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Thursday, September 1, 2016

Creating A Winning Plan for Organizational Change
by Michael E. Smith
In our last article, we told the story of a CEO whose vision for the future of his company was clear: In five years, he believed his organization could be about twice as large and more international, have a diverse customer base and be offering two to three additional product lines. He knew precisely where he stood in the present and where he wanted to go in the future. The problem: He wasn’t sure exactly how to get there.

It is a common problem. When a company is preparing to implement a transformational change as part of a larger revenue growth initiative, leaders know they must craft a plan for that change. Yet all too often, we find those plans fall short in one of two critical ways. Either they fail to consider all the details necessary to move the organization successfully into the future and sustain the changes, or the plan’s creation did not include all the right stakeholders, leading to problems down the road with buy-in, execution and reinforcement of the change.

The problem stems from CEOs tending to think too strategically when planning for the future state. Certainly, it is imperative to have strategic goals, but executing successful transformational change as part of a growth initiative demands a solid operational plan – a detailed roadmap that encompasses all aspects of the organization that will be affected by the change.

So where do you start? With any transformative planning project, it is important that the right people are involved from the start. The CEO is the most critical participant; leadership of this effort cannot be delegated or outsourced to another senior executive. While the Chief People Officer (CPO) is critical to the process overall, the CEO must lead the team as the project only works well when he or she is actively engaged, committed to the project and focused on keeping it on schedule with a clear endpoint.

In considering the rest of the team, CEOs must strike the right balance between broad organizational involvement and speed/execution. Too many voices can slow the process. Depending on the size of the organization, we typically recommend that the first two levels of direct reports be involved.

Once the team is in place, the project should start by (1) confirming the longer-term strategy and future state of the company, and (2) defining the characteristics of the company and operating model that will be required to successfully execute that strategy. When this level of planning is complete, you can then lay the future operating model beside the current one to identify your gaps.

For example, if international sales will be a bigger part of the company three years out, what capabilities will be needed to grow sales internationally: International acquisitions? Stronger international sales talent? New channel partners for international distribution? Country/ regional level management capabilities? International marketing skills? More CEO/COO management focus on international?

In all, we recommend companies think through five operational elements. This holistic view of the future operating model ensures leaders consider every aspect of what the organization needs to deliver to implement its strategy and achieve its vision. Those elements include:

1. Culture and values

What are the cultural values that need to be brought along as the company moves through its planned changes? This is a broad category that includes decision-making, empowerment and accountability.

2. Structure

This encompasses the organizational structure of the company and is where leaders tend to be most comfortable. While structural planning is key, it is important not to get over-focused here.

3. People

Take a hard look at the people filling key roles in your company and the future requirements of each position. Do the people today have the ability to fulfill the demands of the future job function? If not, can they be trained? If you’ll need to bring on new talent, what is the right timing to begin the search?

4. Management processes

These include how a company communicates, who makes decisions, how leaders run the business, how it reports, dashboard views and ensuring the right team is working together at the right levels. What processes will be needed to run the company in its future state? How are they different from what is in place today? How and when should they be implemented?

5. Capabilities

Capabilities encompass a company’s core competencies such as product development, low-cost manufacturing, superior supply chain economics, marketing, ability to generate leads for the sales team and ability to build deep, long-lasting relationships with channel partners. Evaluate every aspect of your capabilities to determine whether change is needed to successfully execute the new operating model.

During the process of evaluating each of these areas to create a detailed plan for the future, it is critical to be data-driven and analytical to minimize the sometimes emotional aspects of evaluating different parts of the organization. The plan cannot be created by gut feel. If the data you need does not exist, seek it.

For instance, the company mentioned earlier surveyed all its senior managers to understand what was working, what wasn’t working and where its gaps were relative to the current and future operating models. In the area of “people,” part of the analysis included a rigorous review of the senior executive team. In particular, the CEO, COO and CPO went through a detailed exercise to evaluate the leadership on critical dimensions.

This process included very candid conversations about what key people could and could not do, what essential capabilities would be required to perform as a larger, more international and more diverse company – and whether current people had those capabilities, could grow into them or would need to be replaced at some point. In understanding how your team will evolve to fill the key roles of the future, it is imperative to use a rigorous evaluation method that is practical and actionable, not simply an interesting psychoanalysis.

This is the most difficult step for any CEO, particularly one who has been in place for a number of years and has successfully grown the company with the current team. Not everyone is capable of making the next stage of the journey. The key criteria is objectivity on whether they can be the leaders of tomorrow in a much different, larger and more complex company.

By intensely focusing on precisely how to get from now to the future, it makes that future state far more real for everyone. It also results in a crisper strategy and greater focus on the key initiatives required to implement the strategy. Importantly, this planning process can provide the Board and the organization with a clear understanding of how the operating model needs to change and a detailed plan for how the changes will be implemented.

Once your detailed plan is in place, you are ready for the next step in executing organizational change: implementing the plan.
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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