Image: From project meeting with client – my colleagues Tore Christiansen and Bjørn Helge Gundersen (from Deloitte) on the right.
Last year was an important year for Reconfig – the new software tool we are developing.
The key purpose of Reconfig is to help leaders find more effective organizational models.
I wrote about the tool in an article on this blog in 2018.
Lots of things have happened since then, so let me give you an update.
- Last year, we launched a full fledged, web based version of the tool (you can see a 5 minute demo of it on the reconfig web page).
- A key journal in the field – Journal of Organization Design – accepted a paper where we describe the principles behind the tool and our experience from two early pilot projects.
- But most importantly: Last year we got our first real clients, in three different countries: Norway (an oil company), Sweden (a Fast Moving Consumer Goods Firm), and Germany (an engineering firm).
It was very exciting to work with these firms and be able to use the tool in practice.
We didn’t just hand over the tool to the clients, but worked with them on the whole process, from planning the project to analyzing and interpreting the data.
The feedback we received was encouraging, and made it possible to further improve the tool.
As with any new tool, things are not perfect, but we are constantly updating and extending the functionality. For example, dozens of changes have been made to the user interface just in the last 3-4 weeks.
Here are some of my own observations from the three projects:
People agree that there is a need for a more data driven approach to organization design.
Our clients agree that Reconfig provides “situational visibility”: You get to see how the organization actually works, before you make decisions about changes.
The output from the tool that clients use the most is the map (or rather, matrix) that shows “who works with whom doing what” in the current organization.
Clients use it to test their own understanding of their organization.
For example, in one project, the firm had staff performing similar work in two locations. The assumption was that these were independent teams; but the data from Reconfig showed that there in fact was extensive communication across the two locations.
The client realized that the teams were missing certain skill sets in each location, which made them more dependent on each other.
Another client mentioned a key benefit from using Reconfig: She said it was easier to gain acceptance for the proposed, new organizational model because people could see that it was based on actual data, as opposed to speculation or hunches.
The data are collected from employees themselves – in a survey questionnaire – that’s where the input to the tool comes from.
What about the solutions produced by tool? Reconfig contains an algorithm that identifies a more optimal way of grouping teams and units.
This topic deserves a whole blog post in itself, but let me mention a couple of things.
We have found that Reconfig usually identifies solutions that reduce coordination costs significantly (by as much as 50%).
If you implement the suggested model, this can be translated into reduced costs: Less time and money will be spent on meetings and e-mails (and on negotiating with people in other units) and more time can be spent on core work tasks.
In short, by using Reconfig, you can increase productivity, because the organizational structure can be aligned with the work processes.
The solutions generated by the tool are different from the designs that people come up with intuitively.
It seems like many people are quite “categorical”, top-down thinkers when considering organizational structures: “Should we organize by product or geography”?; “Should we use a functional structure or cross-functional teams?”.
In contrast, the tool works bottom up, from work processes.
The solutions identified by the tool tend to be hybrids. For example, in the oil company we worked with, Reconfig indicated that the best option was to use a cross-functional structure for the asset teams, but fairly traditional, functional groupings for staff units like IT and Finance.
There are situations where you should re-design the work processes, before you re-design the organization.
In one of the firms, the algorithm struggled to find a solution, it run for 36 hours before terminating, and only achieved a reduction of coordination cost of 26%.
This is still an improvement, but less than we had been hoping for.
After considering the results, both we and the client (independently) arrived at the same conclusion, however: The first step should be process improvement, not organization re-design.
The data from Reconfig showed that was a very large amount of communication and coordination going on between people in different sub-units in this firm (which is “Client 3” in the chart below).
The chart above shows the “”coordination density”, that is, the average number of connections per person (multiplied by the importance of each connection).
Rather than re-organizing right away, the first step in this situation should be to document and standardize the core work processes.
By standardizing processes, one may reduce the number of connections to a more manageable level. Because one can then rely on standards, procedures and guidelines to handle routine issues, instead of direct communication.
Once the work processes are reasonably “mature”, you can consider the right grouping of roles and units.
So what’s next?
This year, our main priority is to extend our reach by working with more firms, and also by developing the tool further.
We are also planning to extend Reconfig with a second module, tentatively called LearnConfig. It will enable project teams to run “what/if” scenarios, manually adjust the solution generated by the tool, and view the effect in terms of reduction or increase in coordination cost.
We are also establishing relationships with partners – consulting firms in different countries. Our partners will use Reconfig with their clients – while we will focus mainly on delivering the software.
Take a look at our web site for more information. On the web site, you can also book at time for a demo.