Framework 135 Changing P & L Responsibilities (Leaps and Hops)

Introduction

Many organisational changes involve a major realignment or readjustment (leap), ie radical transformational, etc followed by many minor adjustments (hops), ie incremental, transactional, etc, steps.

 

(source: Herman Vantrappen et al, 2022)

The "leap" is normally around the organisation's primary or value-providing dimension, ie can include product category, region, customer segment, distribution channel, business function, asset, program, major account, etc. Efforts to change an organisation's primary dimension should be on the basis of delivering better value to customers.

This depends on
"...- creating verticals......through their focus, critical mass, and stability
     - clearly delineating the verticals' responsibilities and assigning accountability for performance
     - establishing clear interfaces and minimal friction losses between verticals..."
Herman Vantrappen et al, 2022

This requires consideration of 2 key questions

i) when has the time come to change a primary dimension?

In answering this question you need to consider

    a) any business model changes (has the way you do business, ie make money, changed, eg

            - telecommunication companies used to be organised by assets (eg fixed network, mobile, Internet, IT systems, etc) but changed to customer segments (eg private, business, corporate, wholesale, government, etc)

            - motion picture studios used to be organised by channel (eg movie theatre, home entertainment, broadcast television, etc) and have change to product (eg direct-to-consumer entertainment, live sports, news, content production, advertising, etc) as on-demand streaming of bundles of content change the dynamics of the industry)

    b) if your organisational structure needs changing (new organisations tend to start as flat structures; as they grow they become more hierarchical, etc; dis-economies of management and span of control can become an issue, etc)

    c) inefficiencies from overcompensating for organisational design (there are ongoing conundrums around global vs local, control vs autonomy, centralisation vs decentralisation, etc; need for 'hops' or small adjustments to fine-tune the 'leaps', ie compensate for the imperfections)

    d) deviations (need to be careful of pleas for adjustments or exceptions based on self-interest; need to understand the big picture and not focus on the local optimisation perspective)

ii) once you have decided to change, how quickly do you go?

In answering this question, you need to consider

    a) rupture without disruption (need to safeguard your organisation's ongoing business and operations from too much disruption)

    b) try to anticipate the unintended consequences (need to anticipate possible collateral, unexpected impacts
"...When changing the 'anatomy' (formal structure) of the organisation, be mindful also of its 'physiology' (processes) and psychology (attitudes)..."
Christopher Bartlett and Paul Beamish as quoted by Herman Vantrappen et al, 2022

     c) participatory approach (staff should indicate their thoughts on what should and should not change plus timetables, ie when; explore the company's core beliefs, attitudes, behavioural patterns, etc; encourage maximum participation to achieve the necessary buy-in by staff impacted)

     d) silos (old silos and new ones are best handled by
"...lateral coordination between the new verticals, which can be done through hard-wiring (such as formal matrix or coordination function) or soft-wiring (such as councils, planning processes, or knowledge networks)..."
Herman Vantrappen et al, 2022)

     e) move when in calm seas (VUCA does not encourage conducive discussion about organisational change as it drains energy, leads to fatigue, prevents alignment, leads to confusion, etc)