Find online courses made by experts from around the world.
Take your courses with you and learn anywhere, anytime.
Learn and practice real-world skills and achieve your goals.
Strategy execution is a hot topic in management today. The Conference Board's recent Survey of CEOs revealed that chief executives are so concerned about strategy execution that they rated it as both their number one and number two most challenging issue.
Why does strategy execution so often fail? Because most strategic plans are little more than a series of vertically integrated objectives. But, the problem is not objectives and it is not vertical. It is the "whole-system" and its ability to adapt and align, internally and externally in fast cycles. In other words, to be agile. The problem is the culture and capabilities of the organization and a process to design and deploy those capabilities. This course provides that process and is based on forty years of experience improving the performance of organizations.
The problem is developing new capabilities and a new culture that will enable the organization to achieve its goals. The term "Agile" implies and iterative process of experimentation, learning, adaptation to the changing environment, and alignment with other business units and support groups. This course is about creating that agility, adaptation and alignment.
Every organization has capabilities that are embedded in the culture. This course will take the leader through a process of assessing the current culture, its assets and liabilities, sensing the changing landscape that presents threats and opportunities, and then engaging the organization in the design of those processes and systems that will represent competitive advantage.
The author of this course is the author of ten books on leadership, lean management and change process. This course includes the text and material from three of his books.
Not for you? No problem.
30 day money back guarantee.
Learn on the go.
Desktop, iOS and Android.
Certificate of completion.
|Section 1: Introduction to Strategy Execution - The Agile/Lean Way|
The Conference Board in their survey of CEOs, has said that strategy execution is both the number one and number two problem they face. This course is designed to provide a specific set of actions to execute strategy by designing and deploying the capabilities and culture that will lead to strategic success.
This lecture lays out the basic premise of this course: External strategy, our position in the market, rates of growth and financial performance, are only achieved by effective Internal Strategy - the culture and capabilities - technical and social, that will enable us to achieve the external or business strategy.
Why is strategy execution such a problem for our organizations? In this lecture I define the basic reasons for the problem and the most essential components of the solution.
Agile Strategy Execution is based on an understanding of the organization as a "whole system" and the interactions of that system with its environment and the interdependence of the sub-systems of the organization.
The system of every organization is comprised of a technical system (the work process, tools, computers, etc.); the social system (skills, motivation, decision-making); and the economic system (the flow of money through the organization.
Agile Strategy Execution is "systems thinking", it is system design, organization design, and design of the culture.
|Section 2: Defining Strategy, Cultue & Capabilities|
In this lecture I review a number of definitions of strategy, including Michael Porter's.
§..”defines and communicates an organization's unique position, and says that it should determine how organizational resources, skills, and competencies should be combined to create competitive advantage.” Michael Porter
§A master plan, a plan of action or policy designed to achieve a major or overall aim.
§"Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations". Johnson and Scholes
Strategy is the long term purpose, goal and plan to achieve sustained business success.
§Strategy must take into account the changing landscape or environment.
§It must take into account current and possible organizational capabilities and weaknesses.
§It must recognize both threats and opportunities.
§It must design the technical and social systems and processes to achieve economic performance.
Culture is often defined in a very fuzzy way that does not lead to action. I have attempted to define culture in a way that is actionable. I also describe a model of the influences on culture that you can manage in order to make the organization more capable of achieving its strategy.
What is Culture?
Capability is found in the core work processes of the organization and the competencies of people. You can not execute a strategy unless you know which capabilities are required to perform.
Adaptation and Alignment are what all living organisms do to survive. Organizations are no different.
The Law of Adaptation
Organizations progress and are sustainable to the degree that they are capable of sensing shifts on the landscape – (economic changes, technology changes, regulatory or political shifts, and changes in social or customer preferences) and then capable of developing those capabilities that will satisfy the market on the future landscape.
The Law of Alignment
The degree to which all of the systems, structure, skills, style and symbols of the organization are aligned to the same principles and purpose they are aligned with each other and friction (wasted energy) is minimized and sustainability is enhanced. The degree to which there is misalignment there is wasted energy and the organization is less sustainable.
|Section 3: The Plan for Agile Strategy Execution|
“We have thousands of guides about developing a strategy, but very few about how to actually execute one. And the difficulty of achieving executional excellence is a major obstacle at most companies." Why Strategy Execution Unravels, Donald Sull, et al., HBR, p.61, March, 2015
Research shows that...
1.Execution equals alignment (vertical). 84% can rely on boss and subordinates. Only 9% say they can rely on colleagues.
2.Execution means sticking to the plan.
3.Communication Equals Understanding
4.A performance culture drives execution
5.Execution should be driven from the top down.
Recommendation from the HBR Article:
To execute their strategies, companies must foster coordination across units and build the agility to adapt to changing market conditions.
Five Principles of Agile Strategy Execution
1. Execution requires the “whole-system” in motion, aligned, and interacting.
2. Initial plans last as long as the first contact with reality.
3. Motivated people make more progress than any goals. We are committed to that which we create!
4. Adaptation to the landscape must be frequent and result in frequent re-alignment. The organization is an “open-system.”
5. Leadership must be on-the-spot and learning from the world’s greatest experts.
This lecture describes the Agile Strategy Execution process that includes the work of a steering team, which is the senior management team; a design team which includes individuals from various levels and departments; and implementation teams.
I know that most of my audience have little interest in theory and are more interested in action. So, you can skip this if you like. However, it may be worth understanding where the Agile Strategy Execution process comes from. It draws upon several different planning and change models:
|Lecture 12||24 pages|
This is an introductory chapter to my book, Getting to Lean. Numerous other chapters are included at other points in this course.
|Lecture 13||24 pages|
This is a case study of a lean implementation at VON Canada using many of the methodologies described in this course. It was a large system change based on an understanding of customer requirements.
|Section 4: What is the Business Strategy?|
To develop an agile execution process you need inputs to the process. Those include the following:
1.A Business Model: Strategic business targets.
3.Customer (Kano) Analysis
4.Capability Planning Matrix
5.Life Cycle Assessment
6.Assets & Liabilities
This lecture focuses on a "Kano Analysis" that creates a matrix of those features of your product or service that are most important to the customer, and those that they rate you as performing best or worst. This helps you prioritize capabilities.
All strategies should be a response to changes on the landscape that present both threats and opportunities. This lecture presents a model to identify the changes on the landscape that may require you to develop or improve capabilities that reside within your sysems and processes.
Please see the attached PDF file that is a chapter from my Getting to Lean book on scanning the environment.
A business model defines the key financial metrics that measure the health of your organization. In this lecture I propose a way to develop and articulate a business model, but more importantly, to engage everyone in "playing the business game."
This lecture provides a way to identify current human and technical capabilities as well as future desired human and technical capabilities.
|Section 5: Assessment: Leadership and Life Cycles|
This and the next two sections are three different ways to assess the culture of your organization and identify changes that are needed. These will contribute to the capability planning matrix. Please see the PDF files in Lecture 19, 32, 40 and 46. There is a lot there!
Barbarians to Bureaucrats - Synopsis and Assessment Questions
|Mark Twain said “History doesn’t repeat itself – but it does rhyme.” That is probably an accurate assessment of the value of history. There are broad patterns that seem to follow some natural evolution as there are natural patterns in the birth and growth of infants, animals and even plants. There can be no exact roadmap drawn from history, but there can be wisdom derived from the patterns. The culture at the birth of a company or civilization is of one kind, and that is entirely different than the culture at maturity or in decline. The behavior of leaders, their relationships, skills and intentions are different at each age. And wealth varies by stage. Obviously at birth a company is not rich in financial assets. But it may be rich in innovation or in the spiritual quality of dedication to a worthy purpose. In maturity a company becomes increasingly focused on the refinement of process and builds its social capital both in brand equity and internal relations. Material resources are growing, and with that growth the motivations are likely to shift from the single cause the excited the early followers to a more narrow self -interest. And as financial assets increase and managers are increasingly drawn from those who know more about finance and mechanisms of financial control, the innovative spirit declines, and social relations fragment. Companies toward their end, like civilizations, decline in a process of social disintegration, the loss of trust and innovation. The loss of money is only the last sign of decay.|
In the life cycle of civilizations and companies there is a twin-fold process of integration and disintegration. Civilizations or companies, when growing, expand their borders and are integrating different people, ideas, competencies, and cultures. When they cease the process of integration and expansion, they start defending their borders and building walls to keep out the energetic barbarians, and the process of internal disintegration begins. As the focus shifts from offense to defense, the focus of energy is increasingly internal rather than external. The spirit of unity of purpose increasingly becomes the spirit of self interest and internal division. Soon the body of the culture is engaged in internal warfare and self-mutilation, and the enemy does not so much conquer as to march in to fill the void created by the impotence of the old culture. Toynbee concluded that the decline of every civilization was not at the hands of an external enemy but rather an act of suicide, the loss of will, and the disintegration of the culture. Whether or not you accept Toynbee's analysis of the rise and fall of civilizations, there are clearly lessons for leaders of companies and countries. You can see these in the emerging periods of the Prophet, Barbarian and Builder and Explorer. You can also see the decay and decline beginning the dominance of the Administrator, the Barbarian and the Aristocrat. You can only hope to see an age of the Synergist, when the best qualities are held in balance.
“Reasonable men adapt themselves to their environment; unreasonable men try to adapt their environment to themselves. Thus all progress is the result of the efforts of unreasonable men.” George Bernard Shaw
“Lean Start-Ups: Human institutions designed to create something new under conditions of extreme uncertainty.” Entrepreneurship is a management science.
Those that succeed are those who can pivot, within every bad idea is the kernel of a good idea, waiting to be recognized. Most ideas are bad ideas, but move in a direction of what works in the marketplace. “Pivots” are the key. “We achieved failure.”
In the beginning is the word, the creative act, the spirit of renewal. Creative personalities, including religious prophets, seem to follow a pattern of withdrawal-and-return. They disappear into the mountains or desert. They remove themselves from the distractions of the current order and seek some vision of a better future. Their power to inspire others is only seen on their return when they are intentionally disruptive. A revolution begins and their followers can hardly be called an organization, more a group of disciples. It is disruption, not order. It is the nature of creative personalities. The vision of these prophets is like a rocket blast, a surge of energy that disturbs the old and propels movement toward something new. Often these prophets are incapable of doing their work within the framework of the old order, but must but be exiled to a new land. As new wine must be put in new bottles, so too, may the new wine of innovation require the new bottle of new organization, (Mar 2:22 And no man putteth new wine into old bottles: else the new wine doth burst the bottles, and the wine is spilled, and the bottles will be marred: but new wine must be put into new bottles.)
You may be a Prophet if…
Your organization may be in the Prophet stage if…
The Failure of the Prophet
“To be a successful soldier, you must know history… What you must know is how man reacts. Weapons change, but man, who uses them, changes not at all. To win battles, you do not beat weapons – you beat the soul of the enemy man.” George S. Patton IV
The prophet founders of companies are soon followed by, or become themselves, barbarians, the commanding generals whose strength of will focuses energy in crisis. The idea and inspiration is not enough. Decisive action is now required to build a company. Every new company is in a crisis, a fight for survival. When business is in a fight for survival it has more in common with war than many managers realize. The ability to move quickly, with discipline and unity of energy and effort, is the key to victory.
You may be a Barbarian if…
Your organization may be in the Barbarian age if…
The Failure of the Barbarian
The period of the Prophet may be a brief moment in the history of the corporation. The age of the Barbarian should also be short. If an organization’s leadership remains in the Barbarian Age, its growth will be arrested. It must move on and enter a period of specialization, a time when systems and structure take form, and the organization matures.
Now leadership has to take on a different character. It must be shared, delegated, and increasingly collaborative. While the leaders must continue to be creative and fast moving, they must also develop increasingly specialized competence in production, service, marketing, and sales. If they do, this third stage may last for centuries in the life of civilization and decades for a corporation.
The primary leaders in this period of specialization are the Builder and Explorer. The Builders will construct the internal capacity of efficient production, while the Explorers continue the push outward, expanding the boundaries of the developing corporation or culture. In civilization the Builders are literally building cities, roads, reservoirs, libraries and stadiums; the Explorers are conquering new territory to expand the scope and influence of the culture by integrating diverse people. In corporations the Builders are creating the means of production, they are making production efficient. The Explorers are out conquering new customers and territories, seeking to dominate their competition.
In the first two stages of development, growth is highly dependent upon the individual leader, the Prophet and the Barbarian. But in the third stage, the environment – both internal and external – is becoming too complex for such centralized decision making.
You may be a builder if…
You may be an Explorer if…
Your organization is in the Building and Exploring Age if…
Failure of the Builder and Explorer
“Whenever an individual or a business decides that success has been attained, progress stops.” Thomas Watson, Sr. (Founder, IBM)
“The arrested civilizations have achieved so close an adaptation to their environment that they have taken its shape and colour and rhythm instead of impressing the environment with a stamp which is their own. The equilibrium of forces in their life is so exact that all their energies are absorbed in the effort of maintaining the position which they have attained already, and there is no margin of energy left over for reconnoitering the course of the road ahead, or the face of the cliff above them, with a view to a further advance.” Arnold Toynbee
Increasingly the challenge is within, not from the external environment. Increasingly the leaders are seeking to bring order to the chaos of differentiated organization created in the previous stage. Counting and recording, systems and structure, are now important. And increasingly the processes of administration become dominant in their minds, and the leaders are drawn from the administrators. In time, with Administrators in charge, counting and recording become more important than the substance and spirit of creativity, the response to the external challenge that was the source of initial growth. Increasingly the focus is on internal, rather than external, challenges. The unchecked priorities of administration will soon lead to bureaucracy.
It is difficult to accept that chaos is good. But growth, in people or cultures, implies some degree of chaos. If you want a perfectly clean and orderly house, do not have children. Children, in their most rapid periods of growth, are a mess, and create a mess around them. Mess is good. In old age, the personality becomes obsessed with order and control. Just as the bones become brittle, so too does the mind become intolerant of innovation. But, there is a middle ground, a balance between the disorder of growth and innovation and needs of administering differentiated organization.
Initially administration serves the needs of those producing and selling, building and exploring. To manage a large manufacturing or selling organization you must know where things are, how many you have, and what they cost. Initially, to “take account” is to assist those engaged in the work that serves customers. But it shifts, and it gradually appears that those producing and selling increasingly come to serve those administering. It is the turning of this tide that signals the entry into the Administrative stage.
In this fourth stage, the corporation is holding its ground, creating and maintain order. And now the successful leaders face their single greatest test. Are they able to maintain forward motion, continue to be creative, decisive, and develop increasing competence, while at the same time administering secured territory? If they can, the organization will break through to that ideal balance that assures continued health. If they can’t and the Administrator becomes the dominant leader, imposing his cultural priorities, decline will begin.
You may be an Administrator if…
Your organization may be in the Administrative Age if…
“The piper who has lost his cunning can no longer conjure the feet of the multitude into a dance; and if, in a rage and panic, he now attempts to turn himself into a drill sergeant or a slave-driver, and to coerce by force a people whom he feels that he can no longer lead by his old magnetic charm, then, all the more surely and more swiftly, he defeats his own intention; for the followers who had merely flagged and fallen behind as the heavenly music died away will be stung by a touch of the whip into active rebellion.” Arnold Toynbee
The transition from the Administrative Stage to that of the Bureaucrat occurs without any plan or intention. Old age happens. It needs no encouragement. No one in the history of organization ever created a design team to design and implement bureaucracy.
As soon as the leader imposes increasing levels of control in his love for order, he becomes a bureaucrat and loses understanding of the original organizing principle that was the energy created by the “word,” the creative act that was the reason to unite and sacrifice. Now the lack of creativity leads to impotence in the marketplace, and survival is dependent on cost cutting and control and anyone with the creative spirit, potential Prophets who possess the very cure that is so needed are driven to exile or crucified for their violation of order. The decline will soon lead to death. The bureaucracy causes the exile or execution of those who are creative but unable to conform to the required order. With the departure of creativity, the fate of the company is sealed
You may be a Bureaucrat if…
Your organization may be in the Bureaucratic Age if…
Management derives its power from its legitimacy, and in the Aristocratic Age legitimacy is lost. It is lost because the managers have stopped doing their job, that of leading, creating vision, and building unity of energy and effort across diverse people and interests. Peter Drucker said:
“Power has to be legitimate. Otherwise it has only force and no authority, is only might and never right. To be legitimate, power has to be grounded outside of itself in something transcending that is accepted as a genuine value… If power is an end in itself, it becomes despotism, both illegitimate and tyrannical.”
Legitimacy is a matter of perception, and it is the perceptions of the constituent groups that matter. In every relationship there must be a balance of power, a mutual concern, and respect. When these mechanisms break down, leadership acts on its own interests, and contrary to the interests of its followers; rebellion inevitably results.
The disintegration of culture may appear as either an internal revolution or an attack by a competing Barbarian. In either case, the cause is the same: the loss of social unity brought about by alienation of the leaders and their loss of legitimacy. It is not employees who become alienated from the leaders. It is leaders who have divorced their followers. They have moved to the 48th floor of the office tower and spent too much of their time surrounded by others who are striving to achieve the same level of detachment from workers and customers. The more detached are the leaders, the more incapable they are of recognizing challenges and issuing forth a creative response to challenge. Woodrow Wilson understood:
“I do not believe that any man can lead who does not act, whether it be consciously or unconsciously, under the impulse of a profound sympathy with those whom he leads – a sympathy which is insight – and insight which is of the heart rather than of the intellect.”
At this stage, the leader’s focus, his motivation, has shifted from serving others to serving self. In the later days of a society, the leaders become obsessed with material self-gratification. This obsession is largely due to the loss of gratification normally derived from productive work. There is satisfaction to be derived from sawing and sanding wood into a piece of furniture, from designing, testing, and watching a mechanical object come to life, from listening to a customer and sincerely striving to meet his or her needs. All of these pleasures are lost to the Aristocrat. Now, the rewards come from the appearance of wealth. The irony is that the Aristocrat is not achieving greater satisfaction than a productive individual of modest resources. The supervisor whose team sets a new production record is undoubtedly achieving a higher level of satisfaction than the Aristocrat purchasing the Gulfstream IV or the new limousine or conducting grand meetings at a country club. The Aristocrat has been so long removed from productive work that he or she no longer remembers their satisfactions.
You may be an Aristocrat if…
Your organization may be in the Aristocratic Age if…
 Drucker, Peter. The Frontiers of Management: (New York: Truman Talley Books, E. P. Dutton, 1986), p. 180.
Achieving Balance – The Search for the Fountain of Youth
Is it inevitable that growth and expansion are followed by bureaucracy and decline? If you study the course of civilization you might reach that conclusion as the long march of cycles appears as an inevitable pattern. But Arnold Toynbee asked himself this question some years after he wrote A Study of History. His answer was “no”. He said that he believed in free will. He believed that if we understand the causes of integration and disintegration, of emergence and decline, we can alter our behavior and achieve an ever-advancing civilization. It is the failure to recognize and respond to new challenges that leads to a condition of ease, to the loss the power of self-determination, the loss of will.
In human aging there are chemical biological processes over which we have no control. Of course, we can greatly influence human aging with diet, exercise, and our own social and mental activity. Organizations, on the other hand can be influenced even more. They are inherently capable of regeneration. Managers change, products change, the market changes, and all of these are opportunities for adaptation, and for adjusting the style, culture, and processes to prolong the life of the organization. The 3M Corporation has been through numerous periods of refocus, redefining its product portfolio, constantly innovating and maintaining its social capital within the organization and its brand equity. It is an “old” corporation that can act young. There are many other examples. And, of course there are examples of organizations that fail to adapt to new markets and technologies and become rigid and lose their ability to innovate within a very short period.
Revolution is the transformation brought about by leaders who recognize new challenges, acknowledge the failure to adapt to a changing landscape, and promote a new outlook, a new spirit, and new strategy. Corporations have proven that there is no fixed time frame of life cycles. The key to this success is always the ability to create synergy of the different styles or capabilities of leadership and to maintain a healthy balance of the five forms of wealth.
What are the lessons of this story? I think there are several. One is the diversity of leadership styles that are needed to fulfill the potential of any organization. As companies mature, the need for the creative Prophet does not disappear; nor does the need for the conquering spirit of the Barbarian. But what is needed is balance and the creation of synergy or harmony between the diversity of talents, each put to work on the challenges appropriate to the type of temperament. The most difficult of all tasks of leadership is to create unity from diversity. It is the purpose of a leadership team. On a leadership team you do not want ten Administrators who will create excellent and orderly plans but never have the energy to go anywhere. Nor do you want ten Barbarians, each with the strong will and singular focus to fight a battle. You also need the Builders, the engineers and specialists who know how to make complex things work and Explorers to expand the territory. And you need Administrators who bring order to complex organizations and tasks through counting and recording. But you do not need the excess of administration that is bureaucracy. You need leaders, or you need to become a leader, who can bring these personalities together in a harmonious orchestra.
Another lesson regards the role of personalities versus process and principles. Civilizations, when they have been at their peak, have had senates, election processes, systems of law, and separation of powers. When Rome was being born it was highly reliant on principles. This was the period, generally regarded as the peak of the civilization, when the Roman senate was supreme and the acceptance of Roman law and order prevailed. It then was overcome with cults and clashes of personality and the law became subservient to the personalities. The process of disintegration exactly paralleled the decline of the reliance on principles and process and the return of dominance of personalities.
|Section 6: Assessment: The Five Forms of Capital|
Sustainable Wealth - the Book
It is time to rethink the meaning of wealth or capital. What is it and how is it achieved? Is our purpose in life to accumulate as much financial wealth as possible or is our purpose to create other forms of wealth that have greater meaning? Is the economy improved by simply pursuing financial profit or would we be better off by recognizing and investing in other forms of capital?
This book is about wealth that will endure and not vanish with the winds of unpredictable storms. It is about the assets, of a person, a company, or a country. It is an effort to redefine capitalism.
In the “good old days” of capitalism (or the bad old days, if you prefer), the days of J.P. Morgan, Carnegie, and Karl Marx, capital was money. If you had money, you had the power to create and control enterprise. Money is great, but it is not what it used to be.
The meaning of wealth changes over time. The possession of land was once considered the most important measure of wealth. The size and shape of your body was once viewed as your measure as a man or woman. Financial assets and cash flow were considered the primary measure of corporate value. And, the military might of a country was once considered the primary asset of a country. Times have changed. We must re-think wealth, capital, and the process of capitalism.
Creating sustainable wealth is about character and culture, a truth proven at all points in history. And, whether in ancient Egypt or Rome, and particularly in the period of decline of any civilization, the people suffer delusions of value and once again we must be reminded: “But God hath chosen the foolish things of the world to confound the wise; and God hath chosen the weak things of the world to confound the things which are mighty; And base things of the world, and things which are despised, hath God chosen, yea, and things which are not, to bring to nought things that are.”
By losing sight of what is truly important companies, countries and individuals lose their ability to arise to current challenges with a creative response and rather rely on mechanically pulling the lever of yesterday’s successful response but in the presence of new challenges. And, that loss of creativity is the certain sign of decay. It is the loss of self-determination, the loss of competition that is not a defeat by a superior competitor, but rather the suicide of lost will. As Arnold Toynbee wrote in his classic A Study of History, his application of the empirical method to the rise and fall of twenty three civilizations, “It looks as though it were uncommon for the creative responses to two or more successive challenges in the history of a given society to be achieved by one and the same minority or individual. So far from this being the rule, the party that has distinguished itself in dealing with one challenge is apt to fail conspicuously in attempting to deal with the next.” 
In other words, it is often the mistaken lesson of success, that what worked in the past must surely work in the future, that is the cancerous cause of failure. It is an irony of the human condition that we are deceived by our own success to rely on the lessons of our own history and fail to be creative in the present. But, this loss of creativity in a company or culture has antecedents in the loss of other virtues. One virtue leads to another and a failure to understand these relationships is the cause of almost every corporate failure, is similar in individuals and is certainly mirrored in the decline of nations.
Stephen Covey wrote that “If you want to make minor, incremental changes and improvements, work on practices, behavior or attitudes. But if you want to make significant, quantum improvements, work on paradigms.” In Sustainable Wealth I am proposing a change in how we think about value or wealth. To be successful in the coming decades we must adopt new ways of thinking about personal, corporate and national assets.
 Corinthians, i. 27-29.
 Toynbee, Arnold. A Study of History, Volume IV, Oxford University Press, London, 1939. P. 245.
 Covey, Stephen R. The 8th Habit. Free Press, New York, 2004. P. 19.
To the degree that an organization can enable, support, or encourage a depth of personal morality and dedication to a noble purpose, it possesses spiritual capital. I sincerely believe that this form of wealth accrues both to the organization and to the individual. It will interact and support every other form of capital and ultimately will have its effect on the financial bottom line. In many ways it is the first cause.
The pursuit of worthy purpose is the primary means of achieving energy in an organization. Human beings are energized by, and will sacrifice for, that which they believe to be noble and therefore ennobling of them. Leaders create energy that may later be directed by managers, but absent the energy that comes from a worthy purpose, there is little motion. Any manager who believes that only technical processes, skills, or financial capital are required for competitive success is much like the racing team that spends a million dollars for the latest racecar but then hires a driver who doesn’t care about winning. Purpose matters. Ennobling purpose matters most.
Shared values are the basis for trustworthy relationships and sociability. Belief systems have enormous impact on the culture of organizations, and it is the function of leaders to exert efforts to intentionally shape these beliefs. A common set of values is the lubricant of fluid associations. It is the basis of unified action and trustworthy behavior.
Social Capital is the value of trust. The degree of trust you engender in others will determine the likelihood of being hired, customers purchasing your products or services, or, employees working, even sacrificing for your company. It defines the likelihood that others will engage you in solving problems. It is a key to the effectiveness of all teams, families or communities. It determines brand equity and market capital. Entrepreneurs often begin their business within a small circle of trust and gradually expand the radius of trust, increasing the scope of their network and their business.
To analyze the current state of social capital and plan the future, it is important to drill down to a more functional level. There are two types of social capital that may be assessed: internal sociability or trust, and external relationships or brand equity.
Internal social capital is the level of trust within the organization. Trust operates both horizontally and vertically within the organization and is critical to the ability to solve problems, innovate, and satisfy customers.
Internal sociability may have the most significant impact on the ability to solve problems. All organizations are a continual stew of problem solving. Whether it is solving the problems presented by a customer, a new technology, or a competitor, business is a game of constant adaptation to a changing environment. The apparently small act of walking down the hall to an associate’s office and sharing a problem, casually brainstorming without regard to who gets credit, or who bears what responsibility, is the most frequent, and probably the most effective way to solve problems. These encounters may escalate into a formal meeting or problem solving process. Whether the interaction remains highly informal or becomes more formal, the critical ingredient is the simple willingness to be engaged, to care about the problem, to listen deeply, think together, and brainstorm solutions.
External brand equity is the recognition and respect given to your firm by the market place. Just as the quality of an individual’s life is largely determined by the quality of their social relationships, the same may be said of a company. The value of a company is directly related to its brand equity.
Human capital is the sum of all of the competencies and motivation of the people within the organization. Human capital has always been a critical component of the performance of any business, but today’s entrepreneur is likely to bring with him, not money, but competency and motivation, the two key ingredients of human capital.
Motivation has been the subject of hundreds, if not thousands of books for managers. When all is said and done, the keys to motivation are relatively simple: work that is interesting and ennobling; sincere recognition by peers and superiors, opportunities for career advancement, positive feedback that can guide performance, strong and supportive social interaction by a team, and, oh, did I forget? – fair and attractive financial rewards. There is little reason to waste time in the endless debates about which is more important: money, recognition, or enriching work. They are all motivating and different personalities are more or less influenced by different types of incentives. The job of designing an organizational system is to optimize all of the various forms of motivation. Over-reliance on any one form is a prescription for poor performance.
Human competence is the only modern parallel to production technology of the past century. Modern production most often occurs in the mind, or the collective mind of a small work group. If you have highly trained marketing professionals, skilled sales men and women, great engineers and brilliant financial managers, you have an important form of capital. These competencies are a foundation of performance. Investment in these assets is likely to pay off in the creation of other classes of assets.
Those organizations that have exhibited the greatest dedication to the development of human competence have consistently outperformed those who have only given lip service to training and development. General Electric, Microsoft, Toyota and other companies that have grown into great economic powers have done so as a result of both attracting and developing the most competent people.
Innovation grows in the soil of spiritual, social, and human capital. To the degree to which there is commitment to a worthy purpose, spiritual capital, members of the organization will engage in the discretionary effort of thinking, exercising their brain on a problem or opportunity. Many creative ideas occur on the weekend or in the evenings, when a member of your team is choosing, even unconsciously, to think about a problem at work or a customer’s needs. This is discretionary effort, effort that cannot be forced, measured, or required. It only occurs when employees genuinely care about the success of the organization.
Innovation thrives in an environment of high trust, social capital. Most innovations are not the product of one person thinking alone. Rather they are the result of thinking together, sharing ideas, brainstorming and allowing your idea to be criticized by your associates. High trust cultures, in the larger economy and in companies, are high innovation cultures. If you examine low trust cultures, such as in the Middle East, you will find very low rates of innovation. Companies in which there is a culture of fear, rather than a culture that celebrates successes, will have low rates of innovation.
The degree of competence, the continual education of employees, lays the foundation for high innovation. When an individual is continually seeking the latest knowledge, the latest experiments, the latest inventions or theories, his or her mind is playing in the intellectual waters in which innovations float to the top.
The success of Honda and Toyota over U.S. automobile companies was the result of their fanatic dedication to process, manufacturing and product or technology innovation. The success of Wal-Mart, Home Depot, L. L. Bean or McDonald’s is all about process innovation in their industries. Processes either create or minimize cost. They assure either consistency and reliability or the unfortunate alternative. Like other forms of capital, the quality of the work process and technological innovations that create an advantage for customers is a significant asset.
Innovations may be one of four types or a combination of types: They may be innovations in a product delivered to customers, or they may be innovations in process, how they are delivered or produced. Either product or process innovations may be small incremental improvements; or they may be large game changing breakthroughs. The way each of these is encouraged is different.
Assessing Your Assets and Liabilities
Forms of Capital Self-Assessment
|Section 7: Assessment: Lean Culture|
The Beginning of Lean
Lean Culture is...
Lean Culture is...
Lean Culture is...
A Visit to Honda - Discovering Lean Culture
|Section 8: Writing the Strategy Design Charter|
The Steering Team is comprised of the senior managers of the organization that is being design to achieve its strategy. Here are the specific functions of the steering team.
1.Become educated champions. Develop knowledge of lean management and culture so you can be a model and know it when you see it.
2.Develop and communicate the business strategy and financial results.
3.Write and communicate the charter.
4.Meet as a team, practice team skills, and improve your own work.
5.Meet regularly with design team(s).
6.Serve as boundary managers for the transformation process with the rest of the organization.
7.Accept, reject, or modify recommendations from design teams.
8.Provide support, resources, and guidance throughout the WSA process.
9.Appoint implementation teams to carry out the implementation of the design.
10.Communicate regularly with the organization.
11.Provide positive reinforcement for positive efforts.
The Design Team will do the detailed work of analyzinng the current state and designing the future state of the technical and social systems. The following are their specific functions.
Be an active, responsible member of the team.
The Roles & Responsibilities of Steering and Design Teams
|The design charter should begin with an understanding of the
corporate level purpose, strategic business model and goals. It should present
the vision of where we are going and why we are going there. That is strategy.
The design of the future state should be for the purpose of creating the
organizational capabilities that will
enable the organization to achieve its strategy. Too many strategic plans begin
in words and end in words. They are not translated into actions that create the
capabilities required to achieve the strategy.
There are several reasons for writing a design charter:
Most management teams have written some mission, vision, and values statements. Or, there may be a corporate-level statement. Many management teams have not given a great deal of thought to what capabilities, competencies, or technologies they believe will result in competitive advantage in the future. This thought process should be the basis of developing the organization architecture.
Once the charter has been written, the steering team meets with the design team and they read the charter together. It is important for the design team to look the steering team in the eye and see that they are serious about considering an entirely different type of organization, culture, or strategy. The design team is likely not to believe that, “We can actually change this....” unless they have this direct communication with the steering team. They may also ask clarifying questions such as, “Do you mean we can actually change the compensation?” A clarification may be, “We do actually want your recommendations to change the compensation system but not actual compensation levels.” This clarification at the beginning of the design process is a simple matter, but the failure to obtain this clarification can result in wasted effort.
Components of a Charter
Generally, effective charters contain the following components:
Writing the Design Charter and Sample Charters
|Section 9: Design Team Discovery|
This lecture is addressed to the Design Team and explains their purpose and challenge.
Gathering the Facts
Value Stream Mapping or Simply Process Mapping
The plan is this…
Most of these remaining steps will take less time than some of the preceding ones because much of it has already been created in your collective intelligence.
Chapter: Mapping Your Value Stream
Analyzing for Waste, Time, Variances and Cost
|Section 10: Dream the Ideal Future|
You have done enough discovery - you are ready to burst! And, you work in the system and you have your own experience to guide you in defining the ideal future system. It’s time to create the dream!
You may remember that when you began the discovery process it was recommended that you create a “Future State Wall” where you put Post-it-Notes with ideas for the future technical and social system of the organization. So… you probably already have many dozens of ideas.
It is important that the design team recognize the value in thinking about the “ideal” versus the “practical.” It is common for people to say, even to themselves, “Well, it would be great if we could have that decision made immediately by the people on the line; but, they don’t have the knowledge or skills to make that decision, so that won’t work.” They then give up on the idea and do not allow it to be considered. A better response is to say “It would be ideal if they could make that decision, and in order for them to do that we will need to provide them with training and information that will allow them to make good decisions.” This is thinking about the whole-system rather than fragments of the system. Every ideal state element has dependencies. This is the nature of all human systems.
When you imagine the ideal process you may find that it requires new technology, new skills, new decision-making processes, or new organization structure to enable that new element of a design. While some of these may at first seem impossible obstacles, it often turns that they are not impossible and simply require an investment that needs to be evaluated relative to its potential positive impact.
Developing the Dream
|Section 11: Design the Future System|
Now that you have created your dream and your current state map you are probably anxious to start mapping the details of your future work process. However, there are two additional types of analysis that are worth doing before mapping the future. These will help you refine your dream. These are an analysis of variances and a search for waste in your process. Both will help you design the leanest possible process.
As you go through both of these analyses you will be asking, “So, if this is a cause of a variance or waste, then how can we change the process to eliminate that variance or waste?” Answering this will help define the future process. It might even cause you to revise your dream. Remember that this process is not entirely linear. In other words, there are no rigid silos between the 4D’s of this process. It is normal to modify your dream as you are designing, and as you are designing you may recognize the need for additional discovery.
Principles of Social System Design
The following principles have proven helpful to design teams as they design the human systems.
1.Design from the Bottom-Up and Around the Work: Too often organizations are designed from the top down. The CEO hires a consultant and he starts with some macro theory and soon the organization is designed to meet the needs of executives and not the needs of those doing the value-adding work.
The principle of whole-system architecture that should be the first principle of organization design is this: The only reason organizations exist is to facilitate the work that adds value to customers. Design to optimize this work. The design of organization structure should begin on the frontline, where the work is done, to create the structure that will optimize the performance of those doing the work.
James P. Womack and his associates at MIT spent five years and five million dollars studying the differences between auto assembly plants in the U.S., Japan, and Europe to identify the key differences in the systems that were the cause of different levels of quality and productivity.
“What are the truly important organizational features of a lean plant - the specific aspects of plant operations that account for up to half of the overall performance differences among plants across the world? The truly lean plant has two key organizational features: It transfers the maximum number of tasks and responsibilities to those workers actually adding value to the car on the line, and it has in place a system for detecting defects that quickly traces every problem, once discovered, to its ultimate cause….So in the end, it is the dynamic work team that emerges as the heart of the lean factory.”
Just as the family unit is the bedrock structure of every society, the first learning organization; the work group or team is the foundation structure of every organization. It is where learning and innovation will occur. It is the structure that will have the greatest impact on daily performance. Get this right and other things become easy.
2.Minimize Walls, Divisions, Hand-offs, and Levels. Each of these represents an interruption in workflow and a possible source of variance. Each division creates work for managers and tends to diminish the work of those creating value for customers. Where walls or divisions are necessary make the walls as “porous” as possible so the work can flow easily and quickly, and learning can occur easily, through those walls.
3.Make Chairs, Not Legs. To the degree possible design the organization so employees can have pride and joy in their work. Pride and joy come from “whole” work – making an entire piece of furniture, for example, not a piece that has no use by itself. Pride of ownership comes from completing a whole work process resulting in a complete product. Craftsman made complete chairs. People will make furniture, whole furniture, as a hobby. No one goes home on Saturday and makes legs. In mass production hourly factory workers were organized into leg, seat, back, and assembly departments. This destroyed their pride and ownership, and it destroyed the quality of products. Create teams to increase intimacy with the product and pride of ownership.
4.Each Level of the Organization Must Add Value That is Unique. The first level of teams is responsible for doing and managing the day-to-day work process. The next level is responsible for managing and coordinating the decision-making and process boundaries of teams. The top management team is concerned with strategy and the overall performance of the organization. Be clear about the value-adding work of each team or level. If they do no value-adding work they are waste.
5.Design Competencies for Future Performance: People perform, not organizations. There is no such thing as a competent organization; there are only competent people. Different types of performance require different competencies, and the design team must design the structure and systems that will build and reinforce required competencies.
6.Design for Continuous Learning: Design feedback loops and shared learning mechanisms to ensure continuous improvement. The design team should ask how they will maximize learning, not only within teams, but across teams and across organizational units.
7.Create an Intelligent Network: Design your organization for the realities of the Internet age, social networks, and networked learning. Create collective intelligence through formal and informal networks, interaction, and communication systems. Design in virtual meeting platforms and processes when appropriate. All deliberations will not be face-to-face.
8.Reinforce Superior Performance: People perform when it matters. Make performance matter. Design the systems to recognize and reinforce superior performance. Design multiple systems of reinforcement.
9.Design Symbols to Reinforce Values and Behavior: Change necessary symbols to support the new culture, work system, and human system. New symbols indicate a new culture.
10.Design the House, but not Where the Furniture Goes: There is always a question as to how much detail to go. A good way of thinking about it is to think about an architect designing a house. He has to decide where the walls go. He has to decide where the kitchen and bathrooms will be. And, he has to layout where electricity, plumbing and cables will flow through the walls. But, he doesn’t have to decide what carpet will go in or what color the walls will be. And, he definitely does not have to decide what furniture, or where the furniture will be placed. Of course, you will then ask “What is furniture and what are walls?” That is something you will have to decide as you do your design work. But simply asking the question will help your team to not waste time debating where the furniture goes.
 Womack, J.P., Jones, D.T. and Roos D. The Machine that Changed the World. New York. Free Press, 1990. P. 99.
Social System Design - Supportive Systems
Designing the Ideal Social System
|Section 12: Deploying and Developing the Future State|
The design team should be well organized, clear and rehearse your presentation. A few tips:
How the steering team receives and listens to the presentations by the design team is critical. A few key tips:
Deploying and Developing the Design
Agile Strategy Deployment
I have added this and the following lecture on objective setting because much of strategy deployment is setting objectives. However, the process of objective setting in many companies does more to destroy motivation than to increase motivation. I hope that these two lectures can provide some guidance to make objective setting productive.
Dr. Deming said to "eliminate management by objectives." Why? The clue can be found in Peter Drucker's 1954 book on the Practice of Management.
For the past forty years Lawrence M. Miller has worked to improve the performance of organizations and the skills of their leaders. His expertise is derived from hands on experience creating change in the culture of hundreds of organizations.
He began his work in youth prisons after recognizing that the learning system in the organization had exactly the opposite of its intended effect – increasing, rather than decreasing, dysfunctional behavior. For four years he worked to redesign the prison system by establishing the first free-economy behind prison walls, where each inmate had to pay rent, maintain a checking account, and pay for everything he desired. This was his first application of organizational transformation.
He has been consulting, writing and speaking about business organization and culture since 1973. After ten years with another consulting firm, he formed his own firm, the Miller Howard Consulting Group in 1983. In 1998 he sold his firm to Towers Perrin, an international human resource consulting firm and became a Principal of that firm. In 1999 he left that firm to focus on solo consulting projects.
He and his firm were one of the early proponents of team-based management and worked with many clients to implement Team Management from the senior executive team to include every level and every employee in the organization. The Team Management process created a company of business managers, with every employee focused on continuous improvement of business performance. In addition to directing the overall change process, Mr. Miller personally coached the senior management team of many of his clients.
The implementation of Team Management led to the realization that the whole-system of the organization needed to be redesigned to create alignment so all systems, structure, skills, style and symbols support the same goals and culture. From this realization he developed the process of Whole System Architecture that is a high involvement method of rethinking all of the systems, structures and culture of the organization. Among his consulting clients have been 3M, Corning, Shell Oil Company, Amoco and Texaco, Shell Chemicals, Air Canada and Varig Airlines, Eastman Chemicals, Xerox, Harris Corporation, McDonald's and Chick-fil-A, Merck and Upjohn Pharmaceuticals, United Technologies, Metropolitan Life and Landmark Communications.
Mr. Miller has authored ten books, among them American Spirit: Visions of A New Corporate Culture, which was the text for Honda of America's course on their values and culture; and Barbarians to Bureaucrats: Corporate Life Cycle Strategies, which draws on the history of the rise and fall of civilizations to illustrate the patterns of leadership and evolution in corporate cultures. Most recently he authored Getting to Lean – Transformational Change Management that draws on the best change management practices such as socio-technical system design, appreciative inquiry, and systems thinking or learning organizations to provide a road map to transforming organizations. He has also authored Team Kata - Your Guide to Becoming A High Performing Team, the core human process of lean organizations. Most recently he published The Lean Coach that corresponds to his course on Coaching Leaders for Success. He has appeared on the Today Show, CNN, made numerous appearances on CNBC, has written for The New York Times and been the subject of a feature story in Industry Week magazine.