Presenter: Don Miller, Managing Director – Human Capital, Deloitte Consulting LLP

Designing the Organization of the Future: Cracking the

Network Code

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Steamengine

DigitalElectricity and telephone

Computing

Early 1800’s

1970’s to 1980 TodayEarly 1900’s

The Fourth Industrial Revolution has fundamentally transformed business, the broader economy, and society

There has been massive improvement in productivity in each revolution… until now.

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Organizations today simply are not structured to deal with the pace of change that we are seeing

Demographic upheavals Millennials make up more than half the workforce, and Boomers work into their 70s and 80s

Omnipresent digital technology Technology is disrupting business models and radically changing the workplace and how work is done

Rapid rate of change Organizations must become more agile to keep up with the rapid rate of change and stay ahead of the curve

New social contracts with employeesYounger workers demand rapid career growth, a compelling and flexible workplace, and a sense of purpose at work

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The opportunity for change is here and now

of organizations surveyed by MIT and Deloitte anticipate their businesses

are being disrupted by digital business models

believe they currently have the right leadership or skills to execute

30%

90%

55 | Copyright © 2016 Deloitte Development LLC. All rights reserved.

Enabled by new digital technologies, customers are sharing and accessing ideas and information faster than ever and expect companies to be similarly agile and responsive to their changing needs, providing them a personalized experience, information at their fingertips, and buying options that make sense for their multi-channel habits.

Employees want an engaging experience, opportunities to develop and the satisfaction that comes from autonomy and accountability at work. They also expect the workplace to provide the same digitally enhanced experience they get as consumers –which is mobile, agile and intuitive.

• I don’t feel understood– the company doesn’t recognize or try to satisfy my unique and evolving tastes and preferences

• I don’t feel cherished –the company doesn’t prioritize my needs above other considerations

• My complaints and recommendations fall on deaf ears – I never see any action taken to solve my problems

• I pay the price, in the form of higher costs of goods in services, for inefficiencies in the company

So what…• Amazon just launched Prime NOW in my city, I’ll

save myself time and aggravation and try it

Challenges when dealing with traditional organizations

• I don’t have the information or support I need to do the right things – the organization is so large, complex and siloed that make communicating and working effectively across groups challenging

• I feel ignored – it’s difficult to communicate my point of view to leadership because of the existing hierarchical culture

• I don’t feel connected to a purpose – instead I’m assessed against operational and tactical metrics that don’t drive better outcomes for the customer

• I can’t believe the number of people or groups I need to go through to get the answers I need to do my job

So what….• I finally decide to toe the line and stop trying to

be a hero everyday to my clients and co-workers

Challenges when working in traditional organizations

WorkplaceExperience

Consumer Experience Business

Outcomes

A new commercial and employment contract is emerging as marketplace choice continues to grow unabated

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build a culture of continuous learning, adaptability & career growth

leverage data, cognitive and AI to improve business outcomes, team productivity, and engagement

utilize digital technology to design and improve the work, the workplace, and the workforce

redesign the organization and its leadership for the future

cultivate the employee experience for engagement, productivity & growth

build a new management system to empower & engage teams

The world is changing and talent is changing with it. We must rewrite the rules to reflect the shifts in mindset and behavior, challenging how we…

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To adapt to disruption, organizations must adopt a new team based model

Old World Today

Products Defined and steady Fluid and changing

Customers Steady and predictable Dispersed and unpredictable

Competition Known Unknown

Connectedness Localized Globalized

Workforce Composition Homogenous Diverse

Processes Rigid Customizable

Structural DNA Pursuit of Efficiency Pursuit of Adaptability

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+=

CAPABILITYEnabling the organization to deliver upon those moments that matter

with the right solutions in the right context at the right time

CONNECTIONBuilding connections across your

organization – geographies, ecosystem partners and clients –to build holistic service delivery

CREDIBILITYGive your organization the license –

the support – in the business to influence and engage on the most

important strategic objectives

CAPACITYFreeing up time

to focus on the moments that truly matter

for the customers and/or business functions you serve

+ + =

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The future of work will be driven by your ability to move to a balanced focus of efficiency and adaptability and operate with sustained organizational performance

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Many companies are reorganizing, but why is confidence so low?

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Let’s start by understanding an example of modern organization design

• CEO type role at the top with about 10-12 direct reports

• 9-10 large teams who each have a span of control of 1:8-1:10 owning expansion/service delivery in different territories.

• COO type role who owns key operational functions – or shared service

• VP type roles who owns a collection of highly specialized / smaller functions

• May include a future leader (e.g. promising talent) who works on special projects

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It’s actually not modern at all…

General Marc Antony’s Legion under Julius Caesar 2,000+ years ago

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Organization design models have not kept up with changes in society and the economy…

Functional

Formal Hierarches

2,000 years ago

140 years ago

Tomorrow

Prehistory

Power & Domination

Self-managed Teams

Matrix

70 years ago

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Designing a Network-based Organization of the Future

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The organization of the future requires us to transform the way things work today

90% of companies are redesigning their organizations to be more dynamic, team-centric, and connected

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To adapt to disruptions, organizations must adapt to a new team based model

Deloitte has developed a new organization design method to break hierarchy and rigidity and allow adaptability to thrive. Unlocking flexibility means moving towards flexible pooled resources and multidisciplinary teams who are empowered to make decisions, have access to the right skill sets and free to adapt to market developments without having to navigate traditional functional hierarchies.

U N L O C K I N G T H E N E T W O R K B A S E D O R G A N I Z A T I O N

Identify the area of an organization most at risk of

disruption

Function A Function B Function C

Define the organization’s critical outcomes and uncover the hidden networks required to the achieve

them

Function A Function B Function C

Organize cross-functional teams by outcomes (e.g., customer experience, product

functionality) and identify required shared services to define the new operating ecosystem

Outcome A

Com

mun

ity

Outcome B

Outcome C

A F L EX IBLE O R GANIZAT ION F O CUSES A N E COSYSTEM O F T E A MS O N S P EC IF IC M I SS IONS T H AT C H ANGE A S T H E E X TERNAL E NV IRONMENT S H IFTS

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Unlocking flexibility in your organization structure

Create an ecosystem of open talent with a fail-fast perspective and

harness social technology as a

mechanism to keep the organization connected

Shift mindset away from static ‘boxes

and wires’ and embrace the

transformative power of systems thinking

Realign existing structures into self-

managed, networked teams focused on a

specific outcome

Find the areas of the organization that require agility and disrupt them with

new ways of working

Adopt a Collaborative

Systems Mindset

Protect the Core & Disrupt at the

Edge

Unleash the Networked Teams

Create Conditions for Flexible Design

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Case Study: Spotify

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Spotify’s Squads, Chapters, and Guilds

Tribe

Squad Squad Squad

Chapter

Chapter

Squad Squad Squad

Chapter

Chapter

Tribe

Mini, self organizing start-up that focuses on one long-term

mission (e.g. payment solutions)

Secondary home for people who do similar work, discuss expertise and challenges (e.g. testers)

Community of interest for sharing knowledge (e.g. web technology)

Collection of squads that act as a mini incubator with less than 100 ppl. (e.g. mobile experience)

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Organization Network Analysis

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ONA is a data-driven approach that analyzes an organization’s social structures to identify opportunities for improvement

Deloitte’s approach to ONA identifies standard sources of data and augments it with targeted survey data to produce the depth of analysis required to improve productivity, identify synergies, and increase organization design effectiveness.

Pre-existing data(i.e., meeting invites, emails, community sites) and targeted survey findings

Both the pre-existing data and information from targeted surveys are analyzed using Network Analysis software to determine organizational breakdowns

On Network Analysis information to implement strategies to increase operational effectiveness, deploy talent effectively, and transform smarter

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Key Considerations

Analyze Data

• Establish metrics

−Determine relevant measures to analyze

• Apply math

− Apply statistical modeling to determine significant data (e.g., network density, network cohesion, clique analysis, lambda sets)

− Establish correlations between data and behaviors and/ or business outcomes

• Visualize

− Aggregate the data and understand the patterns that exist

Apply Experience

• Inside-out

− Prior surveys

−Historical talent practices

−Qualitative responses

• Outside-in

− External practices

− Comparative ONA trends

− Specialist knowledge

Actionable Insights

• Test hypotheses

• Prioritize actions based on business objectives

• Design intervention

• Target efforts through central members identified in network analysis

• Measure post-connectivity and business metrics

The combination of analytical tools and experienced insight provide the difference between ‘data’ and ‘impact’

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Case Study: Global Manufacturer

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A global manufacturing client embraced SNA and produced dramatic business improvements

Representative Issues

Identifying overly connected people

Bridging Invisible network silos

Creating awareness of expertise distributed in the network

Identifying and drawing in peripheral network members

Business Results

Lowered customer dissatisfaction by 24%

Reduced cost of poor quality 66%

Increased new product revenue 22%

Improved operational productivity by more than 10%

SNA Results

Cohesion – average number of steps for each person to get to another – improved by 25%