Leading the journey to create sustainable value for multiple stakeholders requires the flexible combination of leveraging the forces and facilitators of change with leadership activities and behaviors, organizational culture, and individual leader characteristics. The Leading Transformation Framework is composed of fourteen components described in two journal articles (Latham, 2013a and 2013b) and the fourteen chapters of the [Re]Create book. The components are organized into the five dimensions of organization design: stakeholder-focus, leadership for sustainable excellence, structural S3, culture of service and people, and organizational learning.
Organizations today face increasing pressure from multiple stakeholders and relentless global competition, forcing them to become more innovative in everything they do and produce. If the competition is improving faster than you are it is only a matter of time until you are irrelevant and out of business! The Forces for Change and Stakeholders components address the “Why of Change.” Identify the forces that are pressuring you to change your organization and your leadership. Then identify the key stakeholders, what they want, and how well the organization is meeting their needs.
1. Forces for Change
While the motivation for change varies widely, there must be enough tension to overcome the inertia of satisfaction with the status quo. The framework starts with identifying the forces of change specific to your organization and context. What are the external “pushing” forces for change? What are the “pulling” forces of change? What is the vision of a new desired future? Are these sufficient to overcome the inertia of the status quo? How can you leverage these forces to move your organization forward?
2. Stakeholder Value
The focus of a transformation to sustainable excellence is to increase the value created for multiple stakeholders, including the workforce, customers, investors, suppliers and partners, community, and environment. The focus on stakeholder needs and relationships helps provide a common alignment point for the strategy, systems, scorecard, and overall organization design for sustainable excellence. In short, high- performing organizations create an efficient system and value for other stakeholders such as suppliers and partners, society, and the environment. The task here is to understand the stakeholders’ needs and desires.
Leadership for Sustainable Excellence
Become the Designer of the Organization You Really Want! Organizations are designed by humans (consciously or unconsciously) and can be purposefully designed or redesigned to produce even greater value for multiple stakeholders. Conscious [re]design requires the leader to become the architect of the organization they really want! As Gandhi proposed, in order to effectively lead organizational transformation “you must become the change you want to see in the organization.” Only then will you be credible. Leadership for Sustainable Excellence is a special kind of leadership that consists of specific leadership behaviors and activities combined with individual leader characteristics. Leaders use these behaviors, activities, and characteristics to effectively leverage the forces and facilitators of change to [re]design and transform their organization’s strategy, systems, scorecard, people, and culture.
3. Compelling Directive
The needs of the stakeholders inform the creation of a “compelling directive.” The format of the compelling directive varies but typically consists of the organization’s purpose, mission, vision, and values. The vision describes the desired reality. The vision is an essential part of creating positive tension, a vital force of change to overcome resistance to change. The compelling directive builds a bridge between the stakeholders and the strategy.
11. Collaborative Leadership Style
The framework offers leader behaviors that support the leadership system to achieve sustainable excellence. You might consider these the art of leading transformation — or HOW leaders accomplished the activities. The collaborative style includes nine behaviors. Leaders establish their credibility by role modeling the behaviors and actions they want to see in the new organization. Leaders as organization designers respect everyone, which helps them develop collaborative relationships to [re]design and transform the organization. Organization designers are great communicators and deliver a consistent message regardless of the situation. At the same time, they hold people accountable for the changes. They are systems thinkers who are always learning from their involvement in the design and change activities. It is a style that helps people create the organization that they want. This style, along with the activities shapes the culture.
13. The Individual Leader
Organization architects have five common characteristics that increase the odds of achieving and sustaining high performance: purpose and meaning, humility tempered by confidence, integrity, systems perspective, and motivational and attitudinal patterns. While the other leadership components of system and style are visible and observable, this one is below the surface. What would it take to make this leadership style authentic for you? What motivates you to do the key activities?
Get the “DNA” Right First! All too often organizations begin improving the “pieces and parts” of the organization without understanding how they work together as a system. The results are predictably disappointing. There is a better way – build a solid foundation and framework before you redesign the individual components. A solid foundation and framework are formed by the alignment and integration of the strategy, systems, and scorecard to create value for the multiple stakeholders. Some organizations take the “slow road” to excellence working on fixing individual opportunities for improvement without understanding how they influence and are influenced by the larger organization system. This can take years of trial and error and often ends in frustration with modest improvement. It doesn’t have to be that way. If you get the overall organizational “DNA” right first, you can get in the “fast lane” to sustainable excellence.
4. Focused Strategy
How will the organization achieve the desired reality described in the compelling directive? The focused strategy translates the compelling directive and stakeholders’ needs into more specific goals, objectives, and clear expectations. The key here is to focus on a FEW critical goals at a particular point in time. Some organizational transformations require hundreds of changes. Success depends on picking just a few of those to work on at a time and then actually executing the plan, then working on the next priorities as the journey unfolds. The focused strategy is continuously evolving to meet current requirements and challenges. The focused strategy aligns the priorities through the organization and provides the foundation to enable, empower, and engage the workforce.
6. [Re]Design Systems
The focused strategy also drives the implementation of action plans to accomplish the strategy. There are typically two types of strategy deployment projects — those focused on new products and services, and those focused on building the organization systems to develop, produce, deliver, and the products and services. Even new product launches are organization systems that need to be designed or redesigned to achieve a particular goal. The deployment of the strategy focuses on the [re]design and further development of one or more key systems to achieve an objective. The Design Framework, combined with a focus on system design provides the structure to design, develop, and deploy any new or redesigned initiative or system in the organization. The only way we know if our redesign efforts are improving performance is to measure performance.
7. Comprehensive Scorecard
The progress and performance improvements resulting from the deployment of the action plans are measured and tracked by a comprehensive scorecard that measures the stakeholders, strategy, and systems. The comprehensive scorecard goes beyond a simple bottom line to a deeper understanding of the organization as a system. This includes both current performance and performance trends over time. Measuring performance and comparing your organization’s performance to other high-performing organizations helps create dissatisfaction with the status quo and is a vital part of creating tension: productive tension. The scorecard is designed to facilitate dialogue during the periodic organization performance reviews.
Culture of Service and People
Without People, Organizations Don’t Exist! The people and culture are the “glue” that breathes life and energy into the organization. Organizational strategies and systems do not exist without humans to make them a reality. Consequently, without an understanding of human behavior, we cannot understand organizations. And, if we don’t understand organizations, we cannot redesign them to perform better. For many people, human behavior and culture are mysterious, hard to define, and even harder to change. Culture reflects the organization’s values, but values are not directly visible. Values are made manifest through the tangible symbols, rituals, and heroes – all of which are human created and can be intentionally recreated to develop the culture you really want. Team performance is not only a reflection of how well they work together but also the knowledge, skills, abilities, and level of engagement of everyone.
5. Enable, Empower, Engage
While many leaders claim that their people are their most valuable asset, their actions often tell a different story. High-performing organizations develop and engage their workforce to accomplish the strategy. Creating an engaged workforce consists of (a) acquiring and placing talent, (b) developing (enabling) and empowering people, (c) involving and engaging the workforce at all levels, and (d) addressing the whole person. Acquiring and retaining the best talent is a challenge for most organizations. The best people will only work for organizations where they feel valued, enjoy their work, and achieve their full potential in a win-win arrangement. Note: If you don’t need the best people, then consider automating the work.
9. Align, Coach, Appreciate
There is an old saying, “What gets measured gets done and what gets rewarded gets repeated.” Reinforcing behavior is based on progress towards the overall strategy and includes recognition, rewards, promotions, and sometimes the removal of individuals. All too often, incentive systems are counter-productive and drive behaviors that are inconsistent with the overall compelling directive and strategy. So caution is warranted when evaluating and incentivizing performance. High-performing organizations align their incentives to ensure individual performance is supporting the best overall system performance.
12. Culture of Service
Ultimately, sustaining excellence requires that the new systems, processes, and practices become habitual and embedded in the culture. Culture is composed of values and norms that are manifested in the rituals, heroes, and symbols. Organizations that have achieved sustainable excellence have five cultural characteristics in common. They are a complementary combination of valued employees who trust each other and work as a team. At the same time, this trusting team is focused on delivering excellence to the customer. In the end, individuals working together are the essence of any sustainable change.
Learn and Improve Faster Than the Competition! If you are behind but learning faster than your competitors, then you will eventually catch up. And, once you are ahead of the competition continuing to improve faster will help to maintain your advantage. Sustainable excellence is the creation of ever-increasing value for multiple stakeholders including investors, customers, employees, suppliers and partners, the community, and the natural environment. Easier said than done!
8. Organization Performance Review
Scorecard results are analyzed and periodically reviewed by the leaders at all levels who then revise the action plans and operations as necessary to accomplish the strategy. While much of the learning during these reviews is limited to single-loop learning and keeping things on track, occasionally the dialogue will result in an examination of the underlying assumptions and double-loop learning that enables the team to address root causes and prevent similar future problems. This fact-based approach to management includes organization performance analysis that informs the reinforcement of the desired behaviors.
10. Learn and Improve
Successful leaders of transformation are never satisfied with the organization’s performance and learn from experience. To fully develop the organization’s systems, culture and individuals requires that the organization learn not only from their successes but also from their failures. Organizations that have achieved sustainable excellence by learning from success and failure did so using four common methods or approaches: strategic management cycle, organization assessment and improvement, continuous improvement, and benchmarking. These methods are often integrated into the other eight leadership system components.
14. Facilitators of Change
Some leaders of successful change doubted they could do it. It can seem overwhelming. There are a few critical facilitators of change to help you along the journey. First, you are not alone, so start by developing your team of organization architects. Second, begin with the senior leadership team so you will have credibility and personal knowledge to lead the journey. Then develop a plan to guide your [re]design and transformation. There is an old saying, “If it has been done, it must be possible.”
Latham, J. R. (2013a). A Framework for Leading the Transformation to Performance Excellence Part I: CEO Perspectives on Forces, Facilitators, and Strategic Leadership Systems. Quality Management Journal, 20(2), 22.
Latham, J. R. (2013b). A Framework for Leading the Transformation to Performance Excellence Part II: CEO Perspectives on Leadership Behaviors, Individual Leader Characteristics, and Organizational Culture. Quality Management Journal, 20(3), 22.
Latham, J. R. (2016). [Re]Create the organization you really want! – Leadership and organization design for sustainable excellence. Organization Design Studio, Ltd.