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Matrix Structure Navigating & Making It Work

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Matrix Structure Navigating & Making It Work

  1. 1. Matrix Re-loaded:Navigating the Matrix Organization andMaking It Work for YouNg Aung SanHead, Strategy and Corporate Management Information 1
  2. 2. Opening thoughts… “Silence and look out, we shall catch both hen AND chicks” Spanish Proverb “If you chase two rabbits, BOTH will escape” Russian ProverbMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 2Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  3. 3. Agenda 1.  Matrix Organization – What is it? 2.  Matrix Organization – Why bother? 3.  Matrix Organization – What s the problem? 4.  Matrix Organization – How to make it work for you.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 3Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  4. 4. Classical Centralized Functional Unit Organization CEO Key Defining Characteristics: §  Single dimension – Vertically segmented by functions §  One common set of functions serving Market Head, Head, Head, Head, Head, different customer groups in the Marketing Product Operations Finance HR, etc. market Customer/ Mgmt. & IT Group §  Focus is more on internal process 1 standardization/ centralization Marketing Product Operations Finance HR Function Mgmt. & IT Function Function Advantages: Function Function etc. §  Intuitive, and easy to understand – Customer clearly defined single reporting line Group 2 §  Expertise, knowledge and processes optimized functionally §  Low duplication of resource/ work Customer §  High standardization/ centralization Groups 3, 4 … Disadvantages: §  Internally focused - Lack of in-depth understanding of, and tailoring to differences markets §  Vertical silos – One Firm? Customer Groups: §  Problems with hand-offs/ interface §  Country – e.g. Singapore; Malaysia, China, Indonesia etc. between functions §  Market Maturity – e.g. Established and Emerging Markets §  Problems with coordination and §  Product Lines – e.g. Life and General Insurance and Investments communication across functions §  Customer Groups – e.g. Retail and Institutional §  Slow response to market conditionsMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 4Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  5. 5. Classical Multi-Divisional Business Lines Organization CEO Key Defining Characteristics: §  Single dimension – Horizontally Market Head, Business Line/ Customer segmented by business lines/ Group 1 (e.g. Singapore) customer group Customer §  Different/ dedicated set of functions Groups serving each business line 1 Marketing Product Operations Finance HR Mgmt. & IT §  Focus is more on external market orientation/ customization Head, Business Line/ Customer Advantages: Customer Group 2 (e.g. Malaysia) §  Intuitive, and easy to understand - clearly defined single reporting line Groups 2 Marketing Product Operations Finance HR §  Expertise, knowledge and processes Mgmt. & IT optimized by customer group/ business line §  Nimble/ responsive to market changes Head, Business Line/ Customer/ Group 3,4 … (e.g. China, Indonesia) Customer Disadvantages: Groups §  Horizontal silos – One Firm? 3, 4 … Marketing Product Operations Finance HR §  Differing Customer Experiences Mgmt. & IT §  High duplication of resource/ work across business lines Customer Groups: §  Country – e.g. Singapore; Malaysia, China, Indonesia etc. §  Problems with coordination and communication across Business Lines §  Market Maturity – e.g. Established and Emerging Markets §  Slow development, group-wide §  Product Lines – e.g. Life and General Insurance and Investments sharing and adoption of best practices §  Customer Groups – e.g. Retail and Institutional §  Low standardization/ centralizationMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 5Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  6. 6. The Matrix Organization – The best of both worlds? Or the twin ills? CEO Market Head, Head, Head, Head, Head, Marketing Pdt. Mgmt. Ops & IT Finance HR etc. Customer/ Head, Marketing Pdt. Mgmt. Ops/ IT Finance/ HR etc. Groups Business Business Business Business Business Business 1 Line 1 Line 1 Line 1 Line 1 Line 1 Line 1 Customer/ Head, Marketing Pdt. Mgmt. Ops/ IT Finance/ HR etc. Groups Business Business Business Business Business Business 2 Line 2 Line 2 Line 2 Line 2 Line 2 Line 2 Customer Head, Marketing Pdt. Mgmt. Ops/ IT Finance/ HR etc. Groups Business Business Business Business Business Business 3, 4 … Line 3, 4… Line 3, 4 … Line 3, 4 … Line 3, 4 … Line 3.4 … Line 3, 4 … Key Defining Characteristics: §  Twin dimension – Horizontally AND Vertically segmented – Internal (process) AND External (market) focus §  Different/ dedicated yet common/ integrated set of functions serving each different business Line §  Executives hold twin citizenships – Business Line AND Functional units – and have (at least) two bosses §  One dimension has to share power with other dimension – Setting Policy and Strategy; Resource; Executives time/ appraisal; Operational execution decisions etc.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 6Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  7. 7. Agenda 1.  Matrix Organization – What is it? 2.  Matrix Organization – Why bother? 3.  Matrix Organization – What s the problem? 4.  Matrix Organization – How to make it work for you.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 7Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  8. 8. Fundamental Beliefs underpinning Matrix Organization… There is Value in optimizing Global/ Group AND Local Tradeoffs… §  Global/ Group: Take advantage of increased scale and cross-border synergies through group-wide collaboration; Enhancing group competitive advantage through competing as One firm; Benefits of collaboration > Costs §  Local: Protecting/ capturing value of local activities; Staying relevant to local market preferences and responsive to changes; Engendering initiative, entrepreneurship and local adaptations that deliver local value. ... But it will require Collaborative Strategies, Structures and Systems §  Collaboration will not happen automatically, and is in fact, counter-intuitive §  Hence, need for explicit collaborative strategy, structures and systems – i.e. a Matrix Organization §  Group/ Corporate Centre has a role to develop and execute – or manage execution of – collaborative strategy, structure and systemsMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 8Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  9. 9. So what is Collaborative Strategy…? Group/ Corporate Centre Multiple & Cross-SBU/ Lines of Business Single Stand-alone/ Enterprise Collaborative Strategy Vertical SBU Strategy(Creating Enterprise Value) Value (Creating Customer Value) Proposition SBU SBU SBU SBU A B C D Financial Synergies Financial Vertical Strategy, Linkage &Alignment How can we increase the shareholder What are our shareholder expectation FE FA FA FA FA for financial performance? value of our SBU Portfolio Customer Synergies Customer To reach our financial objectives, how How can we share the customer CE CA CB Cc CD do we create value for customers? interface to increase total customer value? Process Synergies Internal ProcessHow can we mange SBU processes to PE PA PB PC PD What are critical processes to deliver achieve economies of scale or value value to customers and shareholders? chain integration? L&G Synergies Learning & Growth (L&G) How can we develop and share our LE LA LB LC LD How do we align our intangible assets intangible assets? to improve critical processes? Cross-SBU Collaborative Strategy, Linkage & AlignmentSource: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis (Creating Enterprise Value)Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 9Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  10. 10. … And what are possible sources of Collaborative Value to enhanceEnterprise and Business Unit Competitive Advantage? Group/ Corporate Centre Multiple & Cross-SBU/ Lines of Business Enterprise Collaborative Strategy(Creating Enterprise Value) Value Proposition SBU SBU SBU SBU A B C D Financial Synergies Cross SBU/ Country Collaborative Financial Synergies: How can we increase the shareholder FE value of our SBU Portfolio Capital Management capabilities: §  Internal Capital Management Customer Synergies §  Asset/ Investment Management How can we share the customer interface to increase total customer CE §  Corporate Portfolio Management expertise value? §  Investor relations Process Synergies Effective Governance:How can we mange SBU processes to PE §  Legal and Regulatory Governance and Compliance achieve economies of scale or value chain integration? §  Management Governance and Compliance §  Governance and Performance Monitoring L&G Synergies §  Financial Reporting and Control How can we develop and share our LE §  Risk Management intangible assets?Source: R.S. Kaplan and D. P. Norton. Alignment; GE AnalysisMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 10Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  11. 11. … And what are possible sources of Collaborative Value to enhanceEnterprise and Business Unit Competitive Advantage? Group/ Corporate Centre Multiple & Cross-SBU/ Lines of Business Enterprise Collaborative Strategy(Creating Enterprise Value) Value Proposition SBU SBU SBU SBU A B C D Financial Synergies Cross SBU/ Country Collaborative Customer Synergies: How can we increase the shareholder FE value of our SBU Portfolio Shared Customers: §  Shared brand name; shared advertising and promotion Customer Synergies §  Cross-selling of products/ services How can we share the customer interface to increase total customer CE §  Interrelated pricing of complementary products value? §  Bundling/ packaged selling or Solutions-selling. Process Synergies Common Value Proposition:How can we mange SBU processes to PE §  Consistent buying experience across geography, business achieve economies of scale or value chain integration? lines etc., aligned with brand/ corporate standards L&G Synergies Shared Channels: How can we develop and share our LE §  Shared distribution channels/ sales force intangible assets? §  Shared service networkSource: R.S. Kaplan and D. P. Norton. Alignment; GE AnalysisMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 11Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  12. 12. … And what are possible sources of Collaborative Value to enhanceEnterprise and Business Unit Competitive Advantage? Group/ Corporate Centre Multiple & Cross-SBU/ Lines of Business Enterprise Collaborative Strategy(Creating Enterprise Value) Value Proposition SBU SBU SBU SBU A B C D Financial Synergies Cross SBU/ Country Collaborative Process Synergies: How can we increase the shareholder FE value of our SBU Portfolio Centralized development and Enterprise-wide sharing of: §  Corporate business operating principles Customer Synergies §  Business setup and management systems (knowledge, How can we share the customer CE expertise, policies, standards, best practices, success interface to increase total customer value? formulas , frameworks, procedures, templates etc.) §  Specialized Build-Operate-Transfer (BOT) Teams for Process Synergies rapid/ robust market/ country entry and expansionHow can we mange SBU processes to PE achieve economies of scale or value Shared Group Processes/ Services for Efficiency Savings: chain integration? §  Shared platforms L&G Synergies §  Centralized operational processes (shared services) How can we develop and share our LE §  Standardized processes among multiple business units intangible assets?Source: R.S. Kaplan and D. P. Norton. Alignment; GE AnalysisMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 12Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  13. 13. … And what are possible sources of Collaborative Value to enhanceEnterprise and Business Unit Competitive Advantage? Group/ Corporate Centre Multiple & Cross-SBU/ Lines of Business Enterprise Collaborative Strategy(Creating Enterprise Value) Value Proposition SBU SBU SBU SBU A B C D Financial Synergies Cross SBU Collaborative Learning & Growth Synergies: How can we increase the shareholder FE value of our SBU Portfolio Leadership and Organizational Development: §  Share competency in development of human, information Customer Synergies and or Leadership How can we share the customer CE §  Human capital recruitment and development (incl. key interface to increase total customer value? executive rotation programs) §  Information – Leverage common technology/ platforms Process Synergies §  Organizational – Propagate/ reinforce strong cultures/How can we mange SBU processes to PE mindsets (e.g. innovation, teamwork) achieve economies of scale or value chain integration? L&G Synergies How can we develop and share our LE intangible assets?Source: R.S. Kaplan and D. P. Norton. Alignment; GE AnalysisMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 13Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  14. 14. Main areas of Group/ Local or Cross-Unit value along Internal Process/Value Chain in Insurance context ILLUSTRATIVE Typical Links of Insurance Value Chain (bubble level) Overall Product Asset Risk inter- Admini- Distri- Strategic design & Management mediation stration bution Levers of Cross-Unit planning packaging Value Creation Resource allocation ● ◑ ◕ ○ ◕ ◔ Expertise sharing ◕ ◕ ◑ ◔ ◕ ◑ Cost efficiency ○ ◕ ◔ ● ◔ ◔ §  Centralized group-wide Strategic Planning (with inputs from individual business/ country units) §  Group-wide perspective on cross-business product profitability for targeted capital allocation/ portfolio management §  Cross-business/ country unit expertise sharing and Group-wide standard setting (Underwriting. Pricing, Asset management etc.) §  Centralized Administration and Asset Management1.  Cross-business/ country units sharing/ synergies and centralizations in insurance context. Source: The New Federalism: How insurance Groups are re-inventing the role of the Group Corporate Centre; Mercer Oliver Wyman Perspectives (November 2005); GE AnalysisMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 14Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  15. 15. Agenda 1.  Matrix Organization – What is it? 2.  Matrix Organization – Why bother? 3.  Matrix Organization – What s the problem? 4.  Matrix Organization – How to make it work for you.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 15Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  16. 16. Problems typically arise in first, Finding the Value; Secondly, havingdesire to Act on what one finds… Finding the Value… §  Hard to spot opportunities between Group and local; and across country or business units Cognitive §  Few people have knowledge or perspective needed to consider a truly cross- Hurdle unit, cross-country, cross-functional approach §  Nascent understanding of true nature of Corporate Strategy §  It is not Business-As-Usual, and hence beyond the here-and-now, meet-the- Resource numbers horizon of most managers Hurdle §  No one in the business/ country units have responsibility for (and luxury of) taking a group/ cross-country perspective Having the desire to act on what one finds… §  Opposition from local power bases fearful of losing autonomy and control Loss of Current §  Concerns of need to compromise in one s own unit to benefit other units Benefit Hurdle §  Potential conflict over priorities in shared activities No perceived §  People unable/ unwilling to see value in greater organizational integration Future Benefit §  Results/ payoff probably only visible in the medium to long term hurdle: §  Difficulty of measuring performance – what is a good job is hard to determineMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 16Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  17. 17. … And finally – and most importantly – having the Clarity and Maturityto Make it Work! Making it Work! §  Competing or conflicting objectives between matrix dimensions §  Inadequate process to align goals and detect possible misalignments Misaligned Goals §  Lack of synchronization, coordination, and poor timing of work plans and objectives §  Insufficient communication and consultation between matrix dimensions §  Unclear job descriptions and guidelines for roles and responsibilities Unclear Roles & §  Confusion over who is the boss Responsibilities §  Not knowing whom to contact for information §  Confusion over who has the final authority Ambiguous §  Lack of clarity on areas of accountability Authority §  Leaders unaccustomed to sharing decision rights §  Delay in decision making process §  Personal conflicts between leaders hinder collaboration between units Silo-focused §  Withholding resources from others Employees §  Lack of trust between employees in different units §  Employees lack requisite skills to function in the matrixMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 17Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  18. 18. Agenda 1.  Matrix Organization – What is it? 2.  Matrix Organization – Why bother? 3.  Matrix Organization – What s the problem? 4.  Matrix Organization – How to make it work for you.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 18Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  19. 19. From experience, getting the Overall Design right, and working toReduce Ambiguity and Engender Collaboration during Operationalizationare both critical to success Design right a Group-Local Reduce Ambiguity & Matrix Organization & System Engender Collaboration §  Find the value §  Define dominant axis of authority §  Consider full range of organizing §  Clarify decision rights/ authorities, options and linkage that support chosen Global/ Local §  Clarify roles and responsibilities for Group and Local Units + strategy by levels, then align fully §  Consider Value Chain focus and Sub-Owners to align and §  Establish and resource Group engender collaboration Corporate Centre, separate from Local Units §  Group Corporate Centre to develop Group Systems (Policies, Processes etc.)Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 19Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  20. 20. Finding the Global/ Cross-Unit and Local Value involves analyzing eachfunction, or even each key Activity, guided by general design principles §  Recognize and play to different strengths §  Leverage economies of scale and skill §  Accelerate setup and growth §  Pool scare resources §  Minimize duplication §  Prioritize proximity to preferred customers and suppliers §  Optimize supply chain configurations §  Avoid undue complexityMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 20Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  21. 21. Consider Range of Organizing Options/ Linkage, and AppropriateMechanisms1 to capture Cross-unit Value Level of Cross-Unit Value Most appropriate type of Group Sample Collaborative & Ease of Capture Cross-Unit Linkage Units Role Mechanisms1 §  High Group/ Cross-Unit Value Fully Centralized Structure Running/ §  Central Unit sets Policy, makes §  Low Local Unit Value §  Centralized decision making Executing decisions and executes them and execution §  Direct supervision by Central Unit §  High Group/ Cross-Unit Value; Centralized Decision Making; Directing §  Central Unit sets Policy and But challenging to capture Local Execution makes decisions §  Low Local Unit Value §  Policies defined and §  Standardize processes and skills decisions made centrally; §  But executed locally §  Moderate Group/ Cross-Unit Aligned Execution Guiding §  Standardize values, principles Value; Fairly easy to capture §  Decision making primarily §  Best practice sharing §  Moderate Local Unit Value locally; §  Rotating key people cross-unit §  Some centrally driven §  Converge processes to facilitate coordination to ensure consistency and alignment alignment/ optimization §  Standardized reporting formats §  Low Group/ Cross-Unit Value Fully Decentralized Structure Targeting §  Standardized financial measures §  High Local Unit Value §  Decisions made and §  Strong local/ in-country Manager Executed fully locally1.  Mechanisms that promote information sharing, coordination, and collaboration across different organizational unitsMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 21Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  22. 22. Appropriate Organizing Option would typically vary across all fourModels depending on combination of Hard and Soft considerations Degree of centralization would vary between sub-function and activity within each function – and may vary across time – before stabilizing HARD FACTORS SOFT FACTORS §  Newness and complexity of specific §  Trust sub-function/ activity §  Working relationship §  Knowledge, expertise, familiarity §  Confidence §  Availability of right resource/ band- width §  Maturity §  Maturity of Group/ Local Market §  Perception §  Culture and belief systemMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 22Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  23. 23. Clarify Roles and Responsibilities for Group and Local Units ILLUSTRATIVE Function/ Group/ Cross-Unit Local/ Country Unit Key Activity §  Define the vision and targets §  Identify local opportunities §  Understand opportunities and decide on market §  Coordinate with Group for methods of entry New Market Development entry priorities and strategy for entry §  Manage local negotiations with local §  Coordinate across local units to respond to multi- government regulators, potential target point competition companies, and partners §  Set allocation group-wide and drive group process §  Coordinate investment Manufacturing §  Decide on optimal locations §  Secure long-term access to supply §  Support negotiations with key suppliers §  Identify sourcing needs and coordinate resources §  Manage relationships with local suppliers Sourcing across the group §  Optimize group supply chain strategy with suppliers §  Search for global opportunities and innovations §  Build tailored local applications R&D §  Execute/ leverage Central R&D Unit/ Infrastructure §  Manage local innovations §  Set targets §  Coordinate customer strategies Sales §  Coordinates cross-selling between Local Units (Business Lines/ Country) §  Determine group shared services strategy and §  Provide and optimize shared service Shared organizing model, and oversee group platforms platforms Services §  Coordinate Shared Services with local unitsMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 23Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  24. 24. Translate Roles and Responsibilities for Group/ Corporate Centre toestablished how Involved it will be, and how it will Add Value Nature of CC Involvement/ Intervention Operational Involvement & Scale Active Centre Staff Involvement Running/ Executing Directing Direct (Little separation between Group/ Centre and (Group adds value through Hands-on Units; High degree of Supervision and Control; development of Strategic Plans with and/ or for Group adds value by Performing some Functions Business/ Functional Units; And providing and Activities centrally for Economies of Scale) Directional Initiatives) Target Setting & Controls Vision, Principles & Oversight Targeting Guiding Indirect (Group influences performance of Business/ (Group adds value by Visioning, Creating new Functional Units by setting Targets and controls. Group know-how, and providing Guiding Group adds value through Scale economies in Principles; with some coordination of Business/ Financial Governance – Budgeting, Control) Functional Units) Economies of Scale/ Cost Reduction Increased Value/ Knowledge Source of Competitive AdvantageMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 24Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  25. 25. This in turn will determine the Skills, Expertise, Talent Type, PlanningProcess and Focus of the Group/ Corporate Centre and Business Unit Operational Involvement & Scale Active Centre Staff Involvement Nature of CC Involvement/ Intervention Running/ Executing Directing §  Centralized value chain management skills §  Process/ system management skills Direct §  Technical expertise §  Process expertise §  Technical managers/ value chain experts §  Process experts §  Top down process, but shared responsibilities §  Discussion between Centre and BU in process §  BU focus: Cost reductions/ competitiveness §  BU focus: Utilizing group process advantages Vision, Strategy & Oversight Target Setting & Controls Guiding Targeting §  Vision, value and principles management skills §  Indirect Financial management skills §  Governance expertise §  Vision and Values §  Financial experts §  Visionary Leaders §  Tight formal process, with targets from Centre §  Process tailored to vision/ values/ principles §  BU focus: Financial Performance §  BU focus: Fit to group vision/ values/ principles Economies of Scale/ Cost Reduction Increased Value/ Knowledge Source of Competitive AdvantageMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 25Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  26. 26. Successful Birth, Growth and Operationalization of the Group/Corporate Centre – Some key points §  FULLY extract Corporate Centre from Flagship (Strong/ Founding) Unit. §  Executives in Business Units – no matter how strong, doubling up – will NOT work! §  Corporate Centre Executives must learn to appreciate it s a full-time job with, even if its not traditional Business-As-Usual. They must feel comfortable/ confident with transition to more strategic role. Doing is now more Planning, Coordinating, Facilitating and Aligning. §  Select top talent for Corporate Centre; Continuously skill them up with planning, technical, relational and project management/ coordination skills – able to add real value and continuously earn respect of local units. §  Executives in Corporate Centre must have medium to long term perspective, and be able to step away. The big picture must be their picture; And they must help Business Units keep big picture in view.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 26Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  27. 27. Group/ Corporate Centre to develop Group Policies/ Systems forActivities where it plays a Directing or Guiding Role ; And decide onappropriate configuration of Standardization/ Customization Pyramid Group s (or Flagship Unit s) existing Policies & Processes Local Unit to leverage Group policies/ practices; No customizations allowed Inputs from Inputs from Inputs from Industry Best Internal & Local Practice Operations External Local Unit Research Consultants leverage Group policies/ practices; Changes subject to Group approval Pilot in Local Unit Operations Local Unit leverage Group policies/ practices; Free to execute/ customize at will, within boundaries Group s ENHANCED Policies & Processes for Group-wide applicationMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 27Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  28. 28. From experience, getting the Overall Design right, and working toReduce Ambiguity and Engender Collaboration during Operationalizationare both critical to success Design right a Group-Local Reduce Ambiguity & Matrix Organization & System Engender Collaboration §  Find the value §  Define dominant axis of authority §  Consider full range of organizing §  Clarify decision rights/ authorities, options and linkage that support chosen Global/ Local §  Clarify roles and responsibilities for Group and Local Units + strategy by levels, then align fully §  Consider Value Chain focus and Sub-Owners to align and §  Establish and resource Group engender collaboration Corporate Centre, separate from Local Units §  Group Corporate Centre to develop Group Systems (Policies, Processes etc.)Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 28Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  29. 29. Define a Dominant Axis of Authority within the Matrix dimensions1… 40 primary responsibility to each dimension/ functions Percentage of survey respondents assigning 35 35 32 30 25 20 15 15 12 10 5 4 3 0 Business Country Both Regional Functional Others a b c d e f Unit/ Mgmt. Country Mgmt. Mgmt. Product Mgmt. & Division Business Units1.  Source: Organizing for Global Advantage in China, India, and Other Rapidly Developing Economies Survey; Boston Consulting GroupMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 29Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  30. 30. … And follow through to give primacy to chosen Axis/ Dimension at theoverall Group level1… If Business Unit/ Country is Dominant Axis (over Functional), then… Group Business Unit Head will… Group Functional Unit Head will…. §  Have full end-to-end accountability of P&L and §  Have accountability for respective area of functional Capability building at Group and Local Units level responsibility at Group and Local Unit level §  Coordinate and exercise Business and Functional §  Coordinate and exercise functional responsibilities/ Units responsibilities/ authorities in BU to ensure authorities in BU – through Group BU Head. coordinated/ aligned instructions and efforts §  Approve local business and functional strategies/ §  Concur with local functional strategies/ policies, policies, ensuring alignment with Group s strategies/ consistent with Group s strategies/ policies. policies. §  Have authority to draw on functional units to support §  Have responsibility to provide quality and timely support its goals, and coordinate support programs based on to BU at reasonable costs, as coordinated by Group BU assessment of local needs Head §  Exercise directly – or delegate functional §  Delegate functional responsibilities/ authorities – responsibilities and authorities to Local BU Head/ through Group BU Head – and not directly to Local CEO or Local Functional Heads Functional Heads. §  Exercise governance to ensure compliance §  Work through Group BU Head to ensure compliance with governance §  Directly supervise and review performance of Local §  Provide inputs to Group BU Head on performance of Head/ CEO Local Head/ CEO1.  Illustrative for Business Unit/ Country by Functional Unit MatrixMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 30Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  31. 31. Clarify Decision-making Authorities, that support chosen Global/ LocalStrategy, for different levels; Then align respective Sub-systems 1 Group Board/ Board Committees with CEO 2 Group CEO with Direct Reports; and Between Direct Reports Group Heads with Local Country CEO/ Unit Heads (Business & 3 Support Functions) 4 Local CEO with Local Unit Heads (Business & Support Functions) Parties involved in Cross-functional Value Chain Processes (Group 5 and Local level)Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 31Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  32. 32. Standardize Decision Rights/ Authorities – their Definitions, Powers andResponsibilities and even Sequence of Execution – Group-wide §  Authorizes a proposal for execution, and holds responsibility/ accountability of approving. §  Responsible to seek concurrence from concurring authority (e.g. peers/ higher authority) where APPROVE necessary, before approval/ execution of proposal. §  Approving authority can initiate a matter for consideration without a recommendation. §  Holder of joint decision marking authority and responsibility CONCUR §  When an approval requires a concurrence, the proposal cannot be executed until concurrence has been given by the concurring authority. §  Supports a proposal for approval by a higher authority. §  The higher authority obtains assurance that another person/ body, with required experience/ ENDORSE knowledge, has reviewed the proposal before it considers the proposal. §  Proposal cannot be executed after it is endorsed, it still requires concurrence/ approval. §  Verifies structure/ format of proposal and approval process adopted is in compliance with REVIEW policies/ frameworks. Can ask for structure/ format of proposal/ process to be amended. §  Proposal cannot be executed after it is reviewed, it still requires approval. §  Initiates proposal for discussion and approval. OWN §  Following approval, responsible/ accountable for execution on proposal according to agreed policies and objectives.Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 32Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  33. 33. Adopt 80-20 rule, to develop a Roles, Responsibility and Authority(RRA) Grid for each level, considering Local Regulators Requirements ILLUSTRATIVE Level #3B Grid - Group BU Head with Local Review Freq. / Group BU Local Local Country CEO/ BU Head Reviewer Head #2 Board CEO STRATEGY & OWNERSHIP (GELINDO) 1 Overall Direction & Risk Annual/ XXX Own - - 2 Market Positioning/ Business Strategy As Req./ YYY Approve - Own 3 Mergers & Acquisitions As Req./ YYY Own Approve (Reg) - … … … … … … PEOPLE 1 Key Appointments/ Promotions/ Terminations As Req./ YYY Concur Approve (Reg) Own 2 Human Capital Policies – Compensation… Annual/ XXX Approve - Own .. … … … … … BUSINESS & OPERATIONS MANAGEMENT 1 Financial Management Policies, Structure, KPIs Annual/ XXX Approve Endorse Own 2 Distribution Management Policies, Structure, KPIs Annual/ XXX Approve - Own .. … … … … … FINANCIAL & OPERATING LIMITS 1 Capital/ Management Expenditure Quarterly/ XXX Approve - Own … … … … … …Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 33Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  34. 34. Cascade RRA Grid across all levels; Then align respective Sub-systems Group Board/ Board Group Board Audit Nom Rem. Group Group Board/ Board Committees with Group CEO Board EXCO Comm. Comm. Comm. CEO 1 Committees with CEO 1 XXX §  XXX 1 §  XXX 2 … YYY §  YYY 1 §  YYY 2 Group CEO with Direct Group CEO with Direct Reports; Group Group Group Group Group Group Group and Between Direct Reports CEO BU Hd 1 BU Hd 2 Ops Hd. IT Hd. Fin Hd. IM Hd. 2 Reports; & Between Direct Reports 1 XXX §  XXX 1 §  XXX 2 … YYY §  YYY 1 §  YYY 2 Group Heads with Local Country CEO Group Heads with Local CEO/ Group Local Local 3 or Unit Heads Unit Heads (Biz & Support) BU Hd 2 Board CEO 1 XXX §  XXX 1 §  XXX 2 … YYY §  YYY 1 §  YYY 2 Local CEO with Local Unit Business Local CEO with Local Business 4 & Support Functional Heads) & Support Unit Heads Local CEO Local Ops Hd Group IT Hd. Group Fin Hd. Group IM Hd. 1 XXX §  XXX 1 §  XXX 2 … YYY §  YYY 1 §  YYY 2Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 34Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  35. 35. Consider Value Chain focus to align and engender Cross-functionalCollaboration, and Group-wide Process Standardization, and Capabilitybuilding ILLUSTRATIVE Typical Links of Insurance Value Chain (bubble level) Product Asset Risk inter- Admini- Distri- design & Management mediation stration bution Typical Vertical Group/ packaging Local Functional Units Marketing ü ü Distribution ü ü ü ü Operations/ IT ü ü ü Finance/ Actuary ü ü ü Investment Management ü üMatrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 35Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  36. 36. Key Takeaways…Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Page 36Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, SingaporeCopyright © 2008 Great Eastern Life Assurance
  37. 37. End of Pack 37

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