[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