The TIPS model

The TIPS model was first developed by Dr. Hole to secure efficiency in turnaround cases, but can  be used to strive for operational excellence in an organization.

The four concepts of the TIPS model are:

  • Technology
  • Intellectual Capital
  • Processes
  • Strategy

Strategy: The model starts on the bottom where Strategy is the purpose driver of the organizations. It is the road map of to the future for the organization.  Business excellence is a strong and clear vision and a logical, applicable strategy, comprehensible to everybody inside and all partners outside of the organisation, to adopt.

Processes: Is the second parameter of the TIPS model. To support and the strategy, the organization need to have a end to end value stream of their work processes, it need to be measured, customer adapted, standardized methods and tools is needed.

Intellectual Capital: Is the third parameter. The employees needs skills and training, be aware of their roles and responsibilities, learning on how to cope with and be part of a continuous improvements culture. The organization need to drive  HR development of its employees.

Technology: Is the fourth and last parameter. Technology needs to support the work processes of the organizations and not vice versa where the technology comes first and then working processes. The technology is also a support tool for employees, it is as much about organizational change and new ways of working, where IT and technology is support functions for the organization.

TIPS eng

Transforming your corporate organization requires time and patience, investment in people (I, intellectual capital, TIPS model) and technology (T, TIPS model) and commitment from executive leadership, middle management, and the workforce.

The TIPS model and Continuous improvement is a way of ruling, a way of working and a way of thinking – which contribute to increased value in the short and long term for clients, employees, owners and society. It’s about the organization manages to have two thoughts simultaneously:

  • Completion of work processes in the right way
  • Daily improvement of the way the work processes performed on
  • Some key principles for successful Continuous Improvement

The TIPS model and Continuous improvement must be anchored at board level to ensure understanding of the importance of continuous improvement efforts. For example, as the board of directors of the Norwegian Insurance company Storebrand has decided that continuous improvement (Lean) is a strategic business area that is equal the insurance business.

Management must engage themselves and all employees in the development and continuous improvement

One must treat causes, not symptoms, often we see that organizations treat symptoms rather than the underlying causes

  • Focusing on the customer and see it from the customer’s perspective (Lean thinking).
  • Focus on achieving value-creating flow and reducing waste (not value-added services, from LEAN) and variety
  • Decisions must be based on facts and data and not emotions
  • A system to improve the performance of a process, a product or an organization
  • Think A – Z, from end-to-end processes and systems
  • Implementation and training is critical to building a culture of continuous improvement

We see time and again that one cannot succeed in a process of change. In the implementation of a process of change that continuous improvement is, there’s a risk of getting lost. It is important that you work from a standard that Lean and ISO. On the other hand, it is important not to become “regular riders’ ie that all the focus will be on tools, methodologies, templates and structure and where you lose focus on what actually matters – creating lasting results through reel change. Most of us have probably been involved ‘rule riders “who should only follow a template, fill out paperwork from A – without understanding what it is all about. Then it is also no change in the organization when such persons sitting as process managers.

In order to be able to create a culture that works with continuous improvement must add a significant resource in training to provide an understanding of why and how to work with this. Through this training you will be able to create a fertile ground for the continuous development of the organization.

To be able to create a culture that works with continuous improvement must add a significant resource in training to provide an understanding of why and how to work with this. Through this training you will be able to create a fertile ground for the continuous development of the organization.

Although every organizations is different, and there is no set formula for determining the appropriate design for your organization. Although through my 15 years of leading turnaround process in major Nordic organizations, I have identified some few guiding principles additional to my TIPS model that apply to every company. These have been developed through years of practice and using the TIPS model in organization to improve performance in 10 national and Nordic organizations across different industries.

Make a clear strategy: The TIPS model should start with corporate self-reflection: What is your sense of purpose? How will you make a difference for your clients, employees, and investors? What will set you apart from others, now and in the future? What differentiating capabilities will allow you to deliver your value proposition over the next two to five years?

For many business executives, answering those questions means going beyond your comfort zone. You must set a bold direction, marshal the organization toward that goal, and prioritize everything you do accordingly. Sustaining a forward-looking view is crucial.

I’ve seen a fair number of organization turnarounds initiatives fail to make a difference because senior executives got caught up in discussing the pros and cons of the old organization. Avoid this situation by set the agenda

TIPS model with “DNA.”: Organization turnaround can seem unnecessarily complex; the right framework, however, can help you decode and prioritize the necessary elements. I have identified eight universal building blocks that are relevant to any company, regardless of industry.

The blocks naturally fall into four complementary pairs, each made up of one tangible (or formal) and one intangible (or informal) element. Decisions are paired with norms (governing how people act), motivators with commitments (governing factors that affect people’s feelings about their work), information with mind-sets (governing how they process knowledge and meaning), and structure with networks (governing how they connect). By using these elements and considering changes needed across each complementary pair, you can create a design that will integrate your whole enterprise, instead of pulling it apart.

You may be tempted to make changes with all eight building blocks simultaneously. But too many interventions at once could interact in unexpected ways, leading to unfortunate side effects. Pick a small number of changes — five at most — that you believe will deliver the greatest initial impact. Even a few changes could involve many variations.

Fix the structure last, not first: Senior executives know that their current org chart doesn’t necessarily capture the way things get done — it’s at best a vague approximation. Yet they still may fall into a common trap: thinking that changing their organization’s structure will address their business’s problems.

You can’t blame them — after all, the org chart is seemingly the most powerful communications vehicle around. It also carries emotional weight, because it defines reporting relationships that people might love or hate. But a organizational hierarchy, particularly when changes in the org chart are made in isolation from other changes, tends to revert to its earlier equilibrium. You can significantly remove management layers and temporarily reduce costs, but all too soon, the layers creep back in and the short-term gains disappear.

In an org redesign, you’re not setting up a new form for the organization all at once. You’re laying out a sequence of business process interventions that will lead the company from the past to the future. Structure should be the last thing you change: the capstone, not the cornerstone, of that sequence. Otherwise, the change won’t sustain itself.

Make the most of the intellectual capital and top talent: The organizational intellectual capital and Talent is a critical but often overlooked factor when it comes to org redesign. You might assume that the personalities and capabilities of existing executive team members won’t affect the redesign much. But, you need to redesign positions to make the most of the strengths of the people who will occupy them. In other words, consider the technical skills and managerial acumen of key people, and make sure those leaders are equipped to foster the collaboration and empowerment needed from people below them.

You must ensure that there is a connection between the capabilities you need and the leadership talent you have. For example, if you’re organizing the business based on innovation and the ability to respond quickly to changes in the market, the person chosen as chief marketing officer will need a diverse background. Someone with a conventional marketing background whose core skills center on low-cost pricing and extensive distribution might not be comfortable in that role. You can sometimes compensate for a gap in proficiency through other team members. If the chief financial officer is an excellent technician but has little leadership charisma, you may balance him or her with a chief operating officer who excels at the public-facing aspects of the role, such as speaking with analysts.

Focus on what you can control: Make a list of the things that hold your organization back: the scarcities (things you consistently find in short supply) and constraints (things that consistently slow you down). Taking stock of real-world limitations helps ensure that you can execute and sustain the new organization design.

Constraints on your business — such as regulations, supply shortages, and changes in customer demand — may be out of your control. But don’t get bogged down in trying to change something you can’t change; instead, focus on changing what you can.

Promote accountability: Redesign your organization so that it’s easy for people to be accountable for their part of the work without being micromanaged. Make sure that decision rights are clear and that information flows rapidly and clearly from the executive committee to business units, functions, and departments.

A global Business Process Outsourcing company was struggling with slow execution and lack of accountability. To address these issues, it created a matrix that could identify those who had made important decisions in the past few years. It then used the matrix to establish clear decision rights and motivators more in tune with the company’s desired goals. Sales directors were made accountable for dealers in their region and were evaluated in terms of the sales performance of those dealers. This encouraged ownership and high performance on both sides, and drew in critically important but previously isolated groups, like the manufacturer’s warranty function. The company operationalized these new decision rights by establishing the necessary budget authorities, decision-making forums, and communications.

When decision rights and motivators are established, accountability can take hold. Gradually, people get in the habit of following through on commitments without experiencing formal enforcement. Even after it becomes part of the company’s culture, this new accountability must be continually nurtured and promoted. It won’t endure if, for example, new additions to the firm don’t honor commitments or incentives change in a way that undermines the desired behavior.

Let the “lines and boxes” fit your organization’s purpose: Every organizations, there is an optimal pattern of hierarchical relationship — a golden mean. It isn’t the same for every organizations, it should reflect the strategy you have chosen, and it should support the critical capabilities that distinguish your organizations. That means that the right structure for one organizations will not be the same as the right structure for another, even if they’re in the same industry.

Think through your purpose when redesigning the spans of control and layers in your org chart. These should be consistent across the organization.

You can often hasten the flow of information and create greater accountability by reducing layers. But if the structure gets too flat, your leaders must supervise an overwhelming number of people. You can free up management time by adding staff, but if the pyramid becomes too steep, it will be hard to get clear messages from the bottom to the top. So, take the nature of your enterprise into account. Does the work at your organization require close supervision? What role does technology play? How much collaboration is involved? How far-flung are people geographically, and what is their preferred management style?

Accentuate the informal: Formal elements like structure and information are attractive to organizations because they’re tangible. They can be easily defined and measured. But they’re only half the story. Many organizations reassign decision rights, rework the org chart, or set up knowledge-sharing systems — yet don’t see the results they expect.

That’s because they’ve ignored the more informal, intangible building blocks. Norms, commitments, mind-sets, and networks are essential in getting things done. They represent (and influence) the ways people think, feel, communicate, and behave. When these intangibles are not in sync with one another or the more tangible building blocks, the organization falters.

At one Nordic pharmaceutical company, it was common practice to have multiple “meetings before the meeting” and “meetings after the meeting.” In other words, the constructive debate and planning took place outside the formal presentations that were known as the “official meetings.” The company had long relied on its informal networks because people needed workarounds to many official rules. The new CEO of the company redesigned its work processes, the leaders of the company embraced its informal nature, adopting new decision rights and norms that allowed the company to move more fluidly, and abandoning official channels as much as possible.

Build on the organizational strengths: Overhauling the organization is one of the hardest things for a chief executive or division president to do, especially if he or she is charged with turning around a poorly performing company. But there are always strengths to build on in existing practices and in the culture. Suppose, for example, that your company has a norm of customer-oriented commitment. Employees are willing to go the extra mile for customers when called upon to do so. They deliver work out of scope or ahead of schedule, often because they empathize with the problems customers face. You can draw attention to that behavior by setting up groups to talk about it, and reinforce the behavior by rewarding it with more formal incentives. That will help spread it throughout the company.

Perhaps your company has well-defined decision rights, wherein each person has a good idea of the decisions and actions for which he or she is responsible. Yet in your current org design, they may not be focused on the right things. You can use this strong accountability and redirect people to the right decisions to support the new strategy.

Conclusion: Remaking your organization to align with the TIPS model and your strategy is a project that only the top executive of a company, division, or enterprise can lead. Although it’s not practical for a CEO to manage the day-to-day details, the top leader of a company must be consistently presented to work through the major issues and alternatives, focus the design team on the future, and be accountable for the transition to the new organization. The chief executive will also set the tone for future updates: Changes in technology, customer preferences, and other disruptors will continually test