Structure your organisation to be a ‘lean, customer-centric, winning machine’

Organisations are experiencing disruption at an unprecedented pace. Enterprises hesitant to embrace ambiguity in the past, now want and need to be agile enough to meet evolving customer, technology, and market dynamics.

However large, traditional organisations are struggling to keep pace. They have typically built-up significant internal complexity over a number of decades, which is slowing or preventing them from change. Examples of this complexity are:

  • Vertical silos with a function/capability focus rather than customer outcome
  • Different operating cadences across core business functions causing misalignment and slow go to market
  • Multiple layers of command and control style hierarchy creating bureaucracy and an inability to deliver change quickly.

To keep up with the constant change required, it’s a challenging juggling act to quickly reconfigure strategy, up-skill or hire new people, update process, protect existing business, and create new propositions, all on an ongoing basis.

There are some local, recent examples of traditional organisations, such as ANZ 1 and Bankwest 2, looking for new ways to design their internal ecosystem. These organisations have used Spotify as a source of inspiration.

We believe that having a tailored operating model, with a foundation built on empowering network based, sticky, multi-disciplinary teams is paramount.

Also ensuring that these teams have the right skills and capabilities with the required supporting infrastructure to enable creativity and productivity to be unleashed is essential for success.

Our previous blogs have looked at our definition of Enterprise Agility 3 and why it is a business imperative, as well as, how you can start your journey 4. In our third edition of our Enterprise Agility series, we will discuss our key agile operating model design principles.

What are three principles to designing a ‘lean, customer-centric, winning’ machine?

1. Orientate around the customer

Conway’s law states that “organisations which design systems … are constrained to produce designs which are copies of the communication structures of these organisations.” 5

The replication of complex and matrixed structures, based on internal process compliance doesn’t deliver what customers ultimately want or need.

Projects are too often launched without actually addressing the true customer need. Moving human centred design closer to the problem, rather than the solution is a great way to challenge the norm.

Having teams focused on the customer journey and experience ensures that, rather than mimicking complex internal structures, teams are organised around delivering value to the customer.

For example, ING had squads within their Mortgage Services tribe that focused on the search engine and another on the mortgage application. Both aligned with the overarching customer outcomes which the tribe was responsible for delivering. 6

The greater the alignment to a customer strategy, and the more autonomously these teams can deliver outcomes against that strategy, the better.

2. Adopt a common organisational cadence

When multiple lines of business or functional areas follow different timelines, release windows or cadences – the ability to coordinate at scale becomes challenging.

This is most commonly the case across areas that may have constrained resourcing (e.g. legal, change, finance), or where there may be added complexity or longer lead times (e.g. technology, operations, security).

“Develop on a cadence […] but release on demand” 7

Organisations need to develop an operating model which can support delivering change multiple times per day, planning every fortnight, and changing direction at least every quarter, if appropriate.
Our guiding principle is to adopt a common cadence across all involved parties to make it easier for teams to plan or pivot based on shifts in strategic direction.

3. Smash through bureaucracy and operate lean

As the role of leaders changes from being less about operational decision making, to servant-leading and empowering teams – the need for complex matrixed structures diminishes.

Employees closest to the work need to be allowed to make real decisions, and be accountable for them. Management need to either get out of the way, or step-in and proactively remove the blockers which prevent teams from going faster.

Focusing less on antiquated and lengthy governance processes and adopting a build, measure, learn philosophy enabling rapid experimentation and lean start-up techniques is a fast way to ensure you’re working on the right things.

“Building something nobody wants is the ultimate form of waste” 8

When change is enacted with greater frequency and in smaller packages, it naturally minimises the scale of what could go wrong.

Our guidance is to allow employees to experiment and test solutions; but do so by time-boxing the design and experimentation process in order to quickly make a decision whether to pursue, pivot or perish an idea.

In Summary

Your enterprise agility journey doesn’t necessarily need to begin with a re-designed operating model or new organisation structure.

However three design principles that you need to consider in your operating model are shifting the focus of teams towards the customer, aligning to an organisational cadence, and removing layers of bureaucracy and focusing on operating lean.

Without these, large organisations will continue to face challenges in keeping up with the pace of change and leap frogging their competitors.

Resources
  1. http://www.afr.com/business/banking-and-finance/anz-blows-up-bureaucracy-as-shayne-elliott-takes-the-bank-agile-20170428-gvumc2
  2. https://www.itnews.com.au/news/bankwest-goes-all-in-with-spotifys-agile-model-477985
  3. http://blog.deloitte.com.au/defining-enterprise-agility/
  4. http://blog.deloitte.com.au/1st-steps-defining-enterprise-agility-journey/
  5. http://www.melconway.com/Home/Conways_Law.html
  6. https://www.youtube.com/watch?v=NcB0ZKWAPA0
  7. http://www.scaledagileframework.com/develop-on-cadence/
  8. http://theleanstartup.com/

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