A Common Sense Approach to Business Strategy
I read a blog post recently that I found very insightful. This blog from the Harvard Business Review, reflected on the fact that all too often, management’s first instinct is to attack issues by redrawing the organization chart. Instead, it is suggested, they should look at the inner workings of the company including decision rights, information flow and motivators to understand the “DNA” that makes up their organizations.
As an example, they discuss a company that in the early 1990s had disappointing company performance. Under a restructuring plan, costs fell by 18%, but over the next 8 years, those same layers that had been cut out, crept back in. “In addressing only structure, management had attacked the visible symptoms of poor performance but not the underlying cause—how people made decisions and how they were held accountable.”
Eventually, executives at the aforementioned company “identified the cultural and organizational issues standing in its way and altered decision rights and the flow of information rather than making costly and disruptive changes to its formal organization structure.”
There were a few key takeaways for me:
- Find a common language. Make sure everyone can talk about the execution issues you face in the same way.
- Walk the talk. People at the top of the organization need to believe in the changes and visibly support them so that the rest of the organization is motivated to change behavior.
- Focus on both organizational and behavioral changes. It is more effective to change both rather than focusing on one or another.
- Know your organization. There is no one-size-fits-all approach to improving an organization’s ability to execute. You must find what works for you.
Like most things when viewed in retrospect, these seem straight forward and driven by common sense (uncommon as that can sometimes be!). Hopefully, this clear lens looking onto others’ experiences and learnings has value for you as it did for me.