This week I am presenting on leading organization design and transformation to achieve sustainable excellence at the Rocky Mountain Performance Excellence Quest for Excellence Conference. This article overviews the key points and provides a free download Presentation Handout that further describes the points.
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 are 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.
The creation of 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 “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 the 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 the 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, 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 a wide variety of methods and management fads. The results have been mixed at best. The interesting thing is 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 Management Design Framework provides a structured but flexible approach to help you navigate the design process. The discovery phase is composed of the first eight components in the framework from purpose to diagnosis. The final component includes the design, development, deployment, and continuous improvement of the system. The first eight steps of the design framework form the discovery phase. These first eight components are the “springboard” to the creative design and development process. It is the expanded discovery process that 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 organization design or redesign.
The center of the Leading Transformation Framework is a leadership system that includes nine activities – WHAT leaders of transformation 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 leaders of transformation lead. You might consider these the “art” of leading transformation. In addition, organization architects have five individual characteristics that increase the odds of achieving and sustaining high performance including purpose and meaning, humble but confident, integrity, systems perspective, and motivational and attitudinal patterns. Ultimately, sustaining excellence requires new systems, processes, and practices become habits and are embedded in the culture. Culture is composed of values, norms, traditions, symbols, and rituals. In the end, 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 is the creation of ever-increasing value for multiple stakeholders including investors, customers, employees, suppliers and partners, the community, and the natural environment. It is achieved through the design and redesign of an organization’s systems to create continuously improving high-performance results across a comprehensive scorecard that compare favorably to relevant comparisons AND eventually embedding those changes into the culture of the organization. Sustainable in this context means that the change endures, and it 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.
Participant Feedback (selected)
Dr. Latham’s delivery was fantastic. His detailed insight of how/why certain Baldrige award recipients were successful, was quite illuminating. In particular, his message of just how important it is for leadership to be engaged and supportive of the process, was very true.
Best presentation of the day.
The singular most outstanding Baldrige presentation I have ever heard. He elevated Baldrige to the next level with his ‘sustaining’ excellence and leaders as organizational designers construct.
Learn More – Download the Presentation Handout (PDF).