Most organizational changes are implemented in two stages: first the target organization is designed, after which this concept is implemented. This blog will focus on the first step, where a typical design of this target organization follows the following logical steps (but not necessarily always in this chronological order):

Target Organization Design

1. Vision: how does the market look like? What are the market segments, size, competitors, other players? Which strategic trends are happening, what are the growth rates per segment?
2. Mission, or strategy design: how are we going to approach the market (either existing or new)? Which markets, which propositions, services, brands (and how do we segment the market amongst our divisions/business units etc. to avoid market confusion and provide focus?). What are their Unique Selling Points (USP’s)?
3. Processes: how are we going to provide our services and cooperate amongst ourselves? Which steps will we perform, which are automated, which outsourced and which do we keep in-house? How are we going to execute these staps, and with which (ERP-)system? Note: the importance and focus here usually lies on Order2Cash more than on Purchase2Pay.
4. Roles: which steps in these processes are going to be performed by which role with which function description? (thus: which salary and cost level?)
5. Organization chart: the size of the market over the divisions determines the division budget, the business unit manager then has to ‘buy’ various roles (similar to a ‘FIFA Manager’ assembling a virtual soccer team) and choose between ‘one Account Manager more’ or ‘an extra Operational Team Lead’.
6. The placement procedure: with any reorganization, the current worker population will need to be plotted into the new design. Where appropriate a decision will need to be made for lay-offs, in which case often binding legally prescribed procedures apply. If lay-offs do not play a role, still a documented and traceable process will need to be followed as objectively as possible in which employees will be assigned the roles they are entitled to. Only after that ‘mathematical process’ one is allowed to take into account the personal preferences of employees, since the advancement of one could lead to the disadvantage of the other. Of course, many employees affected will claim that they want to be heard beforehand, but it is almost impossible to do that without infringing upon the rights of others.

Potential pitfalls

The order in the development of these elements is logical and facilitates the easiest way to progress, however, it does not necessarily be fully chronological. Sometimes one needs to ‘cut corners’ in the interest of time or the lack of resources. Theoretically, one could even work ‘backwards’ and only pick up items when they are needed. However, every time one goes back one step and finds an error or improvement, it will have effects on a later step, meaning a choice to either accept an imperfection or force further changes down the line. Such an approach only works in a ‘sunny scenario’ where everything runs smoothly and no setbacks occur, so only ‘Powerpoint theory’ in my (mainly operational) experience. The inevitable challenge is to find the right balance between speed and care.

*Daniel Budde – Own work, CC BY-SA 3.0, link

The completion of the target concept needs to be well before (possibly testing) and Go-Live. Some time before Go-Live the change project will enter a ‘Tunnel’, where changes occur so fast that one hardly has time to think. The only thing one can do is act. Changes to the ‘Target Organization’ can not be made without creating additional turmoil. All e-mails can not be answered any more, all telephone calls can not be returned. All the changes to be performed (and tested) need to be spelled out in the planning or chaos will ensue. The team will need to be able and rely on each other to perform their tasks in the playbook properly, often without the benefit of endless and frequent alignment, so trust is key. Decisions need to be taken on the spot, the unavoidable errors create ‘pain’, and so do right decisions. Any unforeseen factor may lead to delay, any delay will lead to additional costs in the term of either money, uncertainty or trust with employees. Before one enters a tunnel, one should know the road ahead.

‘The Tunnel’ does not always coincide with ‘Implementation’ or ‘Stabilization Period’ because it will start before Go-Live and needs to be complete well before one can claim Stabilization. The duration of ‘The Tunnel’ indicates how complex the change is and how well the change has been prepared, but for organizational changes often it is measured in months, not weeks.

Jumping the gun is another common pitfall: individuals positioned for new managerial roles might try and start to assemble their team around them to reduce their own and their new team’s anxiety, employees will seek out prospective allies among the new managers and try and seek to get confirmation about their new role. Both movements are counterproductive, since the placement process should be performed objectively, without endangering the position of those not involved in those private talks. When they come to light, a discussion might follow about morally reprehensibility, potential legal challenges and managerial maturity or as an opposite, managerial ‘slickness’ of those drawn into them or not.

Summary

When implementing an organizational change, first ensure the target organization has been designed completely, then re-check the implementation playbook for completeness and accuracy before jumping towards a Go-Live!