Power point

STRATEGIC ALIGNMENT: APPLICATIONS OF THE INTEGRATED STRATEGIC

CHANGE MODEL

Dr. Walter Ross Foster Mobley

The Foster Mobley Group, Inc.

OD NETWORK - 2005

ISC Strategy Implementation Model©

CurrentStrategy

(S1)

CurrentStrategy

(S1)

NewStrategy

(S2)

NewStrategy

(S2)

CurrentOrganization

(O1)

CurrentOrganization

(O1)

StrategicallyAligned

Organization(O2)

StrategicallyAligned

Organization(O2)

StrategicBusiness

Plan

StrategicBusiness

Plan

Strategic AnalysisStrategy Implementation

Strategy Formulation

Strategic Fit

Marketplace

© Dr. Walter Ross

StrategicChange

Plan

StrategicChange

Plan

AGENDA

• Introductions

• The case for the “Integrated Strategic Change Model”

• How ISC integrates OD, Strategic Planning and Strategy Implementation

• Issues in OD and Strategy

• Explorations and Insights

INTRODUCTIONS

• Name

• Organization

• Role

• Background in OD/ Change

• Reason for attending ODN

• Reason for enrolling in this session

The Case for ISC

• Most execs unhappy with strategy execution

• Most execs unhappy with change initiatives

• Half life of small systems OD interventions

• Failure of strategic planning processes

• Integration of “inside out” / “outside in” interventions

• Dick Beckhard – “Integrated Strategic Change: How OD Builds Competitive Advantage” (AW)

The Challenge in Strategic Management Is Not:

• Strategic Analysis

• Business Planning

The Challenge in Strategic Management Is:

• IMPLEMENTATION!

Why Strategies Fail

• Incomplete data from the strategic assessment• FIT with organizational capabilities• Organizational culture• Lack of organizational alignment• Lack of wide-spread ownership and

accountability • Lack of Implementation Plan• Failure to develop strategic capabilities• Inability to change/ adapt/ cope with change

Shortcomings of Traditional Strategic Planning Models

Strategic assessment does not take into account:

• The true capabilities of the current organization

• The capabilities that will be required to implement and achieve the new strategy

Shortcomings of Traditional Strategic Planning Models

The strategic plan does not take into account:

• How the plan will be implemented

• The changes that will need to be achieved to implement the plan

• The organizational integration that will be needed to implement the plan

While business outcomes are tracked:• The capability to achieve those outcomes goes

unmonitored• Signals about organizational Health & Vitality

are ignored

• People are measured and rewarded for short-term results, not strategic results

• Ineffective systems and processes are tolerated

• Organizational resources are misaligned and not focused on strategic outcomes

Shortcomings of Strategy Implementation

Strategically-Focused OD

• How do we ensure strategic fit?

• How do we ensure ownership and accountability?

• How do we develop the organizational capabilities needed to achieve the Strategic Plan?

• How do we create the organizational integration needed to implement the plan?

What We’ve Learned

• Leaders get it!

• Strategy implementation = CHANGE!

• ISC promotes the adaptation and sustained effort needed to achieve the strategic plan

• The ISC process builds organizational muscle

• ISC creates enterprise-wide alignment

• ISC creates laser focus on key strategic outcomes

The Model

ISC Strategy Implementation Model©

CurrentStrategy

(S1)

CurrentStrategy

(S1)

NewStrategy

(S2)

NewStrategy

(S2)

CurrentOrganization

(O1)

CurrentOrganization

(O1)

StrategicallyAligned

Organization(O2)

StrategicallyAligned

Organization(O2)

StrategicBusiness

Plan

StrategicBusiness

Plan

Strategic AnalysisStrategy Implementation

Strategy Formulation

Strategic Fit

Marketplace

© Dr. Walter Ross

StrategicChange

Plan

StrategicChange

Plan

The ISC Model

• Strategic Business Analysis

• Strategic assessment of current organizational capability and the capability needed to achieve the new strategic plan

• Strategic Business Plan

• Strategic Change Plan

Strategic Capability Assessment

• Critical Success Factors – What will we have to do really well to achieve the new strategy?

• What are we currently doing well?

• Level of stress/effort to achieve current performance?

• Current organizational weaknesses/limits?

• How effective will the current organization be in achieving the new strategy?

• What changes need to occur to achieve the new strategy?

• What is the organization’s ability to change?

Strategic Change Plan

• Change Objectives

• Change Strategy

• Change Methodologies and schedule

• Change Metrics (based on Critical Success Factors)

ISC Change Strategy

• Enterprise-wide ownership and alignment of purpose & direction

• Cross-functional partnerships focused on achievement of strategic outcomes

• Focus on stewardship and leadership • Individual and team control over their own

accountabilities• Goal setting and performance measurement

Critical Success Factors• Focused development of the organization’s

capabilities to achieve strategic results.

The Pacific Microchip, Inc. Case

Integration of OD, Strategic Planning and Strategy

Implementation

An Interactive Case Study – Healthcare System Merger Using ISC

Key Facts• Merger among historical competitors in medium-sized

community• Disparate sizes, levels of sophistication, commitment to

leader-led change• The leaders of the smaller of the two spent the previous

1 ½ years in a comprehensive change • New combined CEO didn’t get it, want to get it, or even

acknowledge he needed to get it…however, he tolerated the effort by those on his team– No history of democracy, involvement or engagement

Our Beliefs About Successful Change

• The most effective change is enacted from the top• Leaders embed culture, systems reinforce it• For behavior change to become embedded, it must

be led and lived by the leaders (not delegated)• Decisions informed by many, made by fewer• If you aren’t committed, it’s not going anywhere!

• Alignment is EVERYTHING!

Cascading Process for Change

Engagement

Executive Leadership

Senior Management

Directors

Managers

Supervisors

Staff

Keys to Approach:

One layer at a time – starts at top

One layer engages next layer

Each layer accountable for next

Scenarios aid preparation

Cross-organizational groups for discussion at each level

Values, strategy and/or balanced scorecard frame discussions

Recent Example of "Cascading"

CEO offers "opt out" option at start of process

CEO offers "opt out" option at end of Year #1

Year #1Theme: Organizational Values

Years #2-4Themes: Strategy and Accountability

Work is done at executive level to clarify values

Scenarios (multiple representations) are created to engender dia logue and understanding

Executives are coached on presentation and engagement

With strong and committed leadership, the "top deck" got clear in six months

Once clear, the "top deck" aligned the next two levels in 90 days

Year #2

Year #3

Year #4

Strategic Forum – Values

Strategic Forum – New Performance Appraisal

Strategic Forum – Future Competencies

1st Phase Non-Negotiables

• Engaged, knowledgeable, active leaders• Simple, clear, compelling and repetitive

messages• A reason to engage (strategic imperative)• Practical examples of behavior changes• Measurement system reflective of desired culture• Tangible communication aids• Clear commitment to ongoing action

Organizational Alignment Model

Building Shared Commitment

• • ClarityClarity• • AlignmentAlignment• • PassionPassion

(1)(1)

(2) (2)

(3)(3)

Aligning Actions •• Match WordsMatch Words and Actionsand Actions

Engaging the Organization

Engaging the Organization

High Performance Team Development

Education/Development of the Leaders

How the Senior Team Sets New Direction and Builds New Organizational Capability

Building Shared

Commitment

Aligned Actions

Time

En

gag

em

en

t Inte

nsity June – December 2003

January – December 2004

January 2004 - Ongoing

Lead

ersh

ip E

ffor

t

Organizational Involvement

Low High

HighCriticalMass

ResultsDanger

Zone

Sample: Tasks of the Strategy Team (Detailed View)

Senior Management

MiddleManagement

Supervisor

Staff

Leadership Team Development

Leadership Development

Building SharedCommitment

Aligning ActionsEngaging the Organization

Time

As

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– S

t ra

t eg

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ap

ab

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Org

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Work Process Redesign

Setting Direction/Vision Alignment

En

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Pla

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Re

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eas

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me

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Sy

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ms

(In

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In

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P

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StaffDevelopment

Re

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Supervisory Development

Redesign Measurement Systems(Organization)

Str

ate

gy

F

oru

ms

Executive Coaching

Co

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/F

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Strategy Team Others

Three Dimensions of Business Culture(adapted from Kotter and Heskett)

• Strength of Culture

= the consistency/uniformity of accepted values and behaviors

• Strategic Appropriateness

= the match of cultural characteristics with strategic requirements

• Adaptability= the flexibility of the cultural characteristics, allowing change

What is your theory about the importance of each of these?

Leaders’ Role in Embedding Culture

Through their actions, stories, stories told Through their actions, stories, stories told about them and what they pay attention to:about them and what they pay attention to:

Leaders Embed Culture

Systems Reinforce

Systems Reinforce Systems Reinforce

Systems Reinforce

Important Notes on Culture:• There is a significant difference between a company’s espoused values

(hanging on the wall) and the actual values held in the hearts and minds of its citizens.

• The study of a society’s actual values and beliefs, that can provide insight into why people behave the way they do takes time, keen powers of observation and minds that are open.

• Leaders embed culture, systems merely reinforce it; that is, all the programs and systems, no matter how well intentioned, will not establish or change cultural norms. Leaders, through story telling, reinforcing and demonstrating what’s really important directly influence culture.

• The bottom line: nobody is so smart they can shortcut an attentiveness to culture, and nobody is so foolish as to ignore it and think they can achieve the desired performance and organizational change.

Issues for Further Exploration with ISC

• Is ISC appropriate for emergent change?• Must ISC always be driven from the top? • Can ISC work in ambidextrous organizations?• What determines the sufficient level of alignment

during a strategic change?

Group Exploration of Issues re: Strategic Alignment

Using the World Café Group Process Technology

World Café(adapted from Juanita Brown)

• A group process technology for quickly sharing and collecting ideas and knowledge

• How we’ll use it:– Three tables, each representing a single “stream” in ISC

model (i.e., strategy, organization, culture)– Group divides into three parts, populates tables– Each table collects:

• Forms that stream could contain• Your experiences with, and/or ideas for leading/facilitating

change– Three rounds of 10 minutes each; rotate to each table

• Final stage is report out of forms, experiences and ideas

Report Out – Strategy Stream

• See .jpg file sent under separate cover

Report Out – Organizational Stream

See .jpg file sent under separate cover

Report Out – Culture Stream

See .jpg file sent under separate cover

INTEGRATED STRATEGIC CHANGE©

CurrentStrategy

(S1)

NewStrategy

(S2)Future

Strategies

CreateIntegrativeStrategies

CreateIntegrativeStrategies

CurrentOrganization

(O1)

NewOrganization

(O1)Future

Organization

BuildOrganizational

Capability

BuildOrganizational

Capability

. . . . Strategies That Work . . . .

. . . . Leadership . Culture . Strategic Thinking . Adaptability . . . .

External Environment

ReferencesBrown, Juanita, The World Café (Book and Workbook)

Bunker, Barbara Benedict and Alban, Billie T., Large Group Interventions: Engaging the Whole System for Rapid Change. 1997, Jossey Bass.

Hammonds, Sue Annis, The Thin Book of Appreciative Inquiry. Thin Books, 1998.

Kotter, John P. and Heskett, James L. Corporate Culture and Performance. Free Press, 1992.

Owen, Harrison, Open Space (Various Articles)

Tichy, Noel M. and Sherman, Stratford, Control Your Destiny or Someone Else Will: Lessons in Mastering Change. First HarperBusiness, 1994.

Torbert, William R., Action Inquiry: The Secret of Timely and Transforming Leadership. Berrett-Koehler, 2004.

Worley, Christopher G., Hitchin, David E., and Ross, Walter L., Integrated Strategic Change: How OD Builds Competitive Advantage. Addison-Wesley, 1992.