Many Boards have improved their structures and processes. Yet, despite all the corporate-governance reforms undertaken, many Boards failed the test of the financial crisis. This shows that even if the Board of Directors is stacked with high qualified members and best practices, these are not enough.
Human Dynamics has come to fore in today’s highly volatile business environment. Without the right Human Dynamics, there will be a little constructive challenge between independent Directors and Management, no matter how good the Board’s processes are.
Without Human Dynamics, the Board’s contribution to the company’s fortune is likely to fall short of what it could and should. This is also a concern for executives who are not Directors but report to the Board. Without Human Dynamics, it makes it difficult for them to develop healthy and productive relationships with their Boards. This can have a dire effect on Strategy Development or when organizations are undergoing Business Transformation.
The Importance of Human Dynamics
Human Dynamics is an organizational state where collaborative CEO and Directors think like owners and guard their authority. Without the right Human Dynamics, there will be a little constructive challenge between independent Directors and Management.
Why is Human Dynamics important? When there is a lack of Human Dynamics between CEO and Directors, this can lead to an ineffective performance in the Boardroom. Board’s contribution to the company’s fortunes will fall short of what it could and should be. Non-director executives will have difficulty developing a healthy and productive relationship with the Board. Most importantly, aspiring Directors will be unable to learn what it means to be a good corporate Director.
This can be detrimental to the organization and can direly affect its competitive advantage. However, achieving the right Human Dynamics is not easy. Understanding and identifying the contours of such a fluid interpersonal exchange can be a challenge to both the Board and the CEO.
The 3 Tests in Assessing the Board’s Human Dynamics
While it may be a challenge, building the right Human Dynamics between the CEO and the Directors is essential. There are 3 Tests executives can use to guide them in assessing the Board’s Human Dynamics.
- Board Ownership Mindset. Currently, outside Directors continue to be passive participants. They do not challenge Management beyond asking a few questions during Board meetings. This test is focused on building Boards to be vital stewards of the organization.
- CEO Collaborative Mindset. CEOs nowadays are failing to inform or involve the Board on critical developments such as merger discussions. As a result, there can be a breach of trust which can cost the CEOs their job. The second test ensures that a collaborative CEO is in place.
- Board Authority & Independence. The third test is focused on enabling the Board to protect its stand and independence. This is necessary when the authority of the Board is being chipped away as the CEO experiences greater success. There is also less robust questioning of Management’s proposal or worst, the readiness of the Board to agree to unreasonable demands on executive remuneration.
The 3 Tests for Boards is an effective guiding principle in developing the right Human Dynamics between the Board and the CEO. When it comes to well-functioning Boards, best practice structures are not enough. It is essential that the right Human Dynamics exists as it can help the Board and Management to fulfill their potential.
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Business Process Reengineering (BPR) can be a great success but it can also be a great failure.
After months or years of careful redesign, organizations can achieve dramatic improvements in individual processes. However, a paradoxical outcome has become almost a commonplace. Organizations suddenly find themselves watching the overall results decline. Process costs were reduced by 34% yet operating income stalls. Claims process time cut by 44% yet profits drop. It seems that organizations are squandering management attention and other resources on projects that look like winners but fail to produce bottom-line results for the business unit as a whole.
Reengineering can actually deliver revolutionary process improvements and many organizations have been undertaking major reengineering effort. However, like any major change program, a reengineering project can produce lasting results only if it is designed and implemented the right way.
Implementing Business Process Reengineering
BPR implementation is a series of waves that can wash over the organization for years, leaving a system for continuous improvement. It must be undertaken with a clean slate approach to process design. Only then can companies avoid a classic reengineering pitfall of focusing on fixing the status quo.
Implementation of the Business Process Reengineering requires that new infrastructures are planned and built to support this Business Transformation. The full commitment of senior executives on its redesign and implementation must also be present to ensure the success of the reengineering project.
It is essential that organizations have a good understanding of the success factors, as well as root causes of failure. While reengineering projects can succeed, it can also fail. There are 4 practices that are the most damaging.
The 4 Root Causes of Failure
The root causes of failure remain a challenge for organizations. These are 4 causes they must watch out for to achieve a successful BPR implementation.
- Assign average performers. This is the tendency of organizations to enlist average performers from headquarters. This often happens because of an existing belief that assigning top performers will affect the business unit’s performance.
- Measure only the plan. Measuring only the plan happens when there is a lack of a comprehensive measurement system. The organization also fails to track whether the implementation is succeeding or failing.
- Settle for the status quo. Settling for the status quo is a very deadly decision or reaction. When this happens, aspirations are never translated into reality. There exists the inability to think outside existing skill levels, organizational structure, or system constraints. Further contributing to this is the existence of political infighting on incentives and information technology during implementation. When this exists, often the decision is to maintain a status quo that could be debilitating to the organization.
- Overlook communication. During BPR implementation, there is a tendency to overlook communication. Probably due to a lack of proper understanding, the level of communication is underestimated during implementation. Often, communication is done using memos, speeches, or PR videos. While these may have its purpose, at times these methods can be limiting.
BPR implementation requires a small group format where employees can give feedback and air their concerns. This may be time-consuming but it is important. In fact, organizations must create a comprehensive communication program that uses a variety of methods of communication. When this is undertaken, the chances of succeeding during the BPR implementation is high.
BPR implementation is most crucial. Hence, organizations must have a keen eye, as well as strong leadership development and commitment, to pursue it despite its challenges. BPR implementation is a series of waves that can wash over the organization for years. Hence, a system of continuous improvement must be in place.
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The global economy is currently producing nearly 300 million tons of plastic every year, Half of these is for single use. With the population growing at a fast rate, we are requiring more resources than ever before. Yet, our finite resources are diminishing
Our economy has been built on the concept of a Linear Economy. This is Extract, Manufacture, Distribute, Use, and Dispose of. However, over the past few decades, we have transitioned to a disposable society as we generate waste at an unmanageable rate.
Today’s Business Transformation calls for a shift to a Reuse Economy or the Circular Economy. Moving towards a more Circular Economic activity could deliver benefits such as reducing pressure on the environment, improving the security of the supply of raw materials, increasing competitiveness, stimulating innovation, and others. Moving into a Circular Economy also means that companies are considering sustainable approaches to balance out opportunities for business and the preservation of the environment.
The Shift to a Circular Economy
The Circular Economy is an economic system aimed at eliminating waste and the continual use of resources. It employs recycling, reuse, remanufacturing, and refurbishing to create a close system. With Circular Economy, it minimizes the use of resource input and the creation of waste.
A Circular Economy has a great impact on sustainability. It maximizes the conservation of resources and the reduction of environmental pollution.
In a Circular Economy, industries can increase profitability while reducing dependence on natural resources.
Discovering the 6 Core Activities of a Circular Economy
The 6 Core Activities of a Circular Economy are stepping stones towards increasing productivity, cost savings, and generating greater economic benefits.
A Purview of Circular Economy in Action
Taking the 6-step journey to achieve greater sustainability can lead organizations to draw on the power of the Circular Economy to achieve greater value. Let us take a purview of a Circular Economy in action: The Waste Management Case Study
The Waste Management Case evolves in a scenario where the economic growth in emerging markets has raised living standards resulting in massive waste. As such, municipalities in these markets are spending up to half of the budget on solid waste management.
As a result of economic growth, there is massive consumer and industrial waste generated. In fact, metals extracted from tires in open backyard fires can cause great harm to human health and the environment.
We are in this dilemma right now. With the application of the Circular Economy, we can better address these problems by creating infrastructures to organize and manage waste supply chains. This can include digital transformation.
What is the underlying Circular Economy Principle? It is AGGREGATION. With this principle, we can aggregate volumes substantial enough to justify the business investment. We can enable companies to build the business from waste.
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Inculcating productive workforce behaviors is of utmost significance in Business Transformation, successful Strategy Execution, and Performance Improvement. However, making people embrace productive behaviors involves a concerted effort across the organization.
The realization of Transformation, Strategy, and Performance improvement goals can become a reality by developing a thorough understanding of the 4 components of Organizational Behavior. These components act as powerful levers in shaping the desired behaviors in the workforce:
- Organizational Structure
- Roles and Responsibilities
- Individual Talent
- Organizational Enablers
These Organizational Design levers work effectively when combined and aligned. Let’s discuss the first 2 levers in detail now.
Organizational Structure represents the management reporting lines that create the organization’s spans of control, layers, and number of resources. Organizational Structure is a foundational driver to Organizational Design, which also has a strong positive bearing on promoting the behaviors critical to improve the overall performance of the enterprise. This is owing to the power that a position exerts on the subordinates based on factors that are important for individuals—e.g., work, compensation, and career ladder.
The Organizational Structure indicates an enterprise’s priorities. An organization is typically structured in accordance with its top most priority. For instance, functional organizational structure is adopted by enterprises having functional excellence as a priority. In present-day’s competitive markets, most organizations have to deal with several priorities at a given time, which could be conflicting. However, this does not mean adding new structures on top of existing ones, thereby increasing unnecessary complexity. Creating overly complex structures to manage multiple priorities results in red tape and delayed decisions. All roles are interdependent, necessitating cooperation. This means taking care of the needs of others—instead of just watching over personal priorities—and encouraging individual behaviors that boost the efficiency of groups to achieve collective objectives.
Roles & Responsibilities
Roles and responsibilities deal with tasks allocated to each position and individual. Organizational Design depends heavily on redefining clearer and compelling roles and responsibilities—to avoid any duplication of efforts or creating adversaries among team members. In a collaborative culture where cooperation is the mainstay of an organization, individuals should not only be aware of what is required of them, but also appreciate the responsibilities of their team members, the authorities their roles exercise, the skills required, and the metrics to measure success.
A methodical way to outline roles and responsibilities effectively—while minimizing complexity—that encourages cooperation and empowerment is through the “Role Chartering” technique. The technique requires distinctly identifying all roles on the basis of 6 key factors:
- Describing shared and individual accountabilities
- Outlining indicators to track success
- Specifying who has the right to decide what
- Indicating the capabilities critical for roles
- Assigning the leadership traits valuable for the roles
- Charting the abilities required for accomplishing personal and team goals.
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4 Organizational Design (OD) Elements Essential to Inculcate the Desired Behaviors Across the Organization
“The only thing that is constant is Change.” – Heraclitus
An epidemic of change is happening globally–reengineering, restructuring, and revamping! Workplaces seem to be launching one change initiative after another. Digital Transformation is happening everywhere. Yet, the hard truth is that many change initiatives fail.
Change Management initiatives fail because of the way organizations view change. Often, change is seen as an isolated process. Organizations tend to focus on only one part of the organization in isolation. This can be a fatal error.
Everything in an organization is connected, and changing one piece can impact another. Hence change can only be successful if all interconnected pieces are considered. In 1965, Harold J. Leavitt designed an integrated approach to change, the Leavitt’s Diamond.
What is Leavitt’s Diamond?
Leavitt’s Diamond is a framework for understanding the connection between the key factors in an organization, and building an integrated change strategy. This is an essential element in Strategy Development.
The Structure, Tasks, People, and Technology are the 4 essential components of the Leavitt’s Diamond.
- Structure – The Structure refers to the organization’s hierarchical buildup and the layout of the various departments. However, this is not limited to its hierarchical buildup. It can also refer to the mutual relations that exist between departments and employees, the coordination between various levels of management, and the communication patterns.
- Tasks – The Tasks refers to the functions individual employees are assigned within their jobs. This relates closely to the organization’s goals on the strategic, tactical, and operational levels.
- People – These are your people – your staff, your employees. Beyond its physical countdown, this component also refers to all skills, competence, knowledge, and efficiency that employees bring to the organization.
- Technology – Technology refers to the upgraded machines and devices, as well as systems and software applications that build up the performance of tasks within an organization.
Between these 4 components, there must be the right balance. Only then can change be successfully implemented.
From the Drawing Board to the Ground Running
Having a good understanding of the Leavitt’s Diamond is important for organizations. However, the most critical is having it on the ground running. Each of the components must be identified, defined, and determined–your main tasks, your people, your tasks, and structure.
This is critical because you are building a basic framework for starting the change model. Without the right balance of Structure, People, Tasks, and Technology, the Business Transformation necessary will never occur.
Organizations must also take note that a primary change will always have an impact on each of the 4 components. A change in one component comes with changes in other components of the Leavitt’s Diamond. When this happens, there is a need for necessary adjustments.
Taking The Impact of Change on Tasks As an Example
- Change in People Component: Training or specific hiring policy can change staff and employees’ knowledge and expertise.
- What is the impact on Tasks? There is a change in individual tasks within the employees’ job.
- Change in Structure Component: Restructuring of departments, change in the arrangement of job positions, or even reorganization.
- What is the impact on Tasks? A different way of working is expected from employees to include different ad/or additional tasks.
This is also expected when there is a change in Technology and a corresponding impact on Tasks. Organizations must need to take note that changes in any component must be aligned with changes in other components. Again, there must be a balance for Leavitt’s Diamond Change Model to succeed.
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Companies often know where they want to go when it comes to Strategy Development. Companies want to be more agile, quicker to react, and more effective. They want to deliver great customer experience, take advantage of new technologies to cut costs, improve quality and transparency, and build value.
Yet, while most companies are trying to get better, the results tend to fall short. One-off initiatives in separate units do not deliver big enterprise-wide impact. Improvement methods that were adopted almost invariably yield disappointing results.
Senior leaders have a crucial role to take in making things happen. Business Transformation cannot be a siloed effort. A Next-generation Operating Model is essential to break through organizational inertia and trigger step-change improvements.
Understanding the Next-gen Operating Model
Companies need to commit to a Next-gen Operating Model if they want to build value and provide compelling customer experiences at a lower cost.
- Integrated, Organization-wide Operational Improvement Program. This approach is focused on Customer Journeys and distinctive customer experience. The Integrated, Organization-wide Operational Improvement Program is a holistic approach towards how operations can contribute to delivering distinctive customer experience. It cuts across organizational siloes in both customer-facing and end-to-end processes. This approach is a preferred organizing principle. Having multiple independent initiatives within separate organizational groups can deliver incremental gains. However, the overall impact can be underwhelming.
- Holistic Customer Journey. This is an approach that makes use of multiple capabilities instead of individual capabilities to achieve greater impact.
The holistic Customer Journey is achieved when the 5 core capabilities are utilized.
Discovering the 5 Core Capabilities
There are 5 core capabilities essential in unlocking the most value in the shortest possible time. Two of the 5 capabilities are Digitization and Advanced Analytics.
Digitization is the process of using tools and technology to improve journeys. It has the capacity to transform customer-facing journeys by creating the potential for self-service. It has the power to reshape time-consuming transactional and manual tasks that are part of internal journeys more so when multiple systems are involved.
Another core capability worth knowing is Advanced Analytics. This is the autonomous processing of data using sophisticated tools to discover insights and make recommendations. It provides intelligence to improve decision making and enhance journeys when nonlinear thinking is required. This is very useful in claims triage, fraud management, and pricing.
There are 3 other core capabilities that are essentially important in these days of Digital Transformation. These are Intelligent Process Automation, Business Process Outsourcing, and Lean Process Design.
Intelligent Process Automation is an emerging set of new technologies that combine fundamental process redesign with process automation and machine learning. It can replace human effort in processes that involve aggregating data from multiple systems taking a piece of information from a written document and entering it as standardized data input.
Business Process Outsourcing works best for processes that are manual. It uses resources outside the main business to complete specific tasks or functions. Back-office processing of documents and correspondence is an example of BPO.
The Lean process Design is one capability that helps companies streamline processes, eliminate waste, and foster a culture of Continuous Improvement. It is considered a versatile methodology as it can be applied in multiple processes.
Organizations can use these capabilities to achieve the greatest impact. The maximum effect, however, can be achieved when specific implementation guiding principles are followed.
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Business Process Reengineering (BPR) is a practice of rethinking and redesigning the way work is done to better support an organization’s mission and reduce costs. In all too many companies, reengineering has been not only a great success but also a great failure. After months, even years, of a careful redesign, these companies achieve dramatic improvements in individual processes only to watch overall results decline.
The promise of reengineering is not empty. It can actually deliver revolutionary process improvements, and major reengineering efforts are being conducted around the world. It can even lead organizations to achieve a successful Business Transformation.
Yet, companies cannot convey these results to the bottom line.
The Strategy that is BPR
Business Process Reengineering (BPR) is a Business Management strategy focused on the analysis and design of workflows and business processes within an organization. Often, companies direct Process Reengineering initiative on 2 key areas of business. One is in the use of modern technology to enhance data dissemination and the decision- making process. The second key area is the alteration of functional organizations to form functional teams.
As a strategy, Business Process Reengineering can greatly impact on the organization. It can help organizations fundamentally rethink how work must be done to improve customer service, cut operational costs, and become world-class competitors. It can help companies radically restructure their organizations by focusing on the ground-up design of their business process. BPR, as a strategy, can direct organizations to achieve Operational Excellence.
In the process, there are 2 dimensions that are critical in translating these short-term narrow-focus process improvements into long-term profits.
Understanding the 2 Dimensions of BPR
- Breadth. Breadth is a dimension of BPR that focuses on the range of activity types within a process. It includes the identification of activities includes in the process being redesigned that are critical for value creation in the overall business unit. Breadth can reduce overall business unit costs and can even reveal unexpected opportunities for a redesign.
- Depth. This is the dimension of BPR that focuses on the abstraction levels of process logic within a process. It refers to how many and how much of the depth levers change as a result of reengineering. Depth provides the most dramatic process cost reduction and avoids the classic reengineering pitfall of focusing on fixing the status quo.
Having a good understanding of the 2 Dimensions of BPR will open a range of opportunities for organizations to achieve innovative performance and enhancements.
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Today’s customers are better informed, better connected, and more demanding than ever before. CEOs are now concerned about Customer Loyalty and they recognize that mastery of the customer agenda is essential. In fact, global leaders of successful businesses recognize that creating a customer-centric, digitally-transformed business is a top priority.
In this age of digital disruption, how can organizations engage customers, increase Customer Loyalty, and achieve profitable growth? What is most appropriate when it comes to Customer-centric design?
Almost every market is experiencing a fundamental change. Consumer expectations have shifted and digital technologies are making the biggest impact on businesses large and small since the start of the information age. Ultimately, businesses need to navigate the challenges of digital disruption and find new ways to create economic value and drive growth.
The challenge today is what it takes for organizations to be a Customer-centric Organization.
Unraveling the 6 Core Capabilities of a Customer-centric Organization
A Customer-centric Organization must have 6 Core Capabilities to compete in the Digital Age. In this global time, customer-centricity ceases to be a differentiator. It has become a matter of survival.
The first 2 Core Capabilities are Customer-directed. These are Customer Strategy and Customer Experience (CX).
- Customer Strategy. The first core capability, Customer Strategy is focused on addressing changing customer needs and behavior. It involves the development of a clear view of customer behavior and intentions using data and analytics. Customer Strategy can be applied in several ways. It can be used to refine and develop a proposition or even inform major investments in new media content.
- Customer Experience (CX). Customer Experience (CX) is that core capability that generates a significant competitive advantage – a double revenue growth against industry counterparts. It is being able to respond to customer needs balanced with understanding the values customers bring to the enterprise. The world’s most advanced customer businesses often undertake customer journey mapping and experience design which are critical to executing customer-centric change.
The second 2 Core Capabilities focus on front office capability and across the enterprise value chain. These are Sales & Service Transformation and Connected Enterprise.
- Sales & Service Transformation. As the third core capability, Sales & Service Transformation is essential to becoming a customer-responsive business. This is a newly digitized and fully integrated front office capability that can attract, engage, acquire, and continually engage with customers. With the modernization and transformation of front office functions, Marketing, Sales, and Service teams get to have better ideas on how to work together more effectively. This leads to a full end-to-end Business Transformation. A core concept to Service Transformation is the development of Service 4.0 capabilities.
- Connected Enterprise. Focused on delivering differentiated Customer Experiences, Connected Enterprise is an architecture of fundamental capabilities that work across the Enterprise Value Chain, from back office operations through customer-facing interactions. The application of Connected Enterprises has led to companies experiencing an increase in annual revenue and a positive return on investment.
The third 2 Core Capabilities are Data & Analytics and Digital Transformation — your company’s response to a highly demanding digital market.
- Data & Analytics. The fourth core capability is Data & Analytics. This core capability is focused on creating actionable insights that drive profitable growth. With the use of Data & Analytics, it can uncover patterns of customer behavior, relevant social media influencers, and channel preferences. It is useful in personalizing propositions, channels, marketing communication, and the experiences offered to customers.
- Digital Transformation. The sixth core capability, this is the core capability that can power new ways to engage customers, optimize operations, and transform products. Digital Transformation is delivering the right customer and digital technology. With the advent of virtual reality, augmented reality headsets, the Internet of Things, AI, and cognitive computing, it has changed the way customer-centric companies engage customers. Digital Transformation is not an overnight event. This is a series of incremental steps, each delivering a concrete business advantage.
Developing the 6 Core Capabilities is no easy task. It can be pretty challenging. Companies need to have a good handle of its key challenges and the right approaches to mastering the 6 Core Capabilities. When this is achieved, the high road to global competitiveness is achieved.
Interested in gaining more understanding of these 6 core Capabilities of a Customer-centric Organization? You can learn more and download an editable PowerPoint about the 6 Core Capabilities of a Customer-centric Organization here on the Flevy documents marketplace. There is a series of 3 presentations – Part I, Part II, and Part III that discusses all 6 Core Capabilities.
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“All you need is your own imagination
So use it that’s what it’s for (that’s what it’s for)
Go inside, for your finest inspiration
Your dreams will open the door (open up the door)” Madonna
Madonna is a perfect example of reinvention. A very versatile actress, Madonna has the ability to adapt to new trends; someone that can send a lesson to companies struggling with their own digital revolution.
In this digital age, change is rewarded while being static is being punished. Companies must be open to Digital Transformation; a radical reinvention to find new, significant, and sustainable sources of revenue. Incremental adjustments or building something new outside of the core business can provide real benefits and, in many cases, are a crucial first step for a digital transformation. But if these initiatives do not lead to more profound changes to the core business and avoid the real work of re-architecting how the business makes money, the benefits can be fleeting and too insignificant to avert a steady march to oblivion.
Discovering Digital Reinvention
Reinvention is a rethinking of the business itself. Based on a Digital Quotient Research, reinvention requires significant commitment. First, the investment must be aligned closely with strategy at a sufficient scale. And second, digital leaders must have a high threshold for risk and must be willing to make bold decisions.
Digital Reinvention is not a throw-it-all-out approach. If you look at Apple when it moved from a computer manufacturer to music and lifestyle brand, it has reinvented itself while continuing to build computers. Likewise, this is the case with John Deere. John Deere is the brand name of Deere & Company that manufactures agricultural, construction, forestry machinery, and others. It continued to sell tractors and farm equipment while reinventing itself into a creator of online services for farmers.
Digital Reinvention is an innovative approach to laying the foundation for future growth while continually pushing improvement targets. Digital Reinvention is Business Transformation in action.
Approaching Digital Reinvention
Digital Reinvention will put new demands on leadership. Hence, an organization must have a strategic approach to Digital Reinvention: The 4Ds of Digital Reinvention.
- Discover. The primary goal of Discover is to develop a tight business case for change based on facts. Organizations must discover what your digital vision is based on where the value is. This will shape your digital ambition, strategy, and business case.
- Design. Designing, creating, and prototyping breakthrough experiences is the main focus of Design. It is reinventing and developing new capabilities and breakthrough Customer Journeys.
- Deliver. This is the third phase where organizations need to gather speed and scale necessary for reinvention. Its primary focus is to deliver and develop a network of partners who can rapidly scale your ambition. There is a need to activate an ecosystem to rapidly deliver at scale.
- De-risk. The 4th D, it is focused on structuring the change program, resources, and commercial model to reduce operational and financial risk. It is essential for senior leaders to focus on structural and organizational issues that can hamper the organization’s ability to manage cyber risk.
Having a good handle of the 4Ds of Digital Reinvention will prepare leaders towards Digital Transformation and new challenges. It will be able to come up with the right answers to key questions that will arise in preparation for Digital Reinvention. Coming up with the proper answers to these crucial questions can guide companies to reinvent themselves ad stay in the game.
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Never before has Crisis Management been considered important. With businesses being exposed to a disruptive environment, the emphasis on Crisis Management has never been more profound.
“The secret of Crisis Management is not good vs. bad, it’s preventing the bad from getting worse.”- Andy Gilman of Comm Core Consulting Group
An organization is considered to be undergoing a crisis when there is a sudden and unexpected event leading to major unrest amongst the individuals at the workplace. It is an emergency situation that disturbs the employees as well as leads to the instability of the organization. When this occurs, organizations are expected to have critical documentation and process, e.g. Crisis Management Plan, Disaster Recovery Plan, Business Continuity Plan, etc., in place.
Crisis Management is the art of dealing with these sudden and unexpected events which disturb the employees and organization. Yet, often companies are like the metaphorical frog that doesn’t notice the water it is in is warming up until it is too late. There are managers who either do not realize that they are in a crisis or their crisis situation is worsening. The early signs of distress are often missed. While they are not bad managers, these are managers that are under a set of paradigms that no longer apply and just let the power of inertia carry them along.
As a result, organizations in crisis find themselves faced with a potential cost that is greatly significant. This can lead to longer recovery time, a direct impact on downtime, and lost revenue.
First Things First: Taking a Good Handle of Crisis Management
Crisis Management is the application of strategies to enable organizations to deal with a disruptive and unexpected event that threatens to harm the organization or its stakeholders. It is a situation-based management system with clear roles, responsibilities, and processes. In Crisis Management, it requires a crisis mindset. A crisis mindset is the ability to think of the worst-case scenario while simultaneously suggesting numerous solutions.
Being well prepared for a crisis is the epitome of Crisis Management. It ensures a rapid and adequate response to a crisis and maintaining clear lines of reporting and communication in the event of crisis.
Yet, often the organization and communication involved in responding to a crisis in a timely fashion provide the most challenge to business. Responding to crisis in the most effective way can be done by taking the 10 First Steps.
The 10 strategic First Steps are the organization’s guide when in crisis and there is a strong call toward initiating organizational change.
- Establish a Wide Perception of Distress
- Establish a Crisis Mindset
- Activate the Board as a Crisis Detector
- Change Top-Team Members
The first 4 steps will widen one’s understanding of distress and move people to actions at the time of crisis. It is at this stage that the Board will be empowered to see the forest for the trees and can enable organizations to focus on tough movers that can successfully make organizational changes.
The 5th step focuses on Change Management.
- Communicate a Great Changed Story
Communicating a Great Changed Story can create positive motivation to spur action towards change. When Change Management starts evolving, the organization is now ready to advance towards Business Transformation.
The 6th to 9th steps focus on Business Transformation.
- Integrate Trigger Points
- Have a Strong Cash Position
- Focus on Quick Wins
- Make Target-focused Incentive Plans
Business Transformation starts when trigger points are integrated and a strong cash position is maintained. Management can focus on quick wins to create a trajectory effect to spur actions and develop target-focused Incentive Plans to achieve a successful turnaround.
The 10th and final step is sustaining the gains through effective Talent Strategy.
- Retain your Talent
The final step is Retaining your Talent. It is recognizing those that can make a difference and finding the next level of talent that can create and sustain change.
Organizations can build its Crisis Management capability following the 10 first steps. Crisis Management is not anymore a matter of choice; it has become a necessity.
Interested in gaining more understanding of the first 10 steps to surviving a crisis? You can learn more and download an editable PowerPoint about Crisis Management: 10 First Steps here on the Flevy documents marketplace.
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