Transforming Numero Retail: An Org Topologies Perspective
In the rapidly evolving retail industry, traditional companies like Numero Retail are facing significant challenges. To address these, Numero Retail embarked on a transformation journey in early 2022, focusing on refining its digital team structure to optimize collaboration, innovation, and customer-centricity. Numero Retail is a fictitious company and I use the case scenarios (case study and numerous scenarios created by me) as part of unFIX foundation workshops, and using it again here while using Org Topologies mapping as a thinking tool.
Current State: Hierarchical and Siloed
Numero Retail operates with a hierarchical structure, with distinct departments such as Buying, Merchandising, Sales, Marketing, Operations, and a newly established Digital Department. Each department operates independently, focusing on their own goals and metrics, leading to silos and limited cross-department collaboration.
The Digital Department comprises several specialized teams, each focusing on different aspects of digital operations. These include the E-commerce Team, Digital Marketing Team, User Experience (UX) Team, Data Analytics Team, IT Infrastructure and Security Team, and Innovation and Emerging Technologies Team.
However, the current structure and processes pose several challenges, hindering the department’s effectiveness and ability to meet evolving digital demands. These challenges include slow decision-making processes, limited autonomy and employee engagement, inefficient resource allocation, and a lack of customer-centricity.
The Value Stream
The value stream at Numero Retail involves several key stages, from product selection and catalog management to customer support and returns. Throughout the value stream, data related to customer orders, inventory, and delivery are captured and analyzed by the Data Analytics Team. However, the insights derived from this data are not effectively integrated into the decision-making processes of other teams due to the siloed structure.
The Need for Transformation
Recognizing these dysfunctions, the Numero Retail leadership team identified the need for a transformation program. They engaged a consulting company which recommended a major scaling framework for adoption. The company embarked on a transformation program to implement the framework adoption while forming cross-functional teams following a quarterly planning cycle. Now, they are at least a year into this major change and it’s time to use the Organizational Topologies scan to understand where they are up to. I came across this a few months back, sat in a workshop with Roland and Alexey (the creators of Org Topologies), and using the map as a means to understand and build a quick narrative around the Numero Retail’s transformation.
Org Topologies: A New Approach
Org Topologies offers a framework for understanding and transforming organizational structures.
“A framework-agnostic approach for creating innovative, resilient and adaptive large-scale product development organizations.” — OrgTopologies.com
It identifies seven archetypes based on two dimensions: team-level autonomy and customer-centric alignment. You can read more about the archetypes here & I highly recommend reading it.
Moving along the two axes will create space for collaboration and reduces organizational complexity. This allows solutions to emerge to address cross cutting concerns at the organizational level.
Given the previous state (2022) of Numero Retail as illustrated above, the company can be categorized as a Y1 archetype: component development with narrow-specialized teams. This archetype is characterized by a lack of cross-department collaboration, slow decision-making processes, limited autonomy, and a lack of customer-centricity.
The Transformation Journey
The transformation journey for Numero Retail involves moving from the Y1 archetype towards a more agile-friendly archetype. This involves two paradigm shifts:
1. Shift to multidisciplinary work: This involves breaking down silos and fostering collaboration across departments. Teams should be cross-functional, with members from different specialties working together towards common goals.
2. Shift to user focus: The company needs to become more customer-centric, integrating customer insights into decision-making processes and prioritizing the delivery of value to customers.
Future State: Towards Agile-Friendly Archetypes
The future state for Numero Retail involved moving towards the A3 archetype: autonomous teams. This archetype is characterized by teams that are cross-functional, autonomous, and customer-focused. They are fluent in delivering value fast and have a broad understanding of the problem space.
In this future state, the Digital Department at Numero Retail would be restructured into cross-functional teams, each responsible for a specific aspect of the customer journey. These teams would work collaboratively, with backlogs and a focus on delivering value to customers. Decision-making would be decentralized, with teams empowered to make decisions and take ownership of their work.
The changes were done, squads were formed, a big Digital Tribe launch event happened with reorg changes coming into effect. Cloud engineering and devops specialists became part of Platform teams.
Now, a year into the changes, each team has a product owner and a scrum master. However, dependencies have not been fully eliminated and even though squads appear to be cross-functional, some still can’t deliver end-to-end work. As a result, they are still sitting in the A2 archetype, characterized by cross-functional teams that are not yet fully autonomous.
This indicates that the transformation journey is still ongoing. The next move could be to review or relook at the Org design and identify ways to move the squads towards A3 and possibly B1-3 archetypes characterized by autonomous, customer-centric teams that can deliver end-to-end value.
“Often there are teams working off individual backlogs full of “pre-groomed” low-level “stories”. Stay there for a sprint or two, and you will notice that the teams frequently get blocked by each other. They are not end-to-end cross-component teams, so there is a lot of waiting, groaning, and wasteful dependency tracking. A lot of managers-coordinators-and-pushers too.
Moreover, because each team is led by its team-level work-output owner, those teams are kept busy working on narrow aspects of a product. Be it a component, a subsystem, a product capability or a microservice. Have you seen teams such as “search service team”, “mobile team”, “user registration team”, “reports team”, “data mining team”, and “instant messaging team”? These are just some examples. Those names imply that the teams are fixed (forever or at least long-term) to those product parts. This means that the teams will be working only on what they already know. That may sound alright as the teams have a steady, narrow focus and can apply their existing skills effectively.
But do the search, the messaging, or some other product parts always need to be worked on and improved? But what if those backlogs are full of work only because they exist? Or because it is someone’s full-time job to fill those lists in? And do we assume that all the changes and improvements of those product parts (like reports, mobile apps, microservices) are always and equally top priority from the viewpoint of the customers and the business? That can’t be true. Priorities do change. Users change their minds. Business expectations mutate. Strategies shift focus.
Generally, in such organizations, each team’s focus is very narrow, but the organizational focus is spread too broad. Things are moving slowly, and a change is hard. Don’t get us wrong. Organizations with such a design do function. They do deliver value to their customers and stakeholders. But because of everything that is said above, they are lacking constant market innovation, sharp business focus, and high organizational adaptability. Every change of a strategy is a tragedy, not an opportunity. Your organization can do better. And we as an industry can do so much better, too! “
Reference: https://www.orgtopologies.com/post/tribes-and-squads-how-adaptive-is-that
When we speak of “transformation” in the context of changing how a business operates, we are referring to a profound and sweeping change. It goes beyond mere repositioning or slight modifications in the way things are done. True transformation entails a complete overhaul: the reevaluation of the business’s core activities, the restructuring of collaboration among individuals, the redefinition of its beliefs and values, and the reimagination of its operational approach.
This journey towards transformation is a pursuit of an aspirational state, a bold leap into an existence that does not yet exist, fueled by a vision of a better future. It necessitates systems thinking, perceiving the organization as an intricate and interconnected whole rather than isolated components. In this context, change cannot be achieved by simply tweaking or rearranging existing elements; it requires transcending the limitations of the past and forging an entirely new organizational reality.
A move to a higher level archetype e.g. B3 from the current state would require transcendance and deeper thinking, effort and time. The map acts as a guide to monitor the progress of the journey and improving the design further.
In summary, while the expectations from agile transformations are often high, the reality can sometimes be a stark contrast. It’s crucial to remember that a successful transformation requires more than just a change in structure — it requires a shift in mindset, practices, and culture.
We will delve deeper into the scans through the OT map in the subsequent posts on Org Topologies while I learn and use this approach further in my work.
Conclusion
The transformation journey for Numero Retail is a challenging yet necessary one. By leveraging the Org Topologies framework, the company can navigate this journey with a clear direction and measurable progress. The end goal is a more agile, collaborative, and customer-centric organization that is better equipped to thrive in the rapidly evolving retail industry.
The company is now a year into this major change, and it’s time to assess the progress made so far. Using the Org Topologies scan, we can understand where Numero Retail currently stands in its transformation journey and identify the next steps to continue moving towards the desired future state. This will involve addressing the remaining dependencies, empowering teams to deliver end-to-end work, and continuing to foster a customer-centric culture.
With the Org Topolgies map, it becomes relatively easy to map the current state and have a thorough discussion on the existing challenges and where the Org would need to move on both dimensions.
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