Andrew Toma
Senior Partner & Managing Director
London
Organization Design
Many leaders are rethinking the design of their organizations. They recognize that organization design can be a powerful way to boost performance and keep up with ever-changing markets. Yet many reorganization efforts fail.
More than half of companies in fact rate their reorganization initiatives as “mostly” or “very” unsuccessful. BCG has identified six key factors that distinguished the successes from the failures. Companies that employed these factors have a significantly higher chance of experiencing faster growth and higher profits than their peers:
- Agile ways of working
- A value-adding corporate center
- Clearly delineated profit and loss (P&L) responsibilities
- A flat management structure with a strong frontline focus
- Effective use of shared services
- Strong support for people and collaboration
BCG incorporated these success factors into our award-winning approach to organization design.
BCG’s Approach to Organization Design: Smart Design for Performance
We focus on shaping employee behavior: the underlying driver of a company’s performance. The Smart Design for Performance approach uses a wide variety of organizational levers (see graphics below) in combination and creates a conducive and engaging context for employees so that it is in their own individual interests to adopt and develop the desired behaviors. The context changes the way that people act, interact, and make decisions, resulting in higher organizational performance.
Implementing Organization Design
When it comes to reorganizing, companies have little room for error. The following six factors are critical to flipping the odds of success in a reorganization:
- Synchronize design with strategy. Regardless of the precipitating factor, the reorganization must align with the organization’s strategy and business priorities in the simplest way possible.
- Clarify roles and responsibilities. Of all the organizational capabilities most required for a successful reorganization, this set—clarifying roles and responsibilities, assigning accountabilities, and determining decision rights—is one of the most difficult to get right.
- Deploy the right leaders and the right capabilities. In reorganizations, a common pitfall is tailoring the redesign around the individual capabilities of a few important executives. Another pitfall is overlooking the capabilities required for the new design to succeed.
- Design layer-by-layer, not just top-down. A cascading approach to design puts companies in a better position for success. Address the needs of each layer, according to consistent design principles, rather than using a top down-only design approach.
- Lower execution risk. Execution is by far the most important capability for achieving a successful reorganization—applying a step-by-step, disciplined approach to implementation is crucial to avoid missteps.
- Don’t wait for a crisis to reorganize. Reorganizations that take place prior to a crisis have a much better chance of success. During a crisis, the odds of a successful reorganization are only 50/50.
Learn More about Organization Design
- Smart Design for Performance
- Boosting Performance Through Organization Design
- Flipping the Odds for Successful Reorganization
- Designing the Corporate Center: How to Turn Strategy into Structure
- How Digital Can Turbocharge Shared Services
- Breaking Free of the Silo: Creating Lasting Competitive Advantage Through Shared Services
Experts in Organization Design
Fabrice Roghé
Senior Partner & Managing Director
Düsseldorf
- Organization design
- Digital shared services
- Digital organization set up
- Agile transformation
Steve Maaseide
Senior Partner & Managing Director
Washington, DC
- Organizational transformation
- Operating-model redesign
- Merger integration
- Organization and governance for digital
