can obscure the small stuff How the bigger picture

Having worked in this field for over 12 years now, one of the most common issues raised by clients is how to go about reviewing the organisational design of their organisation and what methodology to use of the myriad that are present in the market.

By Shaun Barnes, Executive Director at 21st Century

How big to go, how deep to dive? How do we analyse the boxes and organisational charts that offer the modern representation of a company structure? Where do we start and where do we finish? How do we present our analysis and findings in a way that is quantifiably sound and not just subjective conjecture? The questions are many and often the answers are few.

Due to the proliferation of global consultancies and large-scale projects associated with restructuring and strategy changes, many people are under the impression that organisational design is a field reserved only for large-scale projects with exorbitant budgets.

This is not the case at all. In our continuous search for organisational renewal and structural improvement and the big picture that drives this, we often lose sight of the logical objectives and common human resource methodologies we have at our disposal. We simply do not use the ’small things’ we all have in every organisation enough.

The first step is to put aside the “million ways to do it” conundrum and understand the logical flow of the organisation design process. Most organisational design projects work according to logical progressive steps that will deliver a strong product if they are followed in the correct order.

You may only need to check or redo the outcomes of one or two of the steps, not all, but it still helps to understand the flow and linkages to see where your organisation might be falling short.

The process to be followed can be visually represented by the following graphic:

This reflects a basic outline of the process to be followed in determining the organisational design of a business. many practitioners make the mistake of jumping immediately from strategy to Structure. This approach runs the risk of skipping several vital links in the chain, and as can be seen, there are other subjects to be dealt with first. The flow of the approach can be explained in more detail:

1. Strategy

Strategy can be defined as a general direction set for the company and its various components to achieve a desired state in the future. Strategy results from the detailed strategic planning process.

The strategy we adopt will define the structure we need. If we adopt a strategy that needs a move to automation in our business, as an example, we know that our current structures will need to be trimmed over time. If, as another example, we adopt a strategy to enter into a new stream of business, we know that we will have to source staff to man the new business stream.

2. Business model

The business model simply states, “how do we make money?”. A business model expresses the business logic of an organisation in a concept. It describes the value a company offers customers and the value chain for creating, marketing, and delivering this value, to generate profitable and sustainable revenue streams.

In a nutshell, it tells everyone how we make our money and sets that up in a bigger model that shows who are clients are, how we distribute our products and what our cost and revenue structures are in the quest to declare a profit.

A business model should be drafted in a way that it can be placed on a company website and explain to all shareholders and stakeholders how the company operates.

3. Value chain

A value chain is a model that describes the full range of activities needed to create a product or service within an organisation. This is then used to plot which part of the organisation is responsible for which area of the value chain and how the pieces integrate. This assists in designing the nest step which is an operating model.

Once again it must be stressed that the value chain should be designed and represented in such a way that it is easily understandable to people within and outside of an organisation and not elevated to a complicated, multi-level and intricate model which only business process architects can understand.

4. Operating model

An operating model dictates where and how the different areas of work get done across a company and serves as the vital link between a company’s strategy and its detailed structure. Before we start looking at our structure, we need an operating model that sets the rules of the game.

6. The micro structure

The operating model tells us how we should organize ourselves and describes the architecture of the organisation that reflects the elements of the business model in systems and structures that enables it to implement and execute the strategy and the value chain.

An operating model should be captured and designed in such a way that it can be openly shared and understood by all shareholders and stakeholders. Companies too often do not resist the urge to get overly complicated and ‘cute’ in their drive to present an impressive operating model.

5. The macro structure

The macro structure of an organisation is the executive management level of a business that is responsible for the execution of strategy. The macro structure needs to be modelled to link to the operating model and value chain to be able to deliver on the planned strategy.

The macro structure sees the operating model being translated into functional areas. This is often referred to as the “N” and “N-1” levels (with ‘N’ denoting the CEO/MD position).

The micro structure of an organisation refers to all levels and structures below the executive management level. This is often the part of the process that represents the biggest challenge to practitioners, as this is where the structures and boxes now need to be designed and tests applied as to measure the effectiveness of the current structure versus the new structure. While there are common methodologies for the mapping of the strategy, business model and operating model elements, the macro and micro structures present, as detailed above, the biggest challenge. How does one actually ‘test’ a structure and how do we make sense of the myriad positions that constitute the micro structure?

This is where the ‘small things’ come into play – the checks and balances of our designed structure. Almost every medium to large-sized company has job evaluation and management levelling in place. These methodologies are often used in isolation and job evaluation is especially neglected in terms only being used to match grade to pay. Job evaluation has uses much wider than this within the context of organisational design.

Job evaluation as a useful test for certain features of structural integrity

• Job grades can guide us as to our career paths and where gaps appear in our structures. Gaps of more than three grade levels between positions indicate that incumbents will have difficulty moving into the next level job.

• Grade differences between managers and subordinates can tell us whether we are using too high a level of manager to supervise subordinates. Again, a three or higher grade gap between a manager or supervisor and the positions they manage could indicate we could use a lower level position for this purpose, as the higher the level the higher the cost.

• We can use accepted span of control benchmarks across grade levels to check whether our teams are too big or too small. This will often give a more quantifiable picture than the oft-repeated phrase of “We think our teams are too big”.

• We can check the number of management and supervisory levels we have against the grades of these levels to see if we have too many levels. Once again, the more distinct management and supervisory levels we have, the greater the cost we have to bear.

There are thus a number of tests we can apply to get a better idea of where our current structure is failing us by using the common tools at our disposal such as job grades. This will provide us with a quantifiable and logical approach rather than relying on speculation and subjective input.

If we follow a simpler, logical process as illustrated and use what we have internally to measure what we are versus what we want to become, we can implement an organisational design project without causing mass confusion and excessive cost. ■

Kimberley Taylor

Inventor of Loop software

Kimberely Taylor

Highlighting Leadership And Ingenuity

Kimberley Taylor, the inventor of a new delivery management platform software called Loop.

efficiency and cost, guided by data from daily operations, which Loop cleverly scrutinises so that businesses can save time and money. It’s a completely customisable app that supports each operational tier from the top down.

Loop operates on three platforms:

Loop is an adaptable, intuitive delivery management platform that empowers companies through enabling them to cleverly optimise and scale their delivery systems. Taylor, the vivacious young woman behind the software, personifies the ingenuity of her brand and is a shining example of dynamic South African leadership.

It all started with a third-year chemical engineering assignment at Wits in 2015. Taylor, a bright young student, was tasked with developing an algorithm that shortened the possible distance between cities for a travelling salesman. One year later, a conversation with a friend in the logistics space helped her connect the dots.

“I asked if logistics companies use some sort of route optimisation algorithm to help drivers know what’s the shortest route they need to travel,” she says.

As it turned out, there was a massive need for a digitised platform that connected providers with their supply network and customers in an efficient, cost-effective way.

“I saw such a gap. Drivers don’t have something to help plan their routes. There’s no visibility for the business or the consumer. The communication channels were very complex. That was the basis for what I thought we would build,” she adds.

Kimberley spent her final year at Wits finishing her honours degree while also constructing what would later become Loop, based on meetings with potential clients to find out what they needed to provide a faster, smarter service. Through sheer determination, courage and good old-fashioned street smarts, she landed her first customer based purely on the novelty of her idea.

“You just need a few seconds of bravery to cold call someone or speak to someone in a coffee shop,” Taylor comments.

Her business portfolio now provides measurable value and ROI to major players in the delivery and service space like Nando’s and Quench.

A game changer

Loop is a game changer for these businesses. It’s a fully integrated system that connects delivery companies with all the players in their operation, from suppliers to customers. It allows dispatch managers to make delivery decisions based on

1. a management console that offers a web-based control portal for clients, where logistics can be monitored 24 hours a day, 7 days a week, and operational metadata is captured and organised for business efficiency;

2. a driver app that’s enabled for Android and iOS use; and

3. a customer tracking app where end-users can trace products from the moment they leave the business until they arrive on their doorstep.

The best part is that all of these functionalities are individually configurable for different business models, and that’s really what sets Loop apart: Its ability to respond in real time to the evolving needs of its users.

An unconventional entry into a fast-paced environment

The tech space, traditionally dominated by men, can be intimidating but Taylor’s unconventional entry into this fast paced, unpredictable environment shielded her a little from what might have scared others off.

“I didn’t know anything about business. I didn’t have adults in my life that were in that corporate space. In some ways, I actually think that helped a lot,” she says.

She draws inspiration from her mother, a Brazilian immigrant who also built a business from scratch.

“My mom is an incredible woman in her own right. She has such an amazing story. She’s an incredible example of a brave woman who’s lifted herself up,” Taylor explains.

The same innate strength of character and consistency that Taylor used to bring Loop into the world is the fuel that she uses to keep her creative juices flowing. It’s this powerful mix of passion and ingenuity that she is harnessing to make Loop better day by day. She’s always thinking of ways to make the experience of using the app better for everyone involved in the supply chain, from a driver on the back of his motorbike dodging rush hour traffic to make sure a delivery arrives on time, to the CEO lying awake at night worrying about how to maximise business efficiency.

From those first small seeds planted in 2015, Loop has grown in leaps and bounds as Taylor and her team learn more about specific client needs.

“In the beginning, it’s like playing checkers. But eventually you need to play chess. It’s about understanding where the market is going,” she says. ■