Companies of all sizes are grappling with accelerating challenges brought on by shifting economic pressures, market conditions, and customer preferences, as well as by technological innovation. In response, many are changing the design of their organizations in order to make them more flexible, enable them to offer new services, and unlock the value hidden in existing operations and thereby boost financial performance.
But change for its own sake isn’t enough. In a BCG survey, two-thirds of respondents told us that their enterprises had reorganized recently, but only half deemed the effort mostly or very successful. Analysis of the same survey results suggests that six specific factors in organization design can make a company more likely to become a top performer, with faster growth and higher profits than its peers. The six factors are:
- Agile ways of working
- A value-adding corporate center
- Clearly delineated profit and loss (P&L) responsibilities
- A flat management structure with a strong frontline focus
- Effective use of shared services
- Strong support for people and collaboration
Agile ways of working is the most critical of these factors. Agile companies are up to five times more likely than their peers to become top performers. They are also more likely to include the other elements, which is significant because a company that incorporates all six will benefit from a multiplier effect: its chance of becoming a top performer increases to more than 50%.
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More: BCG
Authors: Fabrice Roghé , Andrew Toma , Stefan Scholz , Alexander Schudey , and JinK Koike