K3 Insights

At a time when many businesses are struggling, while others see opportunities, I am hearing confusion and noise around three change-related topics, when there does not need to be. 

Let's take what should be an easy one off the table – restructures. This element is very narrow and relates to the implementation of changes to people's roles and reporting lines. New Zealand has a well-defined and robust approach to consultation and confirmation of proposed structural changes.

Whilst this is often the approach taken, it takes far more than running a legally compliant restructure process to truly change your organisation.

As a business owner or leader, at its simplest level, you tend to have one of two drivers of change—a ‘desire’ to grow (i.e., new customer segment, opening up a new market, introducing a new product), or a need to robustly address ‘pain’ points (i.e., the market has changed, customer needs are evolving, cost bases are too high).

To do this well, you need to think about how to truly change the activities of your organisation—this could be at a process or systems level, how you organise work, the capabilities you need, the required culture, how to better measure performance or the types of leaders you need for the future.

To me, this is robust organisation design—how a business with a desire or pain considers all of these component parts, thinks about which elements need to change, and creates a sequenced plan to do the required design work, then successfully implements any changes.

Early last year, I started to hear more of the language of ‘Operating Model’ being used by clients who were working with the bigger, global consultancies. It appears the top six consultancies have moved away from leading with terms like "organisation design", and instead use "operating model". My sense is, they have done this because they were concerned leaders lack an understanding about what organisation design is and isn’t, specifically, their lack of understanding of how this type of work can deliver or change business outcomes.

As such, these global consulting businesses have pivoted to the use of ‘operating model’, which, arguably for some, has also created confusion as people then just think this signifies a high-level pictorial depiction or model for their business.

These consultancies then go on to explain all the component parts that will be focused on, and guess what, it’s just the same things as what we have traditionally called organisation design.

Why do I highlight this? Well, regardless of the term you use, it is actually about the work that needs to happen to get a successful outcome.

We (at K3) have been called in numerous times in the past 12 months following the work of some of these 'top' consultancies to clean up or operationalise their "operating model" work. I believe our customers are being sold the benefits of having a clear operating model, but then these consultancies deliver a 'smoke and mirrors' approach to clients with elaborate charts and diagrams of theoretical models, industry best practice comparisons, that lack real-world applicability to these NZ companies.

Example One, a client of ours has had a million-dollar report from one of these top six consultancies literally sitting on the corner of a desk, and people were not sure what to do with it.

After a year of expensive work, all this client had to show for their investment were a bunch of fancy slides, that their leaders didn’t understand and know how to activate. The consultancy they had used did not spend enough time outlining the detailed work that is truly needed to drive the new operating model, therefore it was not sustainable.

We were then hired to come in and re-do (or clean up) the previous work, and within two months, we had an entirely new organisation structure, with key linkages and other enablers like decision rights, key capabilities, metrics, etc., to easily activate our design. Interestingly, much of the work we did was closely aligned with the 'operating model', but what we did, that the other consultancy couldn’t do, was change how work was being done and translate that into an activation plan.

So, to clarify the language of Operating Model or Organisational Design has become ubiquitous in my mind.

The key things to consider are:

1. What language works for your business then use the words that mean something to you;
2. Make sure it covers all of the component parts as detailed above (i.e., processes, structure, governance, capabilities, culture, insights, etc.);
3. Ensure that the design work is actionable and not just ‘nice looking’ slides; and
4. Ensure you have an integrated and sequenced action plan to enable you to track progress.

Do all this well, and you will see a sustainable change that realises the ‘desire’ or helps you to effectively confront the ‘pain’.