in UK service sector businesses Report sponsored by
  2. 2. Excellence in service innovation CBI/QinetiQ report on innovation in UK service sector businesses Report sponsored by
  3. 3. Excellence in service innovation 3 Contents Foreword 5 Summary 6 1 Setting the scene 8 2 Innovation case study themes 22 3 Policy issues 44 4 Conclusions and recommendations 49 Case studies 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 Footnotes 69
  4. 4. Excellence in service innovation 5 Foreword 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. Graham Love CEO QinetiQ
  5. 5. 6 Excellence in service innovation Summary 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. Key messages 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.
  6. 6. Excellence in service innovation 7 Recommendations 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.
  7. 7. 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.
  8. 8. 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 Muckle n Newcastle International Airport n n Nike n n Steria n n Texperts n n n
  9. 9. 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 innovations. 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.
  10. 10. 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 80 70 60 Total GVA Total GVA 50 40 Services Services 30 20 Manufacturing Manufacturing 10 0 1980 1990 1996 2003 2006 0.0 0.0 0.5 0.5 1.0 1.0 1.5 1.5 2.0 2.0 2.5 2.5 3.0 3.0 3.5 3.5 Total services Manufacturing Source: Office of National Statistics
  11. 11. 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.
  12. 12. 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 customer engagement. 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
  13. 13. 14 www.arup.com Excellence in service innovation Arup 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 Jeremy Watson. 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.
  14. 14. 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
  15. 15. 16 Excellence in service innovation – Norwich Union www.aviva.com AVIVA 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,
  16. 16. Excellence in service innovation 17 Telematics attracted far more interest from customers than they could possibly imagine
  17. 17. 18 www.benoy.com Excellence in service innovation Benoy 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 within, offices. 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.