Case Study

Restructuring for growth at tech co.

Developing a new operating model and instituting operational metrics to accelerate innovation

After 10 years of successful growth, a leading global technology company began to experience declining margins and a worrying drop in the pace of innovation. The culprit? An outmoded operating model that had evolved incrementally the point where new products were trapped in a broken innovation process and operations were bloated and inefficient.

Despite deep technology expertise, the company’s organizational structure and metrics were very loose. With nearly three dozen departments involved in Product Development and Operations, it was never clear just who was supposed to be doing what. As a result: 

Although the company was regarded as having a precise engineering culture, it had overlooked the importance of instituting clear operational metrics resulting in an inability to accurately measure performance.

Over time, innovation had become very centralized and bureaucratic. Frustrated by the slow pace of innovation, individual business units independently set up decentralized innovation centers closer to customers. This resulted in multiple innovation efforts, often redundant to each other, and frequently in conflict.

To ensure the right operating model for the company moving forward, WP&C conducted an analysis across four distinct, yet related, areas:

  1. Process-Organizational Complexity Analysis
    WP&C mapped out the current interfaces between key processes and how the functions currently supported them, including clarifying overlaps in roles and responsibilities.
  2. Organizational Cost Analysis
    We assessed how costs were being consumed across organizational units and through different processes to shed light on non-value-added activities and opportunities for cost reduction.
  3. Voice of the Business Units
    WP&C mapped out and codified customer requirements by tapping insights from the “pop-up” innovation centers as a proxy for Voice of the Customer
  4. Innovation Process Deep Dive
    WP&C assessed the end-to-end innovation process, highlighting issues around prioritization, bottlenecks, and critical dependencies.

Based on the analysis, we recommended a new operating model design, along with KPIs to measure and manage performance. Functions that focused on long-term development (e.g. R&D) were separated from functions with a short-term focus (e.g. Sales). Similarly, functions measured on effectiveness (e.g. Product Development) were now separated out from functions measured on efficiency (e.g. Manufacturing). Lastly, organizations with low customer proximity (e.g. Finance) were centralized, while functions with high customer proximity (e.g. Service) were now empowered to operate more autonomously. 

Based on the analysis, we recommended a new operating model design, along with KPIs to measure and manage performance:

  • Functions that focused on long-term development (e.g. R&D) were separated from functions with a short-term focus (e.g. Sales).
  • Similarly, functions measured on effectiveness (e.g. Product Development) were now separated out from functions measured on efficiency (e.g. Manufacturing).
  • Lastly, organizations with low customer proximity (e.g. Finance) were centralized, while functions with high customer proximity (e.g. Service) were now empowered to operate more autonomously.

 

  • The company captured $15M in benefit by restructuring, removing duplication, and clarifying functional delivery.

     The bigger benefit came from a new customer-oriented Product Development organization and a Service Team much closer to the market.

    Additionally, the company was able to generate additional gains through:

    • Increased cost accountability and faster ideation cycles
    • Better prioritization of projects and more efficient utilization of critical resources
    • Improving efficiency and standardization through centralization of key roles

    Client feedback: CEO said, “Fantastic piece of work! You’ve really shed a lot of light on our business.”

Despite deep technology expertise, the company’s organizational structure and metrics were very loose. With nearly three dozen departments involved in Product Development and Operations, it was never clear just who was supposed to be doing what. As a result: 

Although the company was regarded as having a precise engineering culture, it had overlooked the importance of instituting clear operational metrics resulting in an inability to accurately measure performance.

Over time, innovation had become very centralized and bureaucratic. Frustrated by the slow pace of innovation, individual business units independently set up decentralized innovation centers closer to customers. This resulted in multiple innovation efforts, often redundant to each other, and frequently in conflict.

To ensure the right operating model for the company moving forward, WP&C conducted an analysis across four distinct, yet related, areas:

  1. Process-Organizational Complexity Analysis
    WP&C mapped out the current interfaces between key processes and how the functions currently supported them, including clarifying overlaps in roles and responsibilities.
  2. Organizational Cost Analysis
    We assessed how costs were being consumed across organizational units and through different processes to shed light on non-value-added activities and opportunities for cost reduction.
  3. Voice of the Business Units
    WP&C mapped out and codified customer requirements by tapping insights from the “pop-up” innovation centers as a proxy for Voice of the Customer
  4. Innovation Process Deep Dive
    WP&C assessed the end-to-end innovation process, highlighting issues around prioritization, bottlenecks, and critical dependencies.

Based on the analysis, we recommended a new operating model design, along with KPIs to measure and manage performance. Functions that focused on long-term development (e.g. R&D) were separated from functions with a short-term focus (e.g. Sales). Similarly, functions measured on effectiveness (e.g. Product Development) were now separated out from functions measured on efficiency (e.g. Manufacturing). Lastly, organizations with low customer proximity (e.g. Finance) were centralized, while functions with high customer proximity (e.g. Service) were now empowered to operate more autonomously. 

Based on the analysis, we recommended a new operating model design, along with KPIs to measure and manage performance:

  • Functions that focused on long-term development (e.g. R&D) were separated from functions with a short-term focus (e.g. Sales).
  • Similarly, functions measured on effectiveness (e.g. Product Development) were now separated out from functions measured on efficiency (e.g. Manufacturing).
  • Lastly, organizations with low customer proximity (e.g. Finance) were centralized, while functions with high customer proximity (e.g. Service) were now empowered to operate more autonomously.

 

  • The company captured $15M in benefit by restructuring, removing duplication, and clarifying functional delivery.

     The bigger benefit came from a new customer-oriented Product Development organization and a Service Team much closer to the market.

    Additionally, the company was able to generate additional gains through:

    • Increased cost accountability and faster ideation cycles
    • Better prioritization of projects and more efficient utilization of critical resources
    • Improving efficiency and standardization through centralization of key roles

    Client feedback: CEO said, “Fantastic piece of work! You’ve really shed a lot of light on our business.”

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