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Seven Organizational Design Tips for Aerospace Executives

By Tim McConnell Managing Partner, McConnell Consulting Inc.

Your company had a big reorganization last year? Great speech from the CEO about transformation, they moved a bunch of boxes around on the organization chart, closed a plant, laid some people off, and centralized (or decentralized). You’re good to go, right? Think again.

Regular organization design tune-ups are essential to a successful operating model. Just as our bodies fall out of shape without regular exercise, and aircraft engines run roughly without maintenance every 600 flight hours, so it is with companies.

This lack of consistent upkeep, maintenance or review is entropy—the silent killer of business performance. Entropy is the second law of thermodynamics, the measure of disorder in a system. Entropy is a natural process of degeneration—an automatic and unavoidable trend toward chaos. In plain English, things fall apart all by themselves. And entropy is probably happening in your aerospace company, right now. So stop it.

You have a choice. You can continue to do nothing—or you might consider implementing the following processes designed to ensure your company survives, grows and boosts profits:

Design for Battle
Like war, business is a competition between companies. Your weapons are financial capital, human capital and proprietary intellectual property. Your skilled workers are your elite troops. Entrepreneurial units are your special forces. Your Directors and VPs are your generals. Designing your company for battle is more than hiring good people. It involves a ‘go-to-war’ attitude; arranging your structure, your ‘troops’ and your processes to win competitive battles.

Avoid Entropy, Keep Moving
Evolve, grow, and realign. The configuration and relationship of functions, positions, skills, processes, talent and performance to business priorities deteriorates over time. The cure for entropy is ongoing alignment; achieving and maintaining direct connectivity between your business strategy and your structure and processes.

Maximize Agility and Innovation
Agility is the ability to rapidly adapt to market and technological changes in productive and cost-effective ways. Structural over-complexity causes slow strangulation. It confuses your employees, suppliers and clients, hinders product advancement and limits profits. Continual adaptation is vital. You also have to prepare the right organizational set up for the future while simultaneously delivering short term results.

Let’s compare three corporate icons. Kodak, a Darwinian poster child, is a classic example of failing to adapt to changing technology and customer needs and so falling into bankruptcy. Lockheed Martin and BAE Systems (for example) proactively and energetically shift, realign and transform to stay in their sectors’ forefront.

Simplify Decision Making
Effective decision making is a key aspect of real-time command and control. Great businesses make great decisions.

We know of one company that prides itself on being a world leader in innovative, high impact, speedy and cost-effective solutions. However, the decision-making process is bureaucratic and stultified. Projects run months behind schedule. Executives focus on divisional success and resist corporate-wide initiatives. Middle managers concentrate on perfection, with multiple rounds of wordsmithing for every PowerPoint presentation. Rather than clinically move from decision point A to B and C to reach result D; they often over-research point A, over-analyze Point B, second guess themselves on Point C, and then go back to Point A to start over, never reaching D. All of this costs money. Instead, view the decision making process as an entity unto itself. Know what your decision making abilities are, and how this process flows through your organizational structure.

Streamline Your Processes
Business Process Evaluation is an elemental rethinking of workflow to achieve improvements in critical measures of performance such as cost, service, quality, and speed. Ruthlessly eliminate redundancies and steps that don’t add value by mapping out the major activities and steps in your key business, R&D, engineering, manufacturing and administrative processes. Review the key roles (jobs/positions) that perform each step.

Optimize Geography
Is your company local, regional, national, international, global, multinational, or transnational? You know where your locations are, but do you have the optimal geographic model? A global company sells worldwide but is centralized, concentrating core work activities in one location. An international company creates centers of excellence or hubs for each major product or service worldwide. A multinational operates in a decentralized manner, with customized operations in specific regions.

Transnational companies are the highest form of corporate evolution, with centralized operations in the home locale mixed with the economic efficiencies of distributed optimal sourcing. Optimal sourcing locates operations in the place that brings the greatest advantage in terms of client/user contact, cost efficiency or skill need.

Manage Your Talent
This is rocket science! Aerospace companies are in dire need of science, technology, engineering and mathematical skills to support future growth. Managing your talent and talent stream is vital to profitability. Achieve the biggest bang for your buck by having the right people in the right numbers with the right skills in the right place performing at a high level – every day. Sounds elementary, but it’s not. Just like plant floor tools – proper form, fit and function are essential:.

  • Apply the principles of supply chain management to your staffing and recruitment program.
  • Fully integrate your strategy and business planning with workforce planning. You have the appropriate mix of staff with skills in management; finance; procurement; C4ISR; computer science; electrical/mechanical; systems/software engineering; physics; mathematics, and psychology etc. But this mix has to continuously align with strategic priorities.
  • Layoffs aren’t a panacea. Take the long view towards talent optimization, not just short term band aid fixes.
  • Create a flexible workforce. Not every worker has to be a full time, permanent employee with full benefits.
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