Conducting a thorough look inward at your company’s organizational effectiveness is a necessary step before you begin a full blown strategic development effort. In my last blog post, I covered the common obstacles to strategy execution. Many of these obstacles relate to internal struggles (i.e. lack of buy-in from key players) and varying degrees of “organizational dysfunction” that occur in businesses, impeding their ability to properly execute strategy. This whole subject reminds me of a famous quote that I have used from time-to-time in the organizations I have worked in:
“We have met the enemy and he is us”[1]
-Walt Kelly
There are a myriad of causes of organizational dysfunction – some examples include: confusion related to decisions and decision rights, difficulty in managing change, second guessing of decisions, bottlenecks due to structural deficiencies and lack of informational flows.
In any event, when pressed with a challenge like improving organizational effectiveness, I always turn to the experts for some advice, direction and insights. In this quest I have uncovered a great article and web-based tool developed by Booz & Company, as published in the Harvard Business Review magazine.
Based upon an extensive empirical study of more than 1,000 companies and 125,000 individual employee surveys, three Booz & Company consultants published their results in a June 2008 Harvard Business Review article entitled: “Secrets to Successful Strategy Execution”[2]. In summary, they identified (in order of importance) four (4) so-called “building blocks for successful strategy execution”, which are linked to one another:
- Decision rights – everyone in the organization has a good idea of the decisions and actions they are responsible for.
- Information – important information about the competitive marketplace gets back to the headquarters and is shared across the company.
- Motivators – the link between performance and rewards is strong.
- Structure – internal boundaries are clarified so that decision rights, accountability and approval process is clearly defined eliminating bottlenecks and confusion as to whether decisions are being made by the corporate headquarters or business units and/or between functions (i.e. marketing or sales).
As a result of this study, in addition to these building blocks, they identified 17 traits in total that strong execution companies possess. In addition to the 4 building blocks mentioned above, the following round out the top 10 traits of strong execution-based companies:
5. Once made, decisions are rarely second-guessed.
6. Field and line employees have access to the metrics they need to measure the key drivers of their business.
7. Managers “up-the-line” get involved in operating decisions.
8. Conflicting messages are rarely sent to the marketplace.
9. The individual performance appraisal process differentiates among high, adequate and low performers.
10. The ability to deliver on performance commitments strongly influences career advancement and compensation.
Developing an Organizational Effectiveness Plan
In order to develop an organizational effectiveness improvement program for your company, they have developed a “5 Step Organizational Improvement program” simulator at www.simulator-orgeffectiveness.com.
Here is how it works:
First, you select 1 of 7 profiles that most closely match your organization’s profile by answering the questions in the diagnostic survey [3].
Once completed, this online survey then generates the profile for your organization and enables you to then “Advance to the Organizational Simulator”. The organizational effectiveness simulator shows a baseline score from the survey questions and your organization’s profile.
Having established this baseline, you can then pick 5 improvement initiatives for each of the next 2 years that addresses the weakest links within your organization. This step enables you to measure the relative impact that various potential actions have on the organization (via an effectiveness score) and tells you what actions have: 1) the greatest impact, 2) a positive impact or, 3) a negative impact on organizational effectiveness so you can ultimately choose the 5 actions that will have the greatest positive impact. You can then focus your energies in those 5 specific areas for each year, over the next 2 years, and proceed with organizational transformation.
Bottom line: first and foremost, strengthening the underpinnings of your organization is paramount in order to achieve the best possible outcome of strategy execution. The Booz & Company simulator is a great tool for an organization to use to assist them in this improvement plan effort.
Please take a minute to complete my Linked In Poll on #1 Obstacle to Strategy Execution.
Further Reading on the subject:
The Secrets to Successful Strategy Executionby Gary L. Neilson, Karla L. Martin, and Elizabeth Powers, Harvard Business Review, published June 2008. Reprint numberR0806C at www.hbr.org
Mastering the Management System by Robert S. Kaplan and David P. Norton January 2008, Harvard Business Review.
Making Strategy Work by Lawrence G. Hrebiniak, Wharton School Publishing. 2005.
[1] Walt Kelly’s, author of the popular comic strip Pogo, first Earth Day Poster published in 1970.
[2] The Secrets to Successful Strategy Execution by Gary L. Neilson, Karla L. Martin, and Elizabeth Powers, Harvard Business Review, published June 2008. Reprint numberR0806C at www.hbr.org
[3] Diagnose your current organization using Booz & Company’s proprietary tool called the Org DNA Profiler®.
Related articles
- Does Organizational Culture Matter? Part 2 of 2 (vistage.com)
The Savvy Strategist (tm) 
I tried the simulator and it’s a very impressive tool. Assuming you choose the correct model for your organization as it is today, the simulator does a real good job directing you to the actions that will improve effectiveness over the two year period. I was able to find the traits that would double the organization’s effectiveness during the two year implementation period. Very eye-opening exercise.
I Especially like “10. The ability to deliver on performance commitments strongly influences career advancement and compensation.” So pay-for-performance… boy, if only we did more of that. Don’t work, don’t eat. Nothing like the thought of running out of money to motivate you to sharpen your focus – both for short-term results and long-term ROI of time and energy.
Nice post! 😉
Flying Tech