Operating in a very low-margin environment, an energy company recognized room for improvement in their efficiency and effectiveness in order to remain competitive.
Executives at the company were frustrated by the silos and lack of integration in the organization. They saw functional groups who, working toward their own goals, built systems that enhanced efforts within their functional group. However, from the enterprise perspective, many of these well-intended efforts did not account for the workings of surrounding functional groups and led to inefficiencies and conflict. Over time, the optimization of functions created a growing lack of alignment with enterprise-wide operational efficiency goals. What had started as small localized efforts to increase efficiency took on a life of their own and became more significant siloed efforts that had a negative effect on overall efficiency.
The RBL Group was selected to lead an organization redesign effort that would make sure the business was optimizing the core work. In order to gain a clear picture of what the organization needed to deliver to external stakeholders, RBL senior consultants interviewed all of the company executives and over 100 employees. The go-forward plans could only be determined by clarifying these key points to align each function around.
The new design structure centered on the questions: How much could the business reduce costs and sustain longevity of resources? A cross-functional design team of key employees ranging from operation workers to high-level engineers worked for 4-5 months in a highly collaborative design process to identify value-creating work which would optimally create external value.
Following the identification of the core work, cross-functional skills were embedded within the design to optimize and enhance productivity and value. Roles and relationships between the support functions were clarified. And a new structure was defined that brought the right people together around common goals and consolidated work.
By the end of the process, the organization was achieving significantly different results. The new design resulted in cost reductions of greater than 20% while experiencing 15% production increases. Estimates presented to investors on the financial impact of the overall improved productivity and cost savings were calculated to be several billion dollars over a ten year period.
Savings from these changes also provided resources to re-invest and purchase a more profitable energy-producing asset, further contributing to profitability and growth. At the same time, engagement and commitment improved significantly across the organization because work was so much easier, there was a clear line of sight to goals that united the groups, and meaningful collaboration on key issues was enabled by the new design.