Structuring an Organization Using Value-Based Teams

Organizational Agility
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Hong Sun
Management Consultant, Canada

Structuring an Organization Using Value-Based Teams

Changes in organization structure can be a critical part of an organization's agile transformation. One such change is the construction of value-based streams or teams rather than using traditional silo functions. Hereunder are four steps to shift an organization's structure from traditional silo functions into an agile one using value based teams and streams:
    To change an organization's structure into value based teams, the first thing to do is to identify the value drivers of the organization in order to structure the business into appropriate value streams. Value drivers are values that distinguish the company's products and services in its customers' point of view, such as customer segment, product category, geographic area, or sales channel, etc.
    The second step is to identify the contributors in each value creation process or value chain. Basically, anyone that is indispensable in converting the resources to a new product or service is a contributor in the value chain, such as a business line product manager, an engineer, a relevant R&D person, and a marketing expert, etc.
    The third step is to realize the structure of value-based teams, or "squads," which are the essential cornerstones of an agile organizational design.
    • "Squads" are usually composed of 6 to 12 people each.
    • They are "end-to-end" covering the whole chain, from generating a business idea to delivering value-creating products or services to the customers.
    • They all include the critical role of a client representative to make sure that the person who talks to and understands the customers is in the team.
    • "Squads" must be autonomous and sufficiently empowered to make operational and tactical decisions without hierarchical approvals.
    • And "squads" members must be dedicated and permanent.
    Finally, when we decentralize the structure into small, autonomous, and multidisciplinary squads, we also have to simultaneously disaggregate the product into small chunks, each with intrinsic value in terms of the product feature or the production phase, etc. By using small teams to work on small chunks of products, we have a strategy to manage complexity and volatility at the same time.

Source: Collet, B. (2018a, May 28), From functional silos to value-based streams (agile value-oriented enterprise)

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