It is a regrettable fact that most large organisations experience turf wars between different teams. This is especially true for new, or rapidly growing, departments.
There are many reasons for this issue: structural, cultural, behavioural. But based on our experience of working with some of the world’s biggest brands, one of the most common reasons is how brands connect strategy and operations.
Consider a large organisation that has recently completed a digital transformation, established agile product teams, developed some analytics capabilities, and integrated their customer experience capabilities into a single customer experience department. This is a likely scenario for any large business, although these new capabilities may be more or less mature (depending on the sequence of implementation for these various changes).
And within all of the new or updated departments, it is likely that the new staff will have been told that they are ‘empowered’ to drive the success of the business. But with so many smart people being encouraged to drive the business forward, how can organisations coordinate all of these investments to deliver the same strategic objectives?
The answer is neither to undo all of the empowerment and agile working (which would be a major regression), or to rely entirely on organic cross-team collaboration (which would result in significant inefficiencies).
Instead, we believe that establishing a simple ‘altitude’ model across the organisation can allow modern ways of working to be effective within even the largest organisations.
Organisational altitudes
Every organisation operates at multiple altitudes. The highest altitude allows leadership to plan for a far-off horizon: developing strategy, setting direction, and taking the ‘big picture’ perspective.
The lowest altitude deals with on-the-ground operations and managing immediate activities, with a focus on the detail.
In small organisations, it might be possible for an individual or team to operate at both these altitudes, leading to empowered, fast-moving organisations with a strong connection between long-term strategy and short-term execution.
However, when you take some of these behaviours out of a start-up environment and into a large enterprise, it becomes impossible for individuals or single teams to manage this scope of responsibility. And many of the ways of working involved in the digital and customer transformation programmes (referenced above) are those that have worked in start-ups and scale-ups. So it is no surprise that these organisational changes often fail or don’t deliver the anticipated benefits. A speed boat only needs a pilot, but a super tanker needs a team and structure.
We see a need for 5 distinct altitudes across every organisation, and advocate for:
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Organisations to be clear on who operates at which altitude(s)1.
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Direction to cascade from one altitude to the next, establishing a framework for consistency.
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Team to have freedom for how they execute the provided direction within their owned altitude, establishing a framework for agility.
The 5-altitudes model
So far, we have introduced the two extremes of organisational altitude: leadership and operations. However, there are 5 distinct altitudes involved in connecting strategy to operations:
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Strategy – setting direction, goals, principles, and prioritisation.
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Proposition – defining the offerings that will deliver the strategy.
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Service – designing the services needed to enable the propositions.
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Asset – developing the assets that will be used to enable the services.
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Activation – implementing, operating and supporting the assets and services to enable the propositions.
These 5 altitudes are consistent across all organisations, and it is not surprising to find that they bear large similarities to proven organisational change methodologies (e.g. strategy, analysis, design, development, implementation). Indeed, if the 5 altitudes are well-established within an organisation, they will naturally find it easier to implement organisational change.
In other words, it will become easier to successfully set and execute strategy.
Allocating responsibilities
Good organisations will have clearly allocated ownership of each altitude to specific teams. However, different organisations may make these allocations in different ways, ranging from a fine-grained allocation (with different people and teams owning each horizon) to a binary setup where organisations only differentiate between strategy (altitudes 1-2) and operations (altitudes 3-5).
Inevitably, the volume of activity increases significantly at the lower altitudes, so in large organisations the higher altitudes might be able to be managed by individuals or teams, but the lower altitudes are more likely to be owned by entire departments or divisions.
Deciding on these allocations is part of the organisational design and is something that needs to be completed at the overall organisation level, and not within any change project siloes.
Organisational domains
Organisational complexity isn’t limited to connecting the 5 altitudes, big organisations will also have a range of divisions and departments that each have different responsibilities. Traditionally, these departments follow functional structures, such as sales, service, finance, and HR. Alternatively, organisations could structure by country, channel, proposition, or more. Regardless of the approach, these structures will introduce barriers and siloes that affect connections across and through the 5 altitudes.
We believe that a structure based on assets and outcomes is optimal for blending alignment and agility. Using this approach, the organisation would be broken down into high-level domains, such as Customer, Stores and Supply Chain. This model allows each domain to establish and coordinate their own 5 altitudes: to set their own goals and strategy and drive that down from strategy to activation (enhancing the assets and experiences under their control to meet their domain objectives).
A thin layer of overall business strategy would exist separate to, and above, the domains. In a way, this would operate at another altitude (although in our model we still classify this as the strategy altitude).
Optimising structures for business change
Regardless of which type of structure is chosen, there will always be a need for alignment across teams. But with an asset and outcome structure there is a ‘clean’ split across the assets that need to be physically (or digitally) managed to enable services and propositions. This minimises the need for cross-domain alignment and helps accelerate business change.
It should be noted that cross-domain alignment needs to happen at each altitude, and that alignment of strategy for e-commerce, for example, will be necessary across the Customer and Supply Chain domains as a minimum.
Similarly, both domains should align the propositions that they are going to offer, so that they are consistent in terms of the customer experience, service levels and cost-to-serve. If the domains are aligned at the strategy and proposition altitudes, there is then a good chance of both domains being able to execute independently. We call this the ‘strategy in’ principle.
We want to avoid too much alignment at the lower altitudes (service, asset, activation) because of their greater scale of teams and activities. As a result, we recommend designing and running a set of services that know how to interact with each other2, but can each change independently of one another, even from services within the same domain (this topic needs its own article to explain in any further detail).
Making these services actually work requires the development of a range of assets (i.e. web and mobile apps, brick-and-mortar stores, business processes, teams of people, fleets of trucks, etc.). This is the altitude at which abstract concepts (like propositions and services) become real, and we call this implementation of services by developing assets the ‘asset out’ principle.
Teams and roles per altitude
We have recommended that responsibilities are clearly allocated for each of the 5 altitudes, and that in big organisations there will be some separation between who these responsibilities go to. This infers that different teams and roles will work in different altitudes – which is exactly what we think should happen at scale.
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Strategy should be set by leaders, supported by strategy specialists where required.
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Propositions should be designed by commercially-savvy, creative teams.
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Services are the responsibility of service designers.
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Assets will be developed by a range of specialist teams (i.e. UX and product for mobile apps, architects and interior designers for bricks-and-mortar stores, etc.)
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Activation is where operations teams and service managers work.
The relationship between these teams should be a cascade of direction from strategy to activation (with collaboration and feedback loops at all interfaces, of course), but with empowerment at each altitude to determine how the job should be done.
How to use this framework
This article deals with the theory, concepts and principles of the 5-altitudes model. To make this model really useful requires Veriteer to apply it to an organisation, or further study of each of the altitudes and how they work together…which is much more than can be achieved in this initial article.
The 5-altitides model is an element of our Comprehensive DesignTM methodology, which enables large organisations to fully connect their business from strategy to activation, and drive effective business change in pursuit of strategy objectives.
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1 Individuals and single teams may ‘own’ more than one altitude. This is simply a factor of organisational scale.
2 This can be achieved by the use of service contracts, a concept borrowed from a field of software development called Service Oriented Architecture.
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