Design Beautiful Organizations That Can Innovate, Execute and Grow Faster

Organizational Design Matters.

When too much complexity and too many
constraints make it hard to get work done.

When your people spend more time
juggling the ball than moving it forward.

Organizational Design is inescapable when you are…

Scaling

Organizations growing rapidly often face difficulty maintaining quality growth. Quality growth means ensuring adequate operating margins, qualifying new customers, retaining talented employees, protecting a healthy culture  and hiring high-performance employees. Growth coupled with an increase in complexity invariably leads to execution difficulties. The old structure and ways of working no longer function well, requiring Organizational Design expertise.

Innovating or executing too slowly

For mature organizations that need to move faster, teaching employees new methods won’t be enough. Internal and external barriers coupled with misalignment in goals and incentives will make it hard for them to implement what they have learned. Organizational Design helps remove barriers and yields a breakthrough in performance transparency.

Restructuring, divesting or merging

When organizations engage in significant structural change, they have no choice but to engage in Organizational Design, but the work is often done under time pressure and with great difficulty.  Organizational Design done properly, on the other hand, can prevent significant loss.

Process Overview

  1. Form a Working Group

  2. Organizational Design efforts are more likely to be successful when there are clear goals and constraints, an organized process and strong involvement from the affected parties.  The parties must also be aligned in their vision of success and scope.

    To to ensure a collaborative and inclusive process, the first step is to form a working group with 4-12 people depending on the scope of the effort.  The working group typically involves high-level executives in the areas affected and may also include the chief executive. For a larger redesign effort, one might form subsidiary working groups as well.

  3. Map the Current Organization

  4. When an Organizational Design effort is changing an existing organization, it is important to adequately understand how it functions. The working group uses models in the <a title=”Lean Systems Framework” href=”http://postlean.wpengine.com/lsf/”>Lean Systems Framework</a> to map workflows (value streams), information architecture, organization structure, physical workspaces, product families and organizational culture.  The working group uses these maps to ascertain what’s working well as well as to pinpoint and analyze problem areas.

  5. Design/Redesign

  6. Organizational Design often takes place under significant time and resource constraints and with a business that must continue operating. The design effort is organized as a series of workshops resulting in maps describing workflows, organization structure, information architecture, and so forth.  The design is driven by quantifiable objectives set by the working group.

  7. Implementation

  8. The design process culminates in a set of maps and a roadmap with an implementation plan. The working group proceeds to manage the implementation of this roadmap to ensure that their initial goals are being met.

European Media House facing overwhelming app development demand

Managing demand from multiple internal customers required a redesign of the development organization.

When everyone wants everything — yesterday 

Schibsted, a European media conglomerate, was transitioning from printed to online content, a complex process because the divergent app development needs of each of the media houses in its portfolio. The apps were developed on multiple platforms, including iOS, Android and web. Some were advertising-related, and therefore revenue sources impacting near-term financial performance. Others were editorial in nature, tied to major sporting events, elections, etc.  Stakeholders in the various media houses often found themselves competing for fixed app development resources. The lead time for app development requests was measured in months, often made worse by requirements and priorities changing significantly underway.

Engagement

The Schibsted Digital Media division engaged LSI to help it redesign its development organization.  A working group was assembled and trained to use the Lean Systems Framework’s Kaikaku method to map the existing development organization and then redesign it based on Lean principles.

Outcome

  • App development lead time reduced from months to weeks or days
  • Improved work-in-process transparency
  • Improved knowledge management due to consolidation of repositories
  • Greater awareness of cultural obstacles to further improving performance
  • Greater agility for accommodating last-minute changes
  • Successful knowledge transfer and implementation of Lean Development practices

Large defense program overwhelmed by complexity

The Future Combat Systems program was the largest and most ambitious program undertaken by the U.S. Army.

The working group looked at a large set of interrelated issues, seeking to simplify work and remove barriers to innovation.

Workflows were dramatically simplified, leading to a 76% reduction in lead time for new product releases.

From Compliance to Value Focus

Headquartered in Bethesda, MD, Lockheed Martin (NYSE: LMCO) is the world’s largest defense contractor, employing about 140,000 people worldwide.  In 2005, Lockheed’s Information Systems & Global Services Division (IS & GS) was awarded a $100M+ subcontract as part of the Future Combat Systems (FCS) Initiative.  FCS was the largest defense program in modern history, an attempt by the U.S. Army to create new brigades equipped with new manned and unmanned vehicles linked by an unprecedented fast and flexible battlefield network and aided by various pieces of other gear.  IS & GS was responsible for the Level 1 Sensor Fusion (L1F) subsystem, which served to detect enemies and friendlies and placing them in space and time.

The L1F subprogram faced a complex set of circumstances.  It was one of thirty FCS subprograms managed by the master integrator, Boeing. While already ranked #1 for performance out of is peers, the L1F subprogram faced a complex set of circumstances. Boeing dictated the delivery plan as well as the rapidly changing requirements. Progress and resource consumption were managed using a rigid Earned Value management system. Architectural changes had to be coordinated with other subprograms as well.

Engineers and managers were required to use a CMMI-compliant development process. They inherited a set of process constraints that added a significant complexity burden.  They were also subject to frequent compliance audits from Lockheed corporate, the local quality organization, Boeing, and DoD.

The L1F Program Manager was concerned that long lead times and bureaucratic overhead for producing new software releases. L1F had to deliver multiple software builds, with each build taking approximately one year. The development value stream was a sequential progression from requirements to design, coding, integration and test. There was significant inventory buildup along the way, and rework loops adding to the total lead time for new requirements.

There was also a concern that everyone was so focused on complying with imposed process standards and passing audits that they were losing touch with the idea of innovating to deliver value to the customer. Group managers and staff felt they were not empowered to make positive changes without risking problems with process standards compliance, which would potentially affect L1F’s compliance rating with auditors and its top ranking as an FCS subcontractor.

The L1F subprogram also faced a severe knowledge management challenge. In addition to dealing with the complexity of all the required design documentation, they had difficulty selecting the right components for sensor fusion to reuse. No one really had a good overview of what components already existed and their respective capabilities.

Engagement

LSI initially helped L1F organize and evaluate existing software components that could be reused, resolving internal conflicts and misunderstandings. The result was a consensus on key architecture and technology decisions.

To reduce the long lead time for new releases, LSI taught courses in the Lean Systems Framework and facilitated a redesign of the L1F’s Product Development System.  The redesigned product development system utilized cross-functional teams using just-in-time (pull) based scheduling, collaborative spaces and significantly simplified processes.  For maximum agility, the teams were organized around product components instead of features.

LSI also helped L1F implement Kaizen for ongoing improvement and provided training in Lean Product Development, Kaizen and Kaikaku (organization redesign).  To ensure ongoing learning and development, LSI helped L1F begin a Community of Practice program, with “learning tracks” dedicated to Lean and other key topic areas.

Outcome

  • Estimated 76% reduction in lead time for new releases
  • Remained compliant with business process requirements imposed by several stakeholders
  • Reduced risk of delivery delays
  • Reduction in software defects
  • Faster diagnosis of defects detected
  • Greater agility for accommodating last-minute changes
  • Successful knowledge transfer and implementation of Lean Development practices

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