People and Management October 2018 | Page 78

[EVENT SPEAKERS DIARY] Organization design – Hit or Miss Shatrunjay Krishna Senior Principal I t would be fair to say that the way organizations are designed not only impacts the experience of working within them but is also key to their success. While organization design needs to mirror the business model and value chain, three major drivers critically impact its success. Customer Value Proposition (CVP) - When it comes to designing effective organizations, it is crucial to ask - what is the purpose of the organization? Organizations exist for customers and their purpose is to serve customer needs. Therefore, companies should be designed around delivery of customer value proposition. CVP varies from one industry to another and from one company to another even if they marketing as important functions. Now on the other side, services-based organizations would concentrate more towards delivery and having dedicated teams for customer segments. For example, a car leasing company would need dedicated teams for customers if their value proposition is dedicated service. Likewise, this is what bio-research companies would need to do to serve three or four major pharma companies. As another example, let’s consider an IT services company, that supports IT infrastructure for variety of customers at economical rates. The value proposition in this case would be effi ciency and hence, the org design would be built around even realizing so. In such cases, the org design would need to be highly customized based on the intent of the organization to operate as either one or independent businesses or the extent to which the entities may want to exploit synergies. In the above example, based on intent, the organizations could differ as they would have different kind of customer value propositions even though their business model may be services based. When an organization has two different businesses, and these two businesses have different customer value propositions, then they need different org designs. Decision making culture and rate of growth – In today’s time, while most of the leaders aim for aggressive growth, it is of great importance to plan the pace Customer value proposition Services Companies Company 1 Dedicated service Innovative products & services Quality Brand Dedicated customer units Company 2 Effi ciency of Operations Customer Service Quality Innovative products & services Service process based exist within the same industry. For instance, take the case of low cost viz-a-viz full-service carriers and they will have different propositions. Similarly, if we look at a typical automobile company, its CVP would be built around excellence in manufacturing and a strong brand that can attract customers. Hence, the org design is centered on manufacturing and sales and 78 Org Design service process streams. The above examples illustrate that the service organizations need to be designed to have dedicated customers units OR to be organized around service processes. Scale of the organization and diversity of business lines – As organizations expand organically, many a times they may grow into multi- business entities without | Vol. 9 Issue 6 • Sep-Oct 2018, Noida / Pre-Event Edition of change for the organization. Typically, organizations going through a high growth cycle require a different approach to organization design. For fast growth, simplicity in design is critical, to ensure things can move fast and that processes support quick decision making. For slow and large companies, decisions need to be weighed on multiple factors due to implications for far too many folks. P & M