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 includes fourteen components derived from research on CEOs who led successful organization transformations resulting in the Malcolm Baldrige National Quality Award. For a more detailed description of the study, check out two journal articles (Latham, 2013a and 2013b) and the fourteen chapters of the [Re]Create book.
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 identifies the forces of change specific to your organization and context. Several questions are addressed to describe the forces for change. 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 challenge is to create sustainable value for multiple stakeholders, including the workforce, customers, investors, suppliers and partners, community, and environment. Stakeholder needs and relationships help provide a common alignment point for the strategy, systems, scorecard, culture, leadership, and overall organization design. In short, high-performing organizations are aligned and integrated systems that create sustainable value for multiple stakeholders. Leaders as organization designers, need to understand the stakeholders’ needs and desires to do that.
3. Compelling Directive
Stakeholders’ needs inform the creation of a “compelling directive.” While a compelling directive’s format varies widely, it typically addresses an organization’s purpose, mission, vision, and values. The vision describes the desired reality and is essential to creating positive tension, a vital force of change to overcome resistance to change: the compelling directive bridges the stakeholders’ needs and the organization’s strategy.
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 time. Some organizational transformations require hundreds of changes. Success depends on picking just a few to work on at a time, 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.
5. Enable, Empower, and 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, consider automating the work.
6. [Re]Design Systems
The focused strategy also drives the implementation of action plans. 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. 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 facilitates dialogue during the periodic organization performance reviews.
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 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.
9. Align, Coach, Appreciate
There’s an old saying, “What gets measured gets done, and what gets rewarded gets repeated.” Reinforcing behavior includes feedback, recognition, rewards, promotions, and, occasionally, the removal of individuals. Incentive systems are often counter-productive and drive behaviors inconsistent with the compelling directive and strategy. High-performing organizations align their incentives to ensure individual performance supports the best overall system performance.
10. Learn and Improve
Successful transformation leaders 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 from its successes and failures. Organizations that have achieved sustainable excellence by learning from success and failure use four common methods or approaches: strategic management cycle, organization assessment and improvement, continuous improvement, and benchmarking. These methods integrate with the other eight leadership system components.
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 credibility by role-modeling the behaviors and actions they want to see in a 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 constantly learn from their involvement in 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.
12. Culture of Service
Ultimately, sustaining excellence requires new systems, processes, and practices to become habitual and embedded in the culture. Culture is composed of values and norms manifested in 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 focuses on delivering customer excellence. Ultimately, individuals working together are the essence of any sustainable change.
13. The Individual Leader
Organization designers 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 motivation. While the other leadership components of the 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?
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 developing your team of organization designers. Second, begin with the senior leadership team so you have the credibility and personal knowledge to lead the journey. Then create 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.
Leadership and Organization Design for Sustainable Excellence
“(Re)Create is a masterful, comprehensive, and systematic resource for how to craft a relevant, prosperous, dynamic, and sustainable business!… If you have time to read only one business book this year – make it (Re)Create!” Better yet buy a copy for your entire team and together (re)create the optimal culture, execute operational excellence, and craft engaging experiences that drive loyalty and advocacy of your people and your customers.”
Joseph Michelli, Ph.D. CCXP, New York Times #1 bestselling author