Secure Early Wins—Checklist
Given your agreed-to business goals, what do you need to do during your transition to create momentum for achieving them?
How do people need to behave differently to achieve these goals? Describe as vividly as you can the behaviors you need to encourage and those you need to discourage.
How do you plan to connect yourself to your new organization? Who are your key audiences, and what messages would you like to convey to them? What are the best modes of engagement?
What are the most promising focal points to get some early improvements in performance and start the process of behavior change?
What projects do you need to launch, and who will lead them?
What predictable surprises could take you off track?
CHAPTER 6
Achieve Alignment
Hannah Jaffey, a respected human resource consultant, was hired by a former client to be corporate vice president of human resources. She joined a company suffering from such intense conflict at the top that some senior executives were barely on speaking terms. Hannah had been brought in to support the CEO in making needed personnel changes and to rebuild the executive team.
Hannah soon realized the organization’s structure and incentives system were at the root of the problems. A year earlier, the company, which had grown rapidly, had been reorganized into business units, each focusing on a specific product line. However, several of the units’ customer bases overlapped, and the new structure and incentives system discouraged cooperation. The result? Confused customers, conflicts over which units owned key customer relationships, and an inability to offer integrated solutions. The turmoil had begun to impact the financials, with top-line growth stalling and the CEO facing tough questioning from the board and investors.
Convinced the company needed further structural change, Hannah laid out her case to the CEO. But he was reluctant to embark on another round of reorganization, and he remained convinced that the people were the problem. The organizational design was sound, he told Hannah, and with the right people in place it could work.
In truth, there were significant weak links in the executive team. But Hannah knew that the people issues couldn’t be dealt with until the structure was put right. So she kept coming back to her boss. She did an in-depth diagnosis and brought to his attention instances in which incentive misalignments had unnecessarily stoked conflict. She also highlighted how other companies had organized themselves to deal with similar tensions.
It took time, but eventually Hannah convinced the CEO to move the company to a hybrid structure. The focus of marketing and sales was returned to customer segments, leaving operations and R&D organized by product line, and a shared-services organization was created to provide finance, HR, IT, and supply chain support. The realignment worked: a year later, the company was functioning much more smoothly, customers were much happier, and robust growth had resumed. And it had become much clearer which executives needed to be replaced.
The higher you climb in organizations, the more you take on the role of organizational architect, creating and aligning the key elements of the organizational system: the strategic direction, structure, core processes, and skill bases that provide the foundation for superior performance. No matter how charismatic you are as a leader, you cannot hope to do much if your organization is fundamentally out of alignment. You will feel as if you’re pushing a boulder uphill every day.
If you have the scope to alter direction, structure, processes, and skills in your new position, you should begin to analyze the architecture of your organization and assess alignment among these key elements. In the first few months you can’t hope to do much more than conduct a solid diagnosis and perhaps get started on the most pressing alignment issues. But it’s important to get a handle on what needs to be done so that you can focus some of your early-win projects appropriately and lay the foundation for a subsequent, deeper wave of change.
Even if, like Hannah, you lack the authority to unilaterally alter the architecture of your new organization, you should focus on assessing organizational alignment. Look at how your piece of the puzzle fits (or doesn’t fit) into the bigger picture. Think about whether you need to convince influential people—your boss or your peers—that serious misalignments are a key impediment to achieving superior performance. Also, keep in mind that a thorough understanding of organizational systems can help you build credibility with people higher in the organization—and demonstrate your potential for more-senior positions.
Avoiding Common Traps
Many leaders rely on simplistic fixes to address complicated organizational problems, and they end up committing malpractice. Be alert to these common pitfalls:
Making changes for change’s sake. The temptation is great for newly appointed leaders to make rapid, visible changes to strategies or structures, whether or not these elements are the right areas for focus. Often, leaders feel self-imposed pressure to put their stamp on the organization and seek to make changes before they really understand the business; it’s ready, shoot, aim. Once again, the action imperative creates a sure recipe for disaster.
Not adjusting for the STARS situation. There is no one best way to lead change. The right way to drive organizational alignment in a turnaround (with a focus on rapid and often radical shifts) is very different from the right way to proceed in an accelerated-growth situation or a realignment (when subtle and incremental changes often are the right way to proceed). So it’s essential not to adopt a one-size-fits-all approach to change but rather to understand the best ways to proceed in the various STARS situations.
Trying to restructure your way out of deeper problems. Overhauling your organization’s structure when the real issues lie in the processes, skill bases, and culture can amount to rearranging the deck chairs on the Titanic. Resist doing so until you understand whether restructuring will address the root causes of the problems. Otherwise, you may create new misalignments and have to backtrack, disrupting your organization and damaging your credibility.
Creating structures that are too complex. This is a related trap. It may indeed make sense, as it did in Hannah’s situation, to implement a matrix structure. Done well, matrices foster shared accountability and help you work through creative tension. But take care to strike the right balance and not diffuse decision making or introduce sclerotic complexity. Strive, where possible, for clear lines of accountability. Simplify the structure to the greatest degree possible without compromising core goals.
Overestimating your organization’s capacity to absorb change. It’s easy to envision an ambitious new strategic direction or shift in structure. In practice, though, it can be difficult for people to change in response to large-scale shifts, especially if they have experienced a string of such changes in the recent past. Move quickly if you need to—for example, in a turnaround. But proceed incrementally if the STARS situation permits—for example, in realignments or sustaining-success situations.
Designing Organizational Architecture
Begin by thinking of yourself as the architect of your unit or group. This may be a familiar role for you, but it probably isn’t. Few leaders get systematic training in organizational design. Because leaders typically have limited control over organizational design early in their careers, they learn little about it. It’s commonplace for less-senior people to complain about obvious misalignments and to wonder why “those idiots” higher up tolerate clearly dysfunctional arrangements. By the time you reach the midsenior levels of most organizations, however, you are well on your way to becoming one of those idiots. You’re therefore well advised to begin learning something about how to assess and design organizations.
To design (or redesign) your organization, start by thinking of it as an open system. This is illustrated for an entire business in figure 6-1; you may need to focus on only your piece. The “open” part refers to the reality that organizations are open to (that is, those elements they influence and are i
nfluenced by). This reality comprises (1) key players in the external environment, including customers, distributors, suppliers, competitors, governments, NGOs, investors, and the media, and (2) the internal environment: climate, morale, and culture. So leaders’ architectural choices must position the organization to respond to, as well as shape, the realities of the external and internal environments.
FIGURE 6-1
Elements of organizational architecture
The “systems” part highlights the fact that organizational architectures consist of distinct, interacting elements: strategic direction, structure, core processes, and skill bases. The implication is that you can work on individual elements—for example, change the strategy, alter the structure, streamline a process, or hire people with a different skill set—but you shouldn’t do so without thinking through the impact on the other elements. Specifically all four elements of organizational architecture need be aligned to work together.1
Strategic direction. The organization’s mission, vision, and strategy
Structure. How people are organized in units and how their work is coordinated, measured, and incentivized
Core processes. The systems used to add value through the processing of information and materials
Skill bases. The capabilities of key groups of people in the organization
Of course you need to have the right strategic direction to move forward effectively. But misalignments involving any of the other elements can make even the best strategy useless. Strategic direction drives the other elements and is influenced by them: if you decide to change your group’s direction, you will probably have to alter its structure, processes, and skills to create a fully aligned architecture.
Diagnosing Misalignments
Organizations can end up misaligned in many ways. Your goal during your first 90 days should be to identify potential misalignments and design a plan for correcting them. Common types of misalignments include the following:
Misalignments between strategic direction and skill bases. Suppose you head an R&D group and your goal is to increase the number of new product ideas your team generates and tests. However, your staff is not up to speed on the latest techniques that would let you run more experiments faster than before. In this case, your group’s skills do not support its mission.
Misalignments between strategic direction and core processes. Imagine that you lead a marketing group whose mission is to focus on meeting the needs of a new customer segment. If your team has not established an effective way to compile and analyze information about those customers, your group’s systems fail to support the direction. There is a mismatch between strategic direction and core processes.
Misalignments between structure and processes. Suppose you manage a product development group whose members are organized by product line. The rationale for this structure is that it focuses specialized technical expertise on specific products. But this structure has a downside: the group does not have efficient systems for sharing best practices among the various product teams. The resulting mismatch between structure and processes would make it difficult for the entire group to perform optimally.
Misalignments between structure and skills. Suppose the business has recently moved from a functional structure to a matrix structure in an effort to balance product-related and functional decisions. People are used to relying on authority and functional reporting lines to get things done, but now they need to use influence and conflict management skills. The shift in structure has created a mismatch with needed skills that will need to be addressed.
Getting Started
Aligning an organization is like preparing for a long sailing trip. First, you need to be clear on whether your destination (the mission and goals) and your route (the strategy) are the right ones. Then you can figure out which boat you need (the structure), how to outfit it (the processes), and which mix of crew members is best (the skill bases). Throughout the journey, you keep an eye out for reefs that are not on the charts.
The underlying point is that there is a logic to organizational alignment. It’s likely to cause problems if you try to change the structure before figuring out whether the direction is the right one. Also, you cannot fully assess the fitness of your existing crew until you have a handle on your destination, route, and boat, although you certainly can get started. Here’s how:
Begin with strategic direction. Take a hard look at how your unit is positioned with respect to the larger organization’s goals and your agreed-to priorities. Make sure your mission, vision, and strategy are well thought through and logically integrated.
Look at supporting structure, processes, and skills. Look at whether your group’s existing structure, processes, and skill bases support the strategic direction—either the existing one (if you decide not to change it) or the one you envision. Dig into and understand the relationships among these elements. If one or more of them is ill suited to the mission or strategy you have in mind, figure out how you will either adapt your direction or build (or acquire) the capabilities you need.
Decide how and when you will introduce the new strategic direction. Armed with a deeper understanding of your group’s current capabilities, chart a path for shifting direction (if such a shift is necessary). Sketch out changes in positioning (markets, customers, and suppliers) as well as changes in supporting capabilities. Then adopt a realistic time frame for making these changes.
Think through the correct sequencing. Different situations demand different approaches to bringing organizations into alignment. In a turnaround, the right approach often is to alter the strategy (which typically is not adequate), then to bring the structure into alignment with it, and then to focus on supporting processes and skills. In a realignment, however, strategic direction and structure often are not the real source of the difficulties. Instead, they frequently lie in the processes and skill bases of the organization, and these are the places to focus on.
Close the loop. As you learn more about your group’s structure, processes, and skills, you will gain insight into the team’s capabilities and its cultural capacity for change. This insight will in turn deepen your understanding of what changes in strategic positioning are possible over what time period.
Defining Strategic Direction
Strategic direction encompasses mission, vision, and strategy. Mission is about what will be achieved, vision is about why people should feel motivated to perform at a high level, and strategy is about how resources should be allocated and decisions made to accomplish the mission. If you keep in mind the what, the why, and the how, you won’t get lost in debates about what a mission is, what a vision is, and what a strategy is.
Some fundamental questions about strategic direction concern what the organization will do and, critically, what it will not do. Focus on customers, capital, capabilities, and commitments:
Customers. Which set of existing customers (external or internal) will we continue to serve? What is our value proposition? Which markets are we going to exit? What new markets are we going to enter, and when?
Capital. Of the businesses we will remain in, which will we invest in, and which will we draw cash from? What additional capital is likely to be required, and when? Where will it come from?
Capabilities. What are we good at and not good at? What existing organizational capabilities (for example, a strong new-product development organization) can we leverage? Which do we need to build up? Which do we need to create or acquire?
Commitments. What critical decisions do we need to make about resource commitments? When? What difficult-to-reverse past commitments do we have to live with or try to unwind?
It is beyond the scope of this book to delve deeply into the development of strategic direction, but excellent resources are available to help you answer these questions. Our focus here is on assessing the current direction by looking at its coherence, adequacy, and implementation.
Assess Coherence
Is there a clear logic
to the choices that have been made about customers, products, technologies, plans, and resource commitments? To assess whether the elements of strategic direction fit together, you need to look at the logic behind the strategy to ensure that it makes sense overall. Have the people who defined it thought through all its ramifications and the practical aspects of implementing it?
How do you evaluate the logic of the organization’s strategic direction? Start by looking at documents that describe your group’s mission, vision, and strategy. Then disassemble them into their components: markets, products, technologies, functional plans, and goals. Ask yourself, Do the various dimensions support one another? Is there a logical thread connecting the various parts? To be more specific, is there an obvious connection between market analysis and the group’s objectives? Does the product development budget jibe with the capital investments projected in the operations part of the strategy? Are plans in place to train salespeople for new products in the pipeline?
If the organization’s strategic direction makes sense overall, you will spot such connections easily.
Assess Adequacy
Is the defined direction sufficient for what your unit needs to do in the next two or three years? Will it be sufficient to support the larger organization’s goals? Your group may have a well-thought-through and logically integrated strategic direction. But is it also adequate? That is, will it empower the group to carry out what it needs to do to succeed—and to help the larger organization succeed—in the next two or three years?
The First 90 Days, Updated and Expanded_Proven Strategies for Getting Up to Speed Faster and Smarter Page 12