The Strategy is in the System

Lawrence M. Miller, Institute for Leadership Excellence
A free video tutorial from Lawrence M. Miller, Institute for Leadership Excellence
Best Selling Instructor, Author & Leadership Coach
4.4 instructor rating • 16 courses • 125,334 students

Lecture description

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.

Learn more from the full course

Business Strategy Execution: Agile Organization Design

Transforming Culture and Capabilities to Execute Business Strategy: The Agile Way to Business Strategy Success

11:08:05 of on-demand video • Updated March 2020

  • To create a process of agile action to achieve strategic business goals.
  • To align the internal technical systems (work process), social systems, and economic system to achieve business strategy.
  • To achieve agile adaptation and alignment of the organization's systems, structure, skills, style and symbols.
  • To engage the maximum number of leaders and associates in the process of building the future culture and capabilities that will lead to sustainable performance.
English [Auto] Friends let's look at the organizational system and systems thinking is very important. We have to understand just like with the human body that it's a system our environment that we live in is an interactive interdependent system. We need to understand that system if we're going to be effective in any effective way. So here's what I'm going to take you through a series of diagrams and I hope they don't confuse my wife has told me that my dreams are too confusing. So I've tried try to simplify them and build one on the other. So. So they're easier to understand. But if you've seen any system diagram you understand this that there's a process in the organization that transforms input to output that transformation of input the output must be a value adding process. In other words if your process doesn't add value from the input to the output your customers can just go to your supplier. You don't have any value. And often when technologies change the ability to add value by that organizational system may be diminished because in fact people can go directly to the supplier. So there are a lot of changes going on in the external environment that force changes on the system. Every system is dynamic every system is changing precisely because the environment the landscape on which it sits. Technology social changes political changes etc. They're all in motion and we have to adapt. I'm going to talk later about adaptation and alignment. Critical words and understanding how our system functions. But first of all we have this basic model of supplying system the input the process in our organization that transforms the input to the output and then the customers the receiving system right who consider what we have done to be of value. Hopefully when we think about our organization we think about the system and think about what are the inputs and outputs and these are some very basic categories you should think about for your organization what are they. But they almost always are. Information comes in we're not a closed system where all the information is just generated inside. We have an intelligence gathering process right. We get information from outside. We google everything. We're constantly getting information into the organization. We have materials that were particularly for in the manufacturing materials business of some sort or incoming materials or input people skilled people competent people the knowledge that people have is input into the system and there is money there is capital comes into the organizational system that enables the system to function so that you may think of other things and you can break each one of those down if you were going to do a little exercise on this you take each of those four categories and say okay what is the critical kind of information that comes in. What are the critical materials that come in. Et cetera and then do the same for the output. You know we transform all that stuff. Right. We add value to it and we're going to talk a lot about how we do that but we add value to that. And then there's the output that somebody pays for hopefully and that output may be people materials information and hopefully we produce more money than we consume coming in. That's the basic idea of free enterprise right. I mean some money comes in and hopefully more money comes out. That's the that's the basic idea but that's generically true of every business system and even nonprofit systems. Similarly applauds feedback loops. Every system performs well or better at least when there are feedback loops that let you know how we are performing. One of the things that you want to analyze in your own system is the inputs the outputs and then what. What feedback do we receive and what feedback do we give to our suppliers. Both are absolutely critical. This is often called the Sipar in quality management. Supply input process output customers right. That's. But those feedback loops are absolutely critical to success. Now let's blow up that center piece of the organization as a system and let's dissect that. It's like you have the human body there. Right. Well the human body is a system yes. On one level you can just simply say it's a it's a system. But then let's break that down and let's look at the the systems that are within that. Because if you're going to analyze it and you're going to design it you have to start to break it apart and look at the pieces of it. But one way to start to think about that is first of all to think that there are three major subsystems in every organization there is the technical system already mentioned it's the flow of the work. It's the technology. It's software it's the plant and equipment you know all that stuff makes up the technical system and then there's the social system. Who knows who cares who acts who decides. How are they motivated. What skills do they have. All that is social system stuff. And those two things are absolutely interdependent. One will not function without the other. A breakdown we have in our organizations is we have different people designing the technical system the workflow. And we have another group of people worrying about motivation and worrying about skills and culture. Well we have to we have to think about those together because they don't work separately they work together and one defines the other. If we're changing our technical system that is going to require changes in who decides in what people care about and what skills they have etc.. So we're going to go through a process of designing those things to create the capabilities that we need to execute our strategy. And of course there is money flow through the organization. There is every organization even nonprofit organizations. Our economic system simply meaning they don't function without money. We got to pay people. Money comes in money goes out. And how that money flows and where it's consumed in the system. All that is the economic system and it's not hard. Just think about it for a minute. I understand that that economic system is dependent and impacts goes both ways. The technical sense because you have to invest. You have to invest in capital equipment. You have to invest in designing processes etc. you have to invest in people you have to invest in skills etc.. So those three systems are all interacting one with another and they all have to be designed as a whole system. Now think about the external environment. This is absolutely critical to strategic planning and execution. We have to understand the changes going on in the environment. I'm working with some healthcare organization. One of the reasons healthcare organizations are changing a lot today is not just because somebody has a new brilliant idea or not it's not. They've discovered lean management for example although that is going on but it's because the technologies change the technology of you know in the future and this is it's not a distant future. People are going to go on their iPhones or Android phones they're there are going to be apps are already health care apps right. But they're going to be much more sophisticated sensors and apps that are going to measure blood counts. But you know where you can pick your PIN now and do a diabetes test. Well in the coming years not many coming years. You're going to be able to that same pinprick and 40 different blood tests that are going to tell you all kinds of things you're going to be able to do at home send the data to your doctor your doctors are going to scan it is going to respond to it tell your ok or tell you you need to come in technology. In a lot of different areas is changing the nature of health care. Government regulations and it's not just in the United States with our Affordable Care Act it's going on in Canada it's going on in Europe health care systems are changing because government regulations are changing so we can look at each one of these things you know some of them you may say well that's not relevant to me. You know the natural environment natural resources and you know if you're a hospital you may legitimately say well natural resources are not real important. But if you're an oil company it's the basis of your business. Right. And there are lots of businesses that are natural resource based businesses. So there are constantly changes going on the system has to align and adapt to those changes. Businesses fail because of the failure to adapt. You know there was a company that was the leading way you could send messages around the world you wanted to send a message to somebody in Japan quickly or China or to Europe. Where did you go. How did you send that message. It was called Western Union western. What happened to them. That's how we used to send messages. Well we don't talk about them because they did not adapt to new technologies new environments. There used to be a hotel chain when you drove from you know down I-95 going let's say from New York to Orlando a common trip. There was a favorite place to stop both for a meal and for overnight stay. You know what that favorite place was Howard Johns when I was a child Howard Johnson's the the orange roof and 28 flavors of ice cream. Oh boy. I couldn't wait. Let's stop it on Johnson's. Well where are they now. And they're not there now because they failed to adapt to changes in their environment. They did not develop strategy based on changes in the environment and they did not develop the new culture and the new capabilities that would make that strategy a reality. So they they may technically exist but you don't think about them anymore because of that failure of adaptation. So the landscape affects the nature of the system. Now we're going to take that apart as we go through the course and understand more. And then we're going to have a process of change. The last you know half or third of the course is the transformation process. And I'm just going to give you a very simple overview right now that we will go into great detail. But the 4-D discover the current reality. How do the processes work. What are the cycle times where the variances occur in the process where the breakdowns occur in the process. All that his discovery Why don't people care. Why don't people engage in improvement. What's going on with motivation. What skills are lacking. All that's discovery. Right. So when you say we want to go there we want to have these new capabilities we have that now design that we have to discover the current state. And then and I know this sounds silly just except that it sounds silly but believe me when I tell you it's one of the more important stages of the design process dreaming what's the ideal what's the ideal state for next year five years from now. What's the ideal state of the workflow. The technical process what's the ideal state of the culture of the social system creating that imagery is important because then we design to that and we design the future workflow the future or process the technical system and then we design the culture we design skills needed. The organization of people around the process to own the process how are they going to gauge and continuous improvement what's going to motivate them et cetera et cetera you design the social system and then you start implementing you start deploying the design and you don't deploy the design as if you know that you have got everything right and now everybody just has to obey you and do it the way you designed. No no no. The way you're going to deploy the design is as a process of experimentation and iteration. This is core to understanding lean management or Toyota production system. It's all about experimentation. So we're going to create a design that we think is the ideal design. Our best shot and then we're going to start implementing it and we will see what happens. And I guarantee you with the first experiment you'll find out you didn't figure out everything right the first time and not a problem. You adapt. You change it you know and then you move forward and you do another implementation and you keep rolling it out each time getting better and better and learning it's a process of learning and a process of change as you learn it's a continuous improvement process. So that's that's the transformation or change process that we're going to go through. And by the time we're through you'll know how to do this and you're going to be hot stuff. You're going to they're going to execute your.