Designing and Implementing a Successful Business Model · 6 Designing and Implementing a Successful Business Model: A Guide for the C-Suite Executive In the past, your R&D team created

Designing and Implementing a Successful Business Model

A GUIDE FOR THE C-SUITE EXECUTIVE

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Designing and Implementing a Successful Business Model: A Guide for the C-Suite ExecutiveCopyright © 2016

All rights reserved. Except as permitted under U.S. Copyright Act of 1976, nopart of this publication may be reproduced, distributed, or transmitted in anyform or by any means, or stored in a database or retrieval system, without theprior written permission of the publisher.

Designing and Implementing a Successful Business Model: A Guide for the C-Suite Executive

3 Designing and Implementing a Successful Business Model: A Guide for the C-Suite Executive

Introduction

Chapter 1: The Elements of Success in Today’s Dynamic Market

Chapter 2: Aligning Limited Resources for the Things That Matter

Chapter 3: Making Hard Choices within the Organization

Chapter 4: Ensuring Organization Design Effectiveness

Chapter 5: Sealing the Deal on Post-Implementation Performance

Chapter 6: Finding the Right Change Partner

Conclusion

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Table of Contents


Introduction

Imagine you are building your dream home. You have a vision of what it will look like and how it will function. But how do you get from vision to reality? How do you determine what needs to be done? How do you coordinate all the elements of construction—making sure nothing gets missed along the way? Most importantly, what’s needed to stay within the budget and on schedule?

Although this isn’t a guide for building a house, the metaphor is useful when talking about designing and implementing a differentiated business model. You have a vision for your business and how you will serve your customers. That strategic vision plays out in your business model.

Your business model details what problem you will solve for your customers and how you will do so in a distinctive way that will ensure a profitable bottom line. But practically speaking, how will you create an organization that will allow you to solve that problem for your customers? That’s where an aligned organization design comes in. It aligns the various aspects of your business to compete effectively.

This is hard work, and a real challenge for executives today.

In this guide, you’ll learn how to translate your strategy into a differentiated business model and align your organization’s design to deliver to your customers. You’ll also learn how to adjust and realign your organization in response to ever-changing marketplace conditions.


The Elements of Success in Today’s Dynamic Market

How do you know if you have a good business model? In simple terms, you’ll know if it solves a problem for your customer. Obviously there’s more to it than that. Your business model conceptualizes how your organization will create value for customers.

There are three elements that need to be in alignment when developing an effective and differentiated business model.

1. Clarity around the market (and your customer’s expectations)2. A business model that uniquely delivers value to customers and produces a return

for your company3. An aligned organization design that puts the right resources, talent and focus on the

activities that matter most to the customer.

Let’s start with the market and your customer’s needs.

THE NEW DYNAMIC MARKET

It is cliché, but it is true: The marketplace is constantly changing. In the past, a company could compete with a distinctive product or service. Today, you need more.

“We have a good product (or service), so why change?” you ask. Well, the “if it isn’t broken, don’t fix it” mentality no longer works.

CHAPTER 1


In the past, your R&D team created a product or service that you could take to the marketplace. From there, your focus was only on marketing and sales. It was very linear. At one time, this linear approach—get from A (product) to B (market)—was sustainable. Today, there are far more variables. Not the least of which is a fast-paced, technology-driven society that expects and demands more.

Apple is an example of a company that understands this. The iPhone started as a break-through product but has shifted emphasis from being a single, distinct product to a key part of a growing ecosystem of interconnected services and experiences. As a result, we’ve, become dependent on our mobile phones. They keep us connected to people and news, help us coordinate our schedules, stay connected to work, allow us to bank and shop at any time of the day, record important events and play music along the way.

The modern marketplace follows a different pattern. It’s far more like a cog with multiple spokes branching from the center (your product or service), with each branch affecting another cog. And from there, the ecosystem develops.

In today’s business marketplace, you may still develop a core product or service, but that product alone isn’t sufficient to drive sustainable sales and revenue. Rather, it is the relationship to and connections with other add-on experiences and services that create a dynamic sales driver for the organization.

The Relationship of Your Business Model and Organizational DesignThe terms “business model” and “organization design” are often used interchangeably. Your strategic business model outlines what you’ll offer your customers and how you will differentiate your offerings. Organization design provides the blueprint for how you will fulfill those objectives—using your unique organizational capabilities and an aligned set of organizational choices. The design you select sets up your organization to meet the demands of the marketplace, while allowing you to differentiate and achieve business returns.

So, leaders need to recognize their work doesn’t stop with the strategic business model. In fact, it’s really just the beginning.

A business model explains how you will:• serve customers,• generate revenue and profit, and• differentiate your products or services.


The elements of your organization design explain how you will• capitalize on your team’s capabilities, • adjust to market-driven complexities, and • leverage the resources available to you.

When fully differentiated, your business model is unique. So too is your organization design, which identifies the specific choices you must make to better align operations with your desired results. Together they work to move your company forward—ensuring you are ready to take on the competition.

Of course, if you don’t understand your customers, you won’t be equipped to fulfill their needs. We recommend you use our ANCHOR tool to examine what your customer wants and how you can deliver it to them:

A—Audience. You have to know your audience to reach them in a way that resonates. Live in their shoes, and you’ll be able to “feel their pain points.” Then convey how you can help them.

N—Need. What does your customer need? It goes beyond the actual product or service. What is that something extra that you offer that your customer doesn’t even realize that he or she needs? What makes you different from everyone else who sells or offers the same thing? Knowing that will enable you to convey who you are and what makes you different.

CH—Channels. Understanding which channels your customers turn to for access to desired products and services is critical to developing an effective business model. For example, if your target market is the millennial generation, you’re not likely to reach many customers through traditional channels of distribution but rather through on-line channels.


O—Omit. Defining a strategy, need, and audience is as much about what you consciously choose not to deliver as what you choose to target. Successful businesses that can omit opportunities outside their strategy to focus on what is needed to propel in-scope activities into market differentiators gain focus and leverage competitors never capture.

R—Revenue. For many leaders, it is a tough trade-off to make. But if all else fails, remind yourself to keep your eye on revenue. Without it, there wouldn’t be an organization. Again, success hinges on understanding your customer. What price point can they handle? A millennial will have a much lower price tolerance for certain items than a 45-year-old professional at the peak of his or her career. Moreover, your pricing is also driven by your operating and overhead costs.

All of these ANCHOR questions are important for determining the right strategy so you can develop a winning business model and properly align your organization.

The Role of Executive-Level LeadershipAs the experiential, interconnected marketplace has become more commonplace, C-suite executives have needed to adapt. Unfortunately, they don’t always understand what will lead to the truly transformative change. They often fall back on what’s worked in the past. They’re trying to figure out how to work in a more connected market ecosystem. But success is possible when top executives take on the role of a chief alignment officer (CAO).

“Strategy is about the future; [organizational]capabilities are about the past.” - Mastering the Cube

A CAO makes the tough decisions that will ensure all elements of the business are in sync. He—or she—looks beyond the functional elements (headcount, products and services, costs, customers, and revenues), and considers all aspects of the organization that will create proper balance and alignment (i.e., work, structure, information/metrics, people/rewards, and culture/leadership.)

But a CAO cannot be effective if he can’t assess the misalignments in the organization. To initiate the necessary

organizational change to retain competitiveness, a CAO has to shift his own mindset as well as others in the organization to consider new organizational choices that will accommodate the dynamics of today’s market ecosystem.

In our book, Mastering the Cube: Overcoming Stumbling Blocks and Building an Organization that Works, we clarify this important shift when discussing strategy and capabilities: “Strategy is about the future; [organizational] capabilities are about the past.”

As the CAO, look to the future when creating a strategy. Then look to past experience and employ the right capabilities to successfully align your organization to that strategy.


Aligning Resources for the Things That Matter

Optimizing a business model isn’t easy. What’s more, your resources may be limited—requiring you to be more thoughtful when aligning your organization design to your business model. You want to ensure you’re making provisions for the things that really matter.

Without a solid understanding of the parts of the organization that need to fit together (align), you’ll impede your own efforts and shortchange your customers.

KNOWN OBSTACLES TO PROGRESS

Executives frequently fall prey to common practices, assumptions, or even habits that can actually encumber alignment. Although these practices may feel normal, natural, and logical, the first step in identifying and aligning your business model and organization design may be to understand what doesn’t work.

Here are a few areas where leaders often get tripped up:

1) Cocktail napkin planning: Who among us hasn’t taken this approach to planning and designing an organization? Hastily sketch out the who, what, when and how of a strategic plan or an organization design (How you’ll help customers. Who will be the key players, What you’ll do to get there, and When you’ll launch.) If only it was that easy. It can be a challenge to convince leaders why this approach to planning rarely works. Simply put, with a hasty plan, you won’t maximize your capabilities or people and it won’t support your differentiators. In the end, the changes will feel unnatural and won’t take root.

CHAPTER 2


2) Modeling your business after another organization: If differentiation is so important, why would you copy your competitor? What’s more, how you fulfill your customer’s wants or needs depends on the culture, talent and resources of your company—not another company. Instead of developing a business model based on what they have within, too many business leaders copy a model that doesn’t fit their organization.

3) Focusing too much on speed to market: Let’s revisit our house analogy. Creating a business model quickly without thought to how you’ll succeed is like raising all four sides of your house, slapping on a coat of paint, and moving in before you’ve taken the time to install the electricity, plumbing and insulation. Without making sure all systems are working properly before you move in, you quickly render the house uninhabitable. So develop a business model by taking the time to ensure the organization design behind it is practical and implementable.

4) Taking a simplistic approach to the business model: It is a common refrain, “Things used to be simpler.” Wax nostalgic all you like, but you still have to account for the realities of today. As the saying goes, “What you resist persists.” Resist change within your organization all you want. It isn’t going away. If organizations want to keep up, they must adapt. Fight it and you’ll soon be obsolete. Chief alignment officers help the organization embrace the need for making needed changes.

These bad habits can be the undoing of your organization. Now that you know where you can trip up your business model, let’s turn our attention to how to avoid falling back into bad habits.

BREAK THE BAD HABIT CYCLE

It’s difficult to break the established patterns, particularly if you don’t know where and how to start. We’ve developed tools that can help you break the cycle. If employed in the correct order, they can ensure a successful business model and eventual alignment.

Step One: ANCHORs AwayThe ANCHOR tool will help you answer critical questions that will affect the shape and scope of your business model and organization design:

• Where can you reduce costs? • Which areas of the organization require more capital? • Will you need to expand your staff in the near future? • Does each employee’s role make the most of their capabilities?

So know your Audience, their Needs, and the CHannels they use to fulfill those needs. But don’t forget to Omit what won’t work, and always keep an eye that you are driving profitable Revenue for your organization.


Step Two: Dare to be DifferentIt’s more challenging than ever to be heard above the marketplace din. It can be difficult to distinguish your organization from your competitors and reduce imitations. Differentiators give you an edge. They help you stand out.

“ Executives frequently fall prey to common practices, assumptions, or even habits that can actually encumber alignment.”

Take, as an example, the grocery store Wegmans. The chain provides philanthropic support to communities surrounding their stores. That is one of their differentiators. The upshot is more locals shop at Wegmans because they feel the store cares about their community.

No organization can be all things to all people. So select your strongest differentiators to compete effectively. Differentiation will also help as you implement your business model, ensuring you optimize resources for what really matters.

Step Three: Map the Matrix of ChoicesA functional alignment matrix will help you organize and visualize all aspects of your business model. Essentially, it allows you to plan for complete change by ensuring alignment between all the parts of your organization, such as the work, structure, culture, people, and metrics.

Is the balance right? Are there gaps in certain functions? Do all elements of your organization interact seamlessly? Do they support your employees, customers, differentiators, etc.?

Alignment can’t occur if one or more of these choices areas is missing, taking over, falling short or misaligned with the others.


Step Four: Partner for Lasting ChangeYour HR manager or another change partner can be your greatest asset in the process of building and aligning your business model and organization design. Listen to their perspective. Consider their suggestions. Collaboration will ensure a viable business model and an aligned organization.

Of course, you’ll be tempted to go from 0 to 60, but the process really shouldn’t be rushed. That is when your change partner can prove particularly useful. He will temper that urge, making recommendations about the right pace, best way to engage others, and communicate changes to staff.

Furthermore, a good change partner can help plan out a future reorganization—conferring on doable timetables, assembling the right team to develop and implement it, executing several of the tasks, pinpointing capabilities strengths and weaknesses in employees, and engendering support for the plan.

“ Collaboration will ensure a viable business model and organizational alignment.”


Making the Hard Choices

Every organization has finite resources. Returning to our home-building analogy, as you finalize the detailed blueprints, you may notice you can’t afford to add all the dream trimmings. You’ll have to choose. What stays, what goes? The pool or the cutting-edge technology package? The Viking range or the palatial master suite?

It all boils down to hard choices.

It is the same in business—you need to make do with the resources at hand. You simply won’t be able to accomplish everything, at least not all at once.

Be sure the decisions you make align with your business priorities. Decide where to concentrate both your efforts and resources so that you deliver the most bang for the buck within your strategy.

IDENTIFY THE RIGHT TEAM

Change requires a collective effort and the right blend of people. In an ideal world, alignment (from business model development through the implementation of your organization design) should cascade throughout your organization from you, to other organizational leaders, and eventually to the employees at large.

Remember to partner with people not in direct control of the organization. These partners, when included in the design of the business model and alignment of organizational choices, can help provide a big-picture perspective that will ensure the transformation process is a success.

With the right alignment teams in place, let’s review the strategy for effective change.

CHAPTER 3


ALIGN ALL ELEMENTS OF YOUR ORGANIZATION TO YOUR STRATEGY

In building a home, your contractors are the lifeblood of your home’s construction. Each functions as part of your building plan. Their input is essential and their jobs are interconnected. Plumbing can’t be installed if the house hasn’t been framed. Electrical wiring must go in before the drywall is up. Painting can only be completed once the drywall is up, taped, mudded, and textured.

Your organization has similar moving parts that work together to form a whole:

• Work processes• Structure and governance• Information and metrics• People and rewards• Leadership and culture• Continuous improvement

When implementing change, all areas should be considered.

SELECT AN ALIGNMENT STRATEGY

The strategies below facilitate the alignment process: 1) Use alignment to reinforce your

business model: Your strategy, structure, capabilities and choices should be symbiotic. A change or weakness in one area will affect the other parts of the organization. Aligning each area as part of a complete system makes for a stronger, more agile business model, which, in turn, makes you a better competitor.

2) Leverage your organization design for change: The business model alone doesn’t lead to transformative change. Clarify your strategic direction and trade-offs first. You’ll be better equipped to build out the distinctive choices that will work with your strategy and, if needed, absorb complexities adeptly.

3) Build consensus, secure your investment: A good alignment leader works with others to develop a workable solution. Those invested in the process are more likely to make sacrifices for the greater good of the organization. The more involved they are in this process, the more committed they’ll be to its success.

4) Consider capabilities, then structure accordingly: We count on people for their abilities and loyalty. After connecting design choices to strategy we ask the talent question. The people who got the organization to where it is today may not be the people to take it into


tomorrow. Leaders often flip that concept saying, “Here are my people. How can we make them fit our strategy, business model and structure?” Plan the ideal design, then look at the people in the organization and determine what is needed. From there you can leverage, build, or buy the talent needed.

5) Personify the CAO role: A good alignment leader embodies these qualities: a. Understands choices/trade-offs need to be made and sticks to the “Nos” and embraces the necessary “Yeses”. He/she also keeps the ship running while emerging processes and structures come into play. b. Adopts an alignment mentality—looking at all aspects of the organization and encouraging others to consider how alignment choices impact the whole system c. Embraces the change concept and is committed to getting everyone on board—supporting change management in the process d. Maintains alignment and manages change by building capability – working with others to achieve it. Even when you think you’re done, you’ve got to consistently revisit the process – reevaluating what’s working and what’s not, tweaking and reconfiguring and adjusting with the ebb and flow of the marketplace.

6) Make sacrifices in the best interests of the organization: A good alignment leader has the ability to leverage strategy to reduce waste AND grow at the same time. He or she is adept at shifting resources from less strategic work to ensure that the most strategic enabling work is supported.

7) Absorb complexity: To compete, organizations are now driving the customer’s “wants” rather than the other way. Rather than focus on the organizations products and services, investment should be made in designing the experience or solution before the customer “needs” it. However, this approach requires acknowledgement and alignment since your deliverables are more complicated and require trade-offs. This important strategy receives additional attention below.

8) Become more nimble: Working through the alignment process, every aspect needs to be architected for decisive, swift response to market changes without inhibiting growth. It’s an ongoing process if your organization intends to remain a competitive force.

Absorb ComplexitiesMastering the Cube explores the importance of absorbing complexities in a very diverse, challenging marketplace. If you can grasp this fact, your organization will remain agile as well as achieve longevity.

Absorbing complexity involves moving away from the notion that it’s enough to make a great product or deliver an effective service. You must develop a more differentiated experience. This demands more of a leader. It also requires the development of a more sophisticated environment for customers.


Southwest Airlines is a good example of an organization with a successful business model, that with the right planning, can adjust to absorb complexities when necessary. Before 9/11, all that was needed to board a Southwest flight was a plastic card with a boarding number on it. It was fast and cost-efficient. Post–9/11 regulations changed all that. Southwest was required to track who was boarding their planes and whether their luggage was on the same flight as the paying passenger. This new complexity could’ve changed the customer experience, but Southwest found a way to maintain the simplicity that appealed to customers while addressing the new regulatory complexity. Customers can still sit wherever they choose, but only according to their boarding group and boarding number—both of which act as their assigned seat. Southwest maintained the simplicity and efficiency of the process and still complied with Homeland Security’s requirements.

To meet the demands of a new environment, selective design choices often have to be made that may increase internal complexity, but can still deliver a seamless, integrated, and differentiated experience for customers. Frequently, the choices you will have to make will be harder for your organization, but easier for your customers.

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No matter what drives the complexity, it demands more clarity in your business model and organization design. Anything superfluous will affect the entire organization. Be clear about what you will and will not do. Being a good CAO means sticking to the “Omits” and fully embracing the direction of the new strategy.

It’s time to turn away from “functional goodness.” Your functional support areas—finance, IT and HR—may focus too narrowly on “best practices.” These functions may attempt to be cutting edge when they don’t need to be. Moreover, some practices might not be relevant to the organization at all. It becomes a case of the tail wagging the dog.


Ensuring Organization Design EffectivenessThere is a practical approach and sequence to aligning an organization. It may be tempting to zero in right where a problem is surfacing, but by following these steps, you can ensure that everything is aligned from top to bottom (strategy to rewards).

Let’s walk through each step of the organization design and the change management process:

Before you can build a solid house, you need to survey the land, then pass inspections as you build. Skip these steps and your home could be more hazard than habitat. The Diagnosis and Assessment stage in organization design is just as critical. Diagnosis and assessment can give your organization a good handle on where you should start and how involved your improvement plan should be.

1. Survey the scope of the design initiative. 2. Establish best design approach given the misalignments in your organization. 3. Solicit stakeholder feedback to confirm design priorities. 4. Schedule working sessions for the Alignment Team.

CHAPTER 4

DIAGNOSIS STRATEGY MACRO DESIGN MICRO DESIGN

IMPLEMENTATION

AND

SUSTAINABILITY

DIAGNOSIS


5. Create work session agendas and related materials. Confirm Alignment Team members. 6. Confirm Alignment Team member.

What will ensure your success? Consider what assets you have and what you need.

1. Know your stakeholders’ requirements and make provisions for them. 2. Gain consensus on desired outcomes and factor in criteria for the organization’s future. 3. Consider trade-offs as well as value-adds. 4. Design or revise your business model. 5. Explore the distinctive capabilities needed to deliver your marketplace promise (strategy).

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Look at the big picture and account for all the resources needed to meet objectives. Once these are determined, how will they be grouped and organized?

1. Design the optimal organizational model.2. Assess the strategic benefits and risks of the organizational model. 3. Define new or changed roles. 4. Mitigate the risks of the selected organizational model. 5. Ascertain high level staffing implications and decision-making accountabilities. 6. Evaluate areas that will require more focus and alignment at a micro design level. 7. Initiate the transition to micro design by jumpstarting your planning.

Note: Between macro and micro design, select leaders, sponsors and a project managers for micro design work streams.

Drill down to the details to examine how the organization will operate after implementation, as well as what capabilities need to be revamped to ensure success.

1. Determine and organize micro design teams. 2. Gather data and assess current performance and where processes need to be redesigned. 3. Redesign work processes.4. Design lower organizational levels, jobs and spans of control. 5. Align performance systems and metrics.

STRATEGY

MACRO DESIGN

MICRO DESIGN


6. Plan for talent impacts.7. Consider how the design changes will enable the right culture.8. Facilitate implementation transition planning and communications.

Note: Be methodical. Start the design in the most strategic areas, then move onto the next areas until the organization is fully aligned to strategy and across groups and functions.

A blueprint (an organization design) is ineffective if it isn’t managed properly and consistently. The focal point during implementation and sustainability is to make sure the benefits of the new design are met and sustained.

1. Get approvals and buy-in. 2. Create implementation plans and ensure that deliverables are produced so that new

processes, technologies and behaviors can be adopted. 3. Work with HR to hire and/or redeploy employees as well as conduct training. 4. Coordinate communications. 5. Evaluate the design impacts and results 6–12 months after implementation.

Not every organization will follow the change management process in the same order. The plans of some organizations won’t be as detailed. Others will start the process in the middle.

Your distinctive implementation process will include a detailed breakdown of tasks. Project management requires a detailed timeline, communications, moving plans, budget/financial planning, equipment logistics, and organizational change management, as well as individual transitions.

In that same vein, people will be a large part of this implementation process. Job creation (descriptions, compensation, grading, success metrics/rewards, etc.) may be a consideration, but you must also think about the hiring (job sourcing and posting, applications, selection, etc.) and transferring (relocations, budgetary and security factors, performance management plans) of employees, as well.

Citing a quote from Mastering the Cube, “If the work doesn’t change, the results don’t change.” As mentioned earlier, there’s a tendency to rush the process. Again, the process is the real work for leadership. That is why you should work with your HR manager or a change partner throughout each stage. What’s more, such an intricate, comprehensive design approach and implementation plan emphasizes the importance of the leadership team cascading down to all affected levels. If you don’t ensure that the changes reach the lowest required level within the organization, then your business model and alignment efforts may prove futile.

IMPLEMENTATION

AND

SUSTAINABILITY


Sealing the Deal on Post- Implementation Performance

You and your team have worked hard to create a business model and an organization design that meet your objectives, optimize your capabilities, address your customers’ needs, differentiate you in the marketplace, and account for any future complexities.

Good job! Your efforts will pay off. Your organization will be fiscally stronger and more distinctive as well as better prepared to serve your customers, compete in the marketplace, and foster a culture of loyalty and productivity.

BUT…

There’s always a “but,” isn’t there?

There’s absolutely no point in designing and developing a business model and organization design if you’re not going to follow through.

So what do we mean? Avoid the tendency to revert to old habits—negating all your efforts to bring about transformational change.

We witness complacency in organizations all the time. They don’t put in the maintenance, mechanisms, or funds necessary to sustain a plan. Of course, some of that complacency is a side effect of company culture.

CHAPTER 5


So, take a look at your culture. Is it counterproductive? If so, it could be impeding how well your business model and organization design are aligned.

The Follow-Up EffectSurprisingly, many organizations go through considerable time and expense to create a business model and redesign their organization, but never fully implement it—let alone maintain it.

Can you imagine hiring and paying for an architect to create a blueprint of your dream home, and then casting aside its plans and construction? No one with any sense would do such a thing. Yet it happens in business transformations and redesigns all the time.

Avoid this by asking several questions.

Question #1: Is your business model helping you get what you want (higher productivity, more customers, or something else)?

Business models are no longer linear—moving from product to market. We expect more from a business model. Be sure it is fulfilling your business objectives.

Question #2: How deeply are the leaders and employees engaged and supportive of the business model?

If your business leaders and employees are not fully invested in the business, your efforts could be for naught. Make sure current and future employees are fully supportive and understand why changes are necessary. If you can engender support, your rate of success will be exponential.

Question #3: Have you installed the business model and organization design that we architected and to what extent?Conduct an assessment of your business model and organization design 9 to12 months after alignment (though it could be as early as 6 months depending on the implementation scope). Look at processes, structures, people, rewards, etc. to see how effectively they are operating. This assessment can be done internally, or with the help of an outside firm.

Several areas should be examined:

• Capabilities—Is your organization capable of delivering? Are your people capable of delivering to the level you want?

• Objectives—Have your fulfilled all your objectives? For example, if increasing speed to market was an objective, is there evidence that you have done so?

• Initiatives—What initiatives were implemented (and to what level of success)? What initiatives still need to be implemented to get to your objectives?

A post-implementation assessment is often useful when conducted in conjunction with a minor business strategy and budget planning session.

For example, we assessed the progress of one AlignOrg Solutions’ client a year after they changed their


organization design. We conducted interviews throughout the organization to see if they implemented the changes and to what extent. Our goal was to get a sense of how well people understood the organizational design. We then sat down with the company’s leadership to evaluate the findings and reconfigure a plan to address areas that weren’t working or where follow-through wasn’t happening.

Another important point—the language of your strategic plan must cascade down through the organization. Be clear about what you want to accomplish and how. Make sure all parties understand those objectives and the steps to get there—across and cascading down all levels.

Consider, as part of your annual strategic planning process, doing an organizational health assessment. During this process, your team should pinpoint areas where the organization is misaligned. Then identify the steps to realign them in the coming year.

When one AlignOrg Solutions’ client conducted this exercise, they found that the sales team was struggling. Frequently, when sales were down, the team requested additional sales people. Management would turn them down, usually because the sales department couldn’t provide adequate proof as to why the increase was necessary.

After going through the strategic planning session, the sales team discovered that they needed to change the way the sales force was configured and articulate their need in a more convincing fashion to senior management. It proved to be very effective – with management ultimately agreeing to a staffing increase. As a result, the organization saw a notable increase in its sales.

We have a tendency to overestimate our abilities. After all, we’re human. We also hold on to a belief that it’s better to tackle many tasks in-house rather than paying an outsider to perform them. Continue to Chapter Six to determine if working with an outside partner might be right for your organization.

“ If your business leaders

and employees are not

fully invested in the

business, your efforts

will be for naught.”


Finding the Right Change Partner

A change partner is essential when developing your business model and organization design, because they can bring methodologies and tools needed to guide the work (see Chapter 4). Your change partner could be an HR manager or some other internal resource. But it may be better to factor in partners outside direct control of the organization.

External partners may be able to bring a clearer perspective of your organization than those who have a history with your organization. The presence of an external change partner can also bring others into the discussion and smooth the path to consensus.

An effective outside firm can help your organization work through the process of organizational alignment, asking the questions that lead to the best solutions. Only then will you be able to come up with a strategy, a business model, and an organization design and facilitate implementation.

• Is objective. An external partner should not come in with a preconceived agenda for your organization. They also should not come in ready with the answers or even a specific viewpoint. If they do, you’ll likely end up with a business model that may not be what you need. Remember, the alignment process is what leads to answers and solutions, not the other way around.

• Asks tough questions. Nothing that was ever worthwhile was easy. Objectivity allows an outside firm to ask the tough questions. Sometimes, there are ingrained assumptions that need to be challenged. Internal stakeholders may not think to challenge those assumptions or worse may shy away because of the political implications. It is exactly those tough questions that need to be asked. It’s the only way you’ll find out what you really need to do.

CHAPTER 6


• Can help you work through the process more efficiently. A good outside firm will have deep experience working with organizations to create and implement a business model and align organizational choices. They’ll have a track record of success, too. This expertise will pave the way for more efficient development and implementation.

• Provides a balcony viewpoint. Being a good alignment leader or CAO isn’t easy. You need a big-picture perspective. An outside firm can help you step back so you can see the big picture—it is an invaluable quality. Seeing the interconnectedness of your organization’s choices is key to making good design choices.

• Can build capabilities effectively. A good outside firm can transfer tools and methods the organization needs to examine its design choices. To build the necessary skills, business leaders and change partners must learn how to tackle organizational alignment questions in a logical manner so having a toolset is key. Also, leaders and internal change partners need to learn how to help others in the organization embrace the alignment leader role. Your team can’t assume model behaviors if you and your team aren’t teaching and exhibiting them.

Over the last two years, we’ve trained hundreds of practitioners throughout the world to assume the alignment leader role.

For instance, AlignOrg Solutions’ worked with a global manufacturer that brought us in to redesign one function in their business. They had fragmented resources, which left them ineffective in many areas beyond what we were asked to assess. Rather than fixing one function, we helped them develop a better operating model—a macro design similar to what is discussed in Chapter Four.

Another consultant working with the same manufacturer was focused on other change aspects. The intent was to incorporate our work into a broader plan. After a 3-day change management training session with the manufacturer, the other consultant was released. The manufacturer’s approach shifted to align with our work. The difference? We offered a holistic approach to organizational alignment and change that helped the company work through the process efficiently and facilitated capability building for their leaders across the organization.


Conclusion

A business model, when done right, can improve an organization’s productivity, bottom line and position in the marketplace.

When business leaders shift their mindsets from the past and work closely with change partners, they can effectively enact lasting organizational change. If those leaders also acquire the characteristics of a CAO, they’ll be better equipped to navigate demanding markets, absorb complexities, strengthen differentiators, and shore up their resources and capabilities.

Business leaders need to know that:

1. The design of their business model is predicated on the marketplace. Continually seek improvement and implement change as the market necessitates it.

2. Not all of the organizational choices you’ll make will be easy. Some will be more difficult and require sacrifice.

3. There’s a proven, successful approach to driving business model transformation.4. Change is systemic. Therefore, every aspect of the organization (work, structure, metrics,

people/rewards and culture) needs to be factored in to accelerate alignment and for change to be sustainable.

5. Business leaders are alignment leaders and should view themselves as such.6. Your ability to prompt high engagement levels from your team helps enable buy-in and success.7. It’s truly in everyone’s best interests to work with a change partner—either internal or

external—throughout the process. They can detect areas in need of change that might not be evident to you

Embrace the opportunity to meet customer needs in innovative, integrated ways. The key is absorbing complexities through a proven strategy and deliberate alignment of your choices with the support of your team.

Documents

Designing and Implementing a Successful Business Model · 6 Designing and Implementing a Successful Business Model: A Guide for the C-Suite Executive In the past, your R&D team created