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Currently viewing the tag: "Organizational Design"

Time for change

Business environment has transformed drastically from what it was a century ago.  It has become immensely challenging due to competition, disruptive technologies, laws, and globalization.  These challenges warrant better performance to address customer needs and to survive—and outpace—intense competition.  Consequently, organizations have become complex.

The work that individuals perform in an organization has also shifted from manual labor and clerical jobs to knowledge-based experiential tasks.  Traditional workforce was required to adhere to commands and stick to routines, whereas today’s workforce needs to be more empowered, innovative, able to adapt to varying circumstances, and render sound judgment.

Adapting with the constantly changing business environment is essential for organizations aspiring to succeed in today’s competitive markets.  In order to stay competitive, more and more organizations across the globe are undertaking Business Transformation programs to reorganize their businesses.  However, a large percentage of such programs fail to achieve the desired outcomes.

For the Organizational Design to be successful, leaders need to be mindful of the revolutionized work settings and business environment of this age.  One of the major factors attributed to these failure rates is utilizing traditional approaches to reorganization, which are proving ineffective in this digital age.  These traditional approaches appreciate “level of control” and power, and underestimate the significance of employee autonomy and innovation. 

The Smart Design Approach to Organization Design

Today’s Knowledge Economy necessitates the employees to be more empowered to decide on their own than merely following commands.  People act in ways that are best for their own interests.  The new approach to reorganization—termed Smart Organizational Design—aligns the workforce’s best interests with the organizational mission rather than seeking control over the employees.  The focus is on changing the environment (context) and mindsets of employees willingly and instilling team work and cooperation, thereby enhancing organizational performance considerably.

The Smart Organizational Design approach entails classifying the existing workforce behaviors, ascertaining the desired behaviors critical to improve performance, and providing environment (context) favorable to develop new behaviors.  The approach encompasses 3 main steps:

  1. Define why reorganization is necessary (objective)
  2. Determine the behaviors critical to support reorganization
  3. How to execute the Smart Organizational Design

Let’s dig deeper into the second step.

Determine the behaviors critical to support reorganization

The next step involves the leadership to determine the “what” element of the Smart Organizational Design approach—i.e., definition of certain behaviors critical to achieve the transformation purpose.  Determining the desired behaviors necessitates thinking through the following 4 critical Smart Organizational Design aspects.  These 4 design aspects work in tandem to shift the environment (context) for the workforce and motivate them to embrace the new behaviors crucial for improved performance:

  • The Organizational Structure aspect—pertains to management reporting lines, spans of control, and layers of hierarchy.
  • The Roles and Responsibilities aspect interprets individual and shared accountabilities to cultivate teamwork and cooperation.
  • The Individual Talent aspect specifies the right skill set and motivation to perform responsibilities of each role effectively.
  • The Organizational Enablers aspect outlines the elements necessary for creating the right context (environment) for embracing the desired behaviors, i.e., decision processes, performance management, and talent management.

Interested in learning more about the other step of the Smart Organizational Design approach and the factors critical for its success?  You can download an editable PowerPoint on Smart Organizational Design here on the Flevy documents marketplace.

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Warehouse 3As the last decisive step in customer service, a warehouse ensures cost effective distribution.  Latest technological innovation has turned warehousing into a competitive advantage.  It offers untapped potential for improvement. However, warehousing is a hugely neglected part of global supply chains.  There is inconsistency in picking, packing and shipping orders, storing receipts, and managing inventory and logistics operations.

These and the following roadblocks in the way of smooth warehousing operations and Lean Management exist in every traditional warehouse:

  • Lack of focus on acquiring technology to facilitate in improving efficiency and quality.
  • Inability to utilize a structured approach to ascertain the reasons for poor performance.
  • Lack of a big picture viewpoint pertaining to processes, costs, or external supply chain partnerships.
  • Absence of a continuous improvement culture to achieve warehouse operations excellence.
  • Lack of communication, organization, and proper training of resources.

These shortcomings call for implementing Lean Warehousing methodology to unlock improvement opportunities and savings in operational, efficiency, and maintenance related costs.  First initiated by Toyota, the Lean Warehousing approach has a deep emphasis on eliminating 3 basic limitations: waste, variability, and inflexibility. The Lean Warehousing methodology focuses on the following 3 improvement areas:

  1. Cost Reduction
  2. Customer Quality
  3. Service Levels

Cost Reduction

The Lean Warehousing methodology concentrates on increasing productivity and reducing operating costs.  This is achieved by:

  • Cutting undue walking and searching
  • Preventing needless replenishment, reworks, waiting times, and double handling
  • Upgrading demand and capacity planning and manpower allocation

Customer Quality

A Lean Warehouse seeks to take the customer quality to the next level by avoiding:

  • Order deviations
  • Picking errors
  • Damaged goods

Service Levels

Improving service levels is at the center of a Lean Warehousing methodology, which involves:

  • Reducing lead times
  • Enhancing on-shelf availability

Lean Warehousing Transformation

Lean Warehousing Transformation entails streamlining operations to identify waste, know how to increase service levels, implement standardization and innovative ideas, and learn to evaluate and manage performance.  Such transformation becomes a reality in an experiential learning environment and by developing organizational capabilities in 3 critical areas:

  1. Operating System
  2. Management Infrastructure
  3. Mindset and Behaviors

Operating System

The organizational capability to configure and optimize all company physical assets and resources to create value and minimize losses.  The focus areas under operating systems include eradicating variability, encouraging flexibility, and promoting end-to-end design.

Management Infrastructure                                                                   

The organizational capability to strengthen formal structures, processes, and systems necessary to manage the operating system to achieve business goals.  The focus areas under Management Infrastructure are performance management, organizational design, capability building, and functional support process.

Mindset and Behaviors

The organizational capability to manage the way people think, feel, and act in the workplace individually as well as collectively.  The target areas to focus on here include a compelling purpose, collaborative execution, up-to-date skills, drive to improve, and committed leadership.

Model Warehouse Implementation

Lean Warehousing Transformation necessitates developing a “Model Warehouse,” which presents facilities for supply chain people to practically experience state-of-the-art warehouse operations in a modern warehouse and shop-floor environment.  The Model Warehouse incorporates newest technology and systems, and offers real-life conditions for building capabilities—i.e., optimization of storage, pick and pack, and dispatch processes.  Newest technologies—e.g., Smart Glasses and HoloLenses—available at the facility help improve the performance of pickers significantly and execute multi-order picking efficiently.

Such a setting allows people to observe and analyze the performance of an exemplary warehouse and implement this knowledge at their own premises.  Leading organizations organize a week-long rigorous knowledge sharing workshop—in an experiential learning environment of a Model Warehouse—for their people to have a hands-on experience to learn Lean Warehousing, actual picking, packing, root cause analysis, and performance management.  The participants of the Model Warehouse Knowledge Sharing Workshop are excellent candidates for “change agents” to implement Lean Transformation.

Interested in learning more about Lean Warehousing, Model Warehouse Implementation, and Lean Warehousing Transformation?  You can download an editable PowerPoint on Lean Warehousing Transformation here on the Flevy documents marketplace.

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Despite the emergence of new devices and software products designed to unite employees in more ways than ever before, the threat of Organizational Silos Primer pic1organizational silos is still very real. While silos deter customer experiences and producing correctly functioning products – the root of the problem is that many managers fail to spot those silos as they formulate in front of their very eyes.

What are Silos? Organization silos describe the isolation that occurs when employees or entire departments within an organization do not want to or do not have adequate means to share information or knowledge with each other. Siloed teams often end up working in isolation from the rest of the company. This leads to a plethora of internal and external problems for employees, executives, partners, and customers.

In Organizational Design, it is critical to also consider the risks of unintended silos within the organization.  Having organizational silos can lead to duplicate work, inefficiency, bugs and generalized employee disenfranchisement at a granular level. Work is being done without regard to how the work impacts other departments. Departments start having tunnel vision, solely focused on their own functional area. In the end, there is a breakdown in communication and transparency leading to organizational dysfunction on multiple levels. This can greatly affect the company’s ability to deliver excellent Customer Experience.

Breaking Down Organizational Silos: The 5 Key Symptoms

Understanding the 5 Key Symptoms of Organizational Silos will guide companies in breaking down silos and limiting their effect on performance, goals, and targets.

  1. Broken Customer Experiences. This is the most obvious sign of a siloed team. Eventually, this symptom will ultimately make the company undesirable.
  1. Internal Unfamiliarity. There is internal unfamiliarity when employees or colleagues are not on a first name basis. Employees are not familiar with the majority of the people outside the team and what they do.
  1. The Us vs. Them Mentalities. When your department sees other departments as competitors and obstacles to success, then there exists the us vs. them mentality. In the us vs. them mentality, protectionist thinking exists. When this happens, information is not shared for fear that another team’s gain will be their loss.  This leads to the creation of cliques with its own distinct culture that is not aligned with the company’s overall mission and culture.
  1. Disenfranchised Employees. Having employees who feel that they are not part of the team is a symptom of organizational silos. Disenfranchised employees are unhappy, unproductive, and pose the risk of sharing negativity with coworkers.
  1. Task Duplication. Have you seen people of different teams working on similar assignments and projects? That is a symptom that there are organizational silos within your company. When there is task duplication, this can lead to inefficiencies and loss of productivity.

Companies can immediately break down barriers to communication and collaboration once the key symptoms are detected. Silos in business have two sides to the coin. The good side is variety, ownership, accountability, specialization, and efficiency. However, on the other side, the bad side means short-sightedness, inaccessibility, and inefficiency. This can harm your organization.

Organizations must be able to deal with silos inside a business. This can be done by expanding our perspectives and motivation in the work we do.

Interested in gaining more understanding of Organizational Silos, the different types, and proper ways of addressing them? You can learn more and download an editable PowerPoint of Organizational Silos here on the Flevy documents marketplace.

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Information Technology works best when it is tied tightly to our company’s overall business goals.  On the other hand, business unit executivesEnterprise Architecture have remained doubtful about IT’s ability to support them in creating value. Despite the best intentions of managers of both sides, companies continue to struggle to integrate IT systems and to determine whether IT actually improves performance.

This problematic tension between the IT departments and business units has inflicted on many companies for years.

One approach to closing this gap is the discipline called Enterprise Architecture (EA).

What is Enterprise Architecture (EA)?

Enterprise Architecture (EA) is a logical framework that establishes the links between business strategy and organizational structures, processes, databases, and technologies.  The goal of EA is twofold. The first goal is to add value through its support of business goals. Second is to enable companies to measure the value added.

If a company wants to capture better customer information in order to energize an effort to sell additional higher margin products and services to existing customers, the company can use an EA system to align its customer relationship management, information retrieval, and sales planning software. EA applications can also be set up for staff training, account management, and frequent assessments of the campaign’s efficacy.

Enterprise Architecture (EA) has been known to add value through its support of business goals, improve operational efficiency, and agility.  There are identified changes visible upon the application of Enterprise Architecture on organizations.

The architecture of an enterprise is described with a view to improving the manageability, effectiveness, efficiency, or agility of the business, and ensuring that money spent on IT is justified.

The 4 Key Elements to Gaining Enterprise Architecture Maturity

Application of Enterprise Architecture (EA) requires certain levels of maturity. This is necessary for EA to be able to deliver greater impact on bottom lines. The amount of value our company gets depends on the level of maturity of the EA efforts.

There are 4 key elements to Enterprise Architecture Maturity that must be addressed.

  1. Strategic Alignment. The first key element ensures that the design of EA functions is included in both technology and the strategic planning process.
  2. Leadership and Talent Development. The second key element relies on the training and development of Enterprise Architects who understand the business and can further strengthen the organization’s EA capability.
  3. Performance Management. Performance Management accurately measures the results of EA efforts that show an impact on the business.
  4. Organizational Design. Organizational Design is the foundational element of Enterprise Architecture. It involves the frameworks, the tools, and the methodologies necessary in developing a functional capability.

Enterprise Architecture is not an easy task. But, is it worth it?

Based on a survey conducted by Booz & Company (now PwC), executives of 60 financial services companies and government agencies were asked to evaluate EA’s effect on performance.

Organizations that had implemented Enterprise Architecture (EA) reported that the approach had impact and value. It has decreased their cost, reduced complexity, reduced risk, and increased agility.

In this world where operational efficiency, risk mitigation, and agility have become essentially important to achieving competitive advantage and business sustainability, companies have no other recourse but take the road to achieve Enterprise Architecture (EA) maturity and readiness.

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