Beyond cross- functional collaboration. Stuttgart, tt t November 2010

Transcription

1 Beyond cross- functional collaboration Stuttgart, tt t November 2010

2 This study explores how companies can go beyond "classical", task force-based cross-functional collaboration OBJECTIVES Assess the status of "classical" crossfunctional collaboration Explore approaches how to successfully "go beyond" Derive recommendations as basis for discussion and development needs METHODOLOGY AND SAMPLE Exploratory approach based on semi-structured interviews Approx hour interviews with senior managers Broad spectrum of different industries, company sizes and functions: Industry Turnover [EUR bn pa] p.a.] Function Other IT & telecommunication 36% Engineered products 29% 14% 21% Consumer goods <0.5 >0.5 29% 36% 21% 14% >5 >1 Other Organization SCM 26% 29% 14% 21% 14% General mgmt. Procurement 2

3 Key insights of the study 1 Functions still dominate today's corporate structures However, increasing need to integrate across functions 2 Companies rely on "classical", task force-based cross-functional collaboration to overcome functional barriers Its use is wide-spread 3 However, "classical" cross-functional collaboration is often not successful Insufficient incentives and fear to loose power as main reasons 4 Companies need to adapt their management system to go beyond "classical" crossfunctional collaboration 3 elements are most important A Implement alternative organizational models Especially network structures expected to gain importance B Strengthen roles which facilitate collaboration Especially staff to operatively drive or additionally support a project/process/task will become more important C Improve the skills of the employees to prepare them for less hierarchical/structured environments 5 Many companies are prepared to implement major organizational changes However, systematic change management is required 6 Our view: Depending on the industry, network and process organizations will significantly grow in importance; companies need to look for a solution tailored to their needs 3

4 1 Functions still dominate today's corporate structures However, increasing need to integrate across functions "Functions dominate today's corporate structures" Fully agree Fully dis- agree 54% 31% 8% 8% Functional specialization, silos 0% REQUIREMENTS FOR THE FUTURE Growing global integration Increasing customer requirements More complex structures and processes Exhausted "functional" potentials Cross-functional integration 4

5 1 BACKUP "Today, our decision structures are mostly functional. That doesn't fit with tomorrow's requirements." Further interview quotes DOMINANCE OF FUNCTIONS "We have several organizational dimensions. But functions own the resources/budgets." "Organizations exceeding a certain size require specialized staff clustered by functions/sub-functions. That's a given." "Functions dominate more than they should. " "Our people are developed within their respective function." REQUIREMENTS FOR THE FUTURE "Global competitive pressure rises day by day. An integrated view is required to tap hidden potentials." "We have mostly realized the potentials on a functional level. Now our focus are cross-functional improvement teams." "Global networks especially in Engineering are currently installed to meet tomorrow's customers demand." "As processes become more complex it's important t that t people get a broader view." 5

6 2 Companies rely on "classical", task force-based cross-functional collaboration to overcome functional barriers DEFINITION Fully agree 33% 58% "Classical" cross-functional collaboration involves staff from different functions "Classical cross-functional collaboration is widespread" Fully dis- agree 8% 0% 0% goes beyond the daily interaction ti between functions implies cooperation to reach a common goal is based on task forces, i.e. comes on top of daily work AND TAKES PLACE WITHIN THE EXISTING ORGANIZATIONAL STRUCTURES 6

7 2 BACKUP "A few years ago, we have introduced multi-functional teams comprising procurement, engineering, quality and logistics." Further interview quotes "We have many cross-functional circles. We use them e.g. to identify cost reduction potentials, optimize our products, prepare and implement large outsourcing contracts and so on." "We use cross-functional teams on two occasions: 1. To deliver large client projects 2. As value analysis teams to identify product-related related cost reduction potentials. " "We use cross-functional collaboration mainly to deal with special projects, e.g. the setup of a new production site." "Cross-functional collaboration is claimed by many. Reality, however, often looks different." 7

8 3 "Classical", task force-based cross-functional collaboration is often not successful Several reasons are important "Classical cross-functional collaboration does not work in many cases" MAIN REASONS Fully agree 45% 36% High importance 9% 0% 9% Insufficient incentives Fear to loose power Insufficient resources "Silo thinking" Insufficient training Insufficient methods Fully dis- agree 1.0 Low importance 8

9 3 BACKUP "The concept of cross-functional collaboration remains undisputed. Implementation, however, often falls short of expectations." Further interview quotes FAILURE OF "CLASSICAL" CROSS- FUNCTIONAL COLLABORATION "A few years ago, we have introduced multi-functional teams comprising procurement, engineering, quality and logistics. Success is so so." "We use cross-functional teams on several occasions. Results are OK, but can definitely be improved." "In many cases there is limited commitment to support cross-functional projects unless the 'What's in it for me?' is evident to everybody." REASONS "Main reasons for insufficient cross-func- tional collaboration are a lack of capacity and other priorities in daily business." "Defining cross-functional processes alone is not enough. Our employees often do not have sufficient understanding of interlinkages to make crossfunctional collaboration a success." "Silo thinking is also a problem of the generation." "One main hurdle is to 'force' people out of their daily work and get them involved in the cross-functional team." 9

10 4 Companies need to adapt their mgmt. system to go beyond "classical" cross-functional collaboration 3 elements are most important Key elements of the "management system" A Performance Objectives Incentives Primary Secondary Processes organization organization B Roles & responsibilities Company standards C HR Management Values/culture STRATEGY gives clear guidance and defines measureable performance improvement targets ensures a closed loop of objectives, incentives and measureable performance (controlling/kpis) STRUCTURE & PROCESSES focus the available resources on the defined objectives define and organize collaboration based on hierarchical structures and the sequence of work ENABLERS steer corporate behavior in addition to the formal organization (structure & processes) emphasize "soft facts" Most important to successfully go beyond "classical cross-functional collaboration 10

11 4 A Companies need to implement alternative organizational models Especially network structures expected to gain importance Primary organization: Importance of alternative models COMMENTS High Project organization 3.3 importance Organizational setup to cope with complex, singular challenges, e.g. matrix project organization 2.8 Goes beyond "classical", task force-based collaboration by integrating various areas within projects on a regular institutionalized basis Project organization Importance today Network organization Importance tomorrow Process organization 1.0 Low importance Network organization Consisting of independent organizational elements driven by common goals Goes beyond "classical", task force-based crossfunctional collaboration by strong common goals/ incentives and coordination principles Process organization Organization along (end-to-end) business processes, e.g. order-to-delivery Goes beyond "classical", task force-based crossfunctional collaboration by eliminating functional borders along the process 11

12 4 A EXAMPLE PROJECT ORGANIZATION Project organizations typically combine the traditional line organization with an institutionalized project management Matrix project organization of an aerospace & defense company Project management team Module lead Module 1 Module 2 Module 3 Module 1 Function 1 LINE ORGANIZATION Function 2 Functional team members Key account Function 3 Function n End d-to-end resp ponsibility ORGANIZATION OF PROJECT 1 COMMENTS Matrix project organization with the dimensions Project (responsible for content/scope, t/ timeline and cost) Line (responsible for resources, know-how and quality delivered) End-to-end responsibility of project (development, production, maintenance) Involvement of line functions varies by project stage Currently, project organi- zations are mainly used as secondary organization Source: Anonymized client example 12

13 4 A EXAMPLE NETWORK ORGANIZATION Network organizations are typically used to coordinate mostly autonomous entities, e.g. competence centers or offices/sites Global Roland Berger network organization COMPETENC CE CENTERS INDUSTRY Automotive Consumer Goods & Retail Engineered Products & High Tech Roland Berger office Corporate Development FUNCTIONAL COMPETENCE CENTERS Marketing & Sales Operations Strategy COMMENTS Global network organization comprising 5 functional and 9 industry competence centers 36 offices worldwide Flexible staffing of projects based on required functional/industry competence and local market expertise Currently, companies use such network structures only selectively, e.g. to coordinate their global l R&D activities Source: Roland Berger Strategy Consultants 13

14 4 A EXAMPLE PROCESS ORGANIZATION Process organizations are focused on key business processes with additional processes to support the main activities Process organization of a metal products company Business process Support processes Strategy Planning Leadership Controlling Warehousing Quality mgmt. Sales Sheet metal forming Mgmt. processes Engineering Project management Paint shop Product management Development Purchasing Production Assembly Service Transportation Service processes Marke- ting Strategic purchasing Production technology Technical service HR/ organization Continuous improvement Financial accounting IT COMMENTS Process organization comprising 9 product groups structured t along the standard business process 4 internal suppliers (paint shop etc.) organized as service processes Centralized mgmt. and support processes for all product groups Currently, process organi- zations are primarily il used by service companies Source: Anonymized example 14

15 4 B Companies need to strengthen roles which facilitate collaboration "Driver" and "body lease" expected to grow in importance Roles & responsibilities: Roles facilitating collaboration COMMENTS High "Manager" importance 3.2 Overall responsible for project/process/task 2.9 Level of escalation 2.7 Decision-maker "Manager" "Driver" "Body lease" 1.0 Low importance "Driver" Drives the project/process/task on the operative level ("Kümmerer") Moderates between different stakeholders Partially supports (operative mgmt. support) "Body lease" Flexibly supports the project/process/task. wherever needed Trouble-shooting/fire-fighting "On top" resource to standard plan Importance today Importance tomorrow 15

16 4 C Companies need to improve the skills of their staff especially to prepare them for less hierarchical/structured environments HR management: Required abilities COMMENTS High importance "See the big picture" Ability to understand and evaluate global causeand-effect chains and trade-offs Required to achieve a global optimum despite more complex structures, processes etc. Ability to "see the big picture" Ability to "convince without being able to give orders" Ability to "perform in a less structured environment" 1.0 Low importance "Convince without being able to give orders" Ability to steer peers towards a common goal on a voluntary basis Required whenever there is no formal disciplinary power (or this power is not to be used) "Perform in a less structured environment" Ability to cope with higher degree of freedom and insecurity Required to unlash creative potential and manage fast-changing environments Importance today Importance tomorrow 16

17 5 Many companies are prepared to implement major organizational changes However, systematic change management is required "Companies are reluctant to implement major organizational changes" ROLAND BERGER CHANGE MANAGEMENT APPROACH (overview) Fully agree 0% A C Implementation: Employees B Design: Middle management Concept: Senior management Fully dis- agree 20% 30% 50% IV Shape culture ("allowed to do") I Define content of change ("should do") Anchor a culture in line with the vision, create room to maneuver Embed a process of permanent change Ensure sustainability Develop competencies/abilities Project-related training Workplace training Promote networks and collaboration (knowledge management, bestpractice management) Culture Content t Commit- ment Capabil- ities Communication & leadership Design a vision of change and set goals Develop strategic content for communications Define metrics and measure target achievement Create energy for change and sustain it Set incentives, reward success Ensure broad-based involvement of the organization 0% III Develop capabilities ("can do") II Create commitment ("want to do") 17

18 6 Our view: Depending on the industry, network and process organizations will significantly grow in importance Organizational models per industry (schematic) Lot size Mass production Single orders Network organization Innovation BioTech SemiCon "Classical" orga- nizational models: Project organization Aerospace & Defense IT Process organization 1-dimensional (func- tional, divisional, ) 2-dimensional (matrix of products and regions) Hybrid (combination of 1- and 2- dimensional models Automotive Machinery Consumer electronics Utilities Cost Industry driver COMMENTS In addition to the nature of the industry/ company, other factors determine the struc- tural organization Company strategy Market positioning Market environment Communication technology Legal requirements Management philosophy Dynamic internal and external changes require review and optimization i of organizational structures t Today Tomorrow Alternative organizational models Expected movement 18

19 6 Organizations dominated by functions do not fit today's needs Companies should look for a more tailored solution Source: Arend van Dam; Roland Berger study "Beyond cross-functional collaboration" 19