What’s driving your organization?
Ever notice how some organizations generally seem to be on a positive trajectory, while others are constantly playing catch-up, encountering roadblocks and struggling to get on a better track? Among the former are Proctor & Gamble, General Electric, Southwest Airlines and Oracle. Among the latter are Sears Holdings, BlackBerry and Sony.
Looking deeper, you may also notice that some of the organizations that appear to have their act together at times have had to do a major reset to get back on an upward path. Examples that come to mind are IBM moving to services, Starbucks going back to basics and Apple pushing beyond its Mac niche market and launching the iPod.
As the leaders of struggling companies will attest, it's a very difficult task to right a sinking ship. Where to focus and what to do are paramount issues. Obviously, business as usual is not working and incrementalism is not the answer. For the likes of IBM and Apple, the situation demanded a reinvention of the company.
KEY QUESTIONS
In thinking about how to avoid going down the road of a Sears Holdings, Radio Shack, Polaroid, Lehman Brothers, Coldwater Creek or Eastman Kodak, or to know when and how to do a major reset and what it should entail, we have come up with a set of questions that we think every organizational leader should ask:
What drives our organization?
How strong are these drivers?
How deeply are they imbued?
At what levels do they dictate decisions and actions?
Are decisions being made and actions being taken?
Are our decisions and actions reactive or proactive?
Are we driving change, or are we being driven by it in undesirable ways?
Our premise is that every organization has primary drivers that determine what it does and how well it does it. For sure, management would like to think that these drivers are in its control, and that they either are moving the organization to greater success or are being shielded or mitigated so they do not preclude success. However, as the exhibit below shows, organizations are potentially subject to a variety of negative drivers, more self-inflicted than external, that produce dysfunction and can lead to failure.
These negative drivers are all about change, its effects and the organization's response.
Unanticipated external change can force the organization in directions that don't produce the best outcomes. "Tomorrow always arrives. It is always different. And even the mightiest company is in trouble if it has not worked on the future. Being surprised by what happens is a risk that even the largest and richest company cannot afford, and even the smallest business need not run." - Peter Drucker
Inertia is unresponsiveness to change. “Humans see what they want to see.” - Rick Riordan
Change unmanaged can produce chaotic behavior and confusion. "Chaos results when the world changes faster than people." - Will Durant
Lack of clear direction results in indecision and paralysis. "To do nothing is the way to nothing." - Nathaniel Hawthorne
A tendency is to go with the herd may seem to be the safest direction when change occurs. “If everyone is thinking alike, then somebody isn't thinking.” - George Patton
Often the leader believes that he or she is called on to dictate actions and a direction in response to change. “Tactics without strategy is the noise before defeat.” - Sun Tsu
WHAT'S MISSING HERE?
Change in inevitable; it affects all organizations. "Most of us fear change. Even when our minds say change is normal, our stomachs quiver at the prospect. But for strategists and managers today, there is no choice but to change." - Robert Waterman Jr.
The negative drivers listed above are the change itself and how the organization adapts to the change. Confusion, inaction, unthinkingly following others, decisions made from the hip - these are the result of the organization not putting the process of anticipating and adapting to change at the top of its list of priorities.
What's missing from the picture is the process that will best position an organization for anticipating and adapting to change: strategic planning coupled with strategic management. At each step depicted below, the strategic planning process and effective plan implementation enable adaptation to change.
Here's how it works:
Insight is gained into the current state of the organization and the world in which it functions, and into how the organization and its environment are changing and the likely direction of that change. By itself, this insight provides important awareness of impending change.
Based on that insight, the organization develops a shared vision of future success - a future state (perhaps 5 years out) for the organization in which it is highly successful. The vision creates a target to keep sight of and to navigate toward even in the midst of change and its effects.
Strategies are developed that hold the promise of moving the organization from its present situation to the desired future state, addressing the anticipated change. Strategies show the path to the vision through the chaotic, changing environment.
At all levels the organization is mapped into implementing the strategies through the development and cascading of a set of annual action steps. The action steps focus all aspects of the organization on strategy achievement, reducing the uncertainty and disorder stemming from change.
The action steps are executed over time, with consistent monitoring and adjustment to assure their completion. Real-time action and adjustment provide a strong, across the board force to propel the organization in the desired direction, both mitigating and leveraging the force of change at work.
Assessment of results shows the effectiveness of execution on stratgegy achievement and lays the groundwork for a re-plannng cycle to begin with development of more insight, affirmation of the continuing validity of the vision, any needed alteration in strategies and development of a new set of annual implementation action steps. Annual assessment means that the depth and direction of current and impending change are being addressed to help assure that continuing forward movement will occur.
NOT ENOUGH
Yet, alone, the strategic planning and implementation process as described above is not enough to assure greater succcess, because strategies and action steps in and of themselves do not harness and synch with other organizational planning processes.
The answer is for organizational leaders to engage in strategic management, "The comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization," according to the Balanced Scorecard Institute. Strategic managers understand that the core strategic planning process needs to drive and inform all other organizational planning processes.
As the hierarchy of planning processes shown below illustrates, all other organizational planning processes - from longer term to shorter term, from innovation, facilities, programs and marketing to budgeting - need to gain their essential focus and direction from the strategic plan's vision and strategies.
The question is, how do organizations function in a highly effective fashion, much less change as they must when the world in which they operate is changing rapidly, without pursuing a current strategic plan? Without the driving force of a shared vision of future success and strategies to move the organization to the vision, what guides all other organizational planning processes?
We think this aspect of the value of strategic planning and strategic management is obvious. Is it obvious to you? Clearly, many leaders do not understand the driving force of strategic planning, not just as an end in itself but for everything the organization does and chooses to do.
