STRATEGIC DESIGN IS MORE THAN STRATEGIC PLANNING

Every organization of every size has eight separate strategic design elements.  Each element strategically shapes the organization.  By this I mean it provides guidance to the people in the organization on what to do and what not to do; what direction to head in and which ones not to head in; how to do things and how not to do things; how to behave and how not to behave.  The organization’s plans and policies or rules are the most obvious elements which provide this guidance but there are seven other elements—often giving subtle but strong guidance.

When the organization is small and young it is characteristic that few if any of these design elements are written or formal.  This is a real benefit at this stage in the organization’s life, since it  does not have the time or resources to formalize these elements.  Even if it did it is not experienced enough to design them well.  Additionaly they are in a constant state of flux as the young organization discovers it’s self!  They are likely to change frequently as the organization learns.  As the organization grows in size these elements start to become written and/or formalized.  This allows the organization to grow with out the leader being involved in every decision.  Unfortunately as these become formalized two significant problems arise.

MISALIGNMENT

The first is that each of the elements tends to evolve on its own without coordination and integration with the others.              Thus senior leaders create strategy in response to the environment, while HR struggles with the structure, and Accounting with the information system and no one bothers with the culture.  Thus it is more common than not to find organizations where these eight elements are not in alignment.  In fact they often give conflicting information to employees.  For example, our new strategy says focus on customers and their needs, yet everyone knows you get promoted for taking actions which save money or are brilliantly creative.  This; sort of misalignment between strategy, structure, systems, culture and rewards results in tremendous inefficiency and low organizational productivity.  It is like a car whose wheels are all misaligned and pointing in slightly different directions.  You can drive the car, but it takes more energy (gas), burns up more resources (tires) and if you go too fast the whole thing shakes so you better not take your hands off the wheel.  Few leaders are sufficiently skilled or interested in all the eight elements to give them the focus that is required for alignment.  In a sense the higher in the hierarchy you are the less the factors constrain you.  Thus the leaders are often unaware of the misalignment.

AUTOPILOTS

The second problem as these elements become formalized is that they become rigidified and resist change.  Two decades ago we began  to think of them as autopilots on a supertanker.  They kept the ship on course.  If the captain changed course with the steering wheel (strong leadership) the ship would start to turn—slowly.  But if the captain left them helm for a second, the auto pilots hidden in the depths of the ship would whirr away and put the ship back on its original course.  Change requires that each and every ofn the eight auto pilots (strategic design element) must be changed to the new course.  Not bringing all eight into alignment with a new direction is a major reason that change fails.

 THE EIGHT STRATEGIC DESIGN ELEMENTS Although the eight elements are distinctively defined below, in reality they overlap and shade into one another.  Because of this the eight factors interact in such a way that you can never design just one perfectly.  As you design one and go on to the next one your explorations will frequently lead you back to fine tune the first one now that its implications on the second one are clearer.  Thus one cycles through the eight elements over and over again—adjusting and fine tuning. In this process it generally helps to start at the top of the list and work down wards rather than start at any other spot.  This is so because more likely than not you need decisions in all the elements above the one being worked on to design the one at hand. 

For ease in remembering the eight elements we have chosen a word that begins with ‘S’ for each.  The ‘S’ system also pays homage to the Seven S’s that McKinsey Consultants

Developed in the ‘70’s.

1-Scan: A well articulated description of the key opporthreats in your business environment.

2-Spirit: Begins with CEO’s values and expands to organization’s culture, attitudes, beliefs about customers, how people relate to one another and the community.  In the mature business the culture can become larger than any CEO and is a strong provide of continuity from CEO to CEO.

3-Strategy: Purpose, direction and broad choices on how to achieve them. Especially relevant are the basic strategies for growth, profit and competitive advanatage in a business.  These in sum might be called the business model.

4-Structure: How the work is divided up; who reports to whom. Who is responsible for what.  Who has what authority?  Centralization vs. decentralization. Degree of delegation.

5-Staffing: The match of individual knowledge, skills, desire and style to the job requirements.

6-Systems: What we measure, monitor and control. And the mechanisms for doing this.

7-Support: How we allocate resources.  Budgeting in most cases.

8-Sanctions: The formal and informal  rewards and recognitions; both intrinsic and extrinsic.

 NEW BUSINESSES REQUIRE DIFFERENT ALIGNMENTS

Each business has a set of these eight elements which will favor the growth and health and efficiency of the business.  Add a new product/service and their will be significant misalignment if only because the new product/service is developmentally new.  If it has a different market or different set of success drivers or different strategy, the misalignment will be even greater.  This is why innovation may fail.  Christensen’s recent book the Innovator’s Dilemma presents strong data for this long established principle of strategic alignment with a new directin as a critical success factor.

In my work in reviewing why dozens of collaborations fell apart or achieved only modest success, the lack of alignment of the collaboration project with the parent organization’s strategic elements always played a critical role.

Ichak Adizes seminal work on the developmental stages of organizations (Corporate Life Cycles by Ichak Adizez: Prentice Hall.) points out that each developmental stage requires a resetting of the eight autopilots as well as their integration.  For over a decade methods for quantitatively assessing misalignment have existed and have begun to create a respectable data base.

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Hardcover—320 pages (April 2007) Crown

Reviewed by Will Phillips

Over the last five years, I have met close to 1,000 CEOs and posed the following situation.

Let’s assume that you have clarified in your mind the areas in which your talent excels for your business. This means that you are clear on the areas where you make a unique contribution to your business that most likely no other person in the business can make. In addition, this is an area where you have interest, passion, and drive. For instance, in one company, the CEO was an extraordinary negotiator of strategic partnerships with other companies. In another company, the CEO was, in fact, the number one salesperson in opening up new accounts.

Now, let’s suppose that you have hired, developed, and trained a staff so that you can delegate everything outside of your unique talent to your management team. Let’s further suppose that they are skilled, confident, and able to carry out this work without close supervision from you.

Now, the question for you is, “How many days a week would you have to work pursuing your unique talent to keep your business at its current level of performance?”

The average amount of days per week with over 1,000 CEOs responding and over 40 different types of industries is four hours per month. The younger the CEO, the higher the hours. The more mature the business and CEO, the less the hours. But, the average was clearly four.

This, of course, is a great motivation to put in place a management team that can truly pick up the pieces of the business that are not your unique talent.

The next question for the CEO is, “Well, suppose you were only working four days a month and the business was ticking along as usual, what would happen if you doubled that time?” The response was universal—the business would expand, grow, and become dramatically more profitable. This series of questions comes from one of North America’s most insightful executive coaches, Dan Sullivan, who is based in Toronto, Canada.

More recently, Timothy Ferriss, who runs a product-based business largely selling online called Brain Quicken, a nutrition product. When Ferriss grasped the insights of the Pareto Principle which many of us know as the 80/20 Rule, he began applying this vigorously and systematically to his business. “I made several simple, but emotionally difficult decisions that changed my life forever.” Ferriss began focusing on the 20% of his customers who produced 80% of the profits in his business. He also decided to eliminate his extraneous addictions, such as the news addiction, and he now never watches the news or buys a newspaper. He’s also decided that his most important focus was on the key 20% of the activity and customers which drive his business, and he claims, “I complete my most important tasks before 11:00 a.m. every morning. As a result, I have a four hour work week.”

This may seem extreme or impossible to you, but I say it is a worthwhile direction to pursue. In my experience with all of the sophisticated and insightful methods of time management, there is only one word which comes to mind as we talk about time management for the Chief Executive or senior management positions. And, that is “focus.” The more you focus as leader, the more your time management becomes powerful and effective. It is interesting that this strategy parallels the core concept of business strategy, which is to focus the organization. Michael Porter, in his article in the Harvard Business Review, What is Strategy?, laments the fact that most businesses do not have a strategy. Oh, of course, they have strategic plans. But, they do not have strategy because they are unwilling to focus. He goes on to explain that the challenge of building focus is that we must decide what not to do. Peter Drucker commented on this challenge by saying setting priorities is never the problem. It is setting posteriorities, which is what really challenges executives. In other words, deciding what not to do is much more difficult than deciding what to do. And, as a result, everyone’s plate is overfull, everyone’s business is overextended, which weakens every action in every business and weakens the CEO’s leadership time by focusing too broadly.

Maybe you can not achieve a four hour work week or a four day month, but this book may help you gain more focus and more time. If your spouse has ever complained that you work too much, or don’t have enough time at home or for yourself, give this book to your spouse and let them pull out ideas for you to try in applying the 80-20 rule to your life.

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Assumption

This briefing assumes you appreciate the value of training for your staff.  You are in good company a few years ago a Rutgers University study reported that nine billion dollars was spent annually on management training.  The research also reported that CEOs only felt that about 5% of their training dollars delivered real value to the business.  This briefing explains why training fails and how you can improve the value of the training to your business. The Costs Of Training

Training has extraordinary costs to your organization.  Many of these costs can be increased or decreased by the design of the training.  The hard dollar costs may include:

1.      The cost of the trainer.

2.      The cost of materials.

3.      The cost of the training facility.

4.      The cost of participant’s travel/hotel/meals.

One of the obvious indirect costs is the participants’ time.  In addition, there is a large number of less obvious indirect costs.  These include:

1.      The lost opportunities which occurred while the participants were in training.

2.      The frustration of participants who have heavy workloads.

3.      The frustration of participants who see the training as irrelevant.

4.      The frustration of participants who experience the training as good, but do not believe those back home will use it.

This last series of less obvious and indirect costs are probably significantly greater than the more obvious, up-front direct costs. 

 The Cutting Edge Of Training

Organizations that have discovered how to make training matter significantly are investing 1-2 weeks of training for every employee every year, and reaping a ten-fold return on training costs.

Here are some guidelines to make your training as successful:

 Guidelines For Successful Training

1.      Training should be done in Capi[1] GROUPS.  Real work teams should come to training as training units.  These can be permanent teams of people who work together; or they can be temporary, cross-functional teams. Most training, for purposes of efficiency, pulls people out of a number of units who do not work together and who may even be from separate organizations.  This decreases the impact of their absence and it also dramatically decreases the benefit of the training.  When they return home no one else understands the training and within a few weeks most of the enthusiasm, energy,
knowledge, and skills gained in the training has disappeared.  Because the participants are not in real work groups, the examples, exercises and materials used in the training are fictitious.  There has been an abundance of research that points out the superiority of training when people work on real life tasks as opposed to working on play exercises in order to develop skills.

2.      Line managers are the best trainers.  When line managers actually teach their workers they will deliver an accurate picture of the current practices in the organization.  If you wish to make changes in these current practices it is best to concentrate on getting support, skill and buy-in from your line managers on these changes.  You should then have the line managers train their subordinates. 

         Too often the so called “expert” trainer is an expert only in presentation skills, entertainment, and the design of a good training session.  They may have no practical experience managing work.  In some organizations people are trained about computers by computer experts; they are trained about operations by operations experts.  However, when it comes to management training, managers do not deliver the training; the trainers do.  This has the potential for creating a large gap between what the trainer is training, and what the real managers are doing.  This is often the trainer’s attempt to bring change to the organization.  Change must occur from the top down if it is to be effective without creating a revolution.  (See “Why Training Is the Boss’s Job”, Fortune, January 23, 1984.)

         All training, which is the attempt to introduce new skills, processes or behavior into the organization, will benefit dramatically by having a cadre of the key line leaders present at the end of the training.  They should be there to answer questions from participants about specifics on the changes to be made.

3.      Effective training is just in time and just enough.  Giving people extensive training which they will not be applying in the near future harkens back to our early education.  Adults learn best when they can take what they have learned and apply it fairly quickly.  Thus, most of the training seminars and classes where people are given training, which may not be relevant to their immediate work, may be too much for them to retain and apply.  It is largely presented in this format for efficiency and the convenience of the trainers; not for the convenience of the learner.  Thus, both the timing and the content of the training must be responsive to the actual needs of on-the-job workers.  Having a strong cadre of internal coaches and facilitators enables you to take full advantage of the effectiveness and efficiency of the teachable moment, when it occurs.

4.      The CEO must be involved.  The CEO should be the first participant in all of the training programs so that he/she may fine tune, update, or change whatever is appropriate.  It is also relevant for the CEO to be involved in the delivery of the training or at least involved in some part of all management training.  A few minutes of introduction at the beginning and some time at the end of the training for questions and answers can do wonders in terms of implementation.

5.      TEACH TO HEAD, HEART, HANDS.  Learning can occur in your head on the left side of your brain.  This is the site of conceptual knowledge.  Most management training occurs here.  Concepts and principles are very powerful because they can be applied to a variety of specific situations.  This is where the “A” styled manager, in the PAEI model, learns best.  Learning can also occur in your head on the right side of the brain.  This is the site of intuitive and creative learning.  This is where the “E” styled manager learns best.

         Learning can occur in your hands or body.  This kinesthetic learning is the learning of muscles and nerves and is based on the skills of doing specific things.  Some management training occurs here.  This is where the “P’ styled manager learns best.

         Learning can occur in your heart.  This is the site of value and belief learning.  This type of learning is slowest and most difficult.  It is also the longest lasting and most powerful.  This is where the “I” styled manager learns best.

 Some Radical Ideas For Training 

Here are some ideas that are not as traditional as the normal approaches to training which can have very high value and often very low cost.

1.      Job rotation.  As soon as someone becomes competent (of course, you now need to know how to measure and assess competency in each job), they move on to another job so that each person is continually learning a new job. This cross training allows your work force to not only make more intelligent decisions because they understand the impact of their work on other jobs; it also allows you to be extraordinarily more flexible in the work loading and distribution in your organization.  In addition, you increase the challenge and opportunities for each individual person.  For good workers, job rotation in itself is a reward. 

2.      READING RELEVANT BOOKS AND ARTICLES. Each work unit of 5-10 people can meet on a regular basis–let’s say 1-2 hours a month–to read and discuss a current book or article about their industry or management. Each employee on that team would be challenged to go to their local bookstore, pick an appropriate book on management for their area, and purchase sufficient copies for all.  Everyone reads a chapter before each meeting, and then meet and discuss what in the reading is relevant to their business.  One client saved money by buying only one book and taking turns reading aloud in the meeting.

3.      ADVENTURE TRAINING.  A great deal of management training is very intellectual and mental.  There is usually great benefit in considering somatic learning where the learning experience occurs more in the body than the brain.  Typical of such approaches are outdoor challenge programs which can be designed to stretch individuals or to build teams. Most communities now have adventure training companies using such things as initiative training, team problem solving and ropes courses. 

4.      Mission linked training.  All the training done in your organization should be assessed to see which parts of the mission and strategies it supports.  You can actually grade or rate on how well each part is supported by the training.  Training which does not strongly support your mission and strategies should be changed or eliminated.

5.      Assessing real needs.  An in-depth assessment of training needs should be done and updated every 2-3 years for each job type in the organization.  This is more than simply asking the boss what the employee needs to know or simply asking the employee on a survey which course would you like to take.  It means analyzing the job needs and the employee’s knowledge, skills, and attitudes.

6.      CROSS FUNCTIONAL TRAINING.  One of the most practical ways of combining training with real work is to charge each work unit with identifying its customers, clarifying their needs, getting feedback on how well they are meeting those needs, and actually putting together a brochure which markets their department’s services to other parts of the organization.  As this progresses, each department can design the training it would like to offer to other departments.

7.      MANAGEMENT ROUNDTABLES.  Peer managers meet monthly to help one another solve problems and share successes.  See the Management Briefing on Master Mind Groups for guidelines.

8.      Use the twelve question assessment in the book First Break The Rules. Use the results to design training to address shortfalls.  The focus is on increasing productivity and morale.

Tags:   · Effective Management Training · Intact Groups · Training1 Comment

Staying focus and energized brings joy and health to many people.  Creating a list of 100 Life Goals is a way to do this and also prevent boredom and depression.  Choose  the top one, two or maximum three to work on.  When one is accomplished, come back to the list, update it with new goals and removing no longer relevant ones, now select the next one.  Research in leadership in the U.S. Marine COrps shows that working on more than three goals at once leads to diminish achievement on all goals.

1-Be sure you are clear on how you can tell or recognize your goal is achieved.

2-Record which of your  Priorities the Goal serves.

3-What kind of goal is it: Will you BE different, Will you DO differently, Will you HAVE something?

4-Does the goal involve your HEART, Your SPIRIT, your BODY and/or your MIND?

5-Clarify what it will take to achieve the goal: $, Focus, Ideas, Others

6-Set a Target date for each.

Tags:   · Goals · Life Work Planning1 Comment

Causality and Viscosity: Concepts For Understanding Your Organization

One of the most widespread assumptions humans make about the world around them is the linkage between cause and effect. This enables us to explore and understand galaxies, organizations and people. Stuff does not just happen spontaneously. There are always antecedent causes and by discovering these we gain increased understanding and more control. When you know that bacteria causes disease, you can control the disease by controlling the bacteria.

A second assumption is how hysteresis mediates caus