Architecting Organizational Change
CEO’s need simple, proven and powerful ways of organizing their thinking and actions for orchestrating large-scale organizational change. Here are the basics:
1. What type of change are we talking about? This thinking applies to enterprise-wide transformation – i.e., organizations that have multiple businesses, branches, geographies. And where performance depends on significant changes in behavior and capabilities.
A good example would be implementing “Community Policing” strategy in the NYPD – which requires 30,000+ cops across 77 precincts to adopt new mindsets and approaches in improving public safety. Another example would be Jack Welch’s “Workout Process” to speed decision-making on critical business issues across all GE’s business units – from Jet Engines to Health care.
2. How to organize your thinking and actions? Simply put, leaders must work simultaneously on three dimensions:
a. Top-down direction-setting. This includes all the traditional levers such as strategy definition and choices, goal-setting, resource allocation, leadership agenda, communications, symbolic actions, etc.
In other words the actions that often dominate senior leadership team meetings.
b. Bottom-up engagement and performance improvement. Systematically getting groups of people at all levels of the organization solving problems and improving performance consistent with the top-down direction.
Leaders often harness Quality, Lean, Agile or other team-based approaches to provide structure and tools to this dimension.
c. Cross-functional process redesign. Not all objectives or issues can be addressed by people working within existing organizational units. Consequently, think through where people need to be linked together cross-functionally and new ways of collaborating to achieve breakthroughs in performance.
This dimension is particularly important in new product development and solution-selling. Anywhere where getting R&D, Operations, Sales, Finance to work creatively and collaboratively.
3. Getting the balance right is key. Where you start or sequencing is very company and situation-specific. However it is essential that you recognize the risks of not getting the balance and alignment right. If overly:
a. Top Down? You risk lack of commitment, resistance, disconnect from front-line capabilities and insights.
b. Bottom-up. Unfocused work that can not be sustained, scaled or supported
c. Cross-functional. Without the enabling top-down and bottom-up work, cross-functional teams can get bogged down in conflict and confusion.
4. Historical perspective. For bonus points, think about the dominant management discussions over recent decades and you will see how academics and leaders have been working their way around (and more fully developing) the three axes:
a. 1970s: Strategy. Think Michael Porter (“How Competitive Forces Shape Strategy”, 1979) and the emerging prominence of Boston Consulting Group and Bain.
b. 1980s: Quality. Think Philip Crosby, “Quality is Free” and the focus building teams and giving them the tools to improve quality and service.
c. 1990s: Reengineering. Here we had Michael Hammer and “Reengineering the Corporation” (1993)
d. 2000s+: Agile. In many ways the emergence of Agile (2001-ongoing) pulls all three axes together as cross-functional teams are commissioned to work in short sprints to implement elements of a longer-term strategy or project.
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Don’t let the simplicity of working these three axes in a balanced and aligned way turn you off. Once you have this mental model you will start to repeatedly see its applicability and organizing power.