Putting Strategy to Work

Today, Dec 2004 by Girst, Amy L, Schleyer, Robert J

Understanding Your Organization and How it Must Change

When Good Ideas Aren't Enough

It appeared the company did all the right things. Business analysts studied trends, surveyed customers, and evaluated the competition. Strategists assessed the company's place in the market as well as opportunities and threats. Bright people proposed good ideas. Executives devised scenarios, ordered financial plans, and challenged assumptions. Research, analysis, and brainstorming birthed a new business strategy. Enthusiasm mounted.A strong team developed an implementation road map. Announcements were made. Work began.

Ten months later, projects are behind schedule. Operations intended to be reorganized remain the same. Sales channels complain they're losing credibility with customers and prospects. The market has changed. Complacency, frustration, and resistance compete with enthusiasm.

Why does this scenario repeat itself in one organization after another? More importantly, what must a company do to avoid the pitfalls that keep great ideas from producing great results? There are three vital elements of operationalizing business strategy:

* Keen understanding of the organization and how it must change

* Solid implementation planning and management

* Deep leadership engagement in strategy execution

Too often, deficiencies in one or more of these areas are noted only after implementation begins, or not at all. Evaluation of these factors must be part of the strategy development process, while the assessment can contribute to defining and executing the strategy.

Processes, Structure, People, and Technology: How they Must Change

Unlike a good wine, even the best strategy doesn't age well. Implementation delays caused by corporate inadequacies threaten the strategy's success and the company's credibility. It is imperative that the leadership team takes a hard look at the organization's capabilities as part of the strategy development process.

Executives Need to Understand

* The company's current capabilities

* The capabilities required in the proposed business model

* The capabilities necessary to move the company from its current to its future state

This exploration of the capabilities focuses on four key aspects of any company: processes, structure, people, and technology. The formulation and execution of a successful business strategy depends on a candid analysis of these elements, an understanding of their capabilities and alignment with one another, and the effort needed to adapt them to the new strategy. Anything less jeopardizes success.

Processes

Each company has several core processes that, ideally, cut across divisions and allow the company to excel in delivering its offerings. These processes often include, for example, the acquisition of new customers, as illustrated in the graphic (page 24). Companies' core processes may differ, but it is critical that strategists can identify and understand their firm's particular processes.

What are your company's core processes? If they are difficult to identify, activities that should be seamless core processes are probably fragmented, dispersed among corporate silos, and operating suboptimally. To test the existence and quality of core processes, consider how the firm thinks about and plans change. Are discussions centered on departments or divisions, or is the discussion about processes, seen from beginning to end and from the customers' viewpoint?

After the company's core processes have been identified, they need to be evaluated:

* How effective and efficient are the firm's core processes?

* How do you know?

* Are corrective measures taken when performance slips or costs rise?

Once you understand these processes, you can visualize how your company must look in the future.

* What core processes are needed to support the proposed strategy?

* How will they be measured and managed?

* How will their costs be contained?

Imagine these processes cutting seamlessly across the firm, driving toward the same goal, as do those depicted in the graphic below. How different is that picture from your current state?

Disparities between existing core processes and the desired future state must be resolved prior to or during execution of the strategy. Issues to be addressed may include:

* Fragmented existing processes

* Inadequacy of current processes to support a new or even the existing strategy

* Misalignment of current processes

* Insufficient customer focus in processes

* Absence of, or inadequate key performance metrics

* Inadequate response when performance drops or costs increase

The following questions about resolving the differences between the existing and desired state of the core processes must then be answered:

* What will it take to close the core processes gap?

* How long will it take?

* How much will it cost?

Structure

For purposes of this discussion, structure includes the organizational structure (as represented by the organization chart) and the mechanisms by which corporate initiatives are approved. Budgets and facilities, which are closely related to organizational structure and influenced by corporate initiatives, are also addressed in this section.