Harvard Case - Changing the Landscape at Arcane: Squad Structure
"Changing the Landscape at Arcane: Squad Structure" Harvard business case study is written by David Loree, Fernando Olivera, Cam Buchan. It deals with the challenges in the field of Human Resource Management. The case study is 12 page(s) long and it was first published on : Feb 13, 2023
At Fern Fort University, we recommend Arcane implement a phased approach to transitioning from a functional structure to a squad-based organization. This approach will focus on building a strong foundation of talent management, leadership development, and change management to ensure a smooth and successful transformation.
2. Background
Arcane, a rapidly growing software company, faces challenges in adapting to its increasing size and complexity. The current functional structure, while effective in the early stages, is hindering collaboration, innovation, and speed to market. The CEO, John, recognizes the need for change and proposes a squad structure, inspired by successful companies like Spotify. However, implementing this change requires careful consideration of the existing organizational culture, employee concerns, and potential risks.
The main protagonists in this case study are John, the CEO, and the key leaders within Arcane, who are tasked with navigating this organizational transformation.
3. Analysis of the Case Study
Arcane's situation can be analyzed through the lens of organizational structure and design, organizational behavior, and change management.
Organizational Structure and Design: The current functional structure creates silos, limiting cross-functional collaboration and hindering agility. The squad structure, with its cross-functional teams, promises to address these issues, fostering innovation and faster decision-making.
Organizational Behavior: The shift to a squad structure will require significant changes in employee behavior. Leadership styles will need to adapt, emphasizing collaboration and empowerment. Employee motivation will be crucial, requiring clear communication about the benefits of the new structure and providing opportunities for career advancement within the squads.
Change Management: Implementing such a significant organizational change requires a structured approach. Arcane needs to address employee concerns, manage resistance, and provide adequate employee training to ensure a smooth transition.
Framework: To analyze the effectiveness of the squad structure, we can utilize the McKinsey 7S Framework, which considers seven key elements of organizational effectiveness:
- Structure: The proposed squad structure aligns with Arcane's growth trajectory and need for increased agility.
- Strategy: The squad structure supports Arcane's strategic goals of innovation and faster product development.
- Systems: New systems need to be implemented to support the squad structure, including project management tools, communication platforms, and performance measurement systems.
- Shared Values: Arcane needs to clearly communicate the values that underpin the squad structure, emphasizing collaboration, ownership, and customer focus.
- Skills: Employees will need to develop new skills, such as collaboration, problem-solving, and self-management, to thrive in the squad environment.
- Staff: Talent management strategies need to be implemented to attract, retain, and develop the right talent for the squads.
- Style: Leadership styles need to evolve to be more collaborative, empowering, and agile.
4. Recommendations
Arcane should implement a phased approach to transitioning to a squad structure:
Phase 1: Planning and Preparation (3-6 months)
- Strategic Planning: Define the objectives, scope, and timeline for the transition. Conduct a thorough analysis of the existing structure, identify key stakeholders, and develop a communication plan.
- Talent Management: Conduct a skills gap analysis to identify training needs and develop a plan for employee training and leadership development.
- Organizational Development: Develop a clear framework for the squad structure, including team composition, roles, responsibilities, and decision-making processes.
- Change Management: Communicate the rationale for the change, address employee concerns, and develop strategies to manage resistance.
Phase 2: Implementation (6-12 months)
- Squad Formation: Form initial squads based on projects, product lines, or customer segments.
- Leadership Development: Train existing leaders on leadership styles that foster collaboration and empowerment within the squads.
- Employee Training: Provide employee training on agile methodologies, communication skills, and collaborative problem-solving.
- Performance Management: Develop new performance metrics aligned with the squad structure and implement a system for tracking progress.
Phase 3: Optimization and Evaluation (Ongoing)
- Continuous Improvement: Regularly review squad performance, identify areas for improvement, and adjust the structure and processes as needed.
- Employee Engagement: Conduct regular employee surveys to gauge employee satisfaction, identify challenges, and ensure the squad structure is meeting its objectives.
- Succession Planning: Develop a plan for identifying and developing future leaders within the squad structure.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The squad structure aligns with Arcane's mission to deliver innovative software solutions and fosters a culture of collaboration and innovation.
- External customers and internal clients: The squad structure aims to improve communication and responsiveness to both external customers and internal stakeholders.
- Competitors: The squad structure is a common approach among successful tech companies, allowing Arcane to remain competitive in the rapidly evolving software industry.
- Attractiveness ' quantitative measures: While quantifying the benefits of the squad structure is challenging, it is expected to lead to increased productivity, faster product development cycles, and improved employee morale, ultimately contributing to higher profitability.
6. Conclusion
Arcane's transition to a squad structure presents a significant opportunity to improve organizational agility, foster innovation, and enhance employee engagement. By implementing a phased approach with a focus on talent management, leadership development, and change management, Arcane can successfully navigate this transformation and unlock its full potential.
7. Discussion
Alternatives not selected:
- Maintaining the current functional structure: This would fail to address the challenges of collaboration, innovation, and agility, ultimately hindering Arcane's growth.
- Rapid implementation of the squad structure: This could lead to chaos and resistance, undermining the success of the transition.
Risks and key assumptions:
- Resistance to change: Employees may resist the new structure, requiring effective communication and addressing concerns.
- Lack of leadership support: Strong leadership commitment is crucial for the success of the transition.
- Inadequate training and development: Employees need adequate training and support to thrive in the new structure.
8. Next Steps
- Form a change management team: This team will be responsible for overseeing the transition process.
- Develop a detailed implementation plan: Outline the steps, timelines, and resources needed for each phase of the transition.
- Communicate the change: Clearly communicate the rationale for the change, the benefits for employees, and the steps involved.
- Pilot the squad structure: Implement the squad structure on a smaller scale to test and refine the approach before full-scale implementation.
- Monitor progress and make adjustments: Regularly review the progress of the transition, identify challenges, and make adjustments as needed.
By following these steps, Arcane can ensure a successful transition to a squad structure, unlocking a new era of growth and innovation.
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Case Description
In November 2019, digital marketing firm Arcane was six months into the conversion of its London, Ontario, headquarters into an organization of "agile" squads (small, self-managed teams)-a radical departure from the discipline-based silos that had served the agency since its beginning in 2011. Chief executive officer Lindsay Schneider and chief operating officer David Bunce, the architects of the change, were preparing an update for Arcane's Ownership Group the following week on the status of the squad structure rollout. Schneider and Bunce were tasked with reviewing the introduction of the squad structure and assessing the success of its implementation.
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