The challenge for the 21st-century organization is to create sustainable value for multiple stakeholders. The definition of success for all types of organizations (profit-seeking, non-profit, and government) is continuously changing and increasingly complex. Stakeholders want more for less, and the “bar” is continuously being raised. While profits have been up since the crash in 2008, the variation in financial performance creates uncertainty, and investors are holding on to their cash. The results are organizations with fewer people to serve, increasing customer needs, wants, and desires. According to Gallup, many to most employees today are looking for new opportunities. In addition, customers are increasingly making purchase decisions based on additional criteria, including social responsibility and environmental factors.
Creating value for ALL key stakeholders (investors, customers, employees, suppliers and partners, community, and the natural environment) is essential to success and sustainable excellence. In other words, we need to design organizations that create a “Win-Win” for all stakeholders vs. taking from one to serve another. The good news is a zero-sum game of trade-offs is not needed to create value for multiple stakeholders. High-performing organizations take a systems approach to organization design that focuses on developing a workforce that creates and delivers great products and services that result in satisfied customers who buy more (repeat business) and tell their friends (referral business), which improves the top line making the investors happy.
Alignment & Organization Design
Unfortunately, many of our organizations are “kludges” of ill-fitting, self-serving silos that are chaotic, complex, and confusing, making it difficult to create value for any stakeholder. Good news, organizations were designed by humans and thus can be redesigned. For our purposes, organization design is a stakeholder-centered approach to aligning and integrating the systems, strategy, and scorecard with the organization’s culture and unique context. When many people hear the words “design” and “designer,” they often think of fashion, interior design, or the design of everyday items such as glasses, salt shakers, and so forth. However, everything that is not created by nature is designed by humans (consciously or unconsciously). Thus, our human-created organizations can be purposefully designed or redesigned to produce even greater value for multiple stakeholders.
Organization designs consist of artifacts that convey information about the context, culture, and systems. Artifacts take many forms, from diagrams and descriptions of systems to visual displays of data to organizational symbols. The four cornerstones of organization design are the stakeholders, strategy, systems, and scorecard. All four are manifested in artifacts, including documents, speeches, etc. The values of a culture are not directly visible. They are inferred from how people act (practices) and the symbols, rituals, and heroes of the organization that are visible and audible. Context also contains important information, including the facilities, the technology, the type of work (e.g., nuclear power vs. education), and the purpose and mission of the organization. These key components must be aligned and congruent to achieve sustainable excellence.
The organization architect must master two core competencies. First, they must become designers. Second, they must learn to lead organizational transformation. Only then will they be prepared to lead the design of the overall organization. Two frameworks, one for design and one for leadership, provide a flexible approach to guide the creation of the organization you really want! Many organizations have attempted to improve performance using various methods and management fads. The results have been mixed at best. Interestingly, most of these methods work in certain circumstances and when aligned with an overall design or “big picture.” However, many of these methods are incremental and take more time than is necessary to improve performance. In addition, they do not take advantage of the combination of design thinking and systems thinking to achieve breakthrough performance.
The Design Framework provides a structured but flexible approach to help you navigate the design process. The discovery phase comprises the framework’s first eight components, from purpose to diagnosis. The final component includes the system’s design, development, deployment, and continuous improvement. The first eight steps of the design framework form the discovery phase. These first eight components are the “springboard” for creative design and development. The expanded discovery process allows the design team to “leap” from the current design to an aligned and integrated design.
Leading the journey to sustainable excellence requires the flexible combination of leveraging the forces and facilitators of change with leadership activities and behaviors, organizational culture, and individual leader characteristics. While the motivation for change varies widely, there must be enough tension to overcome the inertia of satisfaction with the status quo. The leadership framework identifies key forces and facilitators of organizational change that are common to successful organizational design or redesign.
The center of the Leading Transformation Framework is a leadership system that includes nine activities – WHAT transformation leaders do. You might consider these the “science” of leading transformation. The framework also includes nine leader behaviors that support the leadership system for organization excellence – HOW transformation leaders lead. You might consider these the “art” of leading transformation. In addition, organization architects have five characteristics that increase the odds of achieving and sustaining high performance: purpose and meaning, humility with confidence, integrity, systems perspective, and motivational and attitudinal patterns. Ultimately, sustaining excellence requires new systems, processes, and practices to become habits that are embedded in the culture. Cultural components include values, norms, traditions, symbols, and rituals. Ultimately, individuals working together are the essence of any sustainable change.
The Leadership and Design approach is faster than other traditional methods, has a bigger payoff, and increases the odds of success.
- First, the leadership and design approach is a more direct route to the goal of sustainable excellence.
- Second, the direct route results in a faster journey which = increased benefits or speed to benefit.
- Third, learning from those who have already been successful increases the odds of success.
Sustainable excellence creates ever-increasing value for multiple stakeholders, including investors, customers, employees, suppliers and partners, the community, and the natural environment. It is achieved through designing and redesigning an organization’s systems to create continuously improving high-performance results across a comprehensive scorecard that compare favorably to relevant comparisons AND eventually embeds those changes into the organization’s culture. Sustainability in this context means that the change endures and does not take from one stakeholder to serve another. Instead, it is designed to meet the needs of all the stakeholders. Only then will you have the organization you really want and society needs.
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