The consultant was hired to help clarify roles and responsibilities across a large Nordic bank's organizational units. They gathered data through interviews and documentation. They mapped the bank's high-level functions to its organizational structures, noting deviations from its governance principles. They also modeled alternative structures with more independent functions to potentially improve performance by reducing coupling between roles. The analysis aimed to increase understanding of current issues and raise awareness of design options.

1. Defining high level
organizational
architectures
Nicolay Worren
Worren Consulting
www.organizationdesign.net

2. Case
Company
Leading Nordic financial services group
Executive Mngmt team CFO
Rated as one of the world’s safests banks by
Global Finance
Mandate
Employees
Approx. 14 000 Project team
Customers
More than 2.3 million retail customers
Advisor/ External
More than 200 000 corporate customers Internal consultant
consultant
That's me
© Nicolay Worren

3. Project mandate
Decision approved in executive mngt meeting January 19, 2011
“One has attempted to clarify the high level roles with associated responsibilities
in the Group Governance document. As a follow-up to this, each area, including sub-
units, should describe and clarity their roles and responsibilities according to the
allocation of roles given in the the Group Governance document. It is particularly
important to distinguish between delivery roles and Group roles of the different
areas as well as the interfaces between the areas. It is natural that HR will
provide coordination and quality assurance in carrying outthis task.”
© Nicolay Worren

4. What the Group Governance document said
Board of
Directors
Business Area (BA)
Support Unit (SU) Group Audit
Staff Function (SF) Group chief
executive
Marketing and
Communications Corporate Centre
Group Finance
and Risk HR
Management
Retail Large Corporate Non-life Life
Insurance and Asset
Insurance and
Markets Operations IT
Banking and International insurance insurance management
Division
Country X
© Nicolay Worren

5. Some constraints
Existing work having
been done to define “Unclear roles” identified
governance principles as key risk in Operational
Risk Committee
Previous reorganisation
had led to combination of Limited willingness in
staff and support roles business areas to
participate
© Nicolay Worren

6. Discussion: How would you have proceeded?
Example:
- What steps would you have followed?
- What data would you have gathered?
- How would you have analyzed the data?
In groups of 3, spend a few minutes discussing this
© Nicolay Worren

7. Guiding
principles
© Nicolay Worren

8. The notion of architecture is increasingly seen as
a powerful metaphor for organization design
© Nicolay Worren

9. A system’s architecture can be operationalised by
considering its functions and structure
Function (Functional Requirement) Structure (Design Parameter)
Supply O2 to blood and
Biological system Lung
remove CO2 from blood
Physical system Transport passengers Bus
Organization Support IT users IT Help Desk
© Nicolay Worren

10. One way to examine a design is to map the
correspondence between functions and structure
Function (Functional Requirement) Structure (Design Parameter)
Maximize quality care Many physician visits, local
Provide presence, expensive equipment,
health care etc.
services…
Optimize costs Fewer physician visits, centralized
care, less expensive equipment,
etc.
“Coupling”
Key assertion: Coupling decreases (system) performance
(By the way, in some contexts, ambidexterity can be defined as
the ability to remove coupling between functional requirements)
© Nicolay Worren

11. The actual implementation (and presentation) of a
design may differ from the optimal solution
How it is presented
How it actually works…
What would be ideal…
© Nicolay Worren

12. How we
proceeded
© Nicolay Worren

13. Steps
3 months
Analyse and Write report
Gather data V.01 to V.17…
interpret
• Interviews with • Describe each of the • Present/distribute and
representatives from all 14 units update based on
areas • Create detail + high feedback from all areas
• Process documentation level FR-DP matrix • Link to and integrate
• Consider other banks (35 FRs) with other ongoing
• Create interface initiatives
diagrams for 14 units
© Nicolay Worren

14. The first step was to consider why a bank exists
and what it does
Broken down to 35
more detailed FRs
…
Sell financial services and products
Develop financial services and products
Maximize
economic profit
by providing Provide delivery capacity
financial
services Manage risk, secure funding, and allocate
capital
Ensure compliance
to guidlines, policies
© Nicolay Worren

15. We then mapped the units and their interfaces
- SIMPLIFED EXAMPLE -
CFO
Credit limits
Loan
Group Finance and Funding products Individual
Retail Banking
Risk Management clients
Transactional
services
Operations
(For details about this methodology, see my 2006 ODF presentation or my
textbook, which contains a chapter about subunit interfaces)
© Nicolay Worren

16. …and attempted to draw units and their
functions
© Nicolay Worren

17. We noted several deviances from the principles
outlined in the bank’s governance document
Busines Support Staff
Areas Units Units
5 4
Sell financial services and products
Develop financial services and
products
3
Provide delivery capacity
1
2
Manage risk, secure funding, and allocate
capital
Ensure compliance to guidelines, policies
© Nicolay Worren

18. We then indicated that it is possible to consider a
model with more independent functions…
Sales Product Support Staff
units units units units
Sell financial services and products
Develop financial services and
products
Provide delivery capacity
Manage risk, secure funding, and
allocate capital
Ensure compliance to guidelines,
policies
© Nicolay Worren

19. …and asked what advantages such a model might
confer
Decouple product development
and sale /distribution
Sales Product Support Staff
units units units units
Sell financial services and products Consolidate
transactional processes
Develop financial services and
products
Provide delivery capacity
Manage risk, secure funding, and
allocate capital Separate
staff and
Ensure compliance to guidelines,
policies support roles
© Nicolay Worren

20. 0° self-evaluation
What I think we may have accomplished What I would do differently next time
Increased understanding for how the bank Tried to use more goal oriented FRs
works and the gap between intended and (increases saliency of «coupling»)
actual role allocations
Differentiate more strongly between
Contributed to a process of reflection re. operational and financial interdependencies
role requirements and potential role
conflicts (?)
Perhaps attempt a bit more strongly to gain
more involvement among areas at early
Identified some key “fault lines” in the stage
current organisational architecture
Raised awareness re. an alternative, more
scaleable organisational architecture
© Nicolay Worren

21. This was a collaborative project
The client has not been named to preserve confidentiality but
gave permission to use the case. I gratefully acknowledge this
opportunity.
© Nicolay Worren

22. For more information
My textbook where I extend on the principles
described here will be published shortly by Pearson
Education. I will post updated information on my blog:
www.organizationdesign.net
I will publish an article about organisation design of
banks in the upcoming special issue of People &
Strategy.
You can view my 2006 ODF presentation here:
http://www.slideshare.net/NicolayWorren/managing
-interdependencies-in-complex-organizations-
2406305
The approach described here is inspired by systems
theory as described by Ackoff & Emery (1973) and
the axiomatic design approach developed by Suh
(2001). I also recommend the 1997 article by Gresov
& Drazin in the Academy of Management
Review (Issue 2, p. 403-428 )
© Nicolay Worren