Table of Contents
Table of Contents............................................................................................................................ 1
Background..................................................................................................................................... 2
Organization structure ................................................................................................................2
Financial figures........................................................................................................................... 3
Situation Assessment......................................................................................................................3
XYZ Assessment ............................................................................................................................. 4
Group Development perspective ................................................................................................4
Growth Phases Framework ..........................................................................................................5
SWAT Analysis..............................................................................................................................6
What to do next?............................................................................................................................. 8
Self mindset ................................................................................................................................8
Organization mindset................................................................................................................... 8
Plan and Approach.......................................................................................................................8
Strategy Level ..........................................................................................................................8
Dynamic stability as a change approach..................................................................................9
Communication.........................................................................................................................9
Organization Structure Level ................................................................................................. 10
Rational Behind the structure ................................................................................................11
Organization Structure description for Key positions..............................................................12
Systems .................................................................................................................................13
Detailed analysis..................................................................................................................... 14
Human Capital .......................................................................................................................15
Conclusion .................................................................................................................................... 16
1
Background
Company XYZ is a family owned IT system integrator that was founded in 1978 with one branch
and head office in Kuwait. XYZ owners run real estate, automotive and other business lines. XYZ
represent 5% of owner’s portfolio.
With headcount of one hundred employees XYZ focused on sales and support of hardware
products including high end servers, storage solutions and end user equipment like laptops,
personal computers and accessories. In addition to that XYZ established a business unit to sell
engineering design products with focus on AUTODESK products. On opportunity basis, XYZ
extended its offerings to include professional services and software implementation projects.
XYZ sustained its revenue results with fluctuated profit margins during the last years.
Organization structure
General Manager
Assistant General
Manager
Financial and
Sales and Customer support
administration
Operations Manager Manager
manager
Sales operations
Assistants
Engineering and Logistics and
PC Sales Enterprise Sales Project Basis Project
Autodesk Sales Inventory
Department Department Employees Management Team
Department Department
XYZ current Organization Structure
XYZ main product lines were represented in the organization structure as a separate sales
department for each product line, with sales assistance to help in preparing sales quotations,
tender documents and coordinate with accounting department processing of required bank
guarantees and performance bonds.
In addition to different sales teams, logistics, project management as well as project-basis
employees are reporting to Sales and Operations Manager who is reporting to XYZ general
manager.
Customer support and financial and administration functions are also directly reporting to the
general manager.
2
Financial figures
Diagram Below illustrates XYZ financial results for the last years
$7,000,000 8%
$6,000,000 7%
6%
$5,000,000
5%
$4,000,000
Revenue
4%
Profitability
$3,000,000
3%
$2,000,000
2%
$1,000,000
1%
$0 0%
FY02 FY03 FY04 FY05 FY06 FY07
XYZ revenue & Profitability FY02 to FY07
Although XYZ managed to sustain an average revenue result of $5M, profit margins have been
fluctuation during last five years. Entertained profit margins still below 10% and were not
encouraging for additional investment.
Situation Assessment
XYZ general manager who is reporting to the board of directors is resigning due to sever health
problems. I have been appointed to be an interim replacement for three months minimum to run
the firm until the board decided on a new replacement.
Multiple factors are affecting my decision for next course of actions. These factors include:
- I regret the health problems that happened to our CEO; however I have to seize the
opportunity to show XYZ board that I am capable of running the firm with a clear strategy
towards more successful future.
- The situation is challenging as the board declared their intention to search for another
CEO and the assignment is only temporary for three months. This situation will make it
even harder to introduce major changes in the organization.
3
- Some of my colleagues and peers might not be so happy of this situation, and I should not
expect full cooperation from all members.
- XYZ previous CEO managed the company for the last seven years and he stayed with the
company for twelve years climbing different positions in the company, so that he got
enough credit from the board as well as from XYZ staff. This in turn will make it harder to
change the style of management he deployed all these years.
From XYZ board point of view:
- It might be a good opportunity to hear a different point of view of running the business. In
addition to that if Myname managed to drive the business during this transition period,
then no need to introduce new CEO who may and may not achieve our strategic goals.
- In addition to that XYZ board will be willing to encourage loyalty and belongings by
promoting XYZ employees to higher management levels.
From XYZ Staff point of view:
- Given that I had a peer relationship with some department managers and manager
relationship with others, I do expect that some of them will cooperate while others might
not be encouraged to entertain that approach.
- For other staff members, introducing me to this position might be in their favor in their
perception.
XYZ Assessment
Group Development perspective
a. Given the fair old age of XYZ (around 30 years), the organization as a group have
went through several stages from initiation, into exploration and stabilization. XYZ
operating financial results encourages a change. Since this change was enforced by
the health conditions of the CEO, a Re-assessment stage is recommended.1
b. Reassessment stage of XYZ as a group has the following characteristics as
illustrated in Table 1.
Table 1
4
Sta Most observable Tasks Problems Management
ge characteristics implications
- No assessment is Evaluate the The history and Balance several
enforced unless necessity for inertia of the attitudes and
compelling reason change. group may behaviors
- When reason happens , prevent it from
some of them tend to Group must engaging in Force might be the
Reassessment
be stubborn decide if they healthy best tool
- Some will feel betrayed are going to reassessment
- Some will feel more change the Understand and
enthusiasm to change purpose, the expect defense and
- Confusion or disbelief ground rules criticism
might happen to some and the
others authority
- Others may be structure or not
depressed and
withdraw
Considering the above listed characteristics, problems that will arise, a collaborative approach
might be a suitable approach to resolve the listed conflicts.
Seeking board support in some situations will be a must.
Growth Phases Framework
XYZ has been in the market for quite long period and already has demonstrated that it is a
workable business entity. XYZ acquired customers and kept them with its products and services.
The key problem is to shift from only existence to a healthy ration between revenues, profits and
expenses.
Although as a group XYZ should pass through an enforced reassessment stage, XYZ as a
business entity still in Survival stage.2
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Crisis of ?
Organization Size
X Crisis of
Y Crisis of red tape
Z Control
Growth
Crisis of through
Crisis of autonomy Growth Collaboration
Leadership through
Growth Coordination
through
Growth
Delegation
5 through
Direction
Growth
through
Creativity
Young Mature
Organization Age
Neil C. Churchill and Virginia L. Lewis in “Five Stages of Small Business Growth” defined Stage 2
as survival stage.
Survival stage characteristics that can be observed in XYZ case are:
- Company number of employees is small and the structure is simple.
- Systems development is minimal
- The organization stayed in survival stage for the last five years.
To move from this stage into Stage 3 (Success Stage), some changes could be implemented
including:
- Structural changes that allow multiple divisions act on their own behalf.
- Indirect control thorough delegation
- Introduce systems to handle the growth
SWAT Analysis
On a high level, the following SWAT analysis can be observed.
Strengths Weaknesses
- Financial Position (Backed by the - Organization Structure, Skills, System,
Group) etc, Coverage, etc.
- Political influence of the family - Skilled manpower
- Logistics arm - Reporting and planning systems
Opportunities Threats
- Market Growth - Competition
- Government initiatives - Market perception for the company as
box mover
- Real estate business boom
- Vendors focus and perception
- Aggressive market penetration
6
rates from vendors. - Ability to invest
7
What to do next?
Parallel moves in different tracks should be planned and carried out. These parallel moves will
consider two mindsets and perceptions.
Self mindset
One of the important preparation steps required for newly appointed managers is letting go of
the past and embracing the imperative of the new situation to get a running start. This will
require a necessary change in perspective.
I recognize that I have been promoted because I might did well in my previous assignment,
however keep doing and thinking the same way I used to do will not grant success in the new
one.3
I also recognize that I am in a transition period and overriding goal in a transition is to build
momentum by creating virtuous cycles that build credibility and by avoiding getting caught in
vicious cycles that damage credibility.4
Organization mindset
For each individual who transitions, there also are many others- direct reports, bosses, and
peers- whose performance is negatively affected. In a survey of company presidents and CEO’s,
done by Michael Watkins, their best estimate of the number of people whose performance was
significantly compromised by the arrival of a new midlevel manager, on average was 12 people.
In effect, all the people in the “impact network” of the transitioning manager are in transition
too.5
Plan and Approach
I will draw a detailed plan and approach for my next moves. This plan will address the following
key aspects: strategy level, change approach, communication with stakeholders and other
departments and staff, changes in organization structure, systems and detailed planning for the
company.
Strategy Level
In a very competitive market, XYZ experienced difficulties entertaining same profit margins on
hardware and software product sales. Since the market have dramatically changed during last
five years and now many players have been penetrating the market with very competitive prices
and slim margins, XYZ should move into different market segments, product and service
offerings.
Introducing different products or services will require several organization structure changes,
systems to follow up and control the expected change of operation mode as well as skills to run
this show.
The Strategy will focus on four main pillars:6
- Customer focused strategy that accommodates doubling revenues from current business
lines within next three years and introduces new business line that can generate as much
revenue as today’s revenues after three years.
8
- Flawless operations execution that accommodates for decreasing cost of operations by 5%
annually. This can be achieved through using better systems to control inventories and
logistics process as well as project management practice to insure better projects delivery
with maintained costs.
- Performance oriented culture by introducing new reward schema that encourage good
performers and accommodate for relating employees salaries to company’s performance
and objectives.
- Fast and flexible organization that encourage front liners to take immediate customer
satisfaction decisions.
Dynamic stability as a change approach
Recognizing that these proposed changes will dramatically affect the organization, a change
approach that deploy continuous but relatively small changes will be elected. 7
This approach should be accomplished by a buy-in from different stakeholders, board members
as well as senior level management who will execute or fail that change. To secure the required
buy-in, communication on a collaborative mode can do the job.
Communication
Formal communication:
I will initiate a series of formal meetings with different stakeholders to discuss the strategy as
follows:
1- Short term and immediate meetings:
• Company-wide meeting to announce the management change followed by a
circulation from board members to secure official support.
• Board meeting to secure a common understanding for the long term objectives.
2- Regular meetings with departments’ managers and departments to discuss business
initiatives
• Sales pipeline review – once every two weeks.
• Projects review – once every two weeks.
• Collection and accounts receivables review – once a month
• Logistics and operations review – once every two weeks.
• Business review - once a month.
During these intensive meetings and business reviews I will open discussions for the following
topics:
- How we as a team can run XYZ to a better future?
- What are different products and services can be offered?
9
- What are different market segments can we penetrate?
- What systems we need in place?
- What is the best organization structure to run the business now and in future?
- How can we improve our current staff skill set?
- How can we improve our current reward systems?
What I need is to convey the following messages to the team:
- We can do the job and change the company to better future.
- The change will be blessed by them and carried by them.
- The change will benefit everyone.
To start from somewhere, I will be ready with some proposals to be discussed in these
meetings.
Once we framed a strategy I will call for a board meeting to review and approve team
findings.
Social and informal communication
Informal communication can turn into gossip and rumors hurting the company and can as well
used as a parallel communication channel to ease working environment, raise the moral and
declare strategies.
Recognizing the effect of informal communication, I will encourage social gatherings, speak-up
policy and I will create the events to collect feedbacks regarding the future.
Organization Structure Level
The following will represent the initial organization structure that I will propose to start to the
team as well as to the board.
10
CEO
Assist
ant
CEO
Sales Sales Profess
Manager Sales Sales
Manage Manager ional Logistic Financi
operatio
r Engineeri Service s al
n&
ng End User s Manage Manage
Equipmen Executio
Enterpr Solutio Manage r r
t n
ise ns r
Sales Custom
Operation Project Invento
Presale er Procurem
and Managem ry ent
Execution ent s Suppor
Control
assistant t
XYZ Proposed Organization Structure
Rational Behind the structure
The following are the basic assumptions and factors affected the design of the structure:
- Separate sales functions from delivery and logistics tasks to maximize their customer
focus.
- Separate sales function per product line (different customer base, different offering cycle,
and different competitive advantage)
- Professional service department will be responsible for presales and pricing, project
management and execution, as well as after delivery customer support. This will create a
pool of technical competencies that can be used in presales support as well as in delivery
and customer support.
- Check and balance is created between different department will create a sort of functional
conflict8 as follows:
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• Sales departments will focus into getting more business and customers based on
XYZ value proposition rather than price competition since pricing is professional
services responsibilities.
• Professional services department will be responsible for pricing as well as delivery
so that XYZ ensure quality proposals as well as delivery.
• Logistics department will handle procurement and inventory control to ensure
proper supplier handling and inventory levels for all departments required stock.
- Other functions including business development and marketing were not introduced at this
stage in order to maintain the cost, however will be introduced in later stages.
- Human resources function and treasury functions were omitted as it was a shared service
granted at the group level.
Organization Structure description for Key positions
Position Major Responsibilities Major KPI’s
CEO Strategies development and Net operating
implementation profit
Overall business planning
Develop and maintain policies and
procedures to allow smooth operation
Ensure effective reward systems
Inform the board of overall performance.
12
Sales Managers Develop sales strategies, sales Sales target of
plans, and sales targets core business
line.
Acquire and maintain current
customers Contracted Gross
Profit
Stock level from each product.
Obsolete stock
value
Professional Develop and maintain Technical Operational
Services competencies of XYZ Revenue
Develop and execute a presales Operational Gross
organization and process Profit
Develop and execute an after sales
support organization and process
Sales execution Sales execution team is responsible for Number of
tender documents preparation, legal processed
registration process, tender financial quotations per
requirements follow up with accounting month
and treasury departments
Logistics build and maintain supplier database Number of late
deliveries
ensure supplies and deliveries on time
and within budget Stock taking
variations
Maintain and control shipping, handling
and transportation costs. Discount levels
granted from
suppliers.
Systems
Planning, reporting and reward systems are important tools that should be elected and
implemented carefully.
For planning and follow up I would suggest introducing and improving the following reporting
instruments:
- Sales Pipeline follow up
- Projects Review
- Revenue forecasts
- Aging and receivables
13
- Slow moving and dead stock
- Profit and loss statements (Actual /Budget comparisons)
In addition to the listed, I would discuss and introduce having a reward system that assure target
setting at quarter level and tie part of employees’ benefits or salaries to target achievement.
Although this system is as important as or even more important than other systems, the
introduction and implementation of this system will not be practical on the short term.
Detailed analysis
Other strategy meetings openers that will be used in meetings will be the “Portfolio analysis of
existing products and services”, as well as “Fit vs. Attractiveness - new business”9
Market Size, growth, profit margin,
attractiven competitive intensity, structural
ess market shifts.
High Protect Invest to Build
Position build Selectivel
y
Market share,
Medium Build Selectivel Limited share growth,
selectivel y Manage expansio sustainable
y for n or profit, returns
Earnings harvest on assets,
service
Low Protect Manage Divest quality,
and for operations
refocus earnings efficiency
Strong Medium Weak Business
Strength
XYZ FIT vs. Attractiveness - Current products and services
14
Market Size, Expected Growth, Industry
attractiven Performance, Entry/Exit Barriers,
ess Expertise Management
High Develop Diversify Expand
Capabilit
y Synergize,
Management
Medium Controlle Leverage Leverage Capabilities,
d Opportun Opportun Financial
Exposure ity ity Strength,
Low Avoid Hold Hotwatch Past
Experience,
Strong Medium Weak Business Fit
XYZ FIT vs. Attractiveness – New business
Human Capital
Recognizing that all the above plans and initiatives will only come to reality by encouraged,
dedicated and skilled human capital, I will propose a program to collect current knowledge assets
and analyze the required gap to fulfill required business growth; accordingly a continuous
training and development plan will be developed to fill this gap.
This continuous development will not only address technical skills, but will also include
management skills for departments’ manager.
15
Conclusion
This is an opportunity and a challenge that may not happen too often in one’s career so I will
make sure to seize the opportunity to maximize the return. I will invest more time planning and
learning details, communicating formally and informally with company’s staff as well as
company’s board.
I will capitalize on the enforced change due to former CEO’s health conditions and initiate series
of small changes.
I will make sure that these changes will be well studied with all departments and stakeholders
and approved by the board. These changes will address Human capital skills and morale, current
and future business, systems, organization structure, and I will communicate clearly with peers,
subordinates and bosses about this vision.
References
16
1
The developmental dynamics of small group – Darden Business Publishing – UVA-OB-0270.
2
The Five stages of small business growth by Neil C. Churchill and Virginia L. Lewis – Harvard
Business Review
3
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
4
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
5
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
6
What Really works, the 4+2 formula for sustained business success by William Joyce and Nitin
Nohria.
7
Change without pain by Eric Abrahamson- Harvard Business Review
8
Managing conflicts in organizations – Darden business publishing- UVA- OB-0743
9
Both models were used by KPconsulting, www.kpconsulting.in
