Strategy Insight

The higher one climbs in an organization, the greater the need to emphasize the role of organizational architect. Strategy, structure, systems, skills, management approaches, and compensation / rewards programs must be in alignment. Otherwise the leader will feel like s/he is pushing a boulder uphill every day. Planning to assess these areas should be in the 90 day plan.

To effectively design organizational architecture, five elements of organizational architecture need to work together.

1)      Strategy. The core approach the organization will use to accomplish its goals

2)      Structure. How people are situated in units and how their work is coordinated

3)      Systems. The processes used to add value

4)      Skills. The capabilities of the various groups of people in the organization

5)      Culture. The values, norms, and assumptions that shape behavior

Misalignments in any of these areas can make even the best strategy useless. Strategy determines each of these elements and if you change strategy, there will be need to be adjustments in each of these areas.

During the first 90 days, the goal is to identify misalignments and design a plan for correcting them. Common types of misalignments include the following:

• Skills and Strategy Misalignment
• Systems and Strategy Misalignment
• Structure and Systems Misalignment

Frequently, leaders attempt to address these problems without doing the appropriate analysis. This typically only exacerbates the problem. Here are examples of efforts that are likely to fail.

• Trying to restructure your way out of deeper problems without understanding the root causes. Doing so may create other misalignments, disrupting the group, lowering productivity, and damaging your credibility.
• Creating structures that are too complex, such as matrix management, can often create bureaucratic paralysis. Simplifying the structure may be the right solution because it provides for the greatest degree of accountability.
• Automating problem processes often creates problem processes that create problems faster. In any redesign, analyze processes first, then apply technology and then refine the organizational structure for that process.
• Making changes for the sake of change alone and before there is an understanding of the business may aggravate difficulties.
• Overestimating your group’s capacity to absorb strategic shifts may result in greater confusion. Groups need to absorb changes.

There is a specific logic to aligning an organization.

1)      Start with Strategy. The author dedicates a few pages to crafting strategy. He asserts that it centers on customers, capital, capabilities, and commitments. While accurate, he acknowledges that his discussion is limited and is too simplistic. He suggests additional books be read on the subject. A deeper understanding of the industry, competition, differentiation and positioning, tactical planning, etc is required.

2)      Look at supporting structure, systems, and skills. The author examines this area briefly as well. Although he does not discuss this, what needs to be reviewed are the three layers of every department /  organization:

• Physical / Technical Layer which contains the processes, supporting technologies and organizational structures
• Infrastructure Layer which addresses measurements, management methods, and rewards system
• Values Layer which addresses the organizational culture, political power / decision making and individual belief systems.

It is important to assure that there is an appropriate knowledge base, neither too broad nor narrow, in each group so that it may perform effectively.

3)      Decide how and when you will introduce the new strategy.

4)      Reshape structures, systems and skills, simultaneously. This is business process redesign and involves the physical / technical layer, infrastructure layer and value layer.

5)      Close the loop. There will be lessons learned that will lead to continuous improvement.

To initiate a cultural change, consider the following methods:

• Adjust the performance measures and incentives. People will take action on what is measured and rewarded.
• Set up pilot projects. Allow opportunities to test new approaches or methods.
• Judiciously bring in people from the outside to stimulate creative thinking and discipline among group members. Facilitators, with broad business backgrounds, can surface issues that will create dialogue and change.
• Promote collective learning so that alternatives are investigated.
• Engage in collective visioning as brainstorming stimulates new thinking.

This entry was posted on February 4, 2009 at 2:31 am and is filed under Hiring, Leadership, Strategic Plans, Strategy. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.