The situation
The kitchen appliances company dismantled its traditional middle-management structure and reorganized into several thousand small, self-managing microenterprises — each with its own P&L, its own decision rights on hiring and pricing, and direct contracting with the customer and with each other. The model, known internally as ("employee–customer integration"), replaced vertical supervision with horizontal contracting: units earn revenue from the value they deliver to the next unit or to the end customer, not from budget allocations. Corporate functions became internal service platforms competing for internal business rather than mandatory cost overheads.
The challenge
- Decision latency. Simple choices require alignment across three to five functional leaders, none of whom can decide alone.
- Diffuse accountability. When outcomes miss, every function can point to its own KPI being green.
- Hand-off loss. Quality, context, and momentum degrade at each functional boundary; the customer experiences the sum of these losses.
- Stalled transformation. Digital and AI programmes are chartered functionally, so they deliver functional tools that no one integrates into an end-to-end process.
- Cost opacity. Leadership cannot answer "what does it cost us to serve this segment and is it profitable?" without a three-week finance exercise.
- Duplicated effort. Multiple functions independently build overlapping capabilities, data sets, and vendor relationships.
- Change fatigue. Repeated reorganizations that shuffle boxes without changing decision rights have exhausted the organization's appetite — which is precisely why the next move must change how decisions are made, not who reports to whom.
What we did
Phase 0 — Mandate and Design Authority (4–6 weeks)
Secured explicit CEO sponsorship and a small, senior design team with real decision authority. Defined the case for change in business terms, not organizational ones. Critical: agree upfront that this is a decision-rights change, not a boxes-and-lines exercise — this framing determines whether the effort succeeds.
Phase 1 — Value Stream Identification (6–8 weeks)
Mapped how value actually flows today, from customer trigger to fulfilled outcome. Resist mapping the org chart. Identify the natural value streams — typically 5 to 9 at enterprise level, segmented by customer type, channel, or product economics rather than by internal convenience. Quantify each: revenue, cost-to-serve, cycle time, headcount touched, current hand-off count.
Phase 2 — Operating Model Design (8–10 weeks)
For each value stream defined:
Decision rights — an explicit list of what the stream owner decides alone, decides with the function, and escalates. This is the single most important artifact of the entire programme.
The dedicated core team — who moves permanently into the stream versus who stays in the function.
The P&L — the financial boundary and the transfer-pricing logic between streams and platforms.
Function-to-platform conversion — what functions retain: standards, capability building, talent stewardship, risk and compliance guardrails, shared infrastructure.
The governance forum — where streams and platforms resolve conflict, with a decision SLA.
Phase 3 — Pilot (one to two streams, one to two quarters)
Chosen one stream with high pain and high visibility, and one that is structurally different, so you learn about the model rather than about a single case. Run them fully — real P&L, real decision rights, real dedicated teams. Half-measures in the pilot produce ambiguous evidence and stall the program.
Phase 4 — Appoint and Enable
Selected value stream owners deliberately: general-manager temperament, credibility across at least two functions, comfort with ambiguity. Most organizations have fewer of these people than they assume — treat this as the binding constraint on rollout pace. Invest in a genuine enablement program; these leaders are moving from functional depth to system-level trade-off making.
Phase 5 — Scale (3–4 quarters)
Sequenced the remaining streams by readiness, not by political pressure. Migrate the financial architecture — planning, budgeting, and reporting must follow value streams or the old structure quietly reasserts itself through the budget cycle. This is where most transformations fail.
Phase 6 — Rewired the Reinforcing Systems (continuous)
Performance management, incentives, career paths, talent reviews, and the management calendar all need to align to the new model. A value stream structure sitting on top of functional incentives will revert within four quarters.
Two things to get right throughout: treat the functions as winners, not losers, in this design — reframe them as centers of capability and standards, or you will fight the transformation from within. And communicate to the front line in terms of what gets easier for them, not in terms of organizational architecture.
What it delivered
Commercial outcomes
Faster time-to-market and shorter end-to-end cycle times
Improved margin visibility and genuine cost-to-serve transparency
Better customer experience through fewer hand-offs and consistent ownership
Higher hit rate on transformation and digital investment, because someone owns the end-to-end process being transformed
Organizational outcomes
Clear, single-point accountability for outcomes that matter
Materially reduced coordination overhead and meeting load
Faster decisions at lower organizational levels
Executive time redirected from arbitration to strategy
Strategic outcomes
A structure that can absorb new business models without another reorganization
A pipeline of general managers built through real P&L ownership
Coherent data and technology architecture with named owners
Scalable capability — new value streams can be stood up on a proven pattern rather than invented each time