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How To Simplify A Complex Organization

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How To Simplify A Complex Organization

High-level presentation discussing the challenge of how to simplify large and complex organizations. If you are interested this topic, you can subscribe to receive updates from my blog http://www.organizationdesign.net

My book is available from Amazon.co.uk:
http://www.amazon.co.uk/Organisation-Design-Dr-Nicolay-Worren/dp/0273738836/ref=sr_1_1?ie=UTF8&qid=1368539550&sr=8-1&keywords=Worren

High-level presentation discussing the challenge of how to simplify large and complex organizations. If you are interested this topic, you can subscribe to receive updates from my blog http://www.organizationdesign.net

My book is available from Amazon.co.uk:
http://www.amazon.co.uk/Organisation-Design-Dr-Nicolay-Worren/dp/0273738836/ref=sr_1_1?ie=UTF8&qid=1368539550&sr=8-1&keywords=Worren

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How To Simplify A Complex Organization

  1. 1. How to simplify a complex organization Nicolay Worren, PhD www.organizationdesign.net
  2. 2. Organizations today are multidimensional 1960 2012 CEO CEO CEO Shared Services Product A Product B Region A Region B HR Engineering Country A1 Production Marketing IT Product B Accounting Product A Country A2 organizationdesign.net 2
  3. 3. Gettings things done requires intensive collaboration – but one sometimes forgets cost and capacity limits 110 ∆ = 20 100 90 80 70 Number of potential 60 bilateral interdependencies 50 40 30 20 10 ∆=4 0 0 1 2 3 4 5 6 7 8 9 10 11 Number of employees organizationdesign.net 3
  4. 4. Collaboration is particularly challenging across the interfaces in a matrix structure Example Product A Product B Product C Region A Whose goals do we prioritize? Who resources what? Region B Who makes what decisions? Who’s accountable for what? Region C organizationdesign.net 4
  5. 5. Employees experience the consequences of increasing complexity on an every day basis Information Unclear More time in overload accountability meetings ”We know who is Corporate e-mail traffic responsible for solving (billions of messages per year) key business problems in 35 our unit” 30 25 40% 30% 30% 1960 20 15 10 NO YES 5 0 Typical result in employee 2003 2004 2005 2006 surveys in large corporations 1982 organizationdesign.net 5
  6. 6. Surveys confirm that organizational leaders now view complexity as a major challenge “What is the level of complexity in your organization today compared to three years ago?” The same Source: Global PwC CEO 17% Somewhat lower survey 2007 6% Much lower Higher 2% 50% N= 1400 27% Much higher “Are you experiencing a high level of complexity?” Currently Source: Global IBM CEO 60% 40% study 2010 Over the next five years N= 1500 79% 21% organizationdesign.net 6
  7. 7. There is also a growing recognition that the organizational structure may contribute to complexity “Our organizational structure is contributing to an increase in the complexity in our firm” Source: Economist Intelligence Unit Disagree Agree Survey 2011 43% 57% N= 300 organizationdesign.net 7
  8. 8. The first step in a simplification process should be to evaluate the current situation and set improvement targets Example  = Today  = Where we should be To a great Our decision processes enable us to Not at all extent respond quickly to changes in the external market To a great Feedback from our employees suggest that Not at all extent there is clarity with regard to roles and responsibilities in our organisation To a great The goals pursued by different functions Not at all extent and units in our organization are complementary To a great Our productivity measured per Not at all extent employee is as good or better than the average for similar companies organizationdesign.net 8
  9. 9. One should examine unit mandates and ensure that each unit has a clear purpose and a distinct role Example - Units - Unit mandate Mngtm team Corporate staff Shared Services Create strategy X Develop policies X ? Provide support to X business units ? organizationdesign.net 9
  10. 10. An internal customer-supplier model is an alternative to the matrix that simplifies reporting relationships Units/roles that deliver Units/roles that develop Units/roles that market internal support services and deliver products or and sell products or or resources to product services to end services units customer Requests Requests Requests Delivers Delivers Sells Support service product product Products Region Customer services organizationdesign.net 10
  11. 11. It’s also crucial to design a formal structure that is aligned with the work processes (and vice versa) Out Before Example In In Out After 11
  12. 12. More information For more information: http://www.organizationdesign.net/who-is-this-blog-for/book organizationdesign.net 12

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