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Tuesday, August 30, 2016

Execute Organizational Change with Confidence
by Michael E. Smith
Driving home one day, the CEO of a fast-growing mid-sized company mulled over the just-concluded Board meeting. At $350 million in annual revenues, the company was doing well, building on a strong record of growth and turning out a solid financial performance. The current leadership team had worked together for a long time and knew the industry thoroughly.

Their growth plans were well defined: In five years, the CEO believed the company could be about twice as big, more international, have a more diverse customer base and be offering two to three additional product lines. By all accounts, the company was a success and its future looked rosy.

And yet, a query from an investor and Board member after the meeting nagged at the CEO. The question: Was the organization ready to successfully execute on its ambitious plans?

Pondering it, the CEO came to a critical realization: he didn’t know. He had a solid grasp on what his operation looked like today. And he knew exactly where he wanted to be in five years. However, he had not identified the specific changes that would need to be made in the company’s structure, staff, sales strategy, product development capabilities, etc. in order to realize the planned growth. Clearly, there was work to be done.

The CEO’s quandary was not unique. In our work with hundreds of companies, we frequently find that although the timing for change is right, the path forward is not very clear. Too often in planning for growth, leaders give a lot of thought to moving around names in boxes but overlook other crucial aspects of the company.

A more holistic view of what a company requires to achieve its growth aspiration takes a top-to-bottom look at what needs to change. Typically, this includes developing new capabilities, establishing new management processes, realigning people, refining the organization structure, and strengthening the underlying culture and values – all key components of the operating model.

Done right, this holistic approach to mapping the future helps leaders better understand current capability weaknesses and challenges as well as clarify the vision of the future state. It also results in a highly detailed plan that can be communicated to the Board and down through senior management, giving everyone total clarity as to the strategic goals, the future operating model to which the company is evolving and how they are going to get there.

Consider the CEO in the example above. After realizing he did not have a clear plan to take his company from where it was at the time to where it needed to be in five years, the CEO sat down with his COO, the head of HR, and a team from Blue Ridge Partners (BRP) and said, “Let’s define the future.” In doing so, the most significant change they anticipated was a shift to a more international growth focus.

This understanding prompted the leadership team to begin asking some important questions: What new capabilities would be required to support the company’s growth plans and what type of leadership would be needed to build these capabilities? What new positions should be created on the organizational chart to ensure those growth targets were realized and what would be the qualities of the right candidates to fill those positions?

Those questions were just the beginning. As the CEO and his team worked through each of them, they kept in mind these 10 key principles that lie at the heart of preparing for a successful change in a company’s operating model in order to grow revenues:

  • Focus on the goal of implementing the strategy and delivering on performance commitments – the ultimate objective – not on organizational change, per se.
  • Agree up front on objectives – the “guiding principles” for the operating model – before making hard-to-reverse decisions on structure or people.
  • Consider all dimensions of the operating model (capabilities, decision-making processes, culture, and so on). Avoid excessive focus on structural considerations.
  • Develop and compare, contrast, and evaluate alternative operating models as a way to sharpen decisions. Iterate between options.
  • Develop “ideal” solutions and then move to the “practical” solutions, recognizing likely people, budget or time constraints.
  • Do not compromise on staffing of critical positions. Thorough and hard-nosed assessments ensure the company has the talent in place for the critical roles that will drive future success.
  • Recognize that in the end, the CEO/COO preferences are key as the organizational model must be consistent with their leadership styles. These preferences should trump other design considerations.
  • Carefully consider the project approach, especially the project team composition. Be prepared to make a trade-off between broad organizational involvement/input and project speed.
  • Plan for intensive communication with the executive team during the process and across the company as implementation gets underway.
  • Communicate changes in the context of the “big things” the organization needs to deliver, such as serving customers, introducing new products and meeting growth and profit objectives.

 In all, the process takes two to three months with a focused team. Companies that understand and embrace this holistic approach to managing business transformation and change as part of a larger revenue growth initiative will find the approach to be a very powerful one. It not only positions a company for successful growth, it makes Board relationships more dynamic, drives alignment and transparency and enables everyone to be focused in the same direction on execution of the growth strategy.

With these early pieces in place – including a solid understanding of the desired end goal and an awareness of the myriad dimensions that will impact the future state – the leadership team is ready to take the next step towards successful business transformation and change to drive growth: constructing a detailed plan to bring the organization into the future.

Source: CEO

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.·. Miguel Ángel MEDINA CASABELLA, MSM, MBA, SMHS .·.
Especialista en Management Estratégico, Gestión del Cambio e Inversiones
Representante de The George Washington University en Foros y Ferias de LatAm desde 2001
Representante de The George Washington University Medical Center para los Países de LatAm desde 1996
Ex Director Académico y Profesor de Gestión del Cambio del HSML Program para LatAm en GWU School of Medicine & Health Sciences (Washington DC)
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