The Effective Organization�
Honest Conversations Are Essential to the Development of an Effective, High Commitment, High Performance Organization
Copyright © President & Fellows of Harvard College
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The Effective Organization:
Overcoming Silent Killers of Learning & Change
By
Mike Beer
With
Johanna Pregmark
Forthcoming Book
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“Every institution is vulnerable,” according to Jim Collins,
author of How the Mighty Fall, “no matter how great.
No matter how much you’ve achieved, no matter how much
power you’ve garnered, you are vulnerable to decline. There
is no law of nature that the most powerful will inevitably
remain at the top. Anyone can fall and most eventually do.”
Collins, J. (2009) How the Mighty Fall: And Why Some Companies Never Give In
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“You can only truly understand organizations by
actively trying to change them.”
Kurt Lewin
Founder Field Organization Change & Development
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Organizations are often too ineffective
to cope with and adapt to continuous change
52% of the World's Fortune 500 companies in 2000 no longer existed by 2014
70% of Organizational Change Initiatives Fail
Ineffectiveness is Makes Organizations Vulnerable
Why Organizational Transformations Are Hard: Require Conversations About Both the Tangible and Intangible Issues
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Short-term
Long-term
Hard
Soft – relationships, mindsets, emotions
Surface
Deep undiscussable organizational issues
Source: Adapted from Malcolm Wolf
Tangible/Visible Issues
Intangible/Hidden Potentially Threatening Issues
����The Effective Organization�In a VUCA World, Managers Must Achieve all 3 Outcomes to Develop an Effective and Sustainable System Responsive Its Environment��
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Performance alignment
Psychological alignment
Capacity to learn, change & realign
A system of organizing, managing and leading aligned with the new direction inspired by changes in the environment
A partnership between leaders and their people to execute the strategy and enact the values of the organization
Capability to learn the unvarnished truth, about both tangible and intangible issues that make organization ineffective
The Effective
Organization
Source: Adapted from
Beer (2009)
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Organizations Become Ineffective Because of Inadequate Response to Changes in Environment & Requisite Strategy
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“Can you help us become a company capable of implementing its strategies.”
Ray Gilmartin
CEO, Becton Dickinson
1990
����������How we Learned�Honest, Collective and Public Conversations Revealed The Truth �Developed and Applied for 3 Decades at Becton Dickinson & 100s of Companies
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The Strategic Fitness Process
An Organizational Intervention & Research Process
It Enables An Honest, Collective, and Public Conversations
It is Structured 9 Step Leadership Platform
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The Strategic Finess Process (SFP): A Disciplined Leadership Platform for Having the Honest, Collective and Public Conversations that Matter �
Senior Management Team
Organization
Employee Task Force
Where we are Going
What stands in the way
get unvarnished truth �on the table & build a �partnership for �to fully realize strategic�intent
An Engineered Process for Building Fit and Fitness: Fitness Profiling
1) Define org. direction: purpose, strategy, values.
5) Diagnose root causes of ineffectiveness in achieving direction
6) Develop change agenda & presents it to task force for their critique
8) Revise agenda – and with TF –jointly create final change plan
2) Interviewer training & selection of 100 be interviewed
4) Task force reports unvarnished truth to TFT
7) Meet to develop a critique of change plan
9) TMT communicate what it heard and the change plan it commits to implement
3) TF Interviews 100 key people re organization strengths & barriers
Broader �organization
Fitness task force (TF)
Top Mgt. Team (TFT)
Strategic Fitness Process �9 Step roadmap for becoming an Effective high commitment, performance organization
Strategic Fitness Process�The “Fishbowl” designed to put the truth on the table
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Leadership team
Task force
● | Task members get a “seat at the table” |
● | Enables “unvarnished truth” to be heard and productively addressed by the leadership team |
● | Creates shared and broad ownership of key issues |
I never got hit by a punch I saw coming.
– Peter Dunn, Steak n Shake CEO
What Honest Conversations Revealed�Silent Undiscussable Barriers to Effectiveness
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2. Unclear strategy, values, and conflicting priorities
4.Poor coordination across functions, business & geographic regions
3.Leadership behavior – top down or laissez faire (hands off)
6. Inadequate leadership development system and weak bench of leaders
7. Poor vertical communication and learning – lack of honest conversations
Source: Adapted from Beer & Eisenstat (2000)
5. Failure to delegate decision rights and authority to lowest possible level
possible consistent with knowledge available at level empowered to decide
��������������������Corporate Change�The Silent Killers Exist in Every Subunit of the Company – Unit by Unit Change �
Adapted from the Beer Eisenstat & Spector, “The Critical Path to Corporate Renewal,” 1990
Heads of subunits
Staff
CEO
Cross-cutting teams
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The work that we kicked off with [honest conversations through the Strategic Fitness Process(SFP)] started to really energize the transformation in multiple dimensions…So all those things happened because of SFP...Sure, I had a lot of these ideas, but…SFP was giving a voice to the organization so they could have a dialogue with me…and with others. But I didn’t have the whole thing scoped out in my head. It was this information from SFP that enabled me to refine my thinking…
Vince Forlenza
CEO, Becton Dickenson
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resources. The resultant factions around these two strategies are tearing
this organization apart.
that refuse to cooperate effectively for fear they will lose power.
Case Example
Hewlett Packard’s Santa Rosa Systems Division
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I think people did not know how to break through to it… You read about these bad marriages, where the wife and the husband both know what’s wrong, they just can’t find a way to talk to each other about it. And I think that’s what was going on. We all knew the problems were there and I think we could not find a way to discuss it with each other in a constructive way.
Member of Senior Team:
HP’s Santa Rosa Systems Division
Organizational Silence
Lack
of
Honest
Vertical
Conversations
Org. Design
Does Not
Facilitate
Requisite
Coordination
Unclear
Uncompelling
Strategic and
Values
Direction
Ineffective
Top
Management
Team
An
Unengaged
Conflict Averse
Top Down
Leader
Ineffective
Organization
Poor
leadership
Development
Process
and Weak Bench
of Leaders
Inadequate
Delegation
Of Decision
Rights &
Authority
The Silent Killer Syndrome That Makes Organizations Vulnerable
The Dynamics of an Ineffective Organization
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Inadequate Delegation
Lack of clear accountability�or empowerment
Poor
coordination & collaboration
Inadequate Leadership/Management Capabilities and Development
Poor Quality of Strategic Execution
Overly directive or disengaged senior management style
Ineffective
Top team
Overload; Conflicting Priorities
Poor Quality of Strategic Direction
Poor Quality Vertical Communication and Learning
SOURCE: The Silent Killers of Strategy Implementation and Learning, Beer & Eisenstat, Sloan Management Review, Summer 2000
A predictable (research-proven) set of barriers that often emerge during big change
Top Team
Broader
Organization
SRSD suffers from the legacy of HP. We are not a box [instrument] division, yet we manage and have structured SRSD as though we are. Although it has taken on a more expansive role in creating systems than it ever did in past divisions, Custom Systems is still run out of manufacturing. Although test and measurement systems have to be heavily market oriented, we still have R&D calling most of the shots. Although our product lines need to be grown and managed as businesses, we still treat them as projects. The systems market is vastly different than anything HP has done in the past with test and measurement, that we need to start thinking of ourselves as a unique entity operating in circumstances that require a different strategy and structure than has been traditionally utilized in the past.
– George Mosby, Finance Manager
Performance & Psychological Alignment Declines As Environment Changes
The task force feedback really served several important roles. Not only did it function as a powerful tool to communicate difficult issues, but it also showed that that the top team cared about what employees thought and that we would not institute a change process without asking for their input. Also, I believe that by asking for their “unvarnished” opinions, the employees realized just how serious we were about improving SRSD”s effectiveness. To Scott Wright’s credit, he probably took the most amount of risk initiating a process like this. He acted as the linchpin, and without his involvement, a process like this would have been spinning its wheels.
– George Mosby, Finance Manager
The Power of Honest Conversations
Annual
Honest
Vertical
Conversations
An Org. Design
That Facilitate
Requisite
Coordination
Clear
Compelling
Strategic and
Values
Direction
Effective
Top
Management
Team
An
Engaged
Participative
Leader
Effective
Organization
System
High Quality
Leadership
Development
Process
and Strong Bench
of Leaders
Delegation
Of Decision
Rights &
Authority to
Lowest Possible
Level
SFP Enabled Transformation of Silent Killers
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Extent of Change in | Silent Killers | |
Type of Organization | Change in Silent Killers | Extent of Overall Change |
HP SRSD – BU | 4.67 | 7.00 |
Toy Company | 4.67 | 6.00 |
Pharma Co., Mexico BU | 3.83 | 5.90 |
Tech. Co. B, BU | 4.23 | 5.00 |
Tech. Comp. C, BU | 4.33 | 5.20 |
Pharma Co. Brazil BU | 5.00 | 5.00 |
Hotel Co. UK | 0.33 | 5.00 |
Tech. Co. D. BU | 2.33 | 4.38 |
Banking BU | 2.17 | 3.00 |
Pharma Co. Argentina BU | 1.90 | 3.33 |
Medical Tech. Co. | 2.67 | 3.09 |
Privatized Gov. Agency | 1.30 | 2.55 |
Case Analysis -- Extent of Change Following SFP - 7 Point Scale
The Dynamics of an Effective Organization �This is what SRSD Became
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SOURCE: The Silent Killers of Strategy Implementation and Learning, Beer & Eisenstat, Sloan Management Review, Summer 2000
Top Team
Broader
Organization
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It is the work they [Santa Rosa Systems Division] did on alignment
[using the Strategic Fitness Process] that got them to come to grips
with what business they wanted to go after and what the business
model was that was needed…Today I see them as one of our star divisions….
Compared to other divisions, it probably is the most dramatic turnaround.
Ned Barnholt
EVP Hewlett-Packard
Test and Measurement Sector
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We lost a lot of employee satisfaction and commitment as a result of our problems but regained it and more. People from other divisions now want to come to work here and they cite that interesting process – honest conversations (SFP) - that we conduct annually
as one of the reasons.
Jody Edwards
SRSD HR Manager
Factors That Moderate Learning and Change Through SFP (Belanger, D. & Beer, M) Unpublished Study�
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Toward a Normative and Actionable Theory of Organization Change and Development
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Support for The Unit-by Unit Corporate Change Strategy
Book: “The Critical Path to Corporate Renewal”
HBR Article: ”Why change programs do not produce change”