Organizing To Leverage InformationTechnology

Speaker A Hi, I'm Forrest Christian, a member of the Global Organization Design Society. In this short talk for experienced It executives or senior technical staff originally created by Gosociety fellow Dan Smith, you'll see how you can organize to leverage information technology for strategic competitive advantage using a research based methodology built on the levels of work complexity. You'll hear how these powerful tool tools can translate your enterprise's strategic vision into managerial accountability structures that have work and roles positioned right, enabling effective and high performing lateral working relationships. If you're an experienced It leader, you know that all too often it makes the very high level organizational design decisions. And it's not just the usual ones of centralized or decentralized or even insource versus outsource. It's also areas like where are just in time operations needed? Where can we leverage technology for competitive advantage? Our challenge is in operationalizing these strategic decisions. As you'll see, the levels of work based methods of organizational analysis and organization design offer practical tools to translate enterprise strategies into operational realities. To see this at work, we're going to look in an example company, a personal and commercial banking P L unit of an international bank. Although it's fictional, this is a composite of problems that we've actually seen in project experience at our fictional bank. They know they must improve their It, their data management and their analytic functions to realize their business strategy. The question, of course, is where are they going to start? Well, it turns out that one of the first places is with the tried and true the organization chart. For all the normal complaints about It, charts can be powerful tools to model and understand an organization. Let's take a look at a traditional chart for a bank. Here you can see the usual job titles and little boxes that are connected with reporting lines. The job titles and reporting chains look a lot like those you've seen. Programmers, analysts and technicians are grouped together under a lead. At the bottom, the lead reports to a manager, who reports to a director, who reports to an associate VP, who reports to a VP, who in turn reports to the president. You'll notice the It organization does not develop or support the business systems. Instead, end user technology teams do this for their own business function. Here you can see them in manufacturing, customer support, finance and HR. From the chart, we can see that It delivers operational services, administrative and hardware support, and the help desk. It's just one of several groups that's under the VP administration. Such a fragmented and administrative oriented It can actually happen pretty easily. Sometimes it starts when the systems project is outsourced to a consulting firm. Sometimes it's just that computing is seen as a way to automate work processes, provide a network, and warehouse the data. And that's just about it. Any It organization in these environments can easily devolve into background administrative support. Relatively low in the reporting structure. This happens way too often, and it has real consequences for delivering on the strategy for the enterprise. Executives who want to know how they can use this to get better performance gains in their commands should start with the three core concepts of levels of work approach to organizational analysis and design the level of complexity of the work the work relationship between a manager and a direct report and in an independent P L business or corporate subsidiary business. A systems approach based on research identifying five distinct levels of work that cross the business functions. We're also going to be talking about essential business functions and about how to do full time improvement work. This traditional chart for our bank doesn't give us too much knowledge, though, about what's hampering the performance. But we'll see that using the Levels of work approach delivers real insight into particular problem areas or performance improvement opportunities. Look at what happens when we analyze it using the Levels of Work approach. We start off with a job analysis, mapping the different roles into levels of work complexity required in each of them. Then we overlay the chart onto a template of five levels of work. For this type of organization, you can see how the chart is stretched up and down depending on the various roles to get into the real level of work being done in them. When you do this, you can really see where the big problems areas are, like places where you have too many layers of management. In our bank, there are eight layers of management doing five levels of work. These jam ups mean that we're paying people who aren't adding value to the work being done beneath them. It's not just organizational fat. You can also see where you're too lean, where functions have missing layers, or report too far down to gain and keep competitive advantage. The president of our bank needs the right essential business functions reporting directly, and those functions that are necessary for the business to operate effectively in the near term and at the same time adapt and innovate over time. Or you may see that the existing business functions are just unclearly, structured, or even that some essential functions aren't there at all. They're just completely missing. Let's take a look at the example of It. It is an essential function in business today, especially for innovation. So where should information technology be positioned? In our example, the It function reports to the VP of Administration. Can the bank achieve its strategic goals with It positioned this way? Well, now take a look at data analytics. It's managed at a work level. Three analytics services and data analysis are actually positioned a level lower than that. This structure might work for a data mart, but it really lacks the roles with high level skill sets needed to drive the effective deployment of big data tools. If our bank wants to compete in today's data dominated and driven marketplace, this just won't do it. An effective organization design can't guarantee business success, but it can find and fix problems that will guarantee long term failure. So let's see what an effective organizational design would look like for a bank. This design positions them to achieve their strategic goals long term and respond more effectively to the normal short term reporting cycles. It satisfies all of the levels of work criteria and positions the bank to meet their goals for innovation and more effective It data and analytics management. As you can see, this new design has all essential business functions reporting directly to the president, positioning them to operate as interdependent peers doing the work at the same level. The operation spine functions are clearly differentiated, with sustaining functions separated from improvement functions. It service is now an essential peer to the other sustaining functions. Certain nonmanagerial specialist roles have also been elevated to the executive team working as a peer with the It operations and Services executives, but with separate complementary accountabilities. For example, the technology improvement role, here called Chief Analytics Officer, is positioned for maximum impact as an advocate and facilitator of big data technology and applications throughout the business. Of course, developing your technology capabilities can be severely impaired if other business areas aren't improved at the same time, these two are elevated in the new organization design. We also created nonmanagerial specialist roles for individual contributors at levels three and four. Application development and support is now integrated into the higher level It services function. You can see how in this Federated model, it is positioned so that they can't easily be left out of critical decisions. It's not the only possible It structure, but you can see how this could be implemented for the best chance of success. This reorganization also removed those extra management layers. In any reporting chain, we now only have five roles that's going from the president all the way down to the operational roles at level one, and that's down from the original eight roles. So this is a leaner, more efficient organization. You see poor organization design, with its unnatural extra layers of management, which at best are just wasting money and often actually crushing innovation, can create barriers to recognizing innovation that's already occurring. Or It can leave out essential It roles. It can position It with no input into key decision making about technology strategy. Poor organization design slows decision making by leaving too many or too few management layers for important strategic information to go from the bottom to the top, or the top to the bottom. But good organization design enables innovation. We've needed a method to operationalize our broad It strategies. Systematic, comprehensive methods to organization design built on the levels of work based approach provide the practical and flexible way forward. For more information about the work levels of work based approach, please contact thego [email protected].