Like doctors, we believe that intervention without diagnosis is malpractice.
Why is something happening? What is the cause? Why is something else not happening? What is blocking it?
How long a diagnosis takes, and how extensive it is depends on the context. But, we know that visible symptoms indicating either pain or joy do not always represent the true underlying causes.
And before knowing what action to take, we need to know the true causes.
Diagnostics are an essential part of improving organizational effectiveness, especially in accelerating the implementation of a new strategy.
An assessment provides evidence. The data must be gathered in a manner that is rigorous, valid and targeted to extract specific information.
Data is important also beyond its value as evidence. It provides a common language among senior managers for understanding issues. It cuts through opinion, hearsay and gossip because it is virtually impossible to argue against the evidence.
In an organizational assessment we see four stages
We analyze change readiness when a company has developed a new strategy that requires a change in the fundamental nature of their business.
A gradual transformation in structure, processes, skills, and mindsets may be required. And before embarking on this journey, it is very helpful to know in detail the appetite for change, and the likely acceptance of the new strategy by leaders and staff.
The new strategy has been developed, but what is the appetite of the organization to adopt it? How ready are employees to listen and work with it?
Diagnosing organizational health is a more general assessment of an organization. We often use, as our guide, The Tushman-Nadler Congruence Model of Organizational Effectiveness. This is a research-based and tested thirty-year-old heuristic that is an excellent organizing framework rooted in the social and behavioral sciences.
The Congruence Model follows the widely accepted social systems view of organizations. It states that when one part of the system changes, all organizational elements need to change, a lot or a little. AND they need to be congruent with each other. If one becomes unbalanced or out of sync with the others, the change is in danger of failing.
Before starting a merger integration we recommend doing organizational due diligence. In other words, digging into one or both merging entities (depending on existing data and familiarity) with the objective of testing for:
Gathering this data will accelerate the merger by uncovering barriers to successful integration and by providing benchmark data for integration teams.
Leading a transformation is a specific leadership skill. We define it as:
By definition, a transformation, requires a major change effort. This is mostly the consequence of a change in strategy.
Once the strategic direction is defined, we support CEOs and senior leaders in architecting change.
This involves translating the new strategy in to organizational and leadership implications. Perhaps a change in culture, structure, processes, skills or mindsets.
We build transformation roadmaps and we guide leaders through the changes over time, offering advice and support on the strategic leadership and organizational issues, while others implement operational and process changes.
In addition to architecting big change, we also support the creation of new organization models. See Organization Design.
The strategic story is the heart and soul of any change. What is the vision? What is the end-state? How is the strategy changing, and what is not changing?
Authoring this strategic story is fundamental to any change. It inspires action.
To be most effective, it should follow the principles of good storytelling (a protagonist, an inciting incident, a call to action, a dreadful alternative, a conflict, an antagonist, the quest, and so on).
Strategy is what is visible, on the surface. Culture is unseen. But in a battle between culture and strategy, culture always wins.
Redefining the strategy is much easier than reshaping the culture.
It can take years, and is a formidable challenge that should be owned and led by the CEO and the leadership group. Because culture is the result of what leaders do; how they behave.
Culture is a set of assumptions that a group shares. They are taken for granted; unquestioned. As new members join the group they learn the assumptions. They are usually formed around whatever is successful. Products that are successful. Processes. Technology. The organization becomes inseparable from the cause of that success. Microsoft and Windows. 3M and innovation. Southwest and low-cost/fun service. Enron and….
(Assuming the strategic story is unambiguous and there is a clear picture of the end-state)
You remove the leaders stuck in the old world. You also promote or hire new leaders who believe in the new world.
You work hard on defining and rewarding the new behaviors.
You work hard on helping everyone understand and make it through the changes.
It is really hard to implement any strategic change of course.
People, especially leaders, protect their position at all costs.
Decision-making is unusually slow.
In medical practice there is a common adage; “Intervention without diagnosis is malpractice.” This is as true for social systems like organizations as it is for biological systems like the human body.
Transformational leaders understand that significant change requires diagnosing the organization’s (1) readiness for transformation, and (2) existing health.
They also know that they must engage leaders in the act of diagnosis before treatment. This builds consensus and commitment to the hard work that must be done.
Those that believe in the new world. About a third will. Another third will resist. Remove them. The final third? They will be on the fence. Encourage the third that ‘get it’ to engage this group; to bring them on the journey.
As CEO, deploy the ’Rule of Seven.’ You need to communicate at least seven times before your message is heard. During transformations, staff are only interested in three things ‘me, me and me.’ Will I have a job? Will it be the same job? Who will be my boss?
What will change and what will not must be unambiguous. Communication is at the core of culture change. Not ‘command and control’ communication. Rather, Conversational Leadership. The most effective way to communicate and build trust. It is a style that encourages discussion. It is informal and personal. You can’t control the message in today’s world. But you can listen authentically, ask questions, draw people out; the vitality of dialogue.
It’s exhilarating chasing the deal. It’s logical deciding which factories to close. It’s rational choosing which processes to merge.
But still most M&As fail.
They wouldn’t if the same discipline and diligence that is applied to the financials of closing the deal are also applied to leadership and cultural issues.
The goal of any M&A activity is to achieve the strategic and financial promise with sustained results. Yet most mergers fail to achieve their targeted value.
|Pre-Close:||First 100 Days:||Months 4-6:||Months 7-12:|
|Strategic Alignment||Launch||Implementation||Consolidation and Leverage|
|Hubris and Numbers Prevail||Engineered: for Failure||Engagement 101||Change Leadership||Enlightened Integration||Cracking the Code|
Organizations are complex social systems. Redesign requires significant changes to structure, decision-making processes and senior roles.
But this work can get messy—fast. It needs to be rigorous and disciplined.
Who does a design? The CEO is responsible. But, with boundary conditions, you can minimize politics and reduce staff anxiety by involving senior leaders.
CEOs and their executive teams turn to organization redesign when their strategies require new levels of performance, such as:
These changes are often transformational, involving more than simply changing boxes and lines.
of change management initiatives met initial objectives, and only 25% yielded gains that were sustained over time.
of the time back-office costs are back to prior levels 4 years after a cost-cutting program.
of respondents state that not enough focus is placed on managing change in critical projects.
Avoid “Ready, Fire, Aim” – Diagnose First
Let Strategy Drive Structure, then Staff to Win
Don’t Go it Alone – Engage Your Leaders
Don’t “Wing It” – Use Proven Tools
Organization Design Process
We use a structured process for a design team(s) to take the results of an organization diagnostic and reconfigure the basic structure. It involves considering functional, market, geographic and business unit configurations and deciding which methods best support the strategic direction. It also involves designing the right processes and methods for linking parts of the organization together, beyond simply instituting a matrix structure.
Operating Governance Design
This process designs the right grouping of leadership teams needed to execute management processes (strategy development, operational reviews, talent reviews, budgeting, etc.). The result is an integrated governance model composed of distinct leadership teams that get work done effectively and efficiently.
Executive Role Redesign
With a new structure and operating governance system there is often need for one or more newly designed leadership roles, for example Chief Operating Officer, Chief Administrative Officer, Chief Innovation Officer, etc. This requires carefully configuring roles with the right responsibilities, accountabilities and appropriate scope. The result is clear job descriptions at the executive level that clearly enable clear decision making and collaboration among executives.
|Back of the Napkin||Amateur Hour||Engagement 101||Change Leadership||Strategy Driven Design||Strategy, Structure and Talent|