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Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You
Ng Aung San
Head, Strategy and Corporate Management Information
Strategic Corporate Planning Conference
Friday, 11th July 2008
Marina Mandarin Hotel, Singapore
Page 2 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Opening thoughts…
“Silence and look out, we shall catch both hen AND chicks” Spanish Proverb
“If you chase two rabbits, BOTH will escape”
Russian Proverb
Page 3 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Agenda
1. Matrix Organization – What is it?
2. Matrix Organization – Why bother?
3. Matrix Organization – What’s the problem?
4. Matrix Organization – How to make it work for you.
Page 4 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Classical Centralized Functional Unit Organization
Key Defining Characteristics: § Single dimension – Vertically
segmented by functions § One common set of functions serving
different customer groups in the market
§ Focus is more on internal process standardization/ centralization
Advantages: § Intuitive, and easy to understand –
clearly defined single reporting line § Expertise, knowledge and processes
optimized functionally § Low duplication of resource/ work § High standardization/ centralization
Disadvantages: § Internally focused - Lack of in-depth
understanding of, and tailoring to differences markets
§ Vertical silos – One Firm? § Problems with hand-offs/ interface
between functions § Problems with coordination and
communication across functions § Slow response to market conditions
CEO
Head, Product Mgmt.
Head, Operations
& IT
Head, Finance
Head, HR, etc.
Head, Marketing
Customer/ Group
1
Customer Group
2
Customer Groups 3, 4 …
Customer Groups: § Country – e.g. Singapore; Malaysia, China, Indonesia etc. § Market Maturity – e.g. Established and Emerging Markets § Product Lines – e.g. Life and General Insurance and Investments § Customer Groups – e.g. Retail and Institutional
Product Mgmt.
Function
Operations & IT
Function
Finance Function
HR Function
etc.
Marketing Function
Market
Page 5 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Classical Multi-Divisional Business Lines Organization
Key Defining Characteristics: § Single dimension – Horizontally
segmented by business lines/ customer group
§ Different/ dedicated set of functions serving each business line
§ Focus is more on external market orientation/ customization
Advantages: § Intuitive, and easy to understand -
clearly defined single reporting line § Expertise, knowledge and processes
optimized by customer group/ business line
§ Nimble/ responsive to market changes
Disadvantages: § Horizontal silos – One Firm? § Differing Customer Experiences § High duplication of resource/ work
across business lines § Problems with coordination and
communication across Business Lines § Slow development, group-wide
sharing and adoption of best practices § Low standardization/ centralization
Head, Business Line/ Customer Group 1 (e.g. Singapore)
Product Mgmt.
Operations & IT
Finance HR Marketing
CEO
Head, Business Line/ Customer Group 2 (e.g. Malaysia)
Product Mgmt.
Operations & IT
Finance HR Marketing
Head, Business Line/ Customer/ Group 3,4 … (e.g. China, Indonesia)
Product Mgmt.
Operations & IT
Finance HR Marketing
Customer Groups: § Country – e.g. Singapore; Malaysia, China, Indonesia etc. § Market Maturity – e.g. Established and Emerging Markets § Product Lines – e.g. Life and General Insurance and Investments § Customer Groups – e.g. Retail and Institutional
Customer Groups
1
Customer Groups
2
Customer Groups 3, 4 …
Market
Page 6 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
The Matrix Organization – The best of both worlds? Or the twin ills?
CEO
Head, Pdt. Mgmt.
Head, Ops & IT
Head, Finance
Head, HR etc.
Head, Marketing
Marketing Business
Line 1
Pdt. Mgmt. Business
Line 1
Ops/ IT Business
Line 1
Finance/ Business
Line 1
HR etc. Business
Line 1
Marketing Business
Line 2
Pdt. Mgmt. Business
Line 2
Ops/ IT Business
Line 2
Finance/ Business
Line 2
HR etc. Business
Line 2
Marketing Business
Line 3, 4 …
Pdt. Mgmt. Business
Line 3, 4 …
Ops/ IT Business
Line 3, 4 …
Finance/ Business
Line 3.4 …
HR etc. Business
Line 3, 4 …
Head, Business
Line 1
Head, Business
Line 2
Head, Business
Line 3, 4…
Customer/ Groups
1
Customer/ Groups
2
Customer Groups 3, 4 …
Market
Key Defining Characteristics: § Twin dimension – Horizontally AND Vertically segmented – Internal (process) AND External (market) focus § Different/ dedicated yet common/ integrated set of functions serving each different business Line § Executives hold twin citizenships – Business Line AND Functional units – and have (at least) two bosses § One dimension has to share power with other dimension – Setting Policy and Strategy; Resource; Executives’ time/
appraisal; Operational execution decisions etc.
Page 7 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Agenda
1. Matrix Organization – What is it?
2. Matrix Organization – Why bother?
3. Matrix Organization – What’s the problem?
4. Matrix Organization – How to make it work for you.
Page 8 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Fundamental Beliefs underpinning Matrix Organization…
There is Value in optimizing Global/ Group AND Local Tradeoffs…
§ Global/ Group: Take advantage of increased scale and cross-border synergies through group-wide collaboration; Enhancing group competitive advantage through competing as One firm; Benefits of collaboration > Costs
§ Local: Protecting/ capturing value of local activities; Staying relevant to local market preferences and responsive to changes; Engendering initiative, entrepreneurship and local adaptations that deliver local value.
... But it will require Collaborative Strategies, Structures and Systems
§ Collaboration will not happen automatically, and is in fact, counter-intuitive
§ Hence, need for explicit collaborative strategy, structures and systems – i.e. a Matrix Organization
§ Group/ Corporate Centre has a role to develop and execute – or manage execution of – collaborative strategy, structure and systems
Page 9 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
So what is Collaborative Strategy…?
Group/ Corporate Centre
Lines of Business
SBU A
SBU B
SBU C
SBU D
Enterprise Value
Proposition
FA FA FA FA
Financial What are our shareholder expectation
for financial performance?
Customer To reach our financial objectives, how
do we create value for customers? CA CB Cc CD
PA PB PC PD
LA LB LC LD
Internal Process What are critical processes to deliver
value to customers and shareholders?
Learning & Growth (L&G) How do we align our intangible assets
to improve critical processes?
Single Stand-alone/ Vertical SBU Strategy
(Creating Customer Value)
Financial Synergies How can we increase the shareholder
value of our SBU Portfolio
Customer Synergies How can we share the customer
interface to increase total customer value?
Process Synergies How can we mange SBU processes to achieve economies of scale or value
chain integration?
L&G Synergies How can we develop and share our
intangible assets?
FE
CE
PE
LE
Source: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis
Cross-SBU Collaborative Strategy, Linkage & Alignment (Creating Enterprise Value)
Vertical Strategy, Linkage &A
lignment
Multiple & Cross-SBU/ Collaborative Strategy
(Creating Enterprise Value)
Page 10 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Cross SBU/ Country Collaborative Financial Synergies:
Capital Management capabilities: § Internal Capital Management § Asset/ Investment Management § Corporate Portfolio Management expertise § Investor relations
Effective Governance: § Legal and Regulatory Governance and Compliance § Management Governance and Compliance § Governance and Performance Monitoring § Financial Reporting and Control § Risk Management
… And what are possible sources of Collaborative Value to enhance Enterprise and Business Unit Competitive Advantage?
Source: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis
Group/ Corporate Centre
Lines of Business
SBU A
SBU B
SBU C
SBU D
Enterprise Value
Proposition
Financial Synergies How can we increase the shareholder
value of our SBU Portfolio
Customer Synergies How can we share the customer
interface to increase total customer value?
Process Synergies How can we mange SBU processes to achieve economies of scale or value
chain integration?
L&G Synergies How can we develop and share our
intangible assets?
FE
CE
PE
LE
Multiple & Cross-SBU/ Collaborative Strategy
(Creating Enterprise Value)
Page 11 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Cross SBU/ Country Collaborative Customer Synergies:
Shared Customers: § Shared brand name; shared advertising and promotion § Cross-selling of products/ services § Interrelated pricing of complementary products § Bundling/ packaged selling or Solutions-selling.
Common Value Proposition: § Consistent buying experience across geography, business
lines etc., aligned with brand/ corporate standards
Shared Channels: § Shared distribution channels/ sales force § Shared service network
… And what are possible sources of Collaborative Value to enhance Enterprise and Business Unit Competitive Advantage?
Source: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis
Group/ Corporate Centre
Lines of Business
SBU A
SBU B
SBU C
SBU D
Enterprise Value
Proposition
Financial Synergies How can we increase the shareholder
value of our SBU Portfolio
Customer Synergies How can we share the customer
interface to increase total customer value?
Process Synergies How can we mange SBU processes to achieve economies of scale or value
chain integration?
L&G Synergies How can we develop and share our
intangible assets?
FE
CE
PE
LE
Multiple & Cross-SBU/ Collaborative Strategy
(Creating Enterprise Value)
Page 12 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Cross SBU/ Country Collaborative Process Synergies:
Centralized development and Enterprise-wide sharing of: § Corporate business operating principles § Business setup and management systems (knowledge,
expertise, policies, standards, best practices, “success formulas”, frameworks, procedures, templates etc.)
§ Specialized Build-Operate-Transfer (BOT) Teams for rapid/ robust market/ country entry and expansion
Shared Group Processes/ Services for Efficiency Savings: § Shared platforms § Centralized operational processes (shared services) § Standardized processes among multiple business units
… And what are possible sources of Collaborative Value to enhance Enterprise and Business Unit Competitive Advantage?
Source: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis
Group/ Corporate Centre
Lines of Business
SBU A
SBU B
SBU C
SBU D
Enterprise Value
Proposition
Financial Synergies How can we increase the shareholder
value of our SBU Portfolio
Customer Synergies How can we share the customer
interface to increase total customer value?
Process Synergies How can we mange SBU processes to achieve economies of scale or value
chain integration?
L&G Synergies How can we develop and share our
intangible assets?
FE
CE
PE
LE
Multiple & Cross-SBU/ Collaborative Strategy
(Creating Enterprise Value)
Page 13 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Cross SBU Collaborative Learning & Growth Synergies:
Leadership and Organizational Development: § Share competency in development of human, information
and or Leadership § Human capital recruitment and development (incl. key
executive rotation programs) § Information – Leverage common technology/ platforms § Organizational – Propagate/ reinforce strong cultures/
mindsets (e.g. innovation, teamwork)
… And what are possible sources of Collaborative Value to enhance Enterprise and Business Unit Competitive Advantage?
Source: R.S. Kaplan and D. P. Norton. Alignment; GE Analysis
Group/ Corporate Centre
Lines of Business
SBU A
SBU B
SBU C
SBU D
Enterprise Value
Proposition
Financial Synergies How can we increase the shareholder
value of our SBU Portfolio
Customer Synergies How can we share the customer
interface to increase total customer value?
Process Synergies How can we mange SBU processes to achieve economies of scale or value
chain integration?
L&G Synergies How can we develop and share our
intangible assets?
FE
CE
PE
LE
Multiple & Cross-SBU/ Collaborative Strategy
(Creating Enterprise Value)
Page 14 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Distri- bution
Product design &
packaging Admini- stration
Risk inter- mediation
Main areas of Group/ Local or Cross-Unit value along Internal Process/ Value Chain in Insurance context
Asset Management
Resource allocation
Expertise sharing
Cost efficiency
Overall Strategic planning
◕ ◕
◑
§ Centralized group-wide Strategic Planning (with inputs from individual business/ country units) § Group-wide perspective on cross-business product profitability for targeted capital allocation/
portfolio management § Cross-business/ country unit expertise sharing and Group-wide standard setting (Underwriting.
Pricing, Asset management etc.) § Centralized Administration and Asset Management
1. Cross-business/ country units sharing/ synergies and centralizations in insurance context. Source: The New Federalism: How insurance Groups are re-inventing the role of the Group Corporate Centre; Mercer Oliver Wyman Perspectives (November 2005); GE Analysis
Levers of Cross-Unit Value Creation
◕ ◑ ◔
○ ◔ ●
◕ ◕ ◔
●
◕ ○
◔ ◑ ◔
Typical Links of Insurance Value Chain (bubble level) ILLUSTRATIVE
Page 15 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Agenda
1. Matrix Organization – What is it?
2. Matrix Organization – Why bother?
3. Matrix Organization – What’s the problem?
4. Matrix Organization – How to make it work for you.
Page 16 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Problems typically arise in first, Finding the Value; Secondly, having desire to Act on what one finds…
Finding the Value…
Cognitive Hurdle
§ Hard to spot opportunities between Group and local; and across country or business units
§ Few people have knowledge or perspective needed to consider a truly cross-unit, cross-country, cross-functional approach
§ Nascent understanding of “true nature” of Corporate Strategy
Resource Hurdle
§ It is not Business-As-Usual, and hence beyond the “here-and-now, meet-the-numbers” horizon of most managers
§ No one in the business/ country units have responsibility for (and luxury of) taking a group/ cross-country perspective
Having the desire to act on what one finds…
Loss of “Current Benefit” Hurdle
§ Opposition from local power bases fearful of losing autonomy and control § Concerns of need to compromise in one’s own unit to benefit other units § Potential conflict over priorities in shared activities
No perceived “Future Benefit”
hurdle:
§ People unable/ unwilling to see value in greater organizational integration § Results/ payoff probably only visible in the medium to long term § Difficulty of measuring performance – what is a “good job” is hard to determine
Page 17 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
… And finally – and most importantly – having the Clarity and Maturity to Make it Work!
Making it Work!
Misaligned Goals
§ Competing or conflicting objectives between matrix dimensions § Inadequate process to align goals and detect possible misalignments § Lack of synchronization, coordination, and poor timing of work plans and
objectives § Insufficient communication and consultation between matrix dimensions
Unclear Roles & Responsibilities
§ Unclear job descriptions and guidelines for roles and responsibilities § Confusion over who is the boss § Not knowing whom to contact for information
Ambiguous Authority
§ Confusion over who has the final authority § Lack of clarity on areas of accountability § Leaders unaccustomed to sharing decision rights § Delay in decision making process
Silo-focused Employees
§ Personal conflicts between leaders hinder collaboration between units § Withholding resources from others § Lack of trust between employees in different units § Employees lack requisite skills to function in the matrix
Page 18 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Agenda
1. Matrix Organization – What is it?
2. Matrix Organization – Why bother?
3. Matrix Organization – What’s the problem?
4. Matrix Organization – How to make it work for you.
Page 19 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
From experience, getting the Overall Design right, and working to Reduce Ambiguity and Engender Collaboration during Operationalization are both critical to success
Design right a Group-Local Matrix Organization & System
+
Reduce Ambiguity & Engender Collaboration
§ Find the value
§ Consider full range of organizing options and linkage
§ Clarify roles and responsibilities for Group and Local Units
§ Establish and resource Group Corporate Centre, separate from Local Units
§ Group Corporate Centre to develop Group Systems (Policies, Processes etc.)
§ Define dominant axis of authority
§ Clarify decision rights/ authorities, that support chosen Global/ Local strategy by levels, then align fully
§ Consider Value Chain focus and Sub-Owners to align and engender collaboration
Page 20 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Finding the Global/ Cross-Unit and Local Value involves analyzing each function, or even each key Activity, guided by general design principles
§ Recognize and play to different strengths
§ Leverage economies of scale and skill
§ Accelerate setup and growth
§ Pool scare resources
§ Minimize duplication
§ Prioritize proximity to preferred customers and suppliers
§ Optimize supply chain configurations
§ Avoid undue complexity
Page 21 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Consider Range of Organizing Options/ Linkage, and Appropriate Mechanisms1 to capture Cross-unit Value
Level of Cross-Unit Value & Ease of Capture
Most appropriate type of Cross-Unit Linkage
Group Units’ Role
Sample Collaborative Mechanisms1
§ High Group/ Cross-Unit Value § Low Local Unit Value
Fully Centralized Structure § Centralized decision making
and execution
Running/ Executing
§ Central Unit sets Policy, makes decisions and executes them
§ Direct supervision by Central Unit
§ High Group/ Cross-Unit Value; But challenging to capture
§ Low Local Unit Value
Centralized Decision Making; Local Execution § Policies defined and
decisions made centrally; § But executed locally
Directing § Central Unit sets Policy and makes decisions
§ Standardize processes and skills
§ Moderate Group/ Cross-Unit Value; Fairly easy to capture
§ Moderate Local Unit Value
Aligned Execution § Decision making primarily
locally; § Some centrally driven
coordination to ensure alignment/ optimization
Guiding § Standardize values, principles § Best practice sharing § Rotating key people cross-unit § Converge processes to facilitate
consistency and alignment § Standardized reporting formats
§ Low Group/ Cross-Unit Value § High Local Unit Value
Fully Decentralized Structure § Decisions made and
Executed fully locally
Targeting § Standardized financial measures § Strong local/ in-country Manager
1. Mechanisms that promote information sharing, coordination, and collaboration across different organizational units
Page 22 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Appropriate Organizing Option would typically vary across all four Models depending on combination of “Hard” and “Soft” considerations
HARD FACTORS
§ Newness and complexity of specific sub-function/ activity
§ Knowledge, expertise, familiarity
§ Availability of right resource/ band-width
§ Maturity of Group/ Local Market
Degree of centralization would vary between sub-function and activity within each function – and may vary across time – before stabilizing
SOFT FACTORS § Trust
§ Working relationship
§ Confidence
§ Maturity
§ Perception
§ Culture and belief system
Page 23 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Clarify Roles and Responsibilities for Group and Local Units ILLUSTRATIVE
Function/ Key Activity Group/ Cross-Unit Local/ Country Unit
New Market Development
§ Define the vision and targets § Understand opportunities and decide on market
entry priorities and strategy for entry § Coordinate across local units to respond to multi-
point competition
§ Identify local opportunities § Coordinate with Group for methods of entry § Manage local negotiations with local
government regulators, potential target companies, and partners
Manufacturing § Set allocation group-wide and drive group process § Decide on optimal locations
§ Coordinate investment
Sourcing
§ Secure long-term access to supply § Identify sourcing needs and coordinate resources
across the group § Optimize group supply chain strategy with suppliers
§ Support negotiations with key suppliers § Manage relationships with local suppliers
R&D § Search for global opportunities and innovations § Execute/ leverage Central R&D Unit/ Infrastructure
§ Build tailored local applications § Manage local innovations
Sales § Set targets § Coordinates cross-selling between Local Units
(Business Lines/ Country)
§ Coordinate customer strategies
Shared Services
§ Determine group shared services strategy and organizing model, and oversee group platforms
§ Coordinate Shared Services with local units
§ Provide and optimize shared service platforms
Page 24 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Translate Roles and Responsibilities for Group/ Corporate Centre to established how Involved it will be, and how it will Add Value
Nature of C
C Involvem
ent/ Intervention
Direct
Operational Involvement & Scale “Running/ Executing”
(Little separation between Group/ Centre and Units; High degree of Supervision and Control;
Group adds value by Performing some Functions and Activities centrally for Economies of Scale)
Active Centre Staff Involvement “Directing”
(Group adds value through Hands-on development of Strategic Plans with and/ or for
Business/ Functional Units; And providing Directional Initiatives)
Indirect
Target Setting & Controls “Targeting”
(Group influences performance of Business/ Functional Units by setting Targets and controls. Group adds value through Scale economies in Financial Governance – Budgeting, Control)
Vision, Principles & Oversight “Guiding”
(Group adds value by Visioning, Creating new Group know-how, and providing Guiding
Principles; with some coordination of Business/ Functional Units)
Economies of Scale/ Cost Reduction Increased Value/ Knowledge
Source of Competitive Advantage
Page 25 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
This in turn will determine the Skills, Expertise, Talent Type, Planning Process and Focus of the Group/ Corporate Centre and Business Unit
Nature of C
C Involvem
ent/ Intervention
Direct
Operational Involvement & Scale “Running/ Executing”
§ Centralized value chain management skills § Technical expertise § Technical managers/ value chain experts § Top down process, but shared responsibilities § BU focus: Cost reductions/ competitiveness
Active Centre Staff Involvement “Directing”
§ Process/ system management skills § Process expertise § Process experts § Discussion between Centre and BU in process § BU focus: Utilizing group process advantages
Indirect
Target Setting & Controls “Targeting”
§ Financial management skills § Governance expertise § Financial experts § Tight formal process, with targets from Centre § BU focus: Financial Performance
Vision, Strategy & Oversight “Guiding”
§ Vision, value and principles management skills § Vision and Values § Visionary Leaders § Process tailored to vision/ values/ principles § BU focus: Fit to group vision/ values/
principles
Economies of Scale/ Cost Reduction Increased Value/ Knowledge
Source of Competitive Advantage
Page 26 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Successful Birth, Growth and Operationalization of the Group/ Corporate Centre – Some key points
§ FULLY extract Corporate Centre from Flagship (Strong/ Founding) Unit.
§ Executives in Business Units – no matter how strong, doubling up – will NOT work!
§ Corporate Centre Executives must learn to appreciate it’s a full-time job with, even if its not traditional Business-As-Usual. They must feel comfortable/ confident with transition to more strategic role. Doing is now more Planning, Coordinating, Facilitating and Aligning.
§ Select top talent for Corporate Centre; Continuously skill them up with planning, technical, relational and project management/ coordination skills – able to add real value and continuously earn respect of local units.
§ Executives in Corporate Centre must have medium to long term perspective, and be able to step away. The big picture must be their picture; And they must help Business Units keep big picture in view.
Page 27 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Group/ Corporate Centre to develop Group Policies/ Systems for Activities where it plays a “Directing” or “Guiding” Role’; And decide on appropriate configuration of Standardization/ Customization Pyramid
Inputs from Industry Best
Practice Research
Inputs from Internal & External
Consultants
Inputs from Local
Operations
Group’s (or Flagship Unit’s) existing Policies
& Processes
Pilot in Local Unit Operations
Group’s ENHANCED Policies & Processes for Group-wide application
Local Unit leverage Group policies/ practices;
Free to execute/ customize at will, within
“boundaries”
Local Unit leverage
Group policies/ practices;
Changes subject to Group approval
Local Unit to leverage Group policies/ practices;
No customizations allowed
Page 28 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
From experience, getting the Overall Design right, and working to Reduce Ambiguity and Engender Collaboration during Operationalization are both critical to success
Design right a Group-Local Matrix Organization & System
+
Reduce Ambiguity & Engender Collaboration
§ Find the value
§ Consider full range of organizing options and linkage
§ Clarify roles and responsibilities for Group and Local Units
§ Establish and resource Group Corporate Centre, separate from Local Units
§ Group Corporate Centre to develop Group Systems (Policies, Processes etc.)
§ Define dominant axis of authority
§ Clarify decision rights/ authorities, that support chosen Global/ Local strategy by levels, then align fully
§ Consider Value Chain focus and Sub-Owners to align and engender collaboration
Page 29 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Define a Dominant Axis of Authority within the Matrix dimensions1…
0
5
10
15
20
25
30
35
40
a b c d e f
1. Source: Organizing for Global Advantage in China, India, and Other Rapidly Developing Economies Survey; Boston Consulting Group
Business Unit/
Product Division
Others Functional Mgmt.
Both Country Mgmt. &
Business Units
Country Mgmt.
Regional Mgmt.
35
3 4
15
32
12
Perc
enta
ge o
f sur
vey
resp
onde
nts
assi
gnin
g pr
imar
y re
spon
sibi
lity
to e
ach
dim
ensi
on/ f
unct
ions
Page 30 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
… And follow through to give primacy to chosen Axis/ Dimension at the overall Group level1…
If Business Unit/ Country is Dominant Axis (over Functional), then… Group Business Unit Head will… Group Functional Unit Head will….
§ Have full end-to-end accountability of P&L and Capability building at Group and Local Units level
§ Have accountability for respective area of functional responsibility at Group and Local Unit level
§ Coordinate and exercise Business and Functional Units’ responsibilities/ authorities in BU to ensure coordinated/ aligned instructions and efforts
§ Coordinate and exercise functional responsibilities/ authorities in BU – through Group BU Head.
§ Approve local business and functional strategies/ policies, ensuring alignment with Group’s strategies/ policies.
§ Concur with local functional strategies/ policies, consistent with Group’s strategies/ policies.
§ Have authority to draw on functional units to support its goals, and coordinate support programs based on assessment of local needs
§ Have responsibility to provide quality and timely support to BU at reasonable costs, as coordinated by Group BU Head
§ Exercise directly – or delegate functional responsibilities and authorities to Local BU Head/ CEO or Local Functional Heads
§ Delegate functional responsibilities/ authorities – through Group BU Head – and not directly to Local Functional Heads.
§ Exercise governance to ensure compliance § Work through Group BU Head to ensure compliance with governance
§ Directly supervise and review performance of Local Head/ CEO
§ Provide inputs to Group BU Head on performance of Local Head/ CEO
1. Illustrative for Business Unit/ Country by Functional Unit Matrix
Page 31 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Clarify Decision-making Authorities, that support chosen Global/ Local Strategy, for different levels; Then align respective Sub-systems
1
2
3
4
5
Group Board/ Board Committees with CEO
Group CEO with Direct Reports; and Between Direct Reports
Group Heads with Local Country CEO/ Unit Heads (Business & Support Functions)
Local CEO with Local Unit Heads (Business & Support Functions)
Parties involved in Cross-functional Value Chain Processes (Group and Local level)
Page 32 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Standardize Decision Rights/ Authorities – their Definitions, Powers and Responsibilities and even Sequence of Execution – Group-wide
APPROVE
§ Authorizes a proposal for execution, and holds responsibility/ accountability of approving. § Responsible to seek concurrence from concurring authority (e.g. peers/ higher authority) where
necessary, before approval/ execution of proposal. § Approving authority can initiate a matter for consideration without a recommendation.
CONCUR § Holder of joint decision marking authority and responsibility § When an approval requires a concurrence, the proposal cannot be executed until concurrence
has been given by the concurring authority.
ENDORSE
§ Supports a proposal for approval by a higher authority. § The higher authority obtains assurance that another person/ body, with required experience/
knowledge, has reviewed the proposal before it considers the proposal. § Proposal cannot be executed after it is endorsed, it still requires concurrence/ approval.
REVIEW § Verifies structure/ format of proposal and approval process adopted is in compliance with
policies/ frameworks. Can ask for structure/ format of proposal/ process to be amended. § Proposal cannot be executed after it is reviewed, it still requires approval.
OWN § Initiates proposal for discussion and approval. § Following approval, responsible/ accountable for execution on proposal according to agreed
policies and objectives.
Page 33 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Adopt 80-20 rule, to develop a Roles, Responsibility and Authority (RRA) Grid for each level, considering Local Regulators’ Requirements
Level #3B Grid - Group BU Head with Local Country CEO/ BU Head
Review Freq. / Reviewer
Group BU Head #2
Local Board
Local CEO
STRATEGY & OWNERSHIP (GELINDO)
1 Overall Direction & Risk Annual/ XXX Own - -
2 Market Positioning/ Business Strategy As Req./ YYY Approve - Own
3 Mergers & Acquisitions As Req./ YYY Own Approve (Reg) -
… … … … … …
PEOPLE
1 Key Appointments/ Promotions/ Terminations As Req./ YYY Concur Approve (Reg) Own
2 Human Capital Policies – Compensation… Annual/ XXX Approve - Own
.. … … … … …
BUSINESS & OPERATIONS MANAGEMENT
1 Financial Management Policies, Structure, KPIs Annual/ XXX Approve Endorse Own
2 Distribution Management Policies, Structure, KPIs Annual/ XXX Approve - Own
.. … … … … …
FINANCIAL & OPERATING LIMITS
1 Capital/ Management Expenditure Quarterly/ XXX Approve - Own
… … … … … …
ILLUSTRATIVE
Page 34 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Cascade RRA Grid across all levels; Then align respective Sub-systems Group Board/ Board Committees with Group CEO
Group Board
Board EXCO
Audit Comm.
Nom Comm.
Rem. Comm.
Group CEO
1 XXX § XXX 1
§ XXX 2
… YYY § YYY 1
§ YYY 2
Group CEO with Direct Reports; and Between Direct Reports
Group CEO
Group BU Hd 1
Group BU Hd 2
Group Ops Hd.
Group IT Hd.
Group Fin Hd.
Group IM Hd.
1 XXX § XXX 1
§ XXX 2
… YYY § YYY 1
§ YYY 2
Group Heads with Local CEO/ Unit Heads (Biz & Support)
Group BU Hd 2
Local Board
Local CEO
1 XXX § XXX 1
§ XXX 2
… YYY § YYY 1
§ YYY 2
Local CEO with Local Business & Support Unit Heads
Local CEO
Local Ops Hd
Group IT Hd.
Group Fin Hd.
Group IM Hd.
1 XXX § XXX 1
§ XXX 2
… YYY § YYY 1
§ YYY 2
Group Board/ Board Committees with CEO
Group CEO with Direct Reports; & Between Direct Reports
Group Heads with Local Country CEO or Unit Heads
Local CEO with Local Unit Business & Support Functional Heads)
1
2
3
4
Page 35 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Distri- bution
Product design &
packaging Admini- stration
Risk inter- mediation
Consider Value Chain focus to align and engender Cross-functional Collaboration, and Group-wide Process Standardization, and Capability building
Marketing
Distribution
Operations/ IT
Asset Management Typical Vertical Group/
Local Functional Units
Typical Links of Insurance Value Chain (bubble level)
ILLUSTRATIVE
Finance/ Actuary
Investment Management
ü
ü ü ü
ü ü
ü ü ü ü
ü ü
ü
ü
Page 36 Matrix Re-loaded: Navigating the Matrix Organization and Making It Work for You ‒ Ng Aung San, Head, Strategy & Corporate MI Strategic Corporate Planning Conference, Friday, 11th July 2008, Marina Mandarin, Singapore Copyright © 2008 Great Eastern Life Assurance
Key Takeaways…
37
End of Pack