The State of Organizations 2023 - Flipbook - Page 79
of certain elements of the operating model. Functional
groups that isolate themselves from others, computing
systems that are incompatible, overly complicated
procurement and other administrative processes—all
of these can prevent organizations from capturing
speed and productivity gains and financial outcomes
that could create more value.
With a sense of the scope of change required and the
key priorities identified, CEOs can determine how
to unlock value, deciding on one of two approaches
based on the required degree of change:
— Tune up the existing operating model. Under
this approach, a CEO might look at ways to
capture straightforward sources of value without
remaking the whole operating model. Some
organizations, for instance, have rationalized
certain core business activities to remove any
redundancies, cleaned up their organizational
charts and executive committee structures, and
clarified who has which decision rights in certain
functions and business units.
— Reimagine the existing operating model. Under
this approach, a CEO may want to take steps
to transform the organization radically. The
CEO will need to present a compelling case for
the changes being proposed and a detailed
overview of their implications across the
organization. If senior leaders agree with the
case, the CEO can begin to create a blueprint for
the new operating model, taking a system view
of the operating model and then determining
how to rewire its parts rather than considering
piecemeal changes. In this way, the CEO can
help cement the connections across all elements
of the operating model—strategy, structure,
process, people, and technology.
Speed can be important here. In our experience, the
most successful operating-model transformations
tend to complete their main phases in fewer than
18 months.6 Across both options, these organizations
get a running start—for instance, by moving the
first 100 people to cross-functional teams early
in the transformation to signal individual and
organizational commitment to the change. In all
cases, the CEO and other senior leaders must
model the behaviors and mindset changes that
April 2023
they want to see and dedicate sufficient time to
the transformation.
The right operating model can frame up new valuecreating possibilities. It can also be a factor in
organizations’ ability to cultivate talent. To ensure
lasting impact, talent and leadership are essential.
Cultivating talent
Without the right talent, any new organizational
model likely won’t work. Long before the COVID19 pandemic, digitization and globalization were
already changing how organizations operated and
the skill sets that they needed to compete with
peers. Finding, developing, and retaining talent now
and for the future has become a challenge—but not
an insurmountable one. Based on the findings in this
report, CEOs and chief HR officers can take three
23%
of organizational
redesigns are
implemented successfully,
44%
33%
tend to stall, and
fail.
77