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ARTICLE: Benefits of Strategy-Driven Organization Change
14-Sep-06 [ by Larry Chao ] 5326 Read and 13 Comment

In an era of cutthroat competition‚ companies have discovered that to achieve successful organization change and stay ahead‚ they must do a much better job linking strategy with change management programs‚ writes Larry Chao.

As the carnage of failed organization change programs accumulates‚ post-mortems suggest that failure is often due to a breakdown between strategy and execution. Change programs that drive execution‚ such as faster innovation processes‚ improved productivity or better people development‚ start strong‚ but lack a sense of urgency. As a result‚ these programs unravel from strategy and sputter over time. What is needed is an approach that weaves strategy with change programs throughout the change process.

Take‚ for example‚ the experience of William Franklin‚ managing director of a U.S.$100 million multinational high tech parts manufacturer. After his company defined its strategy and business objectives‚ he embarked on a frustrating attempt to convert strategy into meaningful change programs. "We had workshops to develop change programs such as how to boost quality and reduce product returns‚" he said. "They looked good on paper‚ but after they were launched‚ people lost interest in them. There was a gap between strategy and change execution."

This is the failure of many organization change efforts‚ where strategy is poorly tied to change programs. Given that conceptual strategy formulation is a separate process from practical change program design‚ this is not surprising. Without discipline‚ strategy becomes muddled in the conversion process.

But to effect change‚ strategy must seamlessly guide the design‚ execution and follow through of change programs to ensure they stay on track. Moreover‚ a systematic process beginning with top management setting strategy and then using this strategy as the framework to cascade change programs downward in the organization is needed.

According to Franklin and other chief executives‚ here are three common mistakes that derail organization change efforts:

  1. Meandering Change Programs. Change programs fail when there is a proliferation of activity‚ but no ownership or discipline for change. A single individual needs to drive each change program and be held accountable for results. It helps if change programs are evaluated against clear targets that measure contributions to strategy. What you can measure‚ you can improve. For example‚ a productivity change program to yield at least 20% reductions in overhead costs‚ or innovations to add 5% incremental sales.

  2. Strategy by Popular Vote. Contrary to popular belief‚ strategy development‚ while participative‚ is not a democratic process. Top management has the responsibility of starting the change process by debating the most appropriate strategy for the business. Once direction has been set‚ a broader management audience may be involved to design suitable change programs. Finally‚ to create momentum for change‚ it is important to mobilize the entire organization by educating everyone on the importance of the change programs and how their jobs fit into the strategic big picture.

  3. Facilitation without Strategic Context. When consultants and trainers facilitate change program development without deeply understanding business issues and strategic priorities‚ they stir up a lot of irrelevant change activity and create false expectations. There is nothing more destructive to the change process than launching exciting change programs that lack strategic punch. It is not long before these efforts disintegrate and morale is lost.
Franklin's experience underscores this message: "Our change programs were ineffective because they did not address the demands of the strategy. We overlooked business issues. As a result‚ our change programs were temporary." For change programs to have impact‚ facilitators must be business savvy and know how to redirect ineffectual change efforts.

Once strategy has been developed and change programs put in place‚ it is easy to step back and relax. But this is precisely the time when micro managing change efforts and demanding results against strategic objectives is critical. Without this discipline‚ change programs turn into one-stop brainstorming sessions to jump start organization change. "In hindsight‚ our change process would have been more effective had we spent more time making sure our change programs supported our strategy the whole way through‚" said Franklin.

Larry Chao is managing director of Chao Group Limited‚ a strategic organization change and training boutique‚ based in Bangkok and New York. 

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