A path for defining a Transformational Structure

You can approach the design of a new organization through the definition of roles and profiles for every position, in other words, a bottom-up approach. However, this approach is far from being transformational. If the company wants to make a transformation, we suggest following these simple steps (see diagram at the end as a reference):


1) Understand the Business Strategy. The strategic definition must be clear enough to obtain strategic guidelines for the design. Use workshops with the C-Level to assure that you capture the intent of the business for the transformation. Have clear in your mind how the company should look like in the future.


2) Map the Business Model. You can use a technique like “Business Model Canvas” to map the to-be Business Model (see http://bauzanotebook.blogspot.mx/2013/05/map-business-model-then-business_13.html). With the Business Model, you shall identify what will be the differentiating capabilities of the company, in order to provide value to its customers. The differentiating capabilities must support your competitive essence in the market (or your future competitive essence...).


3) Map the Capability/Process Model. At this point, you have identified what capabilities are important for the company and they should appear clearly and bold in the Capability Model (see http://bauzanotebook.blogspot.mx/2013/05/a-proposed-structure-for-business_2.html). If not, your design will not support the Business Model and hence, your Strategy. Make sure that the model support the Business Model and provide the value intended to the market.


4) Design the Operating Model. Having your inventory of capabilities and processes, you have to:



a. Classify the capabilities and processes. You can use tags like: Core, Non-Core, and Support. You may use a different classification, depending on the organization strategy. The classification will help you to understand what capabilities and processes can be outsourced or placed in a shared services center, for example (if a given capability is non-core, is a great candidate for outsourcing).



b. Localize the capabilities and processes. Define which capabilities and processes are Local, Regional, Global or Hybrid. This step will help you to understand where to locate these capabilities.



c. Prioritize. Define what should be attacked first, second, etc. It will help you to define a roadmap of implementation of the different capabilities.



In the Operating Model you define “where” is executed and “who” is responsible of executing specific processes. For example, you may define that the accounting processes will be executed in a Shared Services Center and the Demand Planning processes will be executed in a Centralized Center of Excellence. Also, you define the interrelations between the different elements of the Operating Model.



5) Based on your design of Operating Model, then define your different interrelated architectures. At this point you have already defined the capabilities and process inventory aligned to your strategy, so you can start to define you Process, Technological, Information and Organizational Architectures (or additional architectures you may need). Going back to the initial point of this blog, it is difficult to define an Organizational Architecture if you have not decided if you are going to implement a Shared Services Center, a Center of Excellence or a capability will be centralized in the Headquarters of the company. The Organizational Architecture must reflect that. If your Operating Model has a SSC, then you will need a box in your Org Chart to cover that need.