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Strategy to operating model to organization design
- 1. © Ashridge ExecutiveEducation 2015 © Ashridge Executive Education 2015 Organisation Design: Going from strategy to operating model to organisation structure Andrew Campbell
- 2. © Ashridge ExecutiveEducation 2015 Organization Design People Test Feasibility Test Specialist Cultures Test Difficult Links Test Redundant Hierarchy Test Accountability Test Flexibility Test The nine tests of good organization design Business/Function Strategy Test Higher-level Strategy test Good Design Tests Fit Tests
- 3. © Ashridge ExecutiveEducation 2015 Organization Design Higher Level Strategy Test Business/Function Strategy Test Two strategy tests Is there a “box” or powerful mechanism for each priority?
- 4. © Ashridge ExecutiveEducation 2015 Products Segments Countries Channels Sources of advantage or excellence Operating initiatives Implications Test Priorities
- 5. © Ashridge ExecutiveEducation 2015 Products Segments Countries Channels Sources of advantage or excellence Operating initiatives Implications Test Priorities Standard Bespoke Yes Yes Construction Industrial Automotive Aerospace Yes No No No UK Germany Middle East Asia Yes ? Yes ? Yes ? Yes ? Do we need country managers? Do we need segment managers?
- 6. © Ashridge ExecutiveEducation 2015 The Business Model Canvas Key Partners Customer Segments Value Proposition Cost Structure Revenue Streams Key Resources Channels Key Activities Customer Relationships For whom? What? How?
- 7. © Ashridge ExecutiveEducation 2015
- 8. © Ashridge ExecutiveEducation 2015 Suppliers Organisation Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas Locations Information
- 9. © Ashridge ExecutiveEducation 2015 Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas
- 10. © Ashridge ExecutiveEducation 2015 Organisation Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas
- 11. © Ashridge ExecutiveEducation 2015 Organisation Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas Information
- 12. © Ashridge ExecutiveEducation 2015 Suppliers Organisation Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas Information
- 13. © Ashridge ExecutiveEducation 2015 Suppliers Organisation Customer/ Beneficiary Value Delivery Chain(s) The Operating Model Canvas Locations Information
- 14. © Ashridge ExecutiveEducation 2015 Enhanced Business Model Canvas Back End (operations) Front End (customers/channels) Financial Model Middle (value)
- 15. © Ashridge ExecutiveEducation 2015 Start by laying out the value chain(s) needed to deliver the value proposition(s) Low cost
- 16. © Ashridge ExecutiveEducation 2015 Choose what else to put on the Canvas based on what is important to the value proposition * * * Links the value proposition - “low cost” - to the elements of the operating model that make low cost possible. * * * * Low cost*
- 17. © Ashridge ExecutiveEducation 2015 Upstream oil Downstream oil Integrated gas Contractors Global Footprint Function/Business Matrix Engineering culture Multiple ERP systems Bespoke functional applications (global) Tech & Projects Dutch/British HQ Shell
- 18. © Ashridge ExecutiveEducation 2015 Ready for trainers Reasonable prices * * * * * * * * * * * * * * * * * * * Ivo van Haren
- 19. © Ashridge ExecutiveEducation 2015 Compensation and Benefits Talent OD HR Consulting HR Stats HR BPs BU 1 BU 2 BU 3 Corp funct- ions IT function Consultants Recruiters IT Function for on-line retailer
- 20. © Ashridge ExecutiveEducation 2015 Improve retention Improve pipeline * * * * Development Succession Build capabilities * * * * * * Talent: example * * *
- 21. © Ashridge ExecutiveEducation 2015 Most organizations have multiple value chains Ashridge Executive Education Open courses value chain Tailored courses value chain Research value chain Design Market Deliver Market Design Deliver Define problem Design Research Do field work Contract Extract learning Publish
- 22. © Ashridge ExecutiveEducation 2015 Open courses Tailored Qualifications Conferences Weddings Research All Value Chain Steps Design Build Clients Market Quote /Sell Adjust design Admin Deliver/ do Follow up Issue qual + design publish Segments A value chain map comparing segments
- 23. © Ashridge ExecutiveEducation 2015 Open courses Tailored Qualifications Conferences Weddings Research All Value Chain Steps Design Build Client s Market Quote /Sell Adjust design Admin Deliver/ do Follow up Issue qual + design publish Report by function Report by value chain and link Report by value chain keep separate Segments A value chain map comparing segments
- 24. © Ashridge ExecutiveEducation 2015 Organisational implications Design Deliver Open courses Design/C ontract Deliver Design Deliver Quals Build Clients Tailored development Qualification courses Marketing Admin CEO
- 25. © Ashridge ExecutiveEducation 2015 Standard - construction - industry - automotive - aerospace Bespoke All Value Chain Steps Develop tech Negotiate Buy steel Make Sell Deliver A value chain map comparing segments
- 26. © Ashridge ExecutiveEducation 2015 Organisational implications Bespoke Develop Buy Make Sell Buy Standard products Finance + IT HR Deliver … Develop Negotiate CEO UK EU ME
- 27. © Ashridge ExecutiveEducation 2015 Organization Design People Test Feasibility Test Specialist Cultures Test Difficult Links Test Redundant Hierarchy Test Accountability Test Flexibility Test The nine tests of good organization design Business/Function Strategy Test Higher-level Strategy test Good Design Tests Fit Tests
- 28. © Ashridge ExecutiveEducation 2015 Organisations have two kinds of work • Operating work (or value chain work) • aimed at delivering value to “customers” • Support work • aimed at helping other departments within organisation Operating work can become support work if it is “centralised”
- 29. © Ashridge ExecutiveEducation 2015 • Function • Process • Geography • Customer • Product • Project • Asset • Etc • Two boss matrix • Front/back Three ways to structure the operating work Value Chain Unitised Matrix
- 30. © Ashridge ExecutiveEducation 2015 Four types of support work Head of structure Operating Work Policy e.g. Core resource e.g. Champion/Coordinate e.g. Shared service e.g. Lean/ Operating excellence Key accounts Finance HR Research Marketing Finance services HR services
- 31. © Ashridge ExecutiveEducation 2015 Strategy, business model, operating model Operations Customer Offer Employee Offer Partner Offer Beneficiary Offer
Editor's Notes
- #22 Ask them how many value chains in Aijenka.
- #32 While it is evident that organisations need strategies for each stakeholder, most strategy work in commercial organisations is focused on customers. This is because the competition for customers Is the most pressing “difficulty”. Executives often presume that, if they can attract a customer, they will be able to find money, people and business partners. Hence they focus on customer strategy and leave the interaction with the other stakeholders to those working on the “operating model”. But, maybe it would be better if strategists did a complete job of defining all the “core” stakeholders and all the “offers” to these stakeholders.