How to Implement a New Strategy Without Disrupting Your Organization

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How to Implement a New Strategy Without Disrupting Your Organization

Throughout most of modern business history, corporations have attempted to unlock value by matching their structures to their strategies. As mass production took hold in the nineteenth century, for instance, companies generated enormous economies of scale by centralizing key functions like operations, sales, and finance. A few decades later, as firms diversified offerings and moved into new regions, a rival model emerged. Corporations such as General Motors and DuPont created business units structured around products and geographic markets. The smaller business units sacrificed some economies of scale but were more flexible and adaptable to local conditions.

These two business models—centralized by function versus relatively decentralized by product and region—proved durable for a long time, largely because the evolution of business organization was fairly incremental. Indeed, the product division structure remained the dominant model for 50 years or more. But as competition intensified in the last quarter of the twentieth century, problems with both models became apparent, and companies searched for new ways to organize themselves to unlock corporate value.

Many multinationals adopted a matrix arrangement in the belief that they could retain both the economies of scale of centralized functions and the flexibility of their product-line and geographic business units. But matrix organizations were difficult to coordinate. Managers operating at a matrix intersection had to juggle the dictates of two masters, which led to conflict and delay. The business process reengineering movement of the 1990s introduced another model, in which the corporation organized around its various processes instead of its traditional functional, product, and geographic boundaries. But multiple process-focused units still had problems coordinating and aligning their activities; a silo is a silo whether it is a business process, a function, or a product group. More recently, we’ve been hearing about “virtual” and “networked” organizations operating across traditional boundaries and the “Velcro organization,” a company capable of being pulled apart and reassembled in new ways to respond to changing opportunities.

The continual search for new organizational forms is driven by basic changes in the nature of competition and the economy. First, advantage today is derived less from the management of physical and financial assets and more from how well companies align such intangible assets as knowledge workers, R&D, and IT to the demands of their customers. Second, the opportunities and challenges that globalization affords are forcing companies to revisit many assumptions about the control and management of both their physical and their intangible assets. Today’s computer company, for example, can manufacture components in China, assemble them in Mexico, ship them to Europe, and service the purchasers from call centers in India. This dispersal creates demands for new structures to align internal and outsourced units around the world.

As companies have struggled with these issues, many have gotten caught up in expensive and frustrating cycles of organizational change. ABB is a classic case: The company went through one reorganization after another following its first experiment with the matrix form in the late 1980s. As Pankaj Ghemawat of Harvard Business School describes in his November 2003 HBR article, “The Forgotten Strategy,” this restructuring churn is expensive and often creates new organizational problems as bad as the ones they solve. It takes time for employees to adapt to new structures, and a great deal of tacit knowledge—precisely the kind that’s become most valuable—gets lost in the process, as disaffected employees leave. On top of that, companies get saddled with the vestiges of previous organizational decisions, such as obsolete local and regional headquarters and legacy IT infrastructures. Given the costs and difficulties involved in finding structural ways to unlock value, it’s fair to raise the question: Is structural change the right tool for the job?

We believe the answer is usually no. The lesson we’ve drawn from our work with hundreds of organizations on strategy maps and balanced scorecards is that companies do not need to find the perfect structure for their strategy. As we will demonstrate in the following pages, a far more effective approach is to choose an organizational structure that works without major conflicts and then design a customized strategic system to align that structure with the strategy.

We will see how two very different organizations—DuPont Engineering Polymers and the Royal Canadian Mounted Police—took their existing structures as given in the belief that tinkering and realigning authority, responsibility, and decision rights would not produce the magic needed to achieve corporate-level synergies. Instead, executives in these two organizations used the tools of the balanced scorecard strategy management system to guide the decentralized units in their search for local gain even as they identified ways for them to contribute to corporatewide objectives.

What Kind of System Do You Need?

A management system can be defined as the set of processes and practices used to align and control an organization. Management systems include the procedures for planning strategy and operations, for setting capital and operating budgets, for measuring and rewarding performance, and for reporting progress and conducting meetings. It is fair to say that, historically, most companies have relied entirely on financial systems—usually centered on the budget—for these various processes and practices. But relying on the budget as the primary management system caused short-term financial considerations to overwhelm longer-term strategic goals. In the 1980s and 1990s, many companies introduced total quality management as a new management system. But while TQM enabled firms to focus more effectively on process improvements, the ability to implement strategy across organizational units remained elusive. Companies’ management systems were still tactical and operational, not strategic.

by Robert S. Kaplan and David P. Norton

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Start Ups: The Complete Guide to Setting Goals

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English: Matriz de prioridades de tarefas adap...

English: Matriz de prioridades de tarefas adaptada da metodologia de Stephen Covey (Photo credit: Wikipedia)

Español: Peter F. Drucker, padre de la adminis...

Español: Peter F. Drucker, padre de la administración moderna. (Photo credit: Wikipedia)

The Bank of England in Threadneedle Street, Lo...

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

Book Cover

Book Cover (Photo credit: Wikipedia)

Step 1: Put it in writing. Reuters/Dylan Martinez

Welcome to the season of setting goals—a two-month period when businesses, families, and individuals explore aspirations for the year ahead.

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Stephen Covey’s perennial classic, 7 Habits of Highly Effective People offers the following wisdom on goals: Be proactive and begin with the end in mind. You’re more likely to attain your goals if you frame them in the right way and feel a strong commitment (pdf) to your objective.

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Here’s our guide to choosing the right goals—and accomplishing them:

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1.  Think big picture

Start by reading your company’s corporate strategy, suggests Annie Stevens, an executive coach and co-owner of leadership development firm ClearRock. She notes that there is “an important marriage between strategy and goal setting.” Instead of being wedded to the strategy, use it as a way to generate ideas and creative ambitions.

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Executive coach Joel Garfinkle starts by asking himself some questions: “What is most important for this year?” “Where do I want to put my energy and attention?”  He decides where to focus based on the financials of his business as well as his client’s satisfaction. He also considers, “What do I need to not be doing?”

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Garfinkle’s high-level review points out areas of focus that leads to specific goals. Some of his clients need to spend less time on email while others should get rid of unproductive people from their team.

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2.  Make goals SMART or HARD  

Most managers want goals that have a measurable impact and are tied to corporate strategy. Here are two ways to achieve that:

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SMART stands for “specific,” “measurable,” “achievable,” “relevant,” and “time-bound.” This acronym is borne out of the “management by objectives” philosophy popularized by management consultant Peter Drucker in the 1950s. In Attitude is Everything, Paul J. Meyer writes that the most effective goals (pdf) answer the six “W” questions: Who? What? When? Where? Why? and Which?, referring to requirements or constraints.

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HARD is an acronym devised by Mark Murphy for his 2010 book HARD Goals, means “heartfelt,” “animated,” “required,” and “difficult.” Animated refers to being “motivated by a vision, picture or movie that plays over and over in  your mind.” Researchers have found that setting a specific, difficult goal consistently leads to higher performance than a general “Do your best.”

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Both acronyms also carry the idea that your goals are clearly defined and connected to you.

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3.   Cultivate everyone’s goals

Most companies have several rungs of goal-setting: corporate goals, executive goals, senior management or department goals—and then there’s everyone else’s goals for the year.

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Sometimes employees’ goals are an afterthought, made to simply align with corporate mandates. This is a mistake since helping workers achieve success turns them into powerful allies. What’s more, happy workers are more productive and engaged.

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“We need to treat our employees and their goals like we’d treat the CEO’s goals,” said Murphy, who is founder and CEO of Leadership IQ, a management training company. “If we could have them (executives) treat their employees’ goals with the same respect they treat their own, we’d be blowing the doors off with what we could attain.”

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This requires conversations and thoughtful consideration—more than simply checking a box.

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Managers should demonstrate interest in their employees’ careers, and coach them so they increase their influence and achieve what they want, not just what the company wants, said David Miles, president of OI Partners – The Miles LeHane Companies. This will help retain talent, as well as motivate employees to achieve more.

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4.  Don’t underestimate yourself

Most business goals have numbers attached: a 25% increase in customers, hiring 30% more women, reducing shipping time to 12 hours or increasing individual productivity by 50%. Carefully consider these numbers—aim too low and you come off looking like you can’t meet expectations, said Stevens. A better approach: “Surprise on the upside. Gain a reputation as someone who consistently delivers more than is expected” and who stretches and aims high.

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People often shy away from higher numbers. Stevens sees it in her own business: Almost every year, leadership coaches set goals for how much revenue they will bring in and every year she asks them to push for more. So they go from a goal of $600,000 to say $800,000, and they always make it, Stevens said.

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“A lot of people underestimate how much they can get done in a long period of time,” said career coach Caroline Ceniza-Levine. Just make sure you create sub-goals or check-ins every month or once a quarter so that you’re able to make adjustments along the way.

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5.  Identify barriers to achievement

Some 60% of people (pdf) cannot pinpoint what’s holding them back from achieving their goals. Sometimes even a heartfelt goal will be difficult to achieve because your assumptions or behavior that stalls your progress. Two Harvard Graduate School of Education professors found that when we fail to achieve a goal, it’s often a self-defense mechanism.

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It’s important to identify who or what is likely to hold you back. Fear, disappointment, and distrust can prevent us from taking risks or making changes.And, fantasy, procrastination, and stress causes us to abandon a goal before ever getting started.

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6.  Reaffirm and reinforce goals

Publicly sharing a goal can increase your commitment to achieving it and make you more accountable. ”You have to write them down, on a website, tool, or app or a piece of paper,” said Garfinkle. Make your goals visible—post them on a bulletin board or share them with friends or a coworker to build a support system.

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This is especially important given that most people lose momentum within a month or two. ”Goal setting isn’t a one-shot deal,” said Murphy, the author ofHARD Goals. “It needs to be a continual process, testing our goals every couple of weeks.” Sometimes workers need help refocusing or re-energizing themselves. Or occasionally the landscape changes and goals need to be redrawn or replaced, Murphy said.

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Celebrate your successes and your team’s achievements in the form of praise and public recognition. Gifts and monetary rewards are good motivators too. “Acknowledge superior results” with financial incentives or intangible ones, writes author and sales coach Brian Tracy. He favors one-time bonuses for achieving specific projects. Other research shows that group rewards can be more effective than individual recognition.