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Currently viewing the tag: "Change"

OrgD2Research by PwC indicates that leading companies are in a near perpetual state of Reorganization.  This upsurge in Organizational Design initiatives is owing to the accelerating pace of strategic change caused by disruption of industries, changing competitor landscape, customer behaviors, and distribution channels.

Companies opt to commence efforts to restructure their organization in the hopes of enhancing efficiency, perpetuating growth, and surviving in future.  Some shift their Business Models, few alter their focus from products to customer-centric; whereas others adopt new behaviors, systems, or IT architecture.  However, merely a quarter of the Organizational Design initiatives succeed in achieving their anticipated objectives.

The reason for this high failure rate is simple.  Reorganization is not about changing a company’s organogram.  It’s a methodical processes that necessitates transforming / streamlining the decision-making process, mindsets, talent pipeline, reward structures, reporting lines, and the way responsibilities are assigned.

There is no cookie-cutter approach to Reorganization that can work across all organizations.  However, research and management best practices reveal 10 principles that are critical for developing an effective Organizational Design, applicable to any enterprise:

  1. Don’t get caught in past Reorganization initiatives
  2. Consider Organizational Design elements
  3. Transform Organization Chart in the end
  4. Don’t overlook top talent
  5. Converge attention towards controllable factors
  6. Encourage responsibility
  7. Use best practices with care
  8. Harmonize organizational hierarchy with Strategic Objectives
  9. Give due emphasis to intangible elements of organization
  10. Make efficient use of company culture and practices

Let’s dive deeper into these guiding principles.

1. Don’t Get Caught in Past Reorganization Initiatives

Leaders at most organizations tend to keep discussing and focusing on the old reorganization initiatives.  This takes away much of their time and energy which should rather be spent on making the current Organizational Design a success.

Organization Design should be created on the basis of an enterprise’s sense of purpose, strategy, core competencies, products, competitive advantage, and experience offered to customers and employees.  Senior leaders need to be able to see the broader perspective, set clear organizational objectives, and steer the workforce to achieve their personal as well as organizational objectives.

2. Consider Organizational Design Elements

Reorganization is a complex undertaking, but a structured approach to Organizational Design assists in identifying and prioritizing key priorities.  Organizational Design has 8 fundamental elements that are important for all organizations, Business Models, sectors, or regions.  These elements can be categorized into 4 pairs.  Each of these 4 pairs constitute a formal (tangible) and an informal (intangible) element:

  • Decisions team up with Norms (the way people act).
  • Motivators (the way people are influenced to work) pair with Commitments (what affects people’s thoughts about work).
  • Information (the way data is processed) pairs with Mindsets (how people process knowledge and meaning).
  • Structure (reporting lines) pairs off with Networks (how people collaborate).

Leaders should select fewer, prioritized Organizational Design elements to work on that have the most impact on their organizations.

3. Transform Organization Chart in the End

Most leaders consider Organization Structure to be the most critical element to Business Transformation.  In reality, there are other key organizational elements that need to be tackled first to improve effectiveness.  Revisiting the organogram does not have much effect on the way business is done—or to improve it.  Structure depicts reporting lines and changing it can reduce costs temporary.  Changing structure alone—without transforming other organizational elements—allows the redundant reporting lines to reappear and put the organization back to its earlier state of affairs.  Instead of changing the organogram, core organizational issues should be prioritized and confronted first.  Structure will adjust accordingly once the issues resolve.

4. Don’t Overlook Top Talent

Top talent often go unnoticed when it comes to Reorganization.  The skills and traits of the senior leadership has a profound impact on Organizational Design.  Mapping of technical capabilities and leadership abilities of top leadership is an important step to Reorganization.

Interested in learning more about the guiding principles critical for Organizational Design?”  “You can download an editable PowerPoint on 10 Principles of Organizational Design here on the Flevy documents marketplace.

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– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

9662216489?profile=RESIZE_400xStrategy Development has followed a set path since the last century where a predetermined, rectilinear, and inflexible approach defined the process.

In the 21st century, however, business leaders are devising Strategy by evolving it into a probabilistic, repeated, and multifaceted process.  An approach that can both endure and adapt to the growing pace of Change and Disruption that is manifesting itself in all industries.

Using gaming, AI, unremitting execution, and adjustment, with numerous scenarios to deliberate on, leaders create “Flywheels” that successfully tackle the not so deterministic world where the future is highly uncertain.

Flywheel is a concept originally used in the power industry to explain an origin of stabilization, energy storage, and momentum.  The concept was propagated in the Strategy context by author Jim Collins.  Employing the Flywheel concept, executives are able to validate assumptions through simulations as well as in the real-world scenarios.

Rather than using past assumptions and relying on instincts, using the Flywheel Strategy, decision makers exploit the power of Artificial Intelligence (AI) and Advanced Analytics. They model the multitude of variables and produce a sizable number of simulations that propose many strategic bets, option-value bets, and no regret moves.

Instead of numbing decision-makers with a profusion of options they created, the simulations render elucidative insights.  Also, the AI system is made more capable through learning mechanisms called Reinforcement Learning by selecting from the above strategies.

The collection of strategic choices is increased exponentially and cost of experimentation is diminished by this approach.  Decision-makers are also empowered by this tool to make better decisions.  Likewise, organizations are able to select accurate market approaches, pricing, advertising, and customer strategies for several cities and communities, over a time span.

Strategy Flywheels can be used as a basis for developing Growth Flywheels by organizations.  The Flywheel Strategy approach consists of the following 3 phases:  

  1. Sense: Market Sensing
  2. Think: Strategy Formulation and Investment Planning
  3. Act: Performance Evaluation and Learning

The dynamic and resilient Flywheel Strategy of Sense, Think, Act has 3 parts, which are based on establishing policies, contending with dynamic models within the background of environmental assumptions, and handling randomness.

Let us delve a little deeper into the 3 phases.

Sense: Market Sensing

Environmental assumptions are formulated through this procedure of extraneous Market Sensing.

Uncertainties to which probability assignment is difficult are the target of Market Sensing activity.  Most urgent strategic matters can be detected and senior leaders consistently engaged in devising a response to them by recurrently sensing extraneous market changes.

Improvements in Machine Learning and cutting-edge AI can aid in not only expanding the quantity of information scanned but also enhancing the quality of content evaluated.

Think: Strategy Formulation and Investment Planning

Conventional strategic thinking can be aided in the new way of strategizing by the 3-phase process for Gamification—Design and Build, Simulate, and Evaluate.

A stable strategy consists of a portfolio of investments and projects with diverse risk profiles.  Diverse risk profile of performance is a mix of:

  1. No-regret moves
  2. Strategic bets
  3. Option-value bets 

Act: Performance Evaluation and Learning

Performance Evaluation and Learning from the efforts has to be carried out so that improvement in proficiency to sense the market and experiment with new ideas occurs.

Interested in learning more about how Amazon and Uber used Flywheels, how the Gamification approach is used in Flywheel Strategy formulation, and what constitutes a diverse risk profile?  You can download an editable PowerPoint on Flywheel Strategy here on the Flevy documents marketplace.

Editor’s Note:

If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can you stay ahead of the curve.  Full details here.

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“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Lead1Evaluation and onboarding of outstanding leaders is anything but straightforward.  Almost all organizations have set up testing mechanisms or assessment centers to distinguish senior leadership candidates having traits that make up for Exceptional Leaders.  These assessment centers shortlist leaders based on certain indicators and criteria.

However, these assessments are not always accurate in predicting the best leaders.  At times, the entire evaluation exercise results in drafting mediocre leaders and fails to select top influencers and role models for the organization.  The traditional methods of gauging senior leaders prove inadequate based, typically, on 3 common flaws:

  • Granularity – Gauging the candidates for leadership positions using the profiles of successful leaders from the past. Those profiles are not meaningful considering the pace of change today and the future needs of the organization.
  • Long-term Focus – Assessment of candidates based on the traits required to reap the fruits of Business Strategy in 5 years’ time is another ground for not identifying the right leaders.
  • Emphasis on finding typical leadership traits – Instead of looking for traits that separate exceptional leaders from the pack, most assessments are geared towards finding typical leadership traits.

Research by PwC—spanning over a period of 10 years with a sample size of 2500 senior executives, who remained a part of C-suite successions in large organizations—reveals that the common flaws in leadership assessment methods can be confronted methodically.  To find the best C-level executives, leadership evaluations should focus on identifying candidates possessing the following 4 key traits that are typical only of the top C-level executives:

  1. Simplification & Operationalization of Complexity
  2. Drive Enterprise-wide Ambition & Change
  3. Strong Teamwork
  4. Leader Building

Let’s dive deeper into these traits.

Simplification & Operationalization of Complexity

In today’s world of disruption, organizations face new challenges on a day-to-day basis.  Exceptional leaders have the ability to process tremendous volumes of information and simplify things fairly easily.  Leaders who truly standout are well-versed in tackling confusion and learn promptly.  They are great at:

  • Interpreting complexities and creating simplified operational descriptions around them for others’ understanding.
  • Developing visions to influence people and rally them around the shared objectives.
  • Developing & implementing actionable plans to achieve objectives.
  • Developing functional and dynamic storylines encompassing the agenda that demonstrates how the company will execute its strategy. These storylines consistently remind the people to concentrate on the things that matter most to the company (e.g. customers, products).
  • Creating and disseminating robust communication plans—highlighting how their company is best suited to face the challenges of disruption—that are consistently analyzed and improved upon.

Drive Enterprise-wide Ambition & Change

People in an organization often operate in groups.  These groups consider people outside their circle as competitors or “outsiders.”  This tribal mentality is detrimental for an organization and inculcates individual thinking—focusing only on personal / group targets—and debilitates the ability to operate outside one’s comfort zone.  Exceptional leaders have the skills to:

  • Make people come out of this tribal or siloed mentality and think collectively in terms of realizing organizational objectives.
  • Understand different mindsets and know how to influence them constructively.
  • Make people realize their contribution towards the bigger, organizational perspective and work towards achieving their business unit targets rather than personal performance objectives.

Strong Teamwork

Nobody can undermine or deny the importance of teamwork.  Much has been written on the subject. However, in reality, most teams do not quite understand the spirit and commitment fundamental to develop teamwork.

Exceptional leaders:

  • Are aware of the importance of teamwork and collective leadership. They consistently challenge their people to ponder over ways to achieve not only personal but also the strategic organizational objectives.
  • Work with teams to uncover prioritized initiatives critical for organizational growth.
  • Lead their teams and make informed strategic decisions.
  • Focus more on the strategic planning front than tactical way before they reach the C level.
  • Emphasize to the teams the significance of spending time discussing / developing strategy and devising plans.
  • Focus on maximizing the effectiveness of each individual to benefit the organization.

Interested in learning more about the traits of outstanding leaders?  You can download an editable PowerPoint on Exceptional Leadership here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Change4With most Transformation initiatives people gradually revert back to their old habits of doing things.  Sustainable Change Management necessitates 4 key processes:

  • Chartering—defining the scope, rationale, and team for the change initiative.
  • Learning—testing and refining ideas before a full-blown execution of the initiative.
  • Mobilizing—using symbols and metaphors to engage people and gain their buy-in for the change program.
  • Realigning—redefining the roles and responsibilities and managing performance of the initiative and the people driving it.

These processes are critical to enable an Organizational Culture which encourages execution of lasting change.

In addition to these key processes, for the change to entrench into the organizational fabric, Leadership needs to put in place the environment necessary for the people to embrace and own the new processes, systems, and desired behaviors.

The 4 critical processes aid in creating the enabling conditions necessary for institutionalizing change in the organization.  These enabling conditions for sustainable Change take place in 3 settings:

  1. Structural Context
  2. Procedural Context
  3. Emotional Context

The environment for sustainable change must be put in place way before the actual execution of the Transformation initiative.  These enabling conditions encompass making changes to the organization’s structure, procedures, and sentiments / behaviors.

Let’s dive deeper into the 3 conditions critical to enable sustainable change in the institution.

Structural Context

The first element of the enabling environment requires the change leadership to work on reshaping the organizational structure.  The 4 key processes have a direct bearing on the organization’s structure.  Their effect pervades over:

  • The organization’s hierarchy and reporting lines.
  • Compensations, benefits, and rewards systems.
  • Monitoring and control systems.

The Structural Context significantly affects the way employees’ work and expend their time and their interest in certain types of projects.

The structural context is altered during the Realigning process of Transformation in the way new personnel practices are employed.  The Learning process informs the redefinition of linkage between the leadership and field staff.  The Mobilizing process informs the changes to be made in the roles and responsibilities of the management and front-line people—through storytelling and metaphors.  Whereas, the Chartering process helps instill a reformed, team-building culture in the organization.  Together, these changes in the structural context cascade down across the organization.

Procedural Context

The Procedural context pertains to a feeling of objectivity and authenticity of new processes and systems.  The Procedural environment involves the perception of people that their views are taken seriously and acted upon while designing and implementing a new initiative.

Procedural authenticity is critical in gaining commitment from the employees on initiatives that were not validated by them earlier.   It involves belief of the people that the change initiative integrates well with the philosophies of the organization and the way business should be done.  It makes the people feel heard, ensures trustworthiness of the change leadership through positive track records and effective decision making abilities, and alignment of the change initiative with the core values of the organization.

Interested in learning more about the other enabling conditions mandatory for institutionalizing change?  You can download an editable PowerPoint on Conditions for Sustainable Change here on the Flevy documents marketplace.

Did You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd