5371Spring 07Week 1

1
The 21st Century Organization
2
A Holistic View of Work
Individual Value Dignity Respect
Identity Voice
Social
Interaction

• Economic Function
• Security
• Standards of
• Living
• Effectiveness
• Quality of
• goods services
• Speed to
• Marketplace
• Ideas/
• Innovation

World of Work
Place in Society Family Community Citizenship
3
Organizational Challenges
Globalization
Technical Innovation
Deregulation
The New Service Society
Shared Leadership
The New World Order
Knowledge Work and Human Capital
The Leaders Job and the Organizations Challenges
Increase Capabilities of Employees
Intellectual Capital
Competition
Changing Markets
Core Competencies (behavioral)
The New Work Force
Labor Force Demographics
Source Barry A. Macy, Successful Strategic
Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
4
TODAYS WORKFORCE Generation X
Flextime Work Hours
Self-Control and Independent
Empowerment
Let People Furnish Their Own Office
Company Loyalty is Dead
Signing Bonus
Todays Employee Needs, Wants and Desires at Work
Fun
Full-tuition reimburse-ment
Self-fulfillment
Extended Family Benefits
Casual Friday to Everyday is Casual
Work in a Self directed Team
Work at Home
Flex-benefits
____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
5
Eight Primary Drivers of Future Work

• Globalization
• Technologies
• Commercial/Customer/
• E-Business
• Organization
• Societal, Political, Economic
• Labor Supply/Talent
• Environmental
• Demographics

Future World of Work
6
FORCES CAUSING ORGANIZATIONS TO CHANGE
Major Forces Causing Change
Result
Required Changes
Workforce Changes
Societal Changes
Innovation and Speed to the Marketplace
Changes in Clear and Focused Vision, New
Organizational Structures, Systems and Processes
Technological Changes
Global Competition
The Organizational Design Puzzle Designing
a High Performance Organization
B.A. Macy, Successful Strategic Change. San
Fransisco, California Berrett-Koehler Publishers
(forthcoming)
7
Globalization . . . . . . . . . . . . . . . . .
(Only last ten years)
Change . . . . . . . . . . . . . . .
(Economic, Political, Societal, Organizational
and Individual)
Organizational Options . . . . . . . . .
(Choices)
8
Recent Trends Affecting U.S. Workers
100
50
0
Organizational Design/Re-design/ Re-structuring
Re-Engineering
Human Resource System Changes
Down-sizing
9
21st Century Human Resource Functions Where are
They and Who Performs These Activities? - One
Example
NEW HRBusiness and Organizational
Transformation Based
OLD HRTransactions/Activities Based

• Outsourced Organization 1
• Payroll
• Benefits/Insurance
• Employee Assistance
• EEOC/Compliance
• Outsourced Organization 2
• 5. Low to med-level training
• and development
• 6. Team Building/Facilitation
• 7. Organization Development

• Outsourced Organization 3
• 8. Labor Relations/Union Relations
  
• Outsourced Organization 4
• 9. Compensation
• Not Outsourced Keep Inside
• (not HR Core Competencies)
• 10. Assessment Selection/Hiring
• of Professional Employees
• 11. Executive Leadership Development (assisting
  top mgt.s delivery)
• 12. Succession Planning
• 13. Outsource Contractor Relations

Not Outsourced Keep Inside (H.R. Core
Competencies) 14. Simulation/Business/Modeling
Data Analysis on Organization
Reinvention 15. Benchmarking Innovative
Organizations 16. Vision Direction Strategic
Planning 17. O.E./Change Consultants at
the plants. 18. O.E., Organization Design
Change Services at Core HR Group 19. O.E.,
Organization Design and Change Services
located within each of the Business
Groups (dotted line to Core Group in HR)
20. Mergers Acquisitions Group
Organization Cross-section unit of HR,
Supply Chain, Marketing, Sales, and
RD 21. Learning Services Group

• EXAMPLE ORGANIZATIONS
• British Petroleum (Almost all of HR out-
• sourced - 600 Million 5 year contract)
• Bank of America (5 HR processes almost
• 40 50)
• - 550 Million 9 year contract (could
• go to 1 Billion)
• Prudential (Administration/records
• others - 700 Million 10 year
• contract)
• International Paper (Multi-year
• contract Administration/records,
• staffing, training - 600 Million)

10
Some Employee Trends Perks / Benefits
Free Food / Beverages
36
Employee Entertainment / Company Product Discounts
40
Personal Development Training
49
Flexible Hours
60.5
Casual Dress
82
11
Other Trends Work Perks
Telecommuting
27
Fitness Centers
15
Relaxation Rooms
5
Concierge
2.3
Child Care
1
12
The 100 Best North American Companies (Fortune)

• Some of their Attributes
• 26 offer on-site day care
• 29 offer concierge services, like dry-cleaning
  pickup
• 47 offer domestic-partner benefits to same-sex
  couples
• 31 offer fully paid sabbaticals
• 83 offer bounties (bonus) to employees for
  recommending
• new hires
• Top dollar for a job candidate referral 15,000
  at three
• Generally where located Silicon Valley

13
Best Employers in UShttp//money.cnn.com/magazine
s/fortune/bestcompanies/2007/full_list/

• Job Growth Size US Employees
• Google 67 Medium 6,500
• Genentech 25 Medium 9,979
• Wegmans Food Markets 8 Large 33,737
• Container Store 14 Medium 2,866
• Whole Foods Market 15 Large 37,806
• Network Appliance 33 Medium 3,553
• S.C. Johnson Son 0 Medium 3,400
• Boston Consulting Grp. 15 Small 1,434
• Methodist Hospital Sys. 5 Medium 9,424
• W.L. Gore Associates 9 Medium 4,945
• Cisco Systems 3 Large 27,493
• David Weekley Homes 19 Small 1,622
• Nugget Market 1 Small 1,099
• Qualcomm 17 Medium 8,860
• American Century Invest. 1 Small 1,783
• Starbucks Coffee 15 Large 109,873
• Quicken Loans 19 Medium 3,512
• Station Casinos 27 Large 13,957

14
Best Employers in Texas http//money.cnn.com/maga
zines/fortune/bestcompanies/2007/states/Texas.html

• Alcon Laboratories Fort Worth (HQ) 3,034
• Capital One Financial Plano 1,422
• Container Store Coppell (HQ) 450, Houston 113
• David Weekley Homes Houston (HQ) 563, Dallas 307,
  Austin 150
• EOG Resources Houston (HQ) 410, Corpus Christi
  123, Fort Worth 119
• First Horizon National Irving 1,150
• Men's Wearhouse Houston (HQ) 1,314
• Methodist Hospital Sys. Houston (HQ) 10,152
• National Instruments Austin (HQ) 2,038
• SAS Institute Austin 89
• TDIndustries Dallas (HQ) 827, Houston 248, San
  Antonio 103
• Texas Instruments Dallas (HQ) 10,535, Stafford
  1,372, Sherman 879
• Valero Energy San Antonio (HQ) 2,147, Corpus
  Christi 824, Port Arthur 791
• Whole Foods Market Austin (HQ) 1,479

15
Organizations we will discuss in depth(Top 100
Fortune Ranking)

• 7 S.C. Johnson and Son
• 11 Cisco Systems
• 48 SAS Institute
• 55 Dow Corning
• 59 Pella
• 68 Proctor Gamble
• 74 American Express
• 87 Texas Instruments
• 90 Mens Wearhouse

16
Best Places to Work Best Headquarters by State
17
Best Benefit Trends(Fortune 2007)

• Health care
• Sixteen companies on this year's list pay 100 of
  their employees' health-care premiums.
• Child care
• Almost one-third of the Best Companies (32) offer
  an onsite child-care center.
• Work-life balance
• The top 10 Best Companies where employees feel
  "encouraged to balance their work and personal
  life.
• Telecommuting
• Of the 82 Best Companies that allow employees to
  telecommute or work at home at least 20 of the
  time, these 10 have the highest percentage of
  telecommuters.
• Sabbaticals
• 22 companies on this year's list offer fully paid
  sabbaticals.
• Unusual perks
• These companies found unusual ways to keep their
  workers happy. Yes, we're jealous.

18
Market Opportunities for Growth
Customer Demands
HPO
Process Technology other Technologies
____________ Source Barry A. Macy, Successful
Strategic Change, Berrett-Koehler Publishers, San
Francisco, CA (forthcoming)
(High Performance Organization)
Culture, Values, Philosophies, High Expectations,
and Ethics
Future Societal Workforce Trends
19
Old Business Models
21st Century Business Models

• Local to Regional Markets
• Local to Regional Firms
• Local to Regional Customers
• Regional Pricing and Supply
• Commodity Products and Services
• Local to Regional Competition
• Regional Strategic Business Units
• (S.B.U.)
• Sell Directly to Customers
• Multiple to Many Contact
• Points with Customers
• Centralization or De- centralization
• 10-15 Day Customer Delivery
• Time Expectation

• Global Markets
• Global Firms
• Global Customers
• Global Pricing and Supply
• Specialty and Customized together
• with commodity Products and
• Services required
• Global Competition
• Global Strategic Business
• Units (S.B.U.s)
• Sell Directly both to Customers and
• Consumers
• One Contact Point with Customers
• via Global and Regional Enterprise
• Teams
• Fit between De-centralization
• and Centralization - utilize both
• 2-4 Day Customer Delivery Time
• Expectation

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
20
Old Business Models
21st Century Business Models

• Strict lines of Authority in
• the Organization
• Empowerment
• Vertical Communications
• Profit and Loss at S.B.U. levels
• Large Corporate/General Office
• Information, Knowledge and
• Decision Making primarily located
• in corporate office
• Incremental Goals

• Open, boundary-less Organization
• Two-way Empowerment (with
• strict accountabilities and
• responsibilities)
• Horizontal Communication across
• the Value-chain
• In addition to the S.B.U., Modified
• Profit and Loss at the Enterprise
• Team and L.O.B.s levels
• Much smaller-Networked to S.B.U.s
• Information, Knowledge and
• Decision Making. primarily
• located in S.B.U.s, Lines of
• Business and Enterprise Teams
• Step-wise change 100 increase
• in profits in 5 years

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
21
Old Business Models
21st Century Business Models

• Change the Organizations
• Structure (deck chairs on
• the Titanic
• Large Functional silos and
• empires at Corporate Office
• Centralization of Functions and
• Staffs
• Minimize Training and Learning
• costs
• Large, economy of scale thinking
• at work sites

• Changes in Organization Structures,
• Systems, Processes - all three
• at once!
• Small Expertise Centers at
• corporate office others are in the
• S.B.U.s/L.O.B.s/ETs
• De-Centralized Functions and
• Staffs into the Businesses
• Invest and enhance Coaching,
• Development and Learning (160
• hours per employee per year)
• Small, focused factories within
• smaller work sites

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
22
Old Business Models
21st Century Business Models

• Location of Employees does
• not matter
• Go Global via internal
• organizations
• Project Teams to increase Growth
• Manufacturing silo
• Project Leaders
• A paper organization
• National Account Managers
• Selling Teams

• Enterprise Team Leader and Team
• members are co-located close to
• Customer
• Go Global with External Strategic
• Alliances
• Aligned Enterprise Teams to
• increase Growth and Market Share
• Member of the Product-Supply
• organization elimination of
• Manufacturing as a silo
• Enterprise Team Leaders
• Paperless (EDI/SAP/ERP Systems
• from supplier to factory to
• customer to consumer)
• Enterprise Team Leaders and
• members aligned to Customer
• Enterprise Teams with P/L
• responsibility - a mini-business
• within the business

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
23
Old Business Models
21st Century Business Models

• Firms Processes and Products -
• guard them
• Values, Philosophies,
• Expectations and Core
• Competencies - NOT clear
• and NOT agreed to
• Some to little alignment of
• Vision Direction, Values,
• Philosophies, Strategies,
• Systems and Processes
• Quality Assurance Organization -
• as a function - duplicated at each
• work site
• Order Entry located in Sales
• Customer Service located in Sales

• Firms Processes and Products -
• Fairly Easy to Copy
• Firms Values, Philosophies,
• Expectations and Core
• Competencies are a Competitive
• Advantage
• Great degree of Alignment
• between Vision Direction,
• Values, Philosophies, Strategies,
• Systems, and Processes.
• Quality tasks (raw material, in
• process and finals) integrated
• into the peoples task who
• perform the work expertise center
• remains
• Order Entry located in Product
• Supply
• Customer Service located in Product
• Supply

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
24
Old Business Models
21st Century Business Models

• Manufacturing and Product
• Supply High Performance
• Systems (HPS)
• Large Numbers of Employees
• are Employed by the Firm
• Blue-collar work teams/
• S.D.W.T.s
• Performance Appraisals -
• (boss and subordinate)
• One Pay System
• A multitude of Performance
• Measures
• E-Mail accounts for all Leaders
• and Professionals

• Value-chain and Market focus High
• Performance Work Systems (HPWS)
• Much Smaller Number of Employees
• Employed by the Firm
• White-collar and blue-collar work
• teams/S.D.W.T.s)
• Peer Performance Appraisals -
• (boss-subordinate, peers, customers
• and others)
• Two to three different Pay Systems
• for each Employee
• A few, simple Performance Measures
• (EBIT, cash flow, Market Share,
• Customer Satisfaction, Employee
• Satisfaction)
• E-Mail accounts for all Employees

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
25
Old Business Models
21st Century Business Models

• Present State - incremental
• change is good enough
• Leaders think much too narrowly
• about what transformation is
• or can be
• Good intentions and bad
• implementation of organizational
• transformation
• Only one form of Compensation - a
• pay check for people at the
• bottom to the middle of the
• organization

• Future State - breakthrough
• thinking and Step-wise change
• is a requirement
• Common language and agreement
• regarding an organizations
• common mental models and maps
• Good intentions and good
• implementation is required for
• successful organizational
• transformation
• Pay check and stock for all
• employees

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
26
Old Business Models
21st Century Business Models

• Begin Transformation in
• Manufacturing and blue-collar
• CEO and other leaders thinks
• he/she can sprinkle dust and
• transformation will happen
• Organization transformation led
• by experts/Consultants
• Profits is an end state
• Internally focused and Internal
• benchmarks of best practices
• Sell to Customers through Sales
• people

• Begin Transformation at the
• business level
• CEO and the Executive Committee
• have to Drive and Manage the
• Transformation Process
• Organizational Transformation led
• by the Senior Leadership
• Profits is a Means - not an end
• state
• Externally focused and External
• benchmarks of best practices
• E-Commerce directly from
• Consumers

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
27
Old Business Models
21st Century Business Models

• Work is in the Office
• Work NOT out-sourced - some
• minor contracting out
• Work as Individuals
• Hierarchy Stressed
• Information and Access to
• Confidential Information
• available to Leaders
• Spans of Control - 1 8
• Leaders and Managers
• Commercially Astute
• Vertical Organizational Design -
• last 20-30 years

• Work at Home and/or the Office
• 25 of Fortune 500 have out-
• sourced non-valued added work to
• the V-P level
• Work in Teams
• Core Values, Philosophies and
• Clear Expectations are Stressed
• Information and Access to
• Confidential Information
• available to all Employees
• Span of Control - 120
• All Employees are Commercially
• Astute
• Horizontal Organizational Design -
• next 10-20 years

____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
28
Nine Ss of Organizational Alignment
Shared Core Values
Structures
Markets Customers
Strategies
Skills

Systems
Shared Technologies
Style of Leadership
Staff/ People
Shared Processes
29
Typical Late 1980s 21st Century HPO Designs
2 Types of Processes -Business -People
Organization Structures
Systems
Leadership
30
What is a High Performing Organization?

• What is it?
• A High Performing Organization (HPO or HPS or
  HPWS) is an organization intentionally designed
  to bring out the Best in People to produce
  sustainable leadership and Business Results

31
HPO/ HPS/ HPWS Provides

• The delivery of Routine Excellence, thus
  creating the capacity for frequent breakthrough
  or step change in results and processes.
• The greatest competitive advantage a
  knowledgeable and personally invested individual.
  HPOs provide a framework for developing people
  to be ready to flow to the work needed today
  and in the future.

32
An Exemplar Organization ABCs Year 2000-2005
Goals

• From To Increase
• Volume/Employee X1 X2 245
• Sales/Employee Y1 Y2 246
• Earnings/Employee Z1 Z2 286

33
Creation of Financial WealthFood for Thought

• If your Company Wants Breakthrough (Step-wise
  improvement)Then you must Design Breakthrough
  rather than Incremental Changes (Changes in
  Structures, Systems, and Processes (People and
  Business)

34
How does it fit together?
Vision Direction and Strategies
Exemplar Strategies
Vision Direction
Business Imperatives
Year 2012 Step-wise Goals (Internal)
Globalization (External)
Capabilities
High Performance Organizations (Internal)
Strategic Alliances (External)
Future Trends
35
External Context
TECHNOLOGIES
ECONOMY
SOCIETY
POLITICS
UNIONS
MARKETS
COMPETITION
LEGAL
Internal Navigation System
Vision/Direction/Strategies
Core Competencies
Positioning
Alliances/Partnerships
Financing
GLOBAL S.B.U. ALIGNMENT
MARKET
FOCUS ALIGNMENT
CORPORATE ALIGNMENT
PRODUCT SUPPLY ALIGNMENT
High Performance Enterprise Model
STRUCTURES
STRUCTURES
STRUCTURES
STRUCTURES
SYSTEMS
SYSTEMS
SYSTEMS
SYSTEMS
PROCESSES
PROCESSES
PROCESSES
PROCESSES

• ORGANIZATIONAL DESIGN
• Basic UnitsS.B.U.s
• Global
• Value Chain Design
• Processes
• Structures Global S.B.U.s
• Enterprise Teams Product Supply
• (mini-businesses, etc...)

Fit

• OFFERING
• Products/Brands/Mix
• Services
• Unique Attributes (speed, service, cycle
• time, delivery, costs, quality, etc..)
• Marketing
• R D
• Innovation

Fit

• PEOPLE
• Reward Systems
• Training/Coaching/ Development
• Selection
• Staffing
• Work Design
• Team Configuration

• TECHNOLOGIES
• Information Systems
• (CAD/CAM, SAP, etc..)
• Production Methods/Layout
• Distribution Technologies
• Flexible Systems

Source B.A.Macy, Successful Strategic Change
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
36
Organizational Design Categories that Produce
Improvement of Financial Performance
Structures
Processes
Systems
Leadership
____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
37
21st Century Organizational Model
Employees (increased capabilities of peoples
intellectual capital)
Electronic Technologies across the Value Chain
Customers
Shareholder Value
Globalization
____________________________ Source B.A. Macy,
Successful Strategic Change, Berrett-Koehler
Publishers, San Francisco, CA (forthcoming)
38
The major challenge for leaders in the
twenty-first century will be how to release the
brain power of their organizations.
Warren Bennis
39

• At the end of the day,
• You bet on
• PEOPLE
• --Not on
• Organizational Strategies