1. A core team was assembled, made up of those in the management layer reporting directly to the executive team. Given the impetus to design the first three layers prior to the summer break this team was trained as they carried out the design work. This meant they were provided with an understanding of the organization design tools and methodology as they were about to use it.
    
2. As the design progressed, micro design teams were assembled from employees within each of the functional areas. These teams were led by a member of the core design team. Each team went through three days of detailed micro design training so that they possessed the required understanding prior to the work beginning.
    
3. The HR team also formed a change management team and AlignOrg Solutions worked with them to provide insight around our model and tools for both Organizational Change and Individual Transition. We also helped facilitate sessions to ensure clarity of the key HR processes that would support the change. This in turn allowed the HR team to assign all of the required actions as well as make resource tradeoffs to meet the demands they were going to face.

1. Stakeholders – TVNZ faces pressures from a number of different angles, whether it is the advertisers, viewers, government or the local production community. The requirements for all of the key stakeholders were first assessed and then prioritized. This allowed the design team to identify, early on, where there may be significant trade offs requiring mitigation later in the design.
    
2. Value Offering and Differentiation – the team drove for a greater understanding around who their key customer was and what value should they receive in the future world. Again, tradeoffs were discussed and decisions were made about what value would not be offered going forward. Once the team understood the key value ‘points’ they then worked to understand what activities were required to enable TVNZ to sustain differentiation in such an aggressive market, i.e. right content, in the right place, at the right time.
    
3. Categorization – the organization was then broken down to the activity level and each activity was assessed in relation to how closely it aligned to the strategy and differentiating activities from the perspective of the key customers. In TVNZ’s case, this was from three angles – viewer, advertiser and the shareholder. The outputs confirmed that for these customers the majority of activities were closely aligned and where there wasn’t alignment, it provided insights used later in the design process.
   
   At this point in the process, the executive team left the room so that the design team could take these insights and turn them into a design.
    
4. Organizing Rationale – the team spent a number of weeks grouping activities and weighing the pros and cons of each rationale for each high-level area of the business to find the most optimal structure. This structure had to satisfy the following needs:
   
   a. Align operational costs to fiscal reality
   b. Provide organization wide customer ownership and awareness
   c. Enable robust industry interface and fast decision processes
   d. Provide for a simpler commissioning and contracting process
   e. Eliminate repetition and provide the platform for 360° commissioning and centralized rights management process
   f. Ensure that any approach taken was fit for purpose – i.e. how best to deliver the differentiator of ‘right content, in the right place, at the right time’
    
5. Presentation of Recommendations - Following the design work, the group presented back to the executive team who pushed back on some areas (e.g. a stand-alone strategy team) but on the whole directionally liked/approved the design.

Once this approval was obtained, separate micro design teams were established to drive the functional design across the business. Each team had a design window of four weeks in which the following work was completed:

• Week 1 – the design team worked to develop a clear understanding of stakeholder requirements, gain clarity around the value offering and design principles. All activities within the functional area under design were categorized and then different organizing rationale was discussed and agreed.
   
• Week 2 – Any outstanding organizing rationale work was completed. A detailed analysis was then begun around the volume of work that would be placed upon the business unit and where, through either output or activity reconfiguration, we could reduce the current numbers of staff required to complete this work. Process redesign was also initiated, as was driving for clarity around decision rights.
   
• Week 3 – Continued the week two activities.
   
• Week 4 – Any outstanding micro design work was completed. The design team then presented their model to the appropriate stakeholders in order to achieve sign off. Revisions were made and then the micro design team worked with the change management team to start the process of turning their design into something that could be communicated to the business.

Project Outcomes: As a result of this design work the following benefits have or are already being realized:

• Clarity around the critical areas of the business and the activities they need to complete to enable the strategy
• Single heads appointed with clear responsibilities and accountabilities
• Decisions made for the good of the company, at the appropriate levels
• Growth strategy for sustainability in place
• Greater intimacy around viewer desires and how best to get that content to the viewer
• Producing best to multi-screen content
• Enhanced relationships with key stakeholders
• More efficiencies around production and programming – fit for purpose
• Significant cultural change underway – greater accountability now there is clearer direction, better business knowledge/savvy, increasing agility, enhanced collaboration and a more engaged workforce.

Next Steps: With the design now in place, the drive to continue the culture change is gaining pace. A 12-month leadership development program (in conjunction with one of New Zealand’s leading university business schools) for the 50 senior leaders in the business has been undertaken which is not only building greater capability around people leadership but also transformational business leadership. The HR team has also been working on a number of organizational development initiatives to build on the culture and employment brand, while the business has been focusing on further growth initiatives that reinforce greater innovation in the business. An early win in this area is the fact the digital infrastructure has taken a business process approach rather than a technology implementation approach.

Some outstanding design elements are now being undertaken as the steps that needed to occur before this work could begin have been completed. Lastly, the process and linkages team who worked alongside the design teams to identify and redesign some of the cross business processes has been brought back together to clarify the outputs of their work and ensure it is being implemented robustly.

1. Data Gathering—A comprehensive data gathering effort was initiated to learn about the characteristics of the current sales process. Data gathered included information about how customers buy and how they prefer to interact with GE sales people. Additionally, extensive information was gathered regarding key steps in the sales process (i.e., sales opportunity discovery, research, deal structuring, implementation, etc.). Finally, information regarding support needed from marketing, legal, and finance were identified.
    
2. Data Analysis—Data were analyzed in several ways—type of sell, customer touch point, and type of product. Additionally, each sales activity was analyzed according to the strategic relevance of the activity. For example, for highly specialized sales, the activities of discovery, initial evaluation, research, and concept were considered strategic in order to get the sale; whereas activities related to fulfillment were considered important but not strategic. The distinction between strategic work and necessary work helped the group as they began designing the new organization group work in new and different ways.
    
3. Design Session Preparation—Design is a highly visual, interactive, and iterative process. Therefore, time was taken to post much of the data gathered and analyzed on the walls so that participants could see and interact with the data. Additionally, the logistics of the design session were confirmed so that the 30 people participating would be engaged productivity in design process.

The design work-out session entailed the following:

1. Grouping—After data on each P&L and sales region were presented, the session participants worked in three small groups to group their product offerings according to customer type, the strategic relevance of each sales activities, and product type. The iterative grouping exercises led to not only consensus for the group but also logical groupings of products and services according to the customer’s perspective.
    
2. Organizing Rationale—Using the product groupings, the team continued to work in small groups to design each layer of the new organization. Again, consensus emerged as the groups weighed the risks and benefits of each layer of the new organization. With the new design agreed to, the group built a new high-level organization chart, which helped them see how the structure would enable increased sales through offering related product offerings to customers at the right time and place.
    
3. Role Definition—The organization utilized many of the same roles that exist in today’s design; however, several unique roles were identified and defined. The roles helped the group as they worked through options for reducing costs and rationalizing headcount.
    
4. Metrics—Finally, the metrics and accountabilities of the roles in the new design were laid out. Defining metrics ensured accountability was clearly and appropriately placed even though the mechanisms to measure do not exist today.
    
5. Presentation of Recommendations—Following the design work, the group presented to several key stakeholders. All of whom asked pointed questions; however, all supported the design and proposals of the sales design team.

Redesign Team Composition: The sales operations team based at corporate in Atlanta, GA led the sales study project. They project managed the effort; coordinated communications; gathered data needed for analysis; and supported the one-week design work-out session. In addition to the core project team, the regional and P&L sales executives participated in two key ways—one, they helped provide information regarding sales activities, customer perspectives, and support needs, and two, they participated in the four-day macro design work-out session.

Project Outcomes: Following the design work-out session, the team presented recommendations to the VP of Sales and to the P&L general managers. The design recommendations were approved and implementation and micro-design activities are currently being planned. The new design is scheduled to be implemented by January 1, 2005.

Next Steps: With the macro design completed and approved, the core project team and the sales leadership are now charged with creating an implementation plan and with fleshing out the details of the design (micro-design). Again, the macro design enables the organization it doesn’t create new capabilities that is why micro design is required. The micro design effort will explore in detail how resources will be realigned to support the new organization. It will also confirm how sales processes will change, how reward systems will change, how hiring/training will happen, etc.

Key Statistics: B&V Energy will be created from three smaller business divisions—Energy Engineering & Construction (EEC), Power Delivery (PD), and Gas, Oil & Chemical (GOC). The largest of these divisions is the EEC division, which will account for more than 75% of the total combined revenues of the new merged Energy business. The most profitable division is the Power Delivery, which delivers a margin two to three times higher than either of the other businesses. Sales revenue for Energy is expected to exceed $1.3 billion annually.

Approach Overview: Based on a corporate decision to merge three large business divisions into a combined Energy business, a design team was assembled. They were given three weeks to design the new organization. Each division prior to merger operated as a stand alone business unit with a president, CFO, and other corporate infrastructure (i.e., legal, HR, safety, etc.). While some savings could have been achieved through consolidation, the real objective was to implement the organizing concept of Capture/Production. Capture is generally all of the activities needed to find, prospect, sell, and project manage engineering, construction, and procurement work. Production is made up of the processes related to actually doing the work, detailed design, engineering, construction, procurement of materials, etc. With Capture/Production being a given, the design team set out to the do the following key aspects of organization design:

1. Strategy and Guidance—This involved analyzing competitive data and business plans to find the truly unique ways that Energy could be successful in the marketplace. Two key deliverables from this part of the work were the creation of a value offering and a strategy map. Both helped inform the group as they began to make choices about how to structure the new organization.
    
2. Strategic Grouping—During this part of design, the team worked in sub-teams to determine the appropriate layering of organizing rationale to deliver on the organization’s value proposition. Additionally, each activity performed by the organization were evaluated based on the strategic relevance of the work. From there, the work activities were grouped according to those that could be consolidated for efficiency and those that needed to be dedicated to a business line, a client, or a process. Ultimately, a slightly different organizing rationale was used for the Capture side of the organization that was used for the Production side.
    
3. Linkages & Detailed Design—Some of the initial linkages needed in the new organization were identified during the initial design session; however, these linkages were further defined during subsequent follow-up sessions. Additionally, a responsibility matrix was constructed to clarify ownership and involvement in key work activities, decisions, or linkages.

The main design session entailed the following:

1. Analysis—Using 2005 business plans and other competitive intelligence, the design team looked at trends, factors, and opportunities facing the Energy business. Desired business outcomes and stakeholder requirements were identified and prioritized. These requirements became the basis for making design decisions.
    
2. Value Offering—After data on each business division had been analyzed, the group worked to articulate the value offering for the new Energy business. The value offering is a statement using the words of customers on why they choose Black & Veatch. It provides insight into how Black & Veatch chooses to deliver value, how much they will charge, and why customers choose them. It also suggests why customers don’t buy from Black & Veatch. Once articulated, the value offering provided the spring board for the rest of the design decisions as a part of Strategic Grouping.
    
3. Organizing Rationale—Using the Production/Capture framework, the design team continued to work in small groups to design each layer of the new organization. Again, consensus emerged as the groups weighed the risks and benefits of each layer of the new organization. With the new design agreed to, the group built a new high-level organization chart, which helped them see how the new structure would operate across the three merging divisions.
    
4. Role Definition—The organization utilized many of the same roles that exist in today’s design; however, several unique roles were identified and defined. The roles helped the group as they worked through options to operationalize the design, control costs, and maintain sales momentum. Defining metrics ensured accountability was clearly and appropriately placed was critical to clarifying the work needing to done and managed in the new design—a matrix organization.
    
5. Presentation of Recommendations—Following the design work, the group presented to several key stakeholders. Several adjustments where requested and the final high-level design was approved and communicated.
    
6. Linkages—After the new organization was announced, work commenced on selecting the new leadership team. While the leadership team was being selected, an expanded design team began defining actually how the new organization would work—where would the resources report, how would key processes be managed, etc.

Redesign Team Composition: A small, hand-selected group of participants comprised the design team. The team was led by the new Chief Operating Officer (COO for the new division). The design team provided subject matter expertise as well as support in developing various project deliverables (i.e., organization charts, role profiles, linkages, etc.)

Project Outcomes: Following the Strategic Grouping design work and announcement of the proposed Energy business design, the design team began working on the actual implementation details of making the design come to life. Implementation is targeted for January 1, 2005.
 

Key Statistics: Recent industry changes have driven margins downward and threaten the long term viability of the division. Historically, marketing was decentralized, with each division conducting marketing initiatives separate from the other divisions. This approach to marketing resulted in higher costs, focus on marketing operations and not enough leverage across divisions.

Approach Overview: Representatives from marketing across all divisions met to conduct analysis and make decisions concerning the structure of marketing.

1. Strategy and Guidance—The strategy of the GE business was identified and directional changes where development, along with their implications.
    
2. Strategic Grouping—All the work of marketing was captured and categorized as either competitive, competitive enabling, necessary work or compliance. Organizing rationale were developed and vetted by the group. The competitive and competitive enabling work (for the most part) was left as unique to each division (decentralized). Certain high leverage analytical work was centralized. The necessary and compliance work was centralized.
    
3. Linkages & Detailed Design—The risks for the new organization were identified and linkages were created to ensure that the centralized work met the needs of each business unit and the decentralized work was linked to ensure synergy across the organization.
    
4. Role Definition—New marketing roles were created for corporate and for the business units. Each role was defined and deliverables for each role were developed.
    
5. Change Management—Change management issues were identified and action steps were developed for each issue. Leaders were assigned specific tasks in relation to each change management issues.

Project Outcomes: This GE division is currently reducing its costs and becoming more effective at the same time. There is resistance by many of the business unit heads in letting go of their marketing resources. However, change management practices and strategic initiatives are currently driving the new design. Current marketplace impacts as a result of the design are not yet known.
 

Approach Overview: Utilities, Ltd. followed AlignOrg Solution’s organization design process and undertook first a macro design (strategic design) effort to configure the executive levels of the organization and group work to best deliver strategy. The second part of the initiative involved assembling functional design teams to design the micro organisation (detailed, operations design).

At a high-level, here is how the initiative progressed:

1. As mentioned, the executive team met for two intense days to develop the most appropriate structure. The focus was to design the first three layers of the business. The most important element being layer two – to determine what a revised leadership team would look like – while directionally indicating what activities were contained within the individual areas of layer three.
   
   
2. Functional design teams were then assembled from employees from across the key product areas—Gas, Electricity, and Telecommunications. The first round of design these teams did was to design the “macro” design (strategic design) for their respective areas; this was usually a 3-5 day work commitment for each team. Once the strategic design had been approved by the executive team, the functional design teams reconvened to work on the “micro” design (detailed, operational design) for their functional areas. The detailed, operational design work involved defining structure, jobs, linkages, work processes, decision rights, and staffing down to the front-lines of the organization.
   
   AlignOrg Solutions’ directly facilitated the first round of design with the executive team and then the next round of design with the functional design team up to sign-off. Then the HR team working alongside the business facilitated the remaining micro design requirements. HR was in a position to do this because select HR team members had observed and participated in the initial design work with AlignOrg Solutions, attended AlignOrg Solution’s Differentiation by Design training, and co-facilitated at least one design session. This internal development of HR staff in organization design tools not increased the speed of Utilities, Ltd. organisational change, but also minimized dependence on external resources.
   
   
3. Utilities Ltd's Continuous Process Improvement team was also used during the micro design stage of the project to ensure that sufficient work was done to realign all key business processes to the new organisation design.

Approach Detail: Because time was short initially due to an upcoming Board of Directors meeting, a two-day design session with all senior executives was scheduled with the goal of determining the best organisational design to deliver strategy. After the initial session, more time was allotted to do functional redesign work at layers below the executives in the organisation.

1. Stakeholders – Utilities Ltd. was and still is facing pressure from a number of different angles, including customers, suppliers, financial markets, community, lenders and government. A detailed analysis of these stakeholders was completed so the requirements of each could be prioritised. The key requirements that informed the design work were:
   • Reliability/security of supply
   • Employee/community health and safety
   • Better asset utilisation to maximise benefits and access to high-quality solutions at fair prices
   • New solutions to better maintain/grow its reputation
   • Clarity of roles and responsibilities
   
   A number of these factors, if delivered to, would help maintain the financial viability of Utilities Ltd.
   
   
2. Value Offering – One of the biggest issues the team addressed was “who the key customer(s) of the business?” Possibilities included generators, resellers, end users and/or retailers. Tradeoffs were discussed and agreement was reached that to gain the ‘mind shift’ the organisation needed the targeted customers would be Retailers and End users. Considering these targeted customers, Utilities, Ltd. agreed the value that would be offered would be:
   • Provide the best customer experience
   • Be a multi-utility solution provider with the most cost-efficient services and products
   • Ensure consistent, safe, reliable, and environmentally-minded offerings
   
   To drive the required structure and culture changes the organization sought, the following ‘value’ would no longer be offered:
   • No longer ‘gold plate’ all products and services
   • Discontinue investment in unprofitable activities (i.e., pursuing growth at any cost)
   • No more customized solutions for the mass market
   • Stop activities or sell assets that are beyond the organisation’s strategic remit
   • Unquestioned acceptance of ‘good’ industry practice
   
   
3. Business model – The executive team was asked to describe the current business model – being product line focused – and debate the pros and cons of the current model. Pros included in-depth product and functional expertise, strong product ownership, and strong client relationships around specific products. Cons included no synergies across business lines, silo behaviour driving business cannibalisation and value erosion, negative stakeholder (including regulators) perceptions, and customer confusion due to numerous touch points. Culturally, there was little value placed on leveraging the wider product portfolio to deliver on customers’ needs and thus internal competition.
   
   The question ‘Can we improve what we currently have?’ aimed to turn around and mitigate some of the issues rather than redesign the entire organisation. The feeling in the room was that if these risks had been articulated and mitigated two years previously then the organisation would not be in the position it is today. Thus, a larger, more comprehensive change was required.
   
   
4. Categorisation – Work was categorised against the organisation’s new value offering. In so doing, the executive team was able to see what work/activities needed to be designed for effectiveness and what work/activities needed to be designed for efficiency. What became evident is that many of the issues the organisation faced were caused by non-strategic work activities receiving too much attention and resources while strategic, value-creating activities were consistently under-emphasized and under-resourced. Efforts to drive standardisation and efficiency were focused on non-strategic work activities.
   
   
5. Organising Rationale – With all of the work activities of the organization on the wall, the team was able to discuss various ways of reconfiguring the work that would best drive the value offerings. Options considered included customer segment-focused, geographic, and product groupings. Because each organising rationale has benefits and risks, the team had to weigh these options in light of their value offerings. In the end, they landed on a functional design that would allow them to scalable their operations and leverage their product capabilities across customer segments. For example, service operation activities, which was considered non-strategic work, was grouped together irrespective of product.
   
   The benefits of this design included the fact that we eliminated past silos, driving synergy gains and cost savings. There was now clear brand alignment and clarity of purpose making it easier to identify growth opportunities. We had elevated the customer focus, removing duplication while better enabling clarity around all things ‘Utilities Ltd’ that were presented to the market, customers and other external stakeholders. The business was also more focused on capital profitability, with greater sharing of ideas and innovation than in the past.
   
   The risks of the design revolved around the fact some specialist skills could dissolve to be more generalist, there could be hierarchical tension across functional units with some short-term costs to implement. There were also concerns around the ease of separating any part of the business if it were sold of divested and difficulty identifying profitability by product. Despite the risks, the team believed these issues could be suitably addressed.
   
   
6. Presentation of Recommendations - the outputs of this executive team design session were then collated, reviewed, presented to the board seven days later and approved (with only some minor changes debated and agreed).
   
   
7. Once Board of Director approval was obtained, separate micro design teams were established to drive the functional area designs. Each of these teams followed a similar design process as the one the executive team used. One important aspect of the micro design effort was to define and clarify decision rights. Since the teams were working in their functional areas, efforts had to be made to connect the dots between design choices made in one functional area and another. A RACI (responsibility matrix) was used to clarify decision rights as the organization moved from a product line-focused organization to a functional design.
   
   
8. In order to effectively support the micro design efforts, Utilities ‘‘s Co Continuous/ Process Improvement team was tasked with identifying, assessing and redesigning the pertinent processes of the business. To define the priority of work, owners of key business processes participated in a process evaluation workshop. First, using the work categorisation, the strategic relevance of each work process was determined. Second, the level of performance of each process was assessed and agreement was reached about how significant the process gaps would be to the smooth running of the new organisation. The last step was for everyone in the room to agree the priority of redesign of these work processes given resource constraints. This workshop created the platform for the Continuous Process Improvement team to work with process owners and lead process design activities.

Project Outcomes: As a result of this design work the following benefits have or are already being realised:

• Continual review and consolidation of activities to drive greater efficiencies
• Outsourcing of necessary work to third parties to allow for greater focus within Utilities Ltd. on the activities where their own resources can truly add value
• Clarity around the critical areas of the business and the activities they need to complete to better enable the strategy
• Single heads appointed with clear responsibilities and accountabilities to drive business performance and the required synergies
• The right decisions made for the future benefit of Utilities Ltd. at the appropriate levels
• Enhanced relationships with key stakeholders

Next Steps: With all of the senior executives in place, the macro and micro design competed and the process reviews finished, Utilities Ltd.’s focus is to drive the continual business transformation, which has obvious cultural ramifications. Utilities Ltd. has invested in a robust development program for the senior leaders to build transformational business leadership skills. The HR team is also focused on building the culture and their employer brand. With the recession now in full swing the year ahead at Utilities Ltd. revolves around consolidating on what has occurred over the last year and then leveraging this to drive ongoing financial benefits.