MOST Analysis

Mission Statement

Organizations consist of people, processes, and tools. This program will focus on the “processes” of an organization, along with detailed examples and materials on how they can be optimized so that they can work better with the “people” and “tools” of the organization.

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Objectives

01. Introduction to Organizations: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
02. How Organizations Work: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
03. Importance of People: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
04. Function of People: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
05. Running an Efficient Organization: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
06. Importance of Processes: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
07. Function of Processes: departmental SWOT analysis; strategy research & development. 1 Month
08. Efficient Processes: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
09. Importance of Tools: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
10. Function of Tools: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month
11. Efficient Tools: departmental SWOT analysis; strategy research & development. Time Allocated: 1 Month

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Strategies

01. Introduction to Organizations: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
02. How Organizations Work: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
03. Importance of People: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
04. Function of People: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
05. Running an Efficient Organization: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
06. Importance of Processes: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
07. Function of Processes: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
08. Efficient Processes: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
09. Importance of Tools: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
10. Function of Tools: Each individual department head to undertake departmental SWOT analysis; strategy research & development.
11. Efficient Tools: Each individual department head to undertake departmental SWOT analysis; strategy research & development.

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Tasks

01. Create a task on your calendar, to be completed within the next month, to analyze Introduction to Organizations.
02. Create a task on your calendar, to be completed within the next month, to analyze How Organizations Work.
03. Create a task on your calendar, to be completed within the next month, to analyze Importance of People.
04. Create a task on your calendar, to be completed within the next month, to analyze Function of People.
05. Create a task on your calendar, to be completed within the next month, to analyze Running an Efficient Organization.
06. Create a task on your calendar, to be completed within the next month, to analyze Importance of Processes.
07. Create a task on your calendar, to be completed within the next month, to analyze Function of Processes.
08. Create a task on your calendar, to be completed within the next month, to analyze Efficient Processes.
09. Create a task on your calendar, to be completed within the next month, to analyze Importance of Tools.
10. Create a task on your calendar, to be completed within the next month, to analyze Function of Tools.
11. Create a task on your calendar, to be completed within the next month, to analyze Efficient Tools.
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Introduction

Organizational Design and Optimization Principles: The Great Recession’s Lessons

Ford Motor Company reported astonishing losses of $12.7 billion in 2006, but $6.6 billion in profits four years later. Around the same time, Carlos Brito’s “one firm, one culture” optimization strategy produced $2.3 billion in synergies, outperforming pre-merger expectations for the combination of Anheuser-Busch and InBev by 50%.

The CEOs of Ford and AB InBev both successfully applied the organizational optimization principles, which are ideas that Total Finance Restructuring Expert, Christopher Hearing, explores in this workshop.

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Case Study: Bringing Ford Motor Company Back to Life

Ford Motor Company was having trouble in late 2006. A startling $12.7 billion in losses were recorded for that year, a sharp decline from the $1.9 billion in profits made the year before. Profits had recovered to $6.6 billion four years later, and then increased to $10.8 billion in 2016. Amazingly, Ford’s turnaround occurred during the US’s Great Recession, which notably impacted the country’s auto industry. Most notably, Chrysler and General Motors were negotiating bailouts with the Troubled Asset Relief Program (TARP) of the US federal government while Ford was in the middle of organizing its significant reversal.

One of the finest examples of organizational design and optimization in action today is President and CEO Alan Mulally’s revitalization of Ford. Mulally reduced unnecessary and non-value-adding platforms, removed duplication and resource waste, and increased objective clarity throughout the company through a disciplined and well-ordered reorganization of Ford’s regional operations. Mulally named the outcome “One Ford”: a new, single, stronger, more efficient corporation and strategy.

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Organizational design and optimization are at the heart of this workshop. It starts with an introduction to the fundamental ideas of the field and then explores the various ideas and themes that Alan Mulally so deftly incorporated into his successful turnaround of Ford’s fortunes.

Organizational Optimization: What Is It?

The alignment and effective use of an organization’s resources to achieve its stated goals and objectives is known as organizational optimization. High efficiency, high effectiveness, and high use of all pertinent and then already available resources at a company’s disposal come together to form organizational optimization.

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What Justifies Organizational Optimization for Businesses?

Keeping Up in a World That Is Changing Quickly. First, the contexts in which organizations operate today are dynamic; these environments are characterized by times of great volatility, a changing technological landscape, and globalization. A discerning yet erratic global consumer class, whose tastes or preferences seem to alter by the minute, makes it much harder to control these issues. However, when properly tapped into, organizational optimization has proven to be a solid engine for both short- and long-term objectives, which businesses can use to stay ahead of their respective market forces.

The emergence of the workplace of the future. The second is the evolution of previous organizational frameworks. Managers now have to deal with, manage, and inspire globally dispersed workforces, which poses new issues for managers as the workplace continues to develop. The prevalence of remote work (individual and group), the usage of part-time labor by firms, and the reliance on temporary and contract employee models are a few examples of these new arrangements. It is and will continue to be difficult to manage such distributed groups efficiently and effectively, and this will necessitate a planned and purposeful rethinking of organizational architecture.

Getting a Competitive Advantage. By approaching the corporate challenge from a different angle, non-optimized businesses that compete in markets with competitors who are comparatively optimized run the danger of losing their competitive edge and being more exposed. One’s business will be better positioned to respond to unforeseen changes in the marketplace and will be better able to drive toward one’s corporate priorities faster and more effectively by optimizing one’s organization, hiring and deploying the right skill sets, and aligning goals across one’s company.

Acquisition-focused growth strategies are nothing new. At this moment, M&A is a pillar of the global corporate fabric as the counterpart to organic expansion. The key to realizing the anticipated synergies and value-potential of the business combination frequently lies in creating the ideal post-merger organizational structure, which aligns cultures, human resources, priorities, and workflows.

Only 16% of mergers meet their soft and hard goals on schedule, according to a Harvard Business Review article that heavily relies on McKinsey & Co. research. Additionally, 41% take longer than anticipated, and 10% of the time, the new organization actually decreases value rather than adding to it. Deliberate approaches to organizational optimization provide a tried-and-true road map for increased success in this area as well.

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Case Study: The Purchase of Anheuser-Busch by InBev

Anheuser-Busch was acquired for $52 billion by the Belgian company InBev in 2008. Anheuser-Busch had a 48% market share in the US at the time of the acquisition, whereas InBev, although being one of the biggest brewers in the world, had a small share and no domestic production capability.

Cost savings from the corporate merger were expected to total $1.5 billion over the first three years, but by 2011, Anheuser-Busch $2.3 billion in synergies were revealed by InBev, little under 50% more than anticipated. The margins increased by 600 basis points from 33% to 39% throughout the same time frame.

The control over Anheuser-Busch Three things contributed to InBev’s success:

• The first was an unwavering focus on efficiency gains through the elimination of all redundancy. The procurement, engineering, logistics, and R&D divisions of both companies were combined and made more efficient, but this was rapidly followed by deliberate information transfer about best practices and effective processes across the entire organization.

• The second was the implementation of CEO Carlos Brito’s “one firm, one culture” policy, which tolerated zero complacency, drove tight cost controls via its zero-based budgeting practice, enforced personal accountability, and instilled the highest levels of personal and corporate integrity. The result was $1 billion in cost savings within a year and an increase in throughput. The company was able to stay close to its regional and local clients even at scale and respond rapidly to their wants, requirements, and preferences thanks to this strategy. This culture also gave its globally dispersed leaders the capacity to make choices swiftly and independently at a local level.

• Implementation intensity came in third. Carlos Birto and InBev’s well-known integration strategy of “no compromise” led to the rapid deletion of underperforming brands, such as Peroni and Grolsch beer, as well as significant layoffs (6,000 in all). Integration wouldn’t be finished and couldn’t be until every last “i” and “t” that was scripted as part of the pre-merger integration strategy had been crossed.

Over the course of the process, AB InBev experienced significant cost reductions:

• Sales and marketing costs decreased from 15.9% to 13.2% as a percentage of revenues between 2008 (the acquisition year) and 2011;
• distribution costs decreased from 11.5% to 8.5% of sales as a percentage of revenues;
• and administrative costs decreased from 6.2% to 5.2% as a percentage of revenues.

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The Trap of Integration

The integration trap is a fallacy that falsely assumes that mergers and acquisitions are a sure strategy to develop with less risk or to create value quickly. Early, organized, and thorough work must be done to optimize the merged organization in order to avoid this pitfall. This is accomplished by first thoroughly mapping both businesses in order to find areas of overlap, waste, and capability gaps. Then, after identifying these areas, the overlap and waste are eliminated, and the capability gaps are designed with practical solutions.

The acquiring managers must then meticulously strive to standardize and integrate all of the crucial processes and workflows present in both firms. Finally, ex-post, the remaining staff must establish shared and unifying goals, win support at all levels, and work tirelessly to attain them.

The Optimised Business

Theorists and practitioners of restructuring claim that, in order to optimize organizations, attention must be paid to four key areas, which are: process redesign, structured workforce development, improved role clarity, and transparent goal setting. The four components work tenfold better together than they do individually, resulting in a system that is totally congruent and capable of driving peak performance. Each component can and frequently does operate independently. The following provides a more thorough understanding of each:

Process Redesign. Redefining and streamlining current workflows in order to create a more effective and efficient organization is the first step in organizational optimization. The best way to do this is to ask, “How does this given or redesigned process benefit our customer?” for every fundamental activity and process that the firm uses. One very quickly removes non-mission-critical tasks that waste time and resources by continuously asking and answering the question and working unceasingly to eliminate tasks when the answer is either unclear or negative.

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More specifically, the following critical operational areas of a business should be subjected to this procedure: (1) prices; (2) product/service quality; (3) process efficiency; and (4) speed of delivery or execution.

Workforce Development. The workforce development component is the hardest to optimize of the four main areas, but it is also the most crucial. The goal of workforce development is to efficiently match the appropriate talents to the appropriate strategic priority. Employees who don’t have the necessary abilities or whose skills don’t correspond with the company’s aims will either need to undergo new training or personally develop into value-adding members of the reorganized organization… or risk being let go.

The following are effective strategies to take while addressing workforce development: Start by conducting a competency assessment, which is a strategy for finding the distinctive and/or appropriate abilities and behaviors needed to lead a team, unit, or organization toward its objectives. Then, these abilities and conduct should be evaluated in light of the needs of the employer as well as the existence of complementary and substitutable capabilities throughout the organization.

A strategy for enhancing staff capacities can then be created and put into action for best-in-class outcomes, enhanced retention, and maximum cost-effectiveness. The competency assessment process should become a regular tool used frequently to build and drive success behaviors and desired results throughout the business once it has been designed and widely implemented.

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Role Clarity: As its name implies, role clarity is optimized when each employee is aware of the company’s priorities, his or her unit’s role in accomplishing those priorities, and their own tasks and execution responsibilities. Expectations, outputs, deadlines, success measurements, and behaviors should all be understood clearly. Organizations often see significant increases in both individual and group effectiveness as a result of position clarity, and as a side benefit, are better equipped to gauge and reward success.

The following actions can be taken to achieve role clarity:
1. Defining and communicating position descriptions, obligations, and criteria for competence assessments;
2. Setting clear goals for individuals, groups, or units that are in line with the larger corporate objectives and have established deadlines is step two in establishing the rules of accountability.
3. Step three is to continuously practice, communicate, and reinforce these three habits.

Goal Setting: Setting straightforward, attainable goals and aligning persons and units accordingly constitute the final major focal area. There is no better method for achieving this than creating visual roadmaps that show how each employee’s roles, regardless of position or title, will assist the achievement of the organization’s objectives. Better yet, when used properly, these roadmaps can also serve as effective motivational tools, similar to how role clarity does.

Despite the aforementioned, goal alignment can be accomplished using what the business world refers to as a goal cascade. Setting the highest level corporate objectives first, working your way down the organizational structure to divisions, departments, teams, and finally, individuals and their goals, will enable you to achieve goal cascades.

Goal cascades have numerous organizational advantages, such as:

1. Ensuring that all employees are moving in the same direction and that their efforts are concentrated on the tasks that corporate leaders have identified as being most important; and
2. Encouraging cross-team collaboration given that every employee across groups at each level is largely moving toward the same priorities.

Top-down goal cascades unquestionably provide the corporate architecture required to guarantee that strategic priorities are accomplished. Organizations must make a concerted effort to avoid being overly rigid and to provide some employees the freedom to pursue objectives that are not immediately or directly accretive to the management level above.

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Organizational Structure’s Function in the Optimization Model

The accountability and power inside an organization are determined by the organizational structure, to put it simply. The chances of success significantly decline when structures are not built to enable an implementation approach for optimization. This is crucial when a company is trying to transition from one culture and set of behaviors, incentives, and measuring patterns to another and is especially more true when daily operations are involved.

Consequences of Undervaluing Informal Organization

Despite the value of formal structure, leaders should never overlook the informal organization that exists already. The interconnected social structure known as the informal organization, which is at least as potent as the formal organization, controls how individuals work and interact with one another in daily life. The proverbial “water cooler” has long been a symbol of the informal structure of the classic American corporation of the 20th century, and it won’t soon be forgotten.

Successfully implementing change may depend on one’s capacity to analyze, comprehend, and use the informal structure of an organization. In particular, these structures can function as efficient back-channels that leaders can use to influence behavior changes inside a company or get support for fresh initiatives. It is important to note that leaders must take care not to sabotage or alienate an informal organization’s operations while significant changes are introduced. Systems constantly defend themselves, reinforce themselves, and, more often than not, brutally expulse outsiders who pose a threat to their survival or internal structure.

The following questions can be used by corporate leaders to evaluate the efficiency of their organization and to determine whether a reorganization is necessary:
1. Are we structured to serve our clients effectively?
2. Are we structured to accomplish our strategic goals?
3. Are our internal resources being utilised to enhance our core skills through value-added activities?

A Sustainable Optimization Program’s Construction

The first guideline for developing an optimization program is to never view it as a one-time, temporary solution to what are likely fundamentally structural issues. The true gains compound over time as the appropriate practices get ingrained in the organization’s DNA, even though significant benefits might be gained from a single optimization effort. Therefore, the key to continuing success is creating a culture that supports, upholds, and self-produces ongoing optimization.

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he following actions can be followed to create an environment that values efficiency and optimization. Begin by requesting support from everyone in your organization, especially your corporate influencers, from the most junior resource to the most senior executive. In order for the organization to successfully transfer cultures, new behavioral requirements must be established and communicated. Third, promote these habits vigorously throughout the organization. Fourth, create short- to medium-term tasks to gamify involvement at all levels. This is for the most ambitious and skilled among you. And finally, keep enforcing this new culture and routines until they become ingrained in the organization.

The following characteristics are essential to a successful success culture:

1. Sharing knowledge in an open and transparent manner fosters employee collaboration and understanding.

2. cooperation and teamwork: Inextricably linked to information sharing, cooperation maximizes efficacy and, consequently, results across a constant base of resources.

3. Top-to-bottom Cost and Resource Mindfulness: Continuously pursuing cost reductions enhances the company’s margin profile, generating more funds for extra reinvestment in infrastructure, culture changes, and additional human resources to deliver results.

4. Openness and Propensity to Change: Often the most challenging to develop, a culture that welcomes change at both the individual and group levels is essential to a larger culture of optimization.

The Leadership Challenge

The leadership issue of optimizing the organization goes beyond human resources. Implementing an organizational optimization program is disruptive and frequently dangerous because it compels staff to behave in novel, frequently uncomfortable ways. These behaviors include emphasizing open knowledge sharing, transparent accountability, and broad collaboration, all of which call for personal vulnerability and, consequently, discomfort.

However, when done well, organizational design and optimization have the potential to have profound short- and long-term benefits, such as eliminating waste and inefficiency and boosting profits and customer satisfaction. The system frequently becomes self-sustaining, self-policing, and self-propagating once the new culture has taken root, as has been the case at Carlos Brito’s Anheuser-Busch InBev and Alan Mulally’s Ford. This will pay off for years to come.

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Executive Summary

Chapter 1: Introduction to Organizations

The Three-Legged Stool: Juggling Technology, Process, and People

A three-legged stool is a common representation of a People Process Technology (PPT) concept. All three legs must be the same length for the stool to be stable. The stool will fall over if one leg is shorter or longer than the others. The PPT model is the same way. The model won’t work if any one of the three elements is out of balance.

A company might, for instance, use the most cutting-edge technology available. The technology will be useless, however, if the users are not properly trained or the procedures are not well thought out.

Similar to this, a company could have workers who are extremely talented and well-thought-out processes. However, they won’t be able to compete if they are utilizing antiquated or ineffective technologies.

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Dissecting The Structure

Let’s examine each of the PPT framework’s legs in more detail to demonstrate how they complement and balance one another.

People -the cornerstone of any flourishing organization.

Any successful organization is built on its people. To achieve success and drive outcomes, you need a strong workforce. It should come as no surprise that 71% of executives say successful businesses depend on properly engaging their workforce.

It’s crucial to concentrate on a few key aspects in order to develop a strong team. These include good time management, ethical hiring procedures, and strong communication abilities.

It’s crucial for time management that everyone in a business has a shared vision and understands their top objectives. Setting attainable objectives and due dates that everyone works toward is required.

Leaders must set a good example by managing their own time so that others will do the same. To fulfill deadlines, you should prioritize the proper things as a leader.

Process– ensuring that individuals are efficient and productive
Processes are crucial to ensure that employees are efficient and productive at work. Even though people are the most crucial component of every business, they cannot function without clear rules.

Processes give employees the structure and guidance they require. It is obvious when and what tasks personnel are responsible for when a project is managed well.

A procedure might, for instance, outline deadlines or quality criteria for tasks. With these rules in place, workers may concentrate on completing their tasks as quickly as possible. They won’t have to consider what needs to be done or make an effort to work things out for themselves.

Process standardization fosters predictability. Additionally, establishing organizational efficiency requires predictability.

Technology – Making sure the appropriate technological tools are in place to support people and processes

Any modern business must incorporate technology. Utilize the appropriate tools to support your processes and employees. Boost productivity, streamline processes, and enhance internal communication.

However, it’s crucial to avoid getting carried away with all that the newest technology has to offer. In doing so, you miss the point of what technology should truly be doing for your company. After all, the usefulness of technology depends on how well it can meet your wants and objectives as a business owner or manager.

Make sure the appropriate technology model is in place to assist your business by adopting a people- and process-centered approach.

Whether you’re trying to find new ways to interact with your customers or strategies to improve team communication. You can get where you need to go with the aid of clever technologies online.

But it’s up to you to resist being intimidated by what technology is capable of on its own. Instead, it’s your responsibility to strategically harness its potential to further the objectives of your company.

This transforms technology from a distraction to a potent instrument for success.

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Chapter 2: How Organizations Work

Organizational Structure for Departments

How to organize jobs to maximize productivity is a key decision made when businesses establish their organizational structure. Functional areas, divisions, or teams are grouped as a result of the departmentalization process.

There are various drawbacks to the departmental organizational structure, which is the most prevalent design, and other organizational structures have developed to reduce or eliminate those drawbacks. Some of these more contemporary models undermine the conventional departmental structure, while others expand upon it.

The Functional Approach

According to Lumen Learning, some businesses organize positions based on work functions, using a bottom-up approach to structural design. Designers start by listing all the tasks that a company must complete in order to fulfill its objective. They then decide how many tasks each job position should be responsible for, which is known as job specialization.

Designers organize the occupations by work type after specifying the positions, resulting in a departmental procedure. As a result, there are now departments for things like HR, sales, IT, marketing, and accounting. Next, designers establish a departmental hierarchy to manage tasks. The management hierarchy gives rise to a tall or vertical organization that emphasizes rules, control, mechanization, and chain of command.

Both Positive And Negative Aspects

Companies can operate at high levels of efficiency because to the departmental structure’s job specialization and mechanization. Organizing occupations based on comparable functions also produces economies of scale. The system enables businesses to mass-produce while standardizing procedures, goods, and services.

However, departmental structures are too stiff to quickly react to outside market factors due to automation and bureaucracy. Additionally, the structure stifles originality and innovation. The divided departments struggle to communicate with one another, and they risk losing sight of the greater picture.

The Divisional Structure

The divisional structure divides where the functional departmental structure groups. Designers first categorize employment by function before dividing them based on a good or service, region, or market demographic. After being assigned to these divisions, personnel are subsequently functionally classified.

The divisions themselves run independently, almost as if they were independent companies with a departmental setup. However, departments solely focus on divisional priorities instead of spreading out their job activities over a variety of goods, markets, or places. Compared to a pure departmental organization, the divisional structure is able to respond more quickly.

The Matrix Framework

Some businesses choose to keep a vertical departmental structure but add a semi-permanent complementary horizontal framework focused to divisional priorities rather than committing to autonomous divisions. Employees from diverse functional departments collaborate in this matrix to work on various divisional projects.

Teams may be dissolved once a project is finished. The merely functional or divisional structures have both shown to be less adaptable and responsive than the matrix structure. The drawback is that each employee reports to both their functional supervisor and the project manager for their division. Conflict can result from conflicting interests.

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