Organizational Systems DesignModel and Methodology

Presented by Starr EckholdtThe OSD Group Inc

August 17, 2009

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Understanding Company Requirements

1. Secure the best expertise in Organizational Systems Design to enable rapid implementation of the new 5 Point Business Strategy.

2. Carefully define Company’s “Competitive Advantage work,” and align all work processes with the new Business Strategy and shareowner requirements including customers and employees.

3. Conduct a comprehensive work process assessment that will assure identification of Competitive Advantage work, Strategic Support work, Business Essential/Foundation work, and elimination of non-value added work. Build focus and alignment with Core Business Processes. (Note: We understand that there may some ambiguity regarding what the “real” Core Processes are or should be. It is critical that these are clarified accurately and then the entire business capabilities and structure be aligned to optimize these processes.

4. Deep expertise in Strategic Organization Design will be required along with facilitation of Design Team(s) to ensure consistency of operations and the highest customer service.

5. Build the foundation to design a Talent Management process that will attract the finest talent and ensure retention of critical knowledge assets for the future.

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OSD Foundational Concepts

1. Competitive Advantage – Only comes by doing similar activities differently, or different activities.

2. Organizations are perfectly designed to get the results they get. We help organizations make the design choices that will get required results.

3. Organizations are made up of Processes; (e.g. demand creation, supply chain, strategic planning, etc.). But, not all work is created equal. We differentiate between competitive advantage work, strategic support, and business essential work to leverage resources where needed.

4. Knowledge is the purest source of competitive advantage. We help you understand how to compete with the knowledge base you have and to leverage that across organizational boundaries.

5. Strategy and organization design are not enough – unless Hearts and Minds are engaged, nothing gets done right. We make this happen.

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The Organizational Systems Design Model

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Incentives

Renewal

Organizational Systems

Work

Structure

People

Alignment

Information

Ext

ern

al E

nvi

ron

men

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Cu

ltu

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LEADERS AND LEADERSHIP

Res

ult

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StrategicDesign

Purpose, Vision, Mission

Guiding Principles

Goals

Capabilities

Design Choices

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Methodology and Approach

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Focus Align Implement

• Launch project to identify clear deliverables, time table, and overall desired results

• Conduct Snapshot Assessment

• Identify the Design Infrastructure (Steering group, Design Team(s), SME’s, technical resources, etc.)

• Create Master Design and Integration Plan

• Benchmarking activities and best practices

• Mobilize the Leadership

• Envision the Future State

• Create the Strategic Architecture and integration strategy

• Communication Plan

• In depth assessment of the current state: Work system, Structure; information system; People systems; Reward and renewal systems

• Establish performance targets

• Create design principles

• Identify breakthrough design concepts

• Design the future state organization

• Design the transition organization

• Develop resource utilization and selection process

• Leadership development strategy and education

• Financial impact analysis and options

• Create implementation strategy and detailed plans

• Develop organizational systems: new work processes equipment and facility requirements; role and responsibilities; information system; people system design recommendations; reward system to align with company

• Identify the implementation team and conduct and facilitate implementation of new design

• Charter new team(s); trial and modify design as needed

• Full implementation roll-out

• Implement evaluation plan

• Charter renewal team

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Critical Success Factors for a Successful Redesign Effort

• Significant commitment and involvement of senior leadership.

• A clear picture of the future state organization that is shared by leadership team members… “Unity of Identity.”

• Significant investment of resources in Assessment, Design and Implementation activities… Speed is contingent upon available resources.

• Business Strategy is aligned with essential capabilities.

• Identification, engagement, and involvement of key stakeholders.

• Availability of the best talent in the organization as members of the Steering Committee, Design Team, and appropriate sub-teams.

• Willingness to change previous assumptions about “how we have done things in the past.”

• Focus on the “critical few” measures that drive design results.

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Critical Success Factors, continued

• There is a sufficient case for change.

• It is always an advantage for the organization to acquire the internal capability to become “self-designing”. Tools, education, and hands-on experience by members of the organization during the design process reduces the dependence on external consulting resources.

• Know when to go fast, but more important when to go slow to go fast.

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Resources

• OSD consultants are experienced practitioners who have many years of experience consulting in a broad range of industries and have also served as leaders inside organizations

• Following are the bios of likely consultants who could be selected to work on this project

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Starr Eckholdt

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Service

Delivery

Areas of ExpertiseStarr is Founding Partner of The Organizational Systems Design (OSD) Consulting Group. As a pioneer in the field of Organizational Systems Design he co-created the original OSD Model and Methodology in 1984. He has been an architect in the design of High-Performance Work Systems Design for over 25 years. His work in aligning Business Strategy, Strategic Human Resources, Leadership Brand and Change Management has enabled a practical approach for comprehensive large-scale design, redesign and change in an upside down world of business change. Recent client work has included: Leading the start-up of an innovative team-based design for a new $1B metals production facility in Iceland; Leading the re-design and implementation of a top US Defense contractor; Leading a team-based organization re-design for a top Financial services company; Leader of a newly designed global Human Resources Education program for 300 members of a top European pharmaceutical company. Other consulting clients have included Alcoa, American Express Financial Services, AT&T, Corning, Bell Helicopter Textron, Citi-Group, EDS, Ely Lilly, Exxon, IBM, Lucent, Kellogg’s, Merck, Nationwide, Novartis, PacifiCare Health Systems, Tennessee Eastman, UNUM Insurance Co., U.S. Air Force, and others. Starr conducts education events and is a speaker at national and international conferences. His engaging style in working with executives, management teams, operational business units, and design teams stimulates collaboration and excellence.His current work includes Strategic Organization Design, Designing Organizations for High Performance, Large-scale change through fast cycle implementation; Strategic Human Resources Implementation; Executive team leadership and executive coaching,

BackgroundPrior to forming The OSD Consulting Group, Starr was a Partner at The RBL Group; President of Corporate Systems Design; VP of The OSD Division of Franklin Quest; Founding Partner of The original OSD Alliance; and an Internal OD Manager at Exxon Enterprises. He holds a Master of Organizational Behavior (MOB) from Brigham Young University, a faculty member with Duke Corporate Education and continues as a Consulting Partner with The RBL Group.

Publications “Intangibles by Design” Leadership Excellence, March 2005, with Norm SmallwoodThe Corporate Systems Design Handbook: Creating High-Performance, Self Designing Organizations, with Ron Axtell “Transform or Die: The Core Competence of Corporate Reinvention and Redesign” 1998 with Ron Axtell“Redesigning HR Organizations for High Performance”, May 1996, with Steve JacobsThe OSD Introductory Workbook and The OSD Advanced Course Handbook, 1993, with Ron Axtell. “Re-engineering HR” with Steve Jacobs; unpublished manuscript, 1992.

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Mark Rhodes

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Background

Mark is an OSD Principal and Consulting Partner. Mark has consulted with a variety of organizations over the past 20 years, participating in numerous organizational start-ups and organizational redesign efforts. His experience spans service, manufacturing, government, and tribal sectors. Working with colleagues who have pioneered and refined the art and science of organizational design, Mark uses a proven model and methodology for the design and development of organizational systems.

Mark received a Ph.D. in Social Psychology & Organizational Behavior from Harvard University in 1986. He also holds Psychology degrees from Furman University and Wake Forest University. At Harvard, Mark studied with Robert Bales, one of the forefathers of the study of work teams and group facilitation.

Areas of Expertise

Mark is a Consulting Partner with The RBL Group. His area of expertise spans business strategy, strategic decision making, and organizational design. His consulting work includes advising leaders and teams on the design of innovative work systems, as well as the development and implementation of organizational measurement systems.

Mark’s distinctive approach includes using a set of strategic thinking tools and templates useful in determining strategic direction and aligning organizational capabilities with mission, principles and strategy. His “Strategic Thinking” workshop draws from the realms of social psychology, organizational theory and world history to create a unique and inspiring experience for corporate and institutional leaders. In recent years, Mark has developed web-based training and coaching in the art and practice of strategic decision making.

Mark’s experience includes work with AT&T, Amerada Hess, American Express, Bank of America, BHP Steel of Australia, Blue Cross & Blue Shield of SC, Bristol Myers, British Petroleum, Charter Financial, The Cherokee Nation, Colgate-Palmolive, The Department of Education, FMC, Fres-co Systems USA, General Electric, Hallmark, Lucent Technologies, Merck, National Semiconductor UK, Nationwide, Pennzoil, Raytheon, TRW, and the Veterans Administration.

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Paul Gustavson

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Paul is an OSD Principal and Consulting Partner. He specializes in leading organizational design architect strategy making, the design of high performance work systems, change management and knowledge management. In the early 70's, he began an in-depth study of high performance teams and the systemic design of high commitment work systems.

Since 1992, Paul has served as a Marriott School of Management's MOB Advisory Board member and as its Chair for 8 years. In April, 1999, he received the Marriott School of Management's William G. Dyer Distinguished Alumni Award for his contribution in the field of change management, strategy, organization design, and knowledge management. In 1999, he was selected as a member of Work in America's National Advisory Council focusing on identifying best practices in creating and sustaining high-performance teams and work cultures.

Paul's consulting experience has included work in the area of strategy, organization design, knowledge management, team development and change management at a number of companies, including American Express, Advanta, American Transtech, Amoco, AT&T Capital Corp., Amerada Hess, BP, BHP of Australia, Bristol Myers Squibb, Cherokee Nation, Colgate Palmolive, Deere Financial Services, Exxon, GE. InTek, Pennzoil, Pitney Bowes, National Semiconductor, Veterans Administration and Zilog. Paul has worked nationally and internationally in a number of industries, including automotive, steel, oil, chemicals, electronics, financial services, leasing, aerospace, transportation and government. Paul specializes in helping clients to align strategically with key factors in their environment and aligning the design choices an organization makes with culture necessary to achieve the desired outcomes of that organization.

Over the years, Paul has been privileged to work with clients who have been recognized nationally for innovative organizational design. The Veteran's Administration, for example, was the first winner of the Al Gore Hammer Award for reinventing government and a recent recipient of the prestigious PILLAR award. Colgate's Hill's Pet Nutrition facility in Richmond, Indiana has won many national awards as a start-up plant for innovative work design. Several of Paul's clients, including I/N Tek, American Transtech, the Geon Company, AT&T Credit Corp., and Veterans Administration have been featured on Work in America's national tour of outstanding organizations. The work at Amerada Hess received the 2000 Computerworld Smithsonian Award "A Search for New Heroes".

Paul holds a Master of Organizational Behavior from Brigham Young University Marriott School of Management.

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Barbara McCaffrey

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Background

Barbara has over 20 years of experience consulting in Fortune 500 companies focused on achieving targeted, sustainable performance improvement through the alignment of strategy and organizational capabilities. She has led large system redesign and change efforts both internally and externally.

Prior to launching a consulting career, she managed the Training and Organizational Effectiveness function for Fortune 500 companies. As an internal Organization Development professional, Barbara supported key executives and their teams to achieve targeted business results through organization assessment, leadership development, executive coaching, team development, and ongoing organizational consulting.

Barbara holds an M.A. in psychology from Pepperdine University.

Areas of Expertise

Barbara is a Consulting Partner with The OSD Group, helping clients achieve targeted, sustainable performance improvement through the alignment of strategy and organizational capability. She has specialties in strategy development, organization design, and leadership development. She also has significant experience in corporate training, organization assessment, team development, executive coaching, succession planning, and performance management.

Barbara has over 20 years of experience in internal and external consulting with Fortune 500 companies in industries such as health care, aerospace, high tech, communication, manufacturing, and distribution, including companies such as TRW, Bell Helicopter, Bergen Brunswig, PacifiCare Health Systems, Harte-Hanks Communications, and Western Digital. She has also consulted to various Boards such as American Cancer Society, Orange County Bar Association, ASTD, and California Medical Association.

She is a well-known speaker and has spoken at regional and national professional conferences such as ODN, ASTD, and SHRM on topics such as architecting and managing large scale change, organization design, performance management, and accelerating change.

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Jon Tveten

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Background

Jon has over 12 years experience in creating high performance organizations and in organizational design. Prior to his current work in organizational design, Jon earned an M.D. at the Medical College of Wisconsin and began practicing medicine. After 12 years in Internal Medicine practice, he transitioned to medical management where he was involved in aligning a health plan and its health care providers. This led to his final transition, into organizational design.

He is accredited by Organizational Systems Design for organizational systems design and by Implementation Management Associates for accelerating change.

Areas of Expertise

Jon is a Consulting Partner with The OSD Group, working with clients to produce high performance by engaging the workforce in change by design.

Jon specializes in helping organizations understand their systemic nature in order to address performance as a whole, understand line-of-sight relationships between individual efforts and organizational performance, define work processes in terms of optimal value creation, with measurable interim outputs representing a value progression, relate roles and responsibilities to process performance, and understand the interdependencies of organizational results for employees, customers, and owners.

He has led organizational design projects with Engineering, Supply Chain, Human Resources, Medical Group Practices, Claims Payment, Sales, Customer Support, Training, IT, and Continuing Medical Education organizations.

His clients include PacifiCare Health Systems, Bell Helicopter Textron, Raytheon, Root Learning Inc., Glaxo Smith Kline, BP, California Medical Association, Sharp HealthCare, and others.

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Mike Panowyk

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Background

Mike has 20 years of experience in consulting and business leadership. His consulting roles span that of consultant, engagement manager and contributing to intellectual property development. Mike has also enjoyed multi-functional, North American management experience in product development, process engineering, sales and marketing, quality management, and general management across a variety of markets.

Mike has had profit and loss accountability in the chemical, specialty chemicals and plastics industries with Eastman Chemical and Hoechst Celanese Corp. As Business Director at Hoechst Celanese he successfully launched a new business unit within the specialty chemicals area that included a start up facility in the United States and the negotiation and integration of an acquired entity in Canada. He thrives in any situation that requires a radical break from the status quo and believes that high performing organizations develop the capability to repeatedly innovate in the face of change.

He holds a B.A.Sc. in Chemical Engineering majoring in Petroleum and Polymers from the University of Toronto, an MBA majoring in Operations Management from the Schulich School of Business, York University, Toronto.

Areas of Expertise

Mike Panowyk is a Consulting Partner with The OSD Group with a proven track record as business leader, strategic architect, and change agent behind initiatives that transform organizational performance. He brings a strategic perspective to all organization effectiveness initiatives by ensuring that the scope, approach and expected outcomes are clearly aligned to the business goals and strategic requirements of the client organization.

Mike’s primary focus is strategy development and organizational design and development. Representative clients include BP, Kellogg, Dofasco, IBM, Merck and Texas Health Resources.

Publications & Honors

Building Capabilities, Executive Excellence Magazine Association of Professional Engineers of Ontario

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Edana Desatnick

Edana is a Consulting Partner with The OSD Group. She has broad experience in the professional services, consumer, healthcare and industrial products industries. Prior to beginning her own HR strategy, talent and leadership consulting practice, she had worldwide responsibility for corporate Organization Development at Merck. In that capacity, she had responsibility for global leadership/talent planning, performance management and development, and led consulting/coaching to the senior management team on issues of change leadership and organizational effectiveness. Edana’s career includes senior OD/HR leadership roles in a number of leading organizations. Prior to joining Merck, she was Vice President of Organization Development at Honeywell, providing OD leadership in the merger integration of the AlliedSignal and Honeywell organizations. She has also served as Senior Director of Organization Development at Nabisco Brands and at Pepsi prior to that. She began her career in OD/strategy as a member of Coopers & Lybrand’s global strategy consulting practice. Edana now spends her time providing strategic HR, talent planning, organization development, strategy, executive coaching, change management and leadership consulting to major corporations and partnerships. In the area of non-profit, Edana provides her Leadership/OD experience and plays leadership roles on a number of non-profit boards including Matheny Medical and Educational Center and the Arc (the largest non profit serving persons with developmental disabilities) in their Government Legislative and Policy setting work. Edana holds a M.B.A. from The Wharton School, University of Pennsylvania and a B.A. in economics from Tulane University. She and her family live in Basking

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Additional slides

Building Organizational Capability

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Attributes of High-Performance Organizations

1. Strategy addresses the major stakeholders’ most important needs.

2. Clearly-defined values and guiding principles drive organizational choices and behaviors.

3. All organizational systems are aligned to deliver high quality results.

4. Individuals make daily decisions and solve problems at their source.

5. Skills and knowledge expand in alignment with strategic capabilities.

6. Relationships with key stakeholders are true partnerships that deliver competitive advantage.

7. The organization renews itself and redeploys its resources as the environment requires.

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Case for Intangibles

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• Financial results account for a shrinking proportion of a company’s market value

• “Intangibles” now account for about half of market value

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1

2000 2006

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1976 1982 1987 1992

Regression of earnings and stock price

Confidence in track record

Confidence in the future

Who is managing the intangibles?

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Keep Promises

CompellingStrategy

AlignTechnical

Core Comp

BuildOrganizational

Capabilities

Talent

Leadership

Speed of Change

Strategic Unity

Customer Focus

Accountability

Unity of Identity

Innovation

Collaboration

Learning

Technology / Product devmt

Customer acquisition

Operational excellence

Investors CustomersEmployeesRegulatorsCommunity

Corporate & Business Strategy for Growth

How Leaders Build Value: Architecture for Intangibles

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Organizational Capability Issues ORGANIZATIONAL

CAPABILITIES ISSUE

Talent Do our employees have the competencies and the commitment required to deliver the business strategy?

Customer Focus Do we form enduring relationships of trust with target customers?

Accountability Does high-performance matter to the extent that we can ensure execution of strategy?

Leadership Do we have leadership that directs managers on which results to deliver and how to deliver them?

Efficiency/Cost Do we reduce costs by closely managing processes, people, and projects?

Collaboration How well do we collaborate to gain both efficiency and leverage?

Strategic unity Do our employees understand how they can align work objectives, actions and behaviors to achieve the business strategy

Speed Can we move quickly to make important things happen fast?

Shared Identity/Culture

Do we have a culture of identity that reflects what we stand for and how we work? Is it shared by both customers & employees

Learning Are we good at generating new ideas with impact and generalizing those ideas across boundaries?

Innovation How well do we innovate in product, strategy, channel, service, and administration?

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Change Continuum – Simply the Best

Rationalization

Improvement

Redesign

Restructuring

Reinvention(“Game-Changers”)

Degree of Transformation

Challenge Change Dimensions

“Don’t do things”

“Do things better”

“Change how we do things”

“Change who does things and where they get done”

“Redefine what things we do, why we do them and how they will get done”

Focus

Eliminating non-value-added activities

Simplifying and streamlining activities

Standardizing activities and reengineering processes

Consolidating and realigning business unit process and activity responsibilities

Reconstructing the business model and the parameters of operating performance

Low High

Continuous Improvement

Financial Re-engineering (FRE)Enterprise Asset Management (EAM)Sarbanes-Oxley (SOX) Redesign

HR “Deep Dive”Supply Chain “Deep Dive”Utility of the Future

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