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An organization is nothing more than a living embodiment of a strategy. That means its “organizational hardware” (i.e., structures, processes, technologies, and governance) and its “organizational software” (i.e., values, norms, culture, leadership, and employee skills and aspirations) must be designed exclusively in the service of a specific strategy.
Research suggests that only 10% of organizations are successful at aligning their strategy with their organization design.
When it comes to executing strategy, alignment means configuring all of the organization’s assets in the service of your stated strategy and making sure there is no confusion about what each part of the organization does to bring it to life. If you’re embarking on executing your company’s strategy, here are six ways to make sure your organization is designed to do it successfully.
Know what your current organization is and isn’t capable of and what capabilities you need to achieve the newly articulated strategy. Unlike competencies, which belong to individuals, capabilities are organizational.
Every strategy will demand unique competitive capabilities that clearly enable your success. This work that forms these capabilities is work you must be better at than competitors.
Not all work is equal. True competitive work will get you $5 for every $1 you invest in it. However, “everyday work” — tasks that can be done on par with anyone else or in compliance with regulatory requirements, or even work that adds no value to the final product — must be resourced according to its strategic importance.
Problems occur when your competitive and necessary work gets too close or intermixed. In other words, the immediacy of everyday tasks takes away from the focus on competitive work.
In the organizations we work with, governance design — which defines who gets to make decisions and allocate resources — is often too complicated or unclear to be effective. For a strategy to be successful, those closest to the most relevant information, budgets, and problems are the best equipped to make decisions. When leaders have proximity to an issue but no authority, authority without the needed resources, or control of the budget but not the people, the decisions tend to follow hierarchical lines
The new governance is often no match for the legacy behaviours and processes that remain. Like layers of wallpaper in an old house, sometimes you need to strip down to the sheetrock to make way for new décor. Leaders must not only design new governance, they must also strip away previous processes and governance that are no longer contributing to the strategy’s success.
Understand the way your thoughts, feelings, and behaviours motivate other leaders to think, feel, and behave in similar ways. And whether you realize it or not, existing values may be rooted in a previous strategy. Consider an organization whose strategy is moving toward increased innovation and has a corporate value of precision. A value like precision could lead to overanalyzing and a low tolerance for risk — the very things needed to encourage a more innovative culture.
Too frequently, leaders assume that a few nips and tucks to the org chart are the equivalent of good design. But those are the Frankenstein “designs” that make people in different parts of the organization feel like they work in different companies. They quickly grow stagnant and are more fit for the PowerPoint slides on which they’re loosely drawn than for a dynamic business.
For your structure to enable your strategy, it must be agile enough to face the shifts, challenges, and opportunities from its marketplace, stakeholders, and employees.
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