Disruption is pushing companies to rethink their business as a matter of survival. By one analysis 75% of the S&P 500 will be replaced in the next 10 years. However, capabilities and talent across organizations are not pivoting fast enough to keep up with change.
This comes as the workforce is quickly changing: tasks have been simplified, made leaner or completely disappeared due to digital. Fixed workforces or organizational hierarchies no longer define or constrain talent. For instance, a beverage company is today using an app to turn everyday customers into planogram compliance officers – paying them to click and send pictures of store displays so the company ensures they are being optimized to support sales. This underscores what the future of talent is becoming: a fluid ecosystem of fixed and variable human labor, bots, virtual and cognitive agents, crowdsourced talent, and customers and suppliers who, collectively, uncover new efficiencies, skills, and ideas to drive toward business goals.
Foreseeing big changes on the horizon, the future workforce will be a hybrid of permanent, contractor, freelance and internal temporary positions.
Yet amid these major workforce transformations, many organizations still have too many people doing work that doesn’t connect to valued outcomes. Across industries, the workforce is performing tasks in antiquated ways, continuing to adhere to rigid processes and organizing structures that are often generations old. Furthermore, the way companies perform workforce planning is often done by making adjustments to the current organization as opposed to reimagining the work and workforce from a clean sheet. The resulting organizational inertia is deadly.
Forward-looking companies are turning to zero-based approaches to redesign outdated processes, starting from “zero” to take a disciplined look at their organization and remake it for the new. It’s a strategy that we at Accenture call “ZBx” or having a zero-based “mindset.” Zero-based organization (ZBO), in turn, is a progressive new approach that calls on companies to apply the principles of zero-based mindset to their organization’s entire workforce structure. It empowers companies to design the “right” organization from a clean sheet, shifting talent from work that no longer contributes to desired outcomes to the distinctive capabilities and operating model required to fuel profitable growth.
The 5 “rights” of ZBO
On the path to ZBO, there are five “right” components organizations should consider as they redesign their workforce for the future:
- Right work: Consider what work drives the greatest business value, identifying key routines and the most important projects. Eliminate work by reducing unnecessary complexity and investment.
- Right size: Identify the time, effort and frequency of work that must get done. Aggregate workforce effort by routine and project. Employ digital technologies or sourcing strategy where possible.
- Right structure: Design the organization to focus on both core and new priority competencies (such as digital innovation) and clarify roles and responsibilities. Move away from inflexible, hierarchical structures to more fluid project-based structures.
- Right people: Build a true bottom-up, clean sheet organization, looking at skills, levels, tenure, salaries and location. Align skills to key roles and assign stretch roles. The right people share the purpose of the organization and have a cultural fit with the new model.
- Right measures: Set organizational objectives and align them to business functions. Create clear success metrics, drive personal accountability and create true transparency to empower people to make decisions from the frontlines. Another important aspect of this is incenting, measuring and compensating leaders on the quality of the outcomes they deliver – not on the size of the empires they oversee.
We’re seeing tremendous outcomes across industries from this more holistic, diligent approach to talent. Increasingly companies like Unilever are using zero-based budgeting to identify cost-savings opportunities and improve productivity.
Reaping the benefits of ZBO starts with a willingness to think, plan and act differently to create a clean sheet that is truly clean. Leaders must also simplify the organization to empower high performing individuals. Below are some key fundamentals to get started:
- Be who you aspire to be — Other organizational transformation approaches fast forward to restructuring without determining what work the company should do. They drive change by crunching numbers, not by anticipating markets. ZBO is deeply rooted in the future work routine. The key is to assess the strategy in light of what’s happening in the marketplace, while being open-minded to changing course.
- Design from the outside in — The heart of ZBO is determining what work is happening in the business that is not creating value. In fact, our analysis finds that 70% of time consumed in processes in companies is not directly related to value creation. With design thinking, companies can bring a customer-first spirit to recreating the value chain, simplifying customer experiences and shifting talent to work that drives valued outcomes.
- Build it so they will come — With a clear view of the strategic direction and the work that matters to customers, companies using ZBO have firepower at their fingertips to orchestrate the ecosystem required to deliver outcomes. Industry specific analytics create bold targets for what investments “should” cost. Elimination, automation, consolidation, standardization, reskilling and other levers free up time and resources to develop workforce capabilities and competencies that drive the growth agenda.
As we forego the rigid organizational structures of yesterday, this period of rapid workforce transformation demands new approaches, mindsets, and a willingness to abandon what’s been done before. ZBO can help companies design their organization with growth and profitability at the forefront – a common sense approach for facing the complexity of today’s business environments head-on.