When done well, an organisational redesign fosters improved strategic focus, higher growth, better decision-making and more accountability.
However, a McKinsey survey revealed that only 30 percent of organisational redesigns are successful in terms of achieving overall objectives and improved performance. That means a daunting 70 percent of transformations fail.
Why? In the design phase, meddling by too many cooks often obscures the vision of a future operating model. Accommodating multiple opinions means the design becomes fragmented and vulnerable to individual pain points. Resources can get tied up in tasks that don’t add real value, unnecessarily prolonging the process.
More than 80 percent of executives have gone through an organisational redesign at their current company. They know that a transformation is a marathon. But to get to the finish line, it pays to do implementation sprints. That means taking a simpler, iterative approach; learning as you go; and correcting course more frequently. Under this approach, concept development and implementation are linked, running in parallel.
To get to the finish line, it pays to do implementation sprints.
One high-end retailer, for example, faced difficulties with its siloed culture when redesigning its operating model and online assortment strategy. A series of focused two-week meetings, led by cross-functional teams, helped to foster a common view of what needed to change. The quick implementation of changes led to an impressive increase in its online assortment from 30 percent to more than 70 percent in just three months.
6 things to keep in mind
There are six things to keep in mind when going through a transformation:
- Be bold: Set a clear and ambitious target that will help you substantially transform your organisation and let it guide your future operating model.
- Slim it down: Create a simplified first version of your envisioned end-state that will still deliver a significant amount of impact in the first phase of implementation.
- Prioritize change initiatives: Don’t kick off all new initiatives at once. Instead, be clear about how the initiatives will be sequenced and how they relate to one another.
- Conduct implementation sprints: Kick off the implementation in short design-test-apply cycles.
- Adapt and hone when needed: React to requirements that emerge during the transformation and course-correct whenever needed.
- Keep your eye on the ball: Stay focused on the actual end product: a truly transformed organisation, not a perfectly designed plan. Embrace constant reality checks and adapt the plan accordingly. This helps to concentrate resources on those areas that contribute the most value.
Change is not easy, and the odds are hardly in any transformation’s favor. But tackling the root of the problem by simplifying the design and using a pragmatic approach—through implementation sprints—will boost the likelihood of success.
While we all aim for perfection, we should not do so when designing a new operating model. Sometimes complex concepts, which theoretically are superior to simpler plans, don’t get implemented. Instead, they can draw attention and energy away from more fundamental changes and delay the entire transformation.
Aricle originally published by McKinsey & Co.
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