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Speaker A We are now at the point where we're going to go back to the cake us. We've got all this foundation of this roles and skills and all that good stuff. Now we're going to put our consultant back into the sector we've gone into there. We've collected all this wonderful data, we've looked at their extent chart, we know what their strategy is, all that good stuff. And now the where we've got to sit down as a consulting team and figure out what are we going to go back to our CEO, tell her or suggest to her or propose to her around what she might want to do with her current organization as it's currently operating. Not only in terms of how they say it is, but how we found out it is relative to the depth of the stance chart and provide her and her management with at least one. At least one, and perhaps more, if you have time, propositions around how that organization might be redesigned, more requisitely or as recklessly as possible. To be able to function against the strategy that's been described, you'll have to make a few assumptions as you go. So one of the things as you build your case, it would be important for you to describe what some of the assumptions you're making. All right? And that what we're asking you to do is really provide at a minimum one proposition. And again, if you have time to get into that, but also for whatever one or two that you do, we need to have sort of a brief bullet pointed rationale. In other words, you're not going to write report but you need to have some key talking points in terms of why you're recommending that particular proposition. Does that make sense? That's basically what we do as consultants, right? Hired to make those propositions and provide them back to people. And she's hired you to do that. So what I think we should do one more time if you like, is are you comfortable with the team you've got right now or would you like it for this exercise to do one more which you can improve dr by the way, the price is you get to your job. That's prize no, actually the prize is he hires you and it's really competing a million and a half dollar contract. Okay, so you got flip charts, we've got postit notes, we've got pens that you can write on there's. Flip chart paper if you need to pull some things down off the wall to give yourself a little more space. All right, feel free. I'm just going to put these in the middle of the room. You can use flip charts to do it. You can use flip chart paper with stickies so you can move stickies around. We're going to leave that sort of process to yourselves and your team. You probably want to appoint someone who's kind of a team lead, kind of keep things on track. The process now is for us to share out our work with the total group. We're allowing 15 minutes for each group tops, to prepare the presentation the way we've done it in the past. And if you're okay, you can sit where you feel you want to sit. But what we've generally done with this in the past is what we call from my old or development days, a gallery walk where we kind of get.
Speaker B Up and we're gallery.
Speaker A Like. That was pretty cool. Gallery. So what we want to do is sit where you want to sit. That's fine. One of the things that we need to start thinking about is you'll notice in your books we don't need to do it. Now. You might want to do it a little bit as you go along, but it's going to be more of a post after all the designs are out. There's a thing in that section of your book that has a little rating sheet. Just look back in that just to make sure we've got it. What we'll do is everybody in the room, including us, will also, after all the presentations have been made, we'll fill out this rating sheet. And then while my colleagues go on with another set of exercises to finish out the day, I'll do a little score, I'll get the wall and do a little scoring. And then we'll have an announcement at the end around which of the groups everybody felt design. Okay, so which of the five groups and what I've done so we know who we're talking about. I've labeled them. D and E are over here. A is here, B and C. So.
Speaker C When you're doing that, which group it.
Speaker A Is there's the labels. So which of the five groups would care to go first? Or do I have to because we would what we would this group? Yes. So that's the D group. All right.
Speaker C So we don't want to be prescribing a solution to you. That's why we present it to you in a very rough form, so you.
Speaker A Can come up closer.
Speaker C So what we've got, we've got a solution that allows you to actually get your organization so it can be working better with minimal structural change at this point, because the change to the whole bank at once can cause a bit of pain. You may, however, want to rip the Band Aid. So we'll talk about that at the end in terms of which way you want to go. So we want to show you a couple of options in terms of how to do it. So as an interim, what we're doing is we're addressing some of the rec, the issues that we see right from the start. So what we have is a situation here. We're suggesting this role here in terms of the Chief Operating officer is actually causing you more pain than water sweat at this stage. So what we're suggesting is to actually have some of these, the roles that are underneath the CIO reporting straight to you. That's going to give you quite a few direct reports. So during this interim period, if that's how you go, you're going to have to wear that. That'll be a part of it. We can combine these two roles, consumer banking, business banking, because either way you're talking to individuals so that's the business of that person running smaller shows, doing that sort of thing there. We'd also want to elevate this role of wealth management. So we'd have to have a look to see whether this role sitting down here because of the capability of a person, we didn't get a good read on that during the process, but that could be the reason why. Either way, we need to clearly articulate this is a level five business, so we need that running as a full PNL to be able to deliver what it needs to deliver. So that'll give you these guys as a report. So you got your consumer and business, commercial, corporate and wealth. If you come across here at the moment, your regulatory function is sitting low. Now that's presenting a bit of risk to you because the way the banking market is working, the regulators are going to want to see someone at level five. And also you want someone at level five doing that sort of a role there that'll also help get rid of your compression that's occurring here. That's why these guys, you know how they've been frustrated coming to you with their hassles. That's the reason that's been occurring. Now across here, what we have is our customer, our corporate services and our transformation. So what we're talking about here, we're going to have to have not just corporate services, but we're putting transformation in there to demonstrate that this is a role that you're going to be relying on to be almost your parrot on the shoulder. To say, this is what we need to do to get the business to where it needs to be. And underneath this role we have, our existing HR we have, it is actually going to be important in terms of the data strategy we're talking about. So we're dividing that up into our It services and we're lifting up the applications here as well to give that as level four where it needs to be and that'll give you more grunt coming out of that area. And over here we are creating a role at level five which we're calling Data. Now the reason we're calling it Data on purpose is it's not, it's also not there to develop things or develop products necessarily. It's literally there to provide the business with the data that they need to execute your strategy. So that'll give you your reports at level five. We've got some other adjustments at the lower levels which will ease some of the issues. But for now we just wanted to go through this will give you a structure that won't be a major change. In fact, if we get it right, most of the guys will think that makes a lot of sense. And that'll give you a business that can start to execute the strategy you're talking about, which is to use data to create innovation while at the same time making sure you don't get blown out of the water in terms of regulatory that's having to restructure. Okay, the reveal.
Speaker A Take a picture of that before you.
Speaker C I'd put this right on the website as awesome work that you can produce from.
Speaker A Then we can do the other one afterwards. So, Ron, we feel that what we've done here is strengthen your organization to give you time. What we see in your strategy is not well enough defined for us to really come up with a structure. The process for us would be structure, would be strategy, structure to support the strategy and then processes and people. So what we're going to suggest is once you have your company strengthened by making the interim changes that we bring on board a transformation project Lead, we think that this transformation is a one time event. It requires a completely different skill set than the skill set you'd need to run this organization. We thought about a position for transformation, but then you're stuck with that position and it's not needed in the long term. So we would recommend that we do a transformation project. And we laid out a few simple things here that Sam will explain.
Speaker C What we did is we looked at your business and we thought in the future, what you might want to be considering is to have a customer focused or an externally focused part of your business here products. This is where the future of the business would be dealt with. Creating new products for the future, supported by data being a key element and something you've identified as a really important part of your future element that supports the rest of the business through here and then having make sure your risk is covered off here, financially and otherwise.
Speaker A Right.
Speaker C So we would suggest to you that you start to think about whether that kind of alignment would work and then you give that input into your transformation Project Lead as something to start with. In terms of looking at the future.
Speaker A We think this is about as large of a team as you want to support in the sink suite with these five positions. But we really don't know what the strategy structure will look like until we start the transformation. But we're thinking that these areas will have to be covered. Okay. And how does this compare with what you had as the starting point? You've got something around transformation. Is that different than the transformation you got up here?
Speaker D Yeah.
Speaker C Well, this is actually the starting point as you described.
Speaker A Yeah.
Speaker C So we'd have that in that to get things rolling the the refinement of the strategy that you're talking about and some of the initial work. But once we've actually got to the.
Speaker A Point where we've worked out that's when.
Speaker C To implement that, the transformation project lead.
Speaker A Will be and are these positions are different positions largely then than the positions we've got as a starting no, these were not presented as positions. These are areas we think that you need support as a CEO. Okay. And that once we design the strategy, once the strategy creates a structure for us, we will know more about these positions. So these aren't necessarily Stratum five stratum four positions. These are Stratum five positions that we believe you'll need as a CEO to adequately control your business and direct it. So if I've got those, then those would be the five I would need as opposed to the X number. Right. The transition would change from that structure to this, whatever it is, as the.
Speaker C Transformation takes place because we don't have the information from the data analysis yet. So to be putting things forward now would be effectively would almost be saying, were you going to use small data to come up with a structure? Oh, wow, now we've got big data. And it turns out that wasn't what we needed. So by doing one that just has minimal changes, that gets rid of some of the issues that we know are caused by the lack of requisite structure that buys us the time to use the data and to then determine exactly what structure will deliver strategy.
Speaker A I'd like to answer one of your questions as though we had had five more minutes. Do you guys mind if I do that? I think the Transformation Officer there might have disappeared from that diagram had we had five more minutes. Are you great? Maybe. Okay, so I'm your CHRO yes. Very important. You've been teaching us about this levels of work. One thing you didn't really mention was that it looks like you feel our company is a level six complexity organization.
Speaker C Yeah.
Speaker A In fact, the function statement on the okay, all right.
Speaker C We believe it is and the way.
Speaker E They approach this is what I often do in an organization. What you've done is put the functions there and the CEO would describe the major categories of work that has to go into each function and the level that those categories of work under that function have to be. And by the time they finish that, they can pretty well tell whether it's low, mid or high. They're going to need that role at and they can make a really educated guess at how many roles will be needed to support the role there. And they'll never tell you exactly, but they usually say, I think there'll have to be two or three people at level four to support all the work at that function at whatever they know in their head. Once they describe the categories of work within the function, the way they see it.
Speaker A That's why we did not put titles here.
Speaker E Yeah, I use that technique a lot.
Speaker A So I'm going back to that doughnut chart that was shared in the education you gave us around the operational spine functions. So you've kind of done that for us right now. You said these are those major buckets, not necessarily described as a role yet, but a major bucket of work that our president has to consider having underneath him with the transformation group, then going ahead and figuring out what exactly would be the constitutional roles of the roles that would constitute those work and what would be the accountabilities in each of them.
Speaker C And we wanted to do that. Given the emphasis on that, you felt that investing in your data and analytic capability is one of your keys to success. We didn't want to actually be preempting what you're doing there.
Speaker A We weren't clear what your actual strategy was. You picked a tool, but it didn't translate to us from what we know now into an actual strategy. So in terms of the stratified customer then that's not necessarily one position that could be exposition. This is saying that we think you as the CEO are going to need to have some really serious focus on your customer and how the customer is worked with and treated and dealt with. We don't know what yet because we don't have the strategy. But it's going to rise to a high level because you're obviously looking to have a personal relationship with every customer. That's the purpose of big data. So someone needs to be in this level that you can talk to.
Speaker C We had some discussions about how you would split that out. This is just an example. You could split it out of online face to face. Now where that splits out at level.
Speaker A Four or level five is a decision.
Speaker C That we need to make in due course. You could also do that geographically or by your business, other business types as.
Speaker A Well with the HR hat on, it would seem to me that and do you have any thoughts about the possibility that we might not have as many roles in the reporting relationship to our CEO here? There's some roles might disappear, some of these might. Jerry, which role would you have by the Requisite authority to deliver email? 500. Okay, but so you'd separate out customer from product? Yes. So then which of those silos would have P L accountability because you need both customer and product to have.
Speaker F You.
Speaker A Know, Mike, when I saw mean we were working in a group and struggling with some of these things. This in my mind was product development. This was new products innovation where we're going in the future, not necessarily for multiple customer businesses. Well, we had a long discussion about this, right? So if we're going to big data and we're talking about a customer customers, if you think of a customer as a customer to each functional unit, then you have lots of customers. Right. We're thinking that one of the advantages of Big Data probably will be in the strategy that a customer is anyone that we have a relationship with and that we should have a linear, continual relationship through all of the different products. So a wealthy person who has a personal checking account with us and a business account with us would have a common experience for all those pieces and that we would be able to develop the personal banking customer up through the various products and do cross selling. So our definition of customer was not based on what banking service they dealt with. Just as a general, going back to what Paul was saying about the circle, it strikes me if you're looking at marketing, new product development, the provisioning of the services and selling of the products, that the only role that has authority over all of that is your level six CEO. Correct. And that means that's the only role that can be fairly held accountable for PNL, not at level five. Correct. In that structure, yes, in that structure. Then that gets to one of Elliott's, I think, most important discoveries at CRA Mining, which was that if you have a level six integrated business, you're always going to be better off breaking it into several level five businesses aggregated into a portfolio at level six. For me, I love the logic. It's just that that's another architectural principle. You try as much as you can to drive your P L authority accountability role at level five. The logic is great. Yeah. I think that this project, this is a project which is why it's up here and not a permanent employee. This project, its first job will be to actually explicate the strategy clearly what we need. And then once we know what we need, these things will become clear. But from here we can't okay, we need to move on. Is there any last thing from our group E that you like?
Speaker C There's one fundamental question that we're going to ask you to ponder on, which is of these two crucial line functions here, of customer delivering and product, we're going to be asking you to ponder which one of those is going to be what we call the call using our colleague Nick Forrest's work to choose which one. So ultimately, does this person who's delivering for the customers get to say, those products won't work, I don't want them? Or does this role get to say, these are the products that you're going to sell whether you like it or not? You can have to decide that now. But if you don't decide that, you're dooming a lot of money here to start arguing. That'll be key thing once you decide that, we can set up those relationships for you.
Speaker A And that's a classic strategy question. It is. And it's also, from my learning, about you guys, what you told me about collateral accountability, it would require quite a bit of very serious, effective collateral accountability between those two roles. Well, at this level, this is the club. In the CEO, this is the club. Got to be collateral. Great. Thank you, Group. Thank you, Group. Very good.
Speaker G I'm going to explain some of how we come up with the structure and then Manny's going to talk through some of the reasons and rationale behind that. Okay, obviously six level organizations still CEO at the top. What we've done is actually group three of the business areas. So that was five. So we've left wealth management and consumer banking on their own. And then we've actually merged together the business, commercial and corporate all as one. And so then we've actually cascaded that down to have the separate VPs down in that next layer down. We've ensured that HR actually represented at that executive level to make sure that the workforce capability is actually there to execute this entire plan and also make sure that we ran out of room down here. We've got that beautiful organization capability team that will help drive the requisite principles that need to support this model.
Speaker A I really like this model, boss. However, at the same time, what are we going to do with our budy COO? He doesn't seem to be there.
Speaker G No, he unfortunately is going to be, but there may be more opportunity. Well, no, there might be an opportunity for him to apply for one of the new roles and so he will.
Speaker A Be redeployed without the internal role.
Speaker G We've kept our CFO up there and we've then merged some of the roles that go underneath that. So there's actually less reporting there. And then you'll find the reporting layers would eventually go down further. However, we don't have enough information. Sorry.
Speaker A Well, we're mostly interested in the top three layers pretty much anyways.
Speaker G What we've then actually done is what is that? So this is about corporate governance officer. So this is where we've actually combined the audit, the legal, and the risk and compliance. So some of that was sitting in finance before, but we felt that as part of the strategy information we have so far, that having that risk and legal requirements escalated up to that level was an important part of the process.
Speaker A That's good because we've been kind of worried about that risk stuff, right? Absolutely.
Speaker G Then we obviously concentrated on the big data was part of the brief. And so it was then about, okay, let's actually move that role from level four up to level five to say, what does that actually need to look like for the future? What do we actually need to set up to make sure that we can actually deliver on that big data and actually then have the supporting architecture, infrastructure and applications underneath that to support what that big data needs to look like? What the analysis under that will need to be to then work with our EVP of business development. And so this is then what that analysis is actually giving you, what the information around that comes out as to what are you actually going to do with that. So it then moves down into your marketing and brand development, but also your product innovation. So making sure that those two areas actually work together and then support the business over there.
Speaker A Kind of the notion of data is kind of in that role in terms of so, yeah.
Speaker G So these guys will set up the supporting systems of how that data needs to be operational. Operational. But then actually the analysis move over and work with this team as to how do you actually develop that into the business development products to support those key parts of the business that are actually serving the customers.
Speaker A So you're saying too, that look like bosses you're going to have to manage, what is it, one, two, three foot eight people?
Speaker G Yes.
Speaker A What about you feel about that? Like in terms of some of your level six, which we're already getting into, some of that industry stuff you have to do and the whole issues with meeting with the regulator so much and all that kind of stuff, is that going to be probably eight is. Okay. Okay.
Speaker D I do have a question though, in.
Speaker A Terms of the business development, in terms of the business areas of wealth and consumer and business, would they have any marketing or data accountabilities or is it all going to be put in that area and then they provide service over here?
Speaker G We felt it was important to make sure that there was that consistent approach across the organization. So prior you had different sorts of marketing and product development within different streams over here, but then you might have some inconsistencies of how that looks. And particularly if you've got customers that are part of maybe two of those business streams and they're getting very different marketing from one brand that might send the wrong message to the customer that was about having that consistent approach.
Speaker E Probably efficiency.
Speaker A Okay, good.
Speaker E We just want to tell you some of the rationale behind the new structures. One is that we've taken what we feel are the key organizational capabilities like risk management, It operation, data platforms, the business channels, the business development finance, all those key roles are now reporting directly to the CEO. So it provides them to work at the strategic level that they need to drive the business results. Just in terms of complexity, this is probably obvious to you as a CEO.
Speaker A Or at least to my HR person.
Speaker E Is that the revised structure also reflects the complexity of your new business strategy in terms of the necessary interfaces between both the product channels on the left and the data platform. Also the complexity of managing the feature innovations that we want to be able to do with technology and product sex and moving governance and compliance where it was very below to a less acute level, now to a level of seven to five level. And lastly most importantly is managing organizational capability for both the current and the future state. So do we have the talent that we need deployed at the right level to make sure that we can actually level on the business strategy just in terms of some of the important collateral accountabilities that we were able to discern that you need is between the CIO and business development, between business development and product groups. The interface is also between the different product channels, HR obviously providing services to all the other groups as well as the CIO, the CFO and the CGO in terms of some of the more important cross functional groups, all the shared service providers that we just talked about providing to the beus, including HR, CIO, CFO, CGO.
Speaker A So our business unit heads then would not be accountable, say for HR work.
Speaker G For finance work, but that's still be held accountable. But they need to be able to go to that subject matter expert and get the services that they need. So they need to have that service getting authority to go there and actually make sure that those functions are there and supported.
Speaker A So if I was one of the level five business units, I would have.
Speaker G Some dedicated people within those service areas.
Speaker A Yes.
Speaker G So they'd align those business partners relationships so they know who their go to person was and that's where they require.
Speaker A They tend to sit with BMI group or would they?
Speaker G That would be up to you as to what you think would work best for that group. They might sit within that group or they might sit within a HR function. So it depends on what suits the culture of the organization.
Speaker E The dot of line relationship might have.
Speaker A To do with space you boss because we don't have too much space.
Speaker E The word that Elliot used for that if they lived physically in the business unit is they're outposted to the business unit but their reporting relationship is directly up. But the head of the business unit would report to their immediate manager how well they had done and they have to observe all the things that are observed policy and procedure in that business unit and that's very common today with the global companies.
Speaker A So for the rest of the management team, are there any questions at this point?
Speaker E Jerry's question before is still appropriate about.
Speaker A And as long as we're still on HR and Finance, I think that it's entirely appropriate with true services from HR and finance to have that centralized and provide service. But when you're talking about the strategic aspect of HR and finance, I think there's a real risk if you subordinate that centrally rather than subordinate that role, that function to the business unit head because you want these financial analytical functions and the. HR analytical functions to be plugged right into the frontal lobes of the business unit head to constantly help the business unit head think through how are we going to adjust our structure, our financing to deal with these business strategies. And if they're not, they tend to become more cops than they are truly strategic resources. It's often a critical mass issue though. If you don't have enough revenue to support it, then you have no choice but to do this. But it's always my preference, or speaking of my HR, hat enough of the capability to operate in that level. Always. But if you have an upgrade, cool mass and capability, I always want to put finance and HR under the business unit head because they're critical resources to help him or her figure out how to optimize the business. So you're saying what we've learned about this stuff is that that's one of those things where there's no absolute science. There's this managerial judgment that we're going to have to make about some of that stuff. And either way there's a two way relationship, one's managerial, one's cross functional. And you've got to get the advisory relationships right in terms of the layering. If it's a five, you want a four going in there, not a two or a three.
Speaker E Absolutely.
Speaker A And the other piece of that is that this now puts more onus, on the business unit head to ensure that she runs her business within the policies and the constraints. Because if someone deviates within a business and the business unit HR goes to, the head of the business unit, says, we got a problem here, that's who she goes to. Not to the corporate head of HR, because it's the business unit head who has to hold all of his or her people accountable for working within corporate policy. The other thing this does, and all of them do this to a large extent, is it really shows why the CEO needs to be accountable for the organization design. Okay, one last question.
Speaker E So your question about the P L. So the business units are under business commercial, is that right?
Speaker A So I would want to have my own marketing function in there. I'd want to have my own product development function in there.
Speaker G Consistency though, amongst all of those businesses under the one brand stewardship, you have.
Speaker A A corporate role that is accountable for stewarding, the consistent, effective running of processes.
Speaker G Sorry, what do you mean by stewardship?
Speaker A Well, basically I think he's answering your question, as I understand it, to some role that's going to help the CEO make sure that the necessary consistency is there. That's an option to consider. Okay, we need to move on to the how are we doing? We're doing fine.
Speaker B And the grape that you've given us.
Speaker A Now we will explain it in a.
Speaker B Little bit more detail in terms of the logic and the next steps. So as we agreed, that's our basic assumption. We started off with the to be organization chart. Having looked at the issues that the as is organization chart has, you asked us to design with your strategy in mind. If we were designing this organization from scratch, what would it look like? So we will talk about that and as a next step, we would need to make this organization the next iteration of the organizational chart, not just strategy led as it is now, but also talent led and do the capability assessment of the existing individuals to see where we can find internal candidates for the new roles. So basically the main changes concern the business. The biggest problem that we identified in the organization is that in your consumer banking, where most of your people work, where most of your customer acquisition happens, you have way too many layers of management. So the single biggest change here is that the heads of consumer business units are now reporting directly to the Chief Executive Officer with no intermediate CEO position and the further vertical down from them into the heads of branches has been simplified. So instead of having seven management players, you now have five. And that basically means that the organization will be much more agile and will respond to changes much more quickly, leaving aside even all the cost efficiencies. So the heads of business units report directly into Chief Executive and they are P L responsible. We thought, looking at the data on the consumer segments, that the.
Speaker A Four part.
Speaker B Division of customer segments is perhaps too detailed. And we believe that consumer and business could be merged into one business unit and corporate and commercial as large accounts could be merged into another business unit. That's another difference. And because those business unit heads are P L responsible, they need to have key support and stewardship functions reporting directly to them. So we have moved It application development.
Speaker A Which was specific.
Speaker B For those customer segments, but sitting under the central It organization closer to the internal client. So the It in this way will be more strategic, agile and customer focused. And we believed that given the transformation that will need to happen, the HR roles need to be moved from HR business department under head of HR Incorporated, close to the internal customers. And we have also created a new role underneath business unit head, which is the finance, because you can't be PNL responsible without having a finance director according to you.
Speaker A So.
Speaker B That'S the main changes as far as the business unit units are concerned.
Speaker A We added the marketing function.
Speaker B Yes, that's key.
Speaker A Thank you Jerry.
Speaker B Yes. Previously your marketing and new product development was a single role. We believe that they need to be separate and the marketing tells us where the trends are and where the demand may be shifting. Whereas the product development is in charge of data analytics for this customer segment and also in charge of rapid prototyping on new offerings and eventually bringing them to the market.
Speaker A Is that right?
Speaker B So that's our business side.
Speaker A Now, would that be for corporate and commercial as well, having these functions underneath corporate and commercial? Okay. Yes. Okay. Got it. Sort of replicated, if you will.
Speaker B They are similar, but obviously the main business functions are slightly different depending on and we did keep the women entrepreneurs because we know that they're very close to your heart. So we put them underneath major accounts.
Speaker A Okay.
Speaker B But now they have a proper home at the major account with regards to the support functions. Legal and regulations largely stays as it is. But in our reports directly to the CEO, given the importance that you are giving to risk and Compliance, we had a question mark about the chief risk person. And there are three options that we can discuss depending on your approval of the rest of the organizational chart and your appetite for risk. They could either be a separate chief Risk officer, or they can be underneath CFO, or they can be underneath Legal and Compliance. And there are arguments.
Speaker A Is there any organizational design ro principle that would help us make that decision?
Speaker B I think it really depends on the work and the complexity of tasks and the time horizon of risk management that.
Speaker A You want this person to manage. Just as an aside, there's another author that we found very useful. His name is Thompson, James D. Thompson. He wrote a book in 1967. But he did similar to the Roll work. It was really observational. No theories, no presumptions, no hypotheses. Just went out and looked at companies in terms of what they did. One of the things he found in there was the notion of interdependence. And that kind of connects a lot of what Jerry was talking about. Where's the integration point in the hierarchy that you want? And he found there were generally three forms of interdependence. One was sort of very separate. In other words, they were like if you think of I'll go back to my inco example in Sudbury district there. Up there, there were eight mines in the ground. Any mine didn't need any other mine to accomplish its work. So there was not an interdependence between those units. That's the simplest form of independence. So the independence came in terms of what they were all supposed to produce to go up to the next level of the milling and the refining and whatever. The other one is kind of sort of sequential intertenence where it's kind of a process flow. It's one organization delivers something to another one delivers. So mine to Mill to Smelter, to Refinery, for example. And then the other one was reciprocal interdependence. And it was really where two business units or types of work are so tightly linked with each other that it's almost like a constant mutual adjustment has to go on between the two. And then the notion, from a design point of view, what we found was to the degree that you could put that as low in the accountability hierarchy as you could. All right, from a structural point of view, the better. If you can't do it at level two, for example, then you have to figure out how to do it three.
Speaker C If you can't do it three, figure.
Speaker A It out at four.
Speaker C But the notion is I think the.
Speaker A Notion in here is there's some notion about integration between units determine that kind of question. We referenced that article, but we were very concerned that a lot of those principles were copied from the 11th century confucian scroll. Well, I had some friends back there.
Speaker B So in terms of the finance function, it largely remains the same strategic reporting directly to you, the CIO Stroke strategic analytics officer. So the big data comes in here, and it's very important for strategy. So this role has been elevated to a level of direct few direct reports. And what has also changed? As I said, the customer specific applications have moved over into the businesses. So what has remained is common applications and a few changes in human resources function.
Speaker A Looks like you left me to watch. Yeah.
Speaker C But at least you're still there.
Speaker A I was wondering when we started over here, I was wondering too, if I'm level five capable, I'm going to get that move again.
Speaker B The slight compromise that we made between the original brief that we were given to design big two B structure and the sort of intermediate steps, because you will require a transformation office. And we believe that this transformation is largely around the way you manage the organization and your people. Therefore, rather than sort of making it a separate project role, we actually believe that at least in the first instance, the force transformation should reside in HR. And for that to support the head of human resources, we have created a separate level for role, which we call Ro, which will be judging.
Speaker A So are you saying that my role changes in complexity a lot on the basis of having to conduct that transformational work?
Speaker B Yes. And it's a strategic asset for the organization because you will need to make decisions about the growth. How in which sectors do you grow the headcount, and how do you run the internal talent pipeline versus external talent talent acquisition in your various business units.
Speaker A Andre, if I've been taking your lessons about this Ro stuff to heart, what would be my five to ten year task as the head of HR.
Speaker B Question?
Speaker A Because I think if we believe this stuff right yeah. Then there has to be something in my role that would be beyond five years. Agreed.
Speaker B I think that you would need to create and implement a strategic system of managing talent talent, okay. And design the agility into the organizational change so that this can, in five to ten years time, the core of HR becomes part of part and parcel of what line management management does. So your five to ten year task is actually to work yourself out of this role.
Speaker E Well.
Speaker A Considering the color of my hair, maybe we can even shorten that timestamp. Thanks a lot. Well, I'm in charge of packages actually, just on that, there'd be two obvious ones. As a stratum six CEO, I should have a ten to 20 year horizon in terms of my accountability. So I really need support from an HR perspective in terms of the talent, development, transformation management, and so on and so forth in order to do my job. The other piece would be, and this may or may not get the same time spent, is these folks have five to ten year challenges in terms of the businesses. So in terms of supporting that as well, right, that would be a second piece that would be critical for that role. Can I write up that role description now? I'll do it for you. Just one other comment in terms of I think the cross functional is so critical in this stuff. It's something that you tend to leave out. You don't think about it. People think that organization charts are kind of one dimensional. And once you got the organization charts, you're done. In terms of the cross functional, if we look at these support functions in particular, all three of them, finance It, plus big data, HR, legal, all of the support functions need to have two way relationships. That's the chart right there.
Speaker E Exactly that's.
Speaker A My associate Jerry has it together. Okay, well, why don't you go first then? In concert with our overall organizational structure, decision to go federated or hybrid, which in fact we try and get as many support functions as close to the business units as we can. There is certainly a demand, as you well pointed out, Ron, to ensure that we had a governance process, to ensure that we don't have too many silos and that we're looking at it cross functionally. So without taking matter of time, each of the respective organizations that we federated which means distributed to different business units which basically included the Regulation, Risk, the It business analytics, marketing brand and HR, we would have a strategic, tactical and operational governance process in place to ensure that all the organizations horizontally were integrated again strategically, tactically and operationally. So it's critical. If we didn't do that, we basically have worse Silos than we probably would have had beforehand. So this is fundamental to ensuring the integration across the company. Great. Just one quick question. We're in IBM, so we can do this. People kept on saying big data and kept that different from business analytics, and we should all nuts and grind, they're two very different things. And anybody who doesn't understand that ought to recognize that big data is the big stuff that's out there and could be collected. Business analytics is what we do with that big data. Right. And very, very different function, how we capture this stuff and then what we do with this stuff. So just when you go back home, besides learning organizational stuff, recognize the difference between business analytics and big data. Just a little side to support what's been said here about the importance of this. In my work at Suncor Energy, when they made some big changes, they really recognized this ladder and really defining, like, who's got what and then who needs to do what with whom. And they actually really went through a significant process of documenting it. So they had all the holes at the crowd. It's sort of like a macro race in a sense, but they had some very key things down the left hand side and then the various things across the crowd. Then what was the relationship between them? Like had what and who needed to do what with whom? And what I thought was kind of funny was that they knew that it was a learning process and just having that sort of meeting and saying that. But they documented they actually made what they called a placemat. They literally put it on a plastic sized placemat. So all the leaders at that top level had this thing on their desk for about six months to make sure they remembered who they had to relate with and what the relationship was all about. I think it's important because and I had this debate with Kenneth, I'm sure it'll happen again. There's no question organizational structure and the layers levels are really important, but it's one piece of the puzle. If you also don't have governance, you don't have the right support and the right skills, et et cetera, cetera, et cetera, it's not going to be successful. So I respect Organizational people. That lies into one of my clients. One of my CEO clients said to me, what I've really gotten out of this, too, is the notion is that while accountability for outputs is vertical, most of the work to get those outputs done occurs horizontally. So that's the piece we really have to also pay attention to. We had a debate about whether we needed a level five strategic marketing brand management role, or could that be at level four, or did we need a level five corporate new business development role that had strategic marketing and brand management under it. Because if the CEO finds that embryonic growth isn't going to meet the board's criteria, we need someone who is right on top of all of the marketing trends and where the demographics are moving to make new business development inquiries and get into the whole corporate development sphere. Okay. And also, CEO, we just want to show you how much money we're going to save you by. Although I like that.
Speaker B Although you did tell us at the beginning that you are not too cost conscious at the moment, and you gave us a little bit of free rein with regards to designing the proper structure for the future. We also kept value for money in mind and we made sure that the number of roles on levels five and six is within five to 7% of the original number and these are all the roles that are being made redundant should you go with the structure.
Speaker A It may not be a material difference in compensation costs from the but you said, wait a second, they said they're going to give us 50% of the cost savings of the salary. All right, moving right along, we started.
Speaker E With a core business in terms of delivery and sales. We decided we could do away chief operating officer role and combine the businesses. So we put consumer and business together, which is your high volume, low touch portfolios. We combine the corporate and commercial spaces and we combine the wealth investments and capital spaces as well for some of the reasons some of the reasons here basically you've got your customers walking into a branch and these are the same individuals that would open small businesses, whereas this is medium and large businesses and then the structures that support them underneath. Essentially it allows for greater client retention as well as they grow the businesses. Yeah, the commercial and corporate space as well. And then when you look at the wealth and investment space, we're saying it's a higher touch, lower volume, there's greater risk in terms of one portfolio going wrong.
Speaker D As we stepped through, from the analysis we've done, we saw there was a lot of inefficiency within the structure. So where possible we've tidied that up. So whether there were gaps in the structure and where there was compression, we stepped through and cleaned that up a bit. Stepping through, we separated quite cleanly the output function, so the delivery function versus the service and support functions. So CFO, we saw clearly it was a level four role, but there was work under there where there were some gaps, but there were some overlaps in terms of accountabilities, we felt, in terms of where the risk management and the corporate audit could sit versus the legal role, the risk role, where you actually weren't getting true value for that role at the moment. So you're actually paying someone or the role is not fully loaded to be at the level of complexity that you needed it for in terms of the work to be done in terms of compliance around risk. So given the focus on that, we thought it was critical that the risk role also reported to you. So you weren't getting any filtering of the information, you had your go to person there. So CFO remains as a direct report. Again looking at ICT big data and information office, you've got a corporate services role in there, which again long value adding in terms of the ICT function. So the opportunity to remove that again to ensure that you've got the focus on what's happening from the ICT service provision and the big data across into the areas which actually require that support. So again, you've got closer control and closer monitoring on what's happening in that role. We saw that as a level shift from four to five due to the increased work that we'd be putting in the financial fact, enabling you to give recommendations to you in terms of the big data strategy and actually then managing the support and the functions that needed to provide that risk. I've talked about briefly HR again level shifting from four to five.
Speaker A Why?
Speaker D Because there's a significant transformation project here. The transformation project is yours, it is the CEO's project, but we'd expect you to delegate the coordination of that into the HR role so that they're actually monitoring the compliance for that with you question, we had an extensive debate around service provision. So should it be sat within the output function? So should HR and finance support sit within these? Why we came to this model really was around value add. So the risk from an HR perspective around going rogue if you like, the HR support there being around enabling the business units to circumvent the HR systems rather than bringing the feedback on the systems back into HR to enable that improvement work to happen under you. So we actually wanted to keep them here. Similarly, in terms of value add, we felt in terms of the support that the HR specialists would need in terms of doing their job, in the integrated view, it was better integrated under you rather than under the CEO. So that was our so the support functions that go with that. Again, importantly, I guess the question about we did it in finance and in HR, the risk of not being able to get the service which would be one that would present underneath each of the business units. So you actually gave dedicated resources for each of them. So they've actually got the dedicated resource so it would look like on a day to day basis they worked for each of these business units so they would understand the culture, understand the issues, understand the work to be done, but in actual fact they come back for the value add to the support function. So that was our position. There similar challenge around marketing.
Speaker A Is the business unit going to judge their performance?
Speaker D They give the feedback, so they give feedback, but the performance the manager is here and so we'd expect the feedback to come across.
Speaker A So I'll end up doing the performance judgments around those Hrpv with input from these.
Speaker D Absolutely, yeah, recommendations. There decisions here. The marketing we struggled with around there, whether it was actually level five or not. And it comes back to we moved some of the product development out from underneath this consumer business role. Why? Because even at level five we were worried about the role balance there. There's 1000 branches that sit underneath that role and so actually can you get fully effective product development whilst being the core output function within your organization. So it was a challenge for us there. So whilst it's not the perfect solution, we felt was better placed here.
Speaker A Again, sort of separating the thinking and development work over here and more executional work over here.
Speaker D Exactly. So input. So data comes in here. So what's happening out in the branches? What are the types of trends managers are seeing? They actually provide that data through here. There's some processing and integrated view on the product. So what does the product need to be in ten years time from a business perspective? And then that goes back there for recommendation. So it's integrated through here.
Speaker A And what's the connection between that bipolar thing, if you will, and the It crew? Is there a play for it in here as well?
Speaker D The ICT is there to provide the tools to enable that analysis to take place. So they're providing the tools, they're setting up the framework through which that data comes in. The analysis happens here.
Speaker A The product recommendation, would that be that the CIO would have the databases, if you will, and the analytical engines?
Speaker B Yes.
Speaker D So the assets are here, but in actual fact, what happens with that data and the recommendations of what the data trends are telling us come from here rather than ICT. That's about it. Key piece of work in terms of integration here is around the processes to ensure that people have the access to the support that they need. And that's clear around how those role relationships work. So, transitional phase, the people work for the CEO will go up. So more direct reports as we go through this restructuring piece, whether once this becomes embedded and the systems are put in place, whether the complexity of some of these little five roles reduces in time, that's something we need to look at as we move through.
Speaker A Any questions? Martin? No, I think I understand that. We just want to summarize kind of quickly what we've done. So like our colleagues yeah, like our colleagues, I will. So like our colleagues, we recognize that we're suggesting level shifting. So you can see that. And a lot of us came up with that idea along the requisite principles. We've suggested this being a level six organization, which means that it's a portfolio of businesses. So we suggested three lines of business, each of which is a level five business, each of which the division president is the manager of the P L. And we also just did some back of the napkin calculations to show you what we've done here. So what we did is we said we looked to see what was the current cost of management. So given your current structure, we looked at your number of level four, five, and six, and we calculated the number. So you had one level six. So you had 34 people between level.
Speaker C Four and level six.
Speaker A Based on our proposed recommendation, we've reduced that number to 31. Again, making some estimations. You've spent about seven and a half million dollars for your current cost management of four, five and six, and it's going to be now $6.4 million. The principle is the same. This is back of the napkin, we're not sure. But here's the more important thing. So each level has to add a value. That's the notion of differential value. So from our point of view, levels four, five and six are really responsible for driving this innovation. So when you do some put now a corporate finance template on that. We actually have this at the office. We run these calculations for a lot of companies with mark, but in this case, again, we just estimated it, but the principle remains the same. Right now your stock value is $14 a share, whatever it is. But what the marketplace is saying is we don't expect just to pay for what you're doing today, but we expect that you're going to grow and that's why you're doing this big data and that you're going to be creating x amount of future value. That's why we're paying a premium for your company. If we were just paying for the current cash flow, we wouldn't pay you that much. So there's already built in expectation that you guys are going to grow. We call that future value. The unique value added work at levels four, five and six is to deliver this future value, not levels one, two and three. Levels one, two and three keep the lights on. They do current operations. Level four is responsible for innovation, new products, new services. Level five, new product, excuse me, new business model. Level six is creating synergies among this portfolio of businesses. When you put a lens on it, then that means that levels you're levels four, five and six, you guys need to be focusing on generating $6.2 billion in future value. Now what does that mean? That doesn't mean today Division X, you give me a check for a million dollars. You need to be thinking about your operating plans and your executive scorecards need to be aligned toward creating this. You want to be careful as you move to this big data solution. You don't get drugged into doing the day to day work. So these high levels need to have corporate scorecards and operating plans that are aligned with creating this future value. Got you. All right, so then the question becomes within the time frames of four or five. Absolutely. So again, that's why it's important because these are not projects. This transformation can go five to ten years is I wouldn't want my boss to be going in front of the board and saying, I'm going to give you six. That's right. Tomorrow. But I'm just saying though, that this is a target to think about so that we're not just talking about stuff like we're going to do, but that. There is some metric around that. Have you worked out the implications for increased CEO compensation based on yeah, right now you're not even looking this I think you're underpaid right now at 800,000. Okay, so we just ran some internal pay multipliers to kind of guess what these numbers were. But we just want you to start to think about what the numbers associated with that are. Any questions? Anything from the group? Thank you very much. Thank you very much. And again, I think we were very, very impressed as we read some of the case data that while this CEO has been here for the past two years, you could see in the results that we were provided that the bank has been growing. The bank has been doing a very effective job of basically creating some surplus and creating some opportunity. But the concern that the CEO had, as we kind of discussed where the bank is now and the question of where's the bank going to be five years from now, ten years from now, and 15 years from now. We can see that among the strengths of the bank in the existing organization structure is it's a very, very flat structure with a lot of local boutique businesses. And as such, we've accumulated a lot of good, strong banking relationships. The problem we have competitively is that as we talked to the CEO, we said, where is this bank going? And we looked at the current organization structure, we didn't see the risk information, we really didn't see the kind of analytics that would be associated to looking at the capital position of the bank. So while we have an enormous number of strong customer relationships, we have a good income statement, we have a good balance sheet. The issue that we're really concerned about is what's our competition going to look like five years from now, ten years from now, 15 years from now, because we have a lot of customers. But what do we really know about our customers? So the concern we really have as we kind of look at our competition, we kind of look at how we're positioned today, is there are two main issues that we've got to look at. We've got to look at retail banking and we've got to look at commercial banking, into which we're going to put into which some of our investment, investor relation services, et cetera. But the point is that when you really look at the nature of competition in banking, there's this concept again that we, as a regional bank, even though we've been successful, we've got threat levels that lie ahead of us. Because we've got the big national banks all empowered by large infusions of cash that came out of the Tarp programs expanding and taking market share away at very, very large rates. We've also got something called community banks coming in which have been cherry picking through the concept of local, better customer service, but have been cherry picking slowly some of our best customers. So we've taken a look at where we are today and we said although people are comfortable, people are happy. We were able to give some good bonuses during this past year that we've got to take a fundamental look at how we're going to grow, where we're going to be positioned in the future, and how do we really structure ourselves as a customer oriented, market oriented bank and accumulate enough analytics about ourself. So as the competitive market share data changes and we're going to make decisions about where do we put our capital? How do we put our capital, basically in our current strengths, which looks like it's our commercial banking business versus our good consumer loan retail business, which is still under grave threat from powerful large institutions with superior technology. And these were the issues that we talked about. And this is where we found Requisite was so essential to kind of help us look at the current talent and the current levels and the current authorities that are in place and to figure out what we can do to recognize how do we put the talent together? How do we marry them to resources and accountability so we become a faster moving institution. So I'm going to turn it over basically to the people who've taken accountability for the restructuring.
Speaker H So Glenn represents the new SVP of retail. What is organization going to look like?
Speaker I We're moving to a two business structure and rather than three businesses, we've decided that the investment banking probably we're going to fold under commercial so that we're really dealing with a two business unit operation. Now that my business unit. We want these to be P l accountable units. So the general principle is we want the president of that business unit to have as much as broad a control as possible. Marketing, financing have to build up so they can manage this as their own business. We do want to set up, because we have 1000 branches, we want a regional structure. So we would set up a regional structure, we would separate out the operations. Included in the operations would be the 1300, ATMs and that sort of thing. And we also need a customer service under this business itself. So that's the basic structure. We'll contract basically with human resources, with finance, with others to give the support that we don't have internally.
Speaker A Cool. All right, rampaya?
Speaker C Well, very similarly, the idea was to set up a corporate commercial investment bank unit which would be PNL accountable and try to bring as much as operational functions that are needed to deliver on those challenges. Under that of we have two different ways of looking at that. We have products, so we have loans, we have commercial lending, leasing, and we also have a commercial side which includes major account management and also the marketing function that was kind of floating without a clear role at level four. In addition to that, investment banking, which was already functioning as a level four type of type of function, would be brought under the corporate commercial unit. So it's very similar to the retail rationale but to looking more at products and customer relationships.
Speaker A Now, the CEO was so happy with the initial consulting advice she was getting, she actually asked me if I'd be willing to consider joining the bank as the Chief Risk Officer. Can I tell you? And I said, Only if Steve Miller comes with me. But anyway, if you notice that the risk function previously was under the financial organization, it was kind of buried under that organization. And very typically you'll find in many companies that the real Chief Risk Officer is the treasurer of a company. But in this case in the world of banking, the risk management function is becoming extremely important. So if we look at the kinds of tasks again, that an upgraded risk function is really focusing on, I have to go over here to remember some of my own notes. But really we're taking this concept of stress testing, which is now basically becoming a more sophisticated process, which is a global process tied into basel capital reserves analysis. And again, we've heard that some companies, including the major Wall Street banks, have actually, quote failed stress tests. So we want to have a superior stress testing process. We want to use analytics. We want to be the bank that has a balance sheet as clean as the major Canadian banks, as impossible as that may be to think that we can compare ourselves to a Canadian bank, that is an aspirational goal. And as Canadians, we applaud you and we may get a case of Molson sent down or something like that goal. But the other very specific thing that's particular to the retail banking business is that we really need superior technology for fraud detection and over. On the commercial loan side, we need to look at antimoney laundering. And again, on the regulatory compliance side, we want to avoid any of these major mega penalties that you see have accrued to some of our banks that have not been strong in that function. So for this reason, we're elevating the whole risk management function. We're actually strengthening our Risk committee, we're strengthening our relationships with our Asset Liability Management Committee so that we're all in sync with our stress tests and our financial projections. But again, we really are relying on much, much stronger analytics and we need more care about the integrity of the data if we're going to have a good risk management program.
Speaker H So the next new office that we're defining is the Chief Data and Growth Officer. This is a brand new function that doesn't really exist anywhere in the current structure. Who's responsible for making the super regional into a data driven organization and treating data and the growth strategies as something uniquely different from what a CIO might do uniquely different but also very related in partnering with the business units and even across the business. So underneath that, there will be a new team, the data science and analytics team, there will be the data governance team, who will be making sure that all the data that everyone's working with is actually coherent and we don't have ten different records for the same company. There's lots of other issues that can fraud issues that can emerge when both those things happen as well. We'll provide data and analytics as a service to the entire company and we will have a growth strategy role supporting the business units and supporting the CEO, because in this model, you notice that we simplified it to two business units. We may find as we're building this out, that we may need to add another business unit back in. That's why we made this achieve data and growth.
Speaker A Right?
Speaker H So it's really all the pieces are in here together to manage that data and the analytics, but support the business as is needed, but we're not going to run the data operations. And that's where Dimitri comes in to talk about the CIO office.
Speaker A Yes, hello. My role was hugely undervalued in the company. My time span was slightly above two years and I was reporting to the CFO, which is a big mistake. I think these guys cannot implement their plans if I don't provide them right. Technology and the fact to position my role at Startup Five means that my task will be to implement, to design and implement a huge investment program that I will manage in a centralized manner to, first of all, ensure that the entire architecture and platform works. Then we have a battery of very effective and efficient applications which will suit the needs of retail and corporate. My colleagues and I will have my SLAs for that. And I will have a Mr. Q, you remember James Bond Mr. Q function, which will exactly create not only the support function, but my competitive advantage against competition to put that data and inject into products and give to the customer. That's my role, and this is my first role in it, so which proves that my complexity of thinking recompense compensates the lack of my skilled knowledge.
Speaker H So where did our CFO go?
Speaker A All right, Pablo. I'm not so happy I keep the same position. This is a good thing. Yeah, that's a good thing. Hope I will get the same bonus. And I got some functions that I left that are going into the risk management, but on the other side, I'm getting corporate services because nobody knew what to do about it. I hope I would do a good job here. So the CEO doesn't take those roles underneath her directly, but I continue to have the same CFO functions I had before, the controlling finance, planning, treasury and tasks. And the other thing is that audit now will be reporting directly to the CEO and maybe with some dotted line to the board because of the regulations. So auditing will have a scope covering the whole company. Actually learning all the teachings you've been giving me, it sounds like maybe you've actually decomplexed this role when you took all that risk stuff out. And what continues to make it stay at level five? At level five, well, it got some planning and controlling functions that are very complex because of the size of the company. Also tax and also corporate services actually are several functions here that got some implications in terms of business is kind of in a bit of a mess, isn't I guess we're saying a big fix on that part of the business. Probably better go to America than the human resources. Absolutely, I would touch it.
Speaker H And where's Ken?
Speaker A You were teasing him, you wanted to make him feel better. General counsel, he's surrounded by a large number of lawyers, but need to say compliance and regulation super regional, which means many states, which means we're going to.
Speaker E Have to be looking not just the.
Speaker A Past in terms of compliance, but also the future. What the regulation changes are going to be in compliance requirements are.
Speaker F Okay. You are now looking at the most important person. My name is Alejandra. I am the SVP of HR. And the reason that I was placed in Stratum five, I never can think in a different time span. It's at least five to ten years and I am the driver. HR is the driver of all the strategies. And you already hear my team members that they are very articulated and very well spoken about all the transformational change. So who is the driver?
Speaker E HR.
Speaker F So the most important thing is that I am supporting all the business units. So you can think why the business partners, they are not falling under the business units. We strongly believe in these collateral, cross functional things and this accountability. So what we manage is an effectiveness assessment that include the calibration sessions. So in these calibration sessions, we have the feedback of all the business units leaders. So it's very easy to make all HR business partners and other employees of HR to make them accountable of their duties. So this is the reason that I am located in the spy level five, and also because we are in charge of the leaders of tomorrow. The leaders, if we are talking about where is going to be the bank in five years, in ten years from now. So we are creating a very solid succession planning in order to identify which kind of skills, which kind of competencies, which kind of accountabilities, the new leader or the leader evolving from now into ten years will need. So I think that not the least I want to take advantage of this opportunity to thank my team members for doing a great job. We had lots of fun together and I think that it was a very integrative work. So I want to thank you and let's take a picture together.
Speaker A Thank it's. First of all, I thought that I thought that you folks did great, great job, great work in terms of being able to really work through some complex things in a fairly short period of time with very limited information. And so when I look at the outcomes of that, very thoughtful. There are some places that you've come out to similar points in terms of strategy, organization, which seems right. You've knocked out some redundant positions. You've pretty consistently done that. So that seems right. I think it was really good work. You've compressed a couple of the business units, and that streamlined things a bit. You've got the support functions, you've done that in some different ways, but you've got them. So I think really good work. A couple of comments. These are general comments, not specifically about the exercise, but more about the sort of thing that you were dealing with in this particular case. The first is that in terms of a Stratum Six organization, most business units come together at five. Five is sort of the natural place where business units come together. Historically, six has been thought of as a little bit unstable, kind of between a Five, which is a real business unit, and a seven. And the thought was that there are some issues with six in terms of stability. My experience has been that sixes can stick around for a long time. I don't think that's the case. One of the things that's different is I'll talk about my experience. One of the things that's different with a six is that the Stratum Five business units drive the six. You folks saw that they needed to be at five in terms of the support areas, finance, human resources, It, and so on. My experience is it's harder for them to get up to five. It's pretty clear in terms of a Stratum Five organization with them being at four. But in terms of a six, it's harder to get them up to a five level. There's often some issues there in terms of around that four or five boundary. How do they fit in terms of the business units? I think for sure, you want to get the core part in as much as possible. You got to develop your products, market and sell, deliver your products, so on and so forth. So when you think about a business unit doing that, in terms of the services, HR, finance, It, legal and data, and I'll talk about data separately. I think the real key there is that you've got to line them up properly with both the main function and also with the business unit. So if you've got a Stratum Five business unit head, you've got a Stratum Five HR head. Having a Stratum Four HR person who links this way and links this way is critical in terms of providing the support and connection that's necessary both ways. So I find that really critical in terms of the design. My experience is that different organizations make different choices around which one of those lines is managerial and which one of those lines is cross functional. And both can work. The experience going into organizations is that virtually all managers will say that the only way it's going to work is if I manage it. Because if someone else manages it, they always screw up and they don't have the experience of cross functional accountabilities and authorities working. One of the real gifts that I think this sort of approach can give is that it is possible to have cross functional accountabilities and authorities at work. You don't have to manage something in order to have effectiveness in terms of an organization. So if you've got HR, say, and it's managerial to the head of HR, then it's cross functional to the head of the business unit, you provide services and so on. Conversely, if it's managerial to the head of the business unit, the head of HR has a quality assurance role, making sure that the quality is there, that training and development is there, and so on and so forth. So in both cases there's that duality. And if you've got the duality and you really understand both types of managerial accountabilities and authorities, you can actually switch them. We've got a situation now where legal department is looking at moving from a cross functional type relationship to a managerial relationship. Finance tends to like the managerial a bit more, human resources tends to be a bit mixed. It tends to be either way. The really interesting part for me in this exercise was around the data analytics. I mean that's, that's, that's sort of a new evolving piece. That's the one that we had some of the biggest differences on in terms of how we do that. There are a number of different options and my perception is and if there are experts in the room who know more about it than I do, but my perception is it's a relatively new area and that how it fits in best in different organizations, is an evolving process. I've seen arguments for different types of reporting relationships and I think it kind of gets back to the mantra of organization design, that you know the strategy.
Speaker B And you know the work.
Speaker A Those are the starting points. You know the strategy and you know the work. And if you know both of those things, then you can help a client to design it in the best way that works. But with this system it's also flexible that as business needs change, you can make changes in the design. Final comment is, and this exercise didn't give you an opportunity to do it, but one of the things I find useful is to think of an organization as a whole system and really take a look at the whole system in terms of that design process. In this particular example, one of the potential wringers is in terms of the branches. There's what, 1000 branches or whatever, I forget what the number is. But design is kind of top down and bottom up and you kind of hope it meets in the middle and works. But taking both into account is important because if you've got a lot of branches and or whatever, that may have some implications in terms of what the design is going to be and where you need to place those integration points. Okay, those will be a few additional comments in terms of having looked at those types of organizations. But again, let me conclude in terms of what great work you did with limited data.