Ten Absolutes for Organizational Transformation

Asset Manager - Ten Absolutes for Organizational Transformation

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Many have argued that one of the best enterprise management books ever written is Only the Paranoid Survive, by the former chairman of the Intel Corporation, Andy Grove. Intel is the world's largest semiconductor chip maker and arguably one of the most prosperous corporations in the world today. However, at one point they were one of many in a sea of firms manufacturing memory chips. At the time, they were where doing good, but not great. This is where many nonprofits find themselves - doing good, but categorically not "Best In Class". In the book, Andy describes this middle place. They could have continued to establish memory chips and be moderately successful. But the long term picture was not great. They were at a place he describes as an "inflection point". This is a place where they could have continued in their enterprise but long term they would have succumbed to new technology and new competitors.
They had to make a decision that was difficult, expensive, filled with risk, anyone but certain, and deadly if they failed. They had to be ready to stop what they were doing (manufacturing memory chips) retool, reinvest, and establish chips that would ultimately be installed on roughly every Pc in the world. It was a fantastic move but hardly an easy one.

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Many organizations, public, nonprofit, market are in similar circumstances. They must either reinvent themselves and risk dismantling the organization or stay the policy and die a slow (it can take a lifetime) and painful death.

This description will shape 10 significant requirements for prosperous organizational transformation. There is one fundamental assumption that must be understood: for an organization to voice itself, it must occasionally reinvent itself. Markets change, new technology puts the old out of date, the world changes, new group issues replace old ones that no longer look quite as ominous, and younger staff members see the world differently than founding leadership.
Change is inevitable. There are only three options of response:

1. Ant. Eject the risk of reinvention and grow,
2. Take the risk and fail (dismantle the organization), or
3. Stay the policy and ultimately die.

Realize that the only incompatibility in the middle of estimate two and three is one of speed. either way, the organization dies.

#1. Celebrate Past Success

Embarking upon a massive organizational change or transformation has all the appearance of dismissing the past. For staff who often spend their lives into a nonprofit or group sector organization with clear mission minded intent, this removal of past success is difficult. If the staff has been with the organization for any extended time, this change can be brutal. It might have the appearance of teen agers dismissing as irrelevant years of effective service. To counter this reality, celebrate the past.

By celebrating the past, staff and years of personal work is acknowledged. If change does need them to leave, they at least leave with the guarnatee that their personal contribution was valuable.

#2 - Be Brutally Honest With The Facts

In 1982 seven citizen died after taking Tylenol - the Johnson & Johnson over the counter pain medication. The consensus was that the brand was dead, that the enterprise would never again be able to shop anyone under the name of Tylenol. But the enterprise proved the skeptics wrong. roughly immediately Johnson & Johnson admitted there was a potential problem. They stopped output and pulled all remaining supplies from the shelves. Pulling 31 million bottles of Tylenol off the shelves cost the enterprise more than 0 million, threatened the 37% shop share they enjoyed, and putting 0 million in revenues at risk. And yet, Johnson & Johnson earned praised for its reaction and Tylenol is still a top selling over the counter pain reliever. Their honesty won them praise, respect, and most importantly, trust.

When embarking on major transformative change, leaders must be brutally honest with staff, funders, and themselves. The old adage is true, the truth shall set you free, but first it will scare the pants off you. Problems cannot be tackled if the truth about them is unclear, uncertain, or being ignored. If an organization is going to change, then every person deserves the respect of being clear about the reasons why.

When Alan Mulally took over the leadership of Ford Motor enterprise he is reported to have asked his senior executives: "You guys, you know we lost a few billion dollars last year, is there anyone that's not going well?" Yet honesty does not have to be demeaning and degrading. In a similar meeting Alan was told that a new car on the verge of being delivered had some technical problems. However, when told of the question in straightforward truth, his response was "I categorically appreciate that clear visibility". By the next week, the problems were solved.

Speaking again of the Intel Corporation, Authors Larry Johnson and Bob Phillips write in their book, categorically Honesty, state: "Intel has long enjoyed a credit for being a place where citizen express their opinions freely and assertively - and the enterprise has profited handsomely as a result".

#3 - Define The Big picture First

Understanding the larger picture, on a global scale can furnish serious perspective. This generally shows that for most group problems, no particular organization is going to solve the problem. This perspective has the impact of demonstrating the need for collaboration in solving group issues.

In an description in the Stanford group Innovation Review, authors John Kania & Mark Kramer (Winter 2011), point out that impact on major group problems need a collaborative arrival rather than the current arrival which is to find (and fund) the one organization that seems to be doing the most good. This approach, they voice is fundamentally flawed. In the article, they state: "1.4 million nonprofits try to establish independent solutions to major group problems, often working at odds with each other and exponentially increasing the perceived resources required to make meaningful progress".

While many of us would like to believe that we alone have the solutions, the reality is that a consortium of organizations, working collaboratively, are required to address the large involved group problems that address our world. However, once the larger perspective is addressed, then individual organizations can good understand where they can conduce to the whole, rather than endeavor to be the whole. This collaborative arrival also has a way of diminishing competition for resources and ends up putting more resources where they have the greatest impact.

#4 - Use buildings And Discipline

In his book, making Strategy Work, Wharton School of Economics professor, Lawrence Hrebiniak Ph.D, states: "...a disciplined arrival to performance is needed to make strategy work. A confidence on a few sound bytes, anecdotes, or stories is not sufficient....Only an integrated, disciplined arrival can cut straight through this complexity and achieve performance success." Why do so many well designed and beautifully presented, strategic plans fail at or end up being very nice door stops? Some study suggests that 90% of all strategic plans fail to be fully implemented. One solution to this might be inaugurating strategic planning and organizational transformation with a disciplined and structured approach. After reviewing a large strategic plan for a major urban school district, one that should have produced major transformation, there was one sentence that addressed how the district was going to achieve its grand foresight of enhancing schoraly test scores. The remaining 30 plus pages were pointing out problems, statements of aspiration, measures that would be used to monitor progress, (that was good), and slamming the organization for past failures.

In 2001 Steve Gorcester took over as administrative director of the Washington State communication improvement Board (Tib). This small but leading group acts much like a bank, investing state funds in city and county communication projects. Within his first week he was faced with a disaster. The Tib had committed financial resources to more projects than it could fund and it was five months late in paying for the projects that were already completed. In addition, the legislature and the governor were ready to shut the Tib down. He needed to move quickly to turn the organization around. His solution was the implementation of a Balanced Scorecard. This was a tool that was extensive in nature and was able to turn guide the Tib nearby in very short order. One of the attractions of the Balanced Scorecard was the value of balancing contentious objectives within the organization. The Tib had put a great value on buyer service. So much so that anytime a city needed more money to unblemished a project it was in case,granted with hardly a question. This may have been great buyer service but it was driving the group into insolvency. The two contentious objectives had to be balanced. Later, they turned to the Baldrige quality criteria to go even added in their plan to heighten the work of the Tib. As of this writing, (2011) there are two bills in the legislature to growth their funding, even in the midst of state wide budget reductions.

The value of a structured arrival is in the discipline. An arrival such as a Balanced Scorecard or the Baldrige criteria provides a extensive view of the organization. The effect is that nothing is left out. Missing pieces don't show up three years later.

#5 - value The Risk And Plan Accordingly

The risk of major transformative change is significant. Major change can have an immediate impact on staff morale, funding sources, technology, leadership, processes, and customers. Lack of a thorough appraisal of risk can turn the best intentions into catastrophic events. The project management establish defines risk as "An uncertain event or condition that, if it occurs, has a inevitable or negative effect on a project's objectives". From this definition we learn that risk is any incompatibility from the anticipated that has either a negative or inevitable outcome. There are two former benefits of a thorough analysis of risk:

1. Feebleness and threats are identified that can derail the best intentioned plan; and
2. Strengths and opportunities that may lie dormant can be exploited and leveraged for inevitable results.

When Louis V. Gerstner, Jr took over as Ceo of Ibm in 1993 the enterprise had an active plan to dismantle the firm. It was considered too big, too unwieldy, and too insular to change and the parts were worth more individually that the enterprise was as a whole. Instead of seeing size as a weakness, he saw it as impel and turned the enterprise around. The turnaround of Ibm is still considered one of the great stories of modern corporate history. However, it was far from easy. Over 100,000 citizen had to be laid off; many of these staff came to Ibm because of the culture of life time employment.

There are several ways to identify and quantum risk, when it is defined broadly as either a inevitable or a negative unforeseen impact. The former Swot analysis is a useful (but not the only) tool to do this. For those unfamiliar with this tool Swot is an acronym that stands for:

S- Strengths
W-Weaknesses
O-Opportunities
T-Threats
There are other frameworks for identifying risks. Another is Pestel Framework, which stands for:
P-Political
E-Economic
S-Societal
T-Technological
E-Environmental
L-Legal

Whichever one is used, it is leading to use a disciplined arrival to identifying risk and plan accordingly. How many organizations have suffered catastrophic losses after developing a great long term strategy only to peruse three years into the plan that the technology infrastructure is incapable of handling the change, the staff lacked the required skills, and the leadership was incapable of leading?

#6 - Align Operations And The Intangible Assets

Alignment is one of those 'buzz" words that is making the rounds of enterprise management books. Basically it means that every operational and administrative unit is aligned with strategy. It is important, if nonprofits and group sector organizations are going to achieve "Best in Class" performance and the kind of breakthroughs their funders and constituents are seeking. In their book, Alignment, Robert Kaplan and David Norton, (Harvard enterprise School Press) state: "Understanding how to originate alignment in organizations is a big deal, one capable of producing significant payoffs for all types of enterprises."

While alignment needs to happen throughout the organization, one of the most inevitable places is in the budget. Every organization has a detailed strategic plan. Like it or not, it is called the budget. However, the budget may not be the best document to lay out a long term vision.

Examples abound of how organizations fail in their performance of strategy by not aligning their divisions nearby a common strategic strategy. For example, a large national consulting organization has three enterprise units and thousands of divisions. Annually it conducts over 0mm a year with federal, state, and local government agencies. Each year at yearly planning meetings there are enormous discussions about missed opportunities because staff from one group who have existing relationships with a government client, cannot leverage that connection to the benefit of Another division. Every new group president and vice president sees opportunities wasting away because the firm cannot leverage the buyer relationships for added business. Each year management puts out a directive to work together more. Every year the directive fails. Is it a lack of strategy? categorically not. Strategy is abundant. The question was a lack of alignment.

• Staff recompense is associated to one on one buyer relationships rather than the total value of the client relationship;
• Marketing has never segmented the shop in such a way that prospective clients can be identified by any kind of demographic; and
• There has never any kind of buyer connection management (Crm) system in place so that staff from one group could right away tell who had existing relationships with government clients from Another division.

Without these basic tools it is up to personal relationships to make collaboration work. Unfortunately, citizen are too busy worrying about revenues for their own divisions to worry about helping Another division.

The transformational change process is very dependent upon aligning all units of the organization. If alignment does not occur, transformation will look a lot like chaos.

#7 - Define The Transformational change Strategy

Authors, Jeffrey L. Bradach, Thomas J. Tierney, and Nan Stone in their description Delivering on the Promise of Nonprofits, published by the Harvard enterprise communicate point out that the hardest decision a nonprofit has to make is to settle what it will not do. To come to this place it must first settle how it will achieve its foresight by establishing a "Theory of Change" or its "intended impact". This is a straightforward statement of how the nonprofit intends to be prosperous in the performance of its mission and vision.

For example, a nonprofit establishes a foresight that says they are going to eliminate homelessness but never says exactly how they are going to deliver on the vision, unless it is construction homes for every man, woman, or child that is homeless. Others may have a similar foresight but they are going to do it by attacking the root of homelessness - addiction, poverty, unemployment, domestic violence, etc. Establishing the system of change or the strategy that is going to bring about transformative change is significant to delivering on the benefit and promise of the nonprofit. Only as the strategy is identified in clear straightforward language can it be tested and verified.

Hopelink is the largest community action Partnership (Cap) organization in the state of Washington. It's foresight is a community free of poverty. Its mission is to promote self sufficiency and make continuing change. In many ways, this is not too much separate than any local group service agency. Many cities and counties could make the same statement. However, Hopelink has gone further. What separates it from others is a clear statement of how it intends to achieve it rather ambitious mission. "By strategically aligning our organization, leveraging our key community partnerships, and contribution a extensive set of Hopelink services, our clients will be able to achieve and voice their highest level of self-sufficiency, thus enabling us to achieve our mission and vision." Note the key words: aligning our organization, leveraging our key community partnerships, and contribution a extensive set of services.... In effect, it is saying we are going to help citizen become self adequate by:

1. making sure we are totally aligned with this vision. We will do nothing that is not focused on this goal.

2. We cannot do it alone. The task is too large and complex. We have to do it in partnership with other like minded organizations.

3. Our services will be extensive (both ours and those we partner with) so that any service that is needed by man in poverty can come here to get what they need to become self sufficient.

Nonprofits, by their very nature are driven by mission. Conversely, market firms, by their very nature are driven by their need for revenues. When a nonprofit clearly articulates how it will achieve its foresight and mission it makes it easier to do the categorically difficult thing, which is to settle what it will not do.

#8 - Quantify The Vision

When it comes to quantifying a foresight statement, market organizations have a major benefit over nonprofits. "Increase gross revenues by 200%". "Become the estimate one auto maker in the world as considered by total revenues". "Increase sales by 50%". These are examples of common statements of foresight for market firms. Nonprofits, on the other hand, suffer a basic challenge - how to quantify their vision. "Reduce high school dropout rates". "Improve test scores". "Train our students to become lifelong learners". "Eliminate the causes of poverty". "Stamp out hunger". These are all common statements of foresight for nonprofits. However, if the organization is going to thrive in its foresight it must first quantify it. If there is no quantifiable vision, then there is no accountability, any perceived movement towards success can be celebrated, but ultimately no one knows where is the line of success? Staff never receive the value of knowing if they are working successfully. Boards never know if their governance is doing any good. Funders are left with the decision of supporting an organization that looks good rather than the organization that can demonstrate "Best in Class".

Furthermore, instead of foresight driving operations, operations tend to drive vision. Instead of operations being aligned nearby a foresight that can be measured and designed accordingly, operations tend to function nearby their own perceived value, their own perceived understanding of what is reasonable, and their own discipline's idea of best practices. When the Washington State communication improvement Board considered that paying their bills within thirty days was their objective rather than the five months it was taking, all had to change. Their process in project acceptance had to change. Their financial system had to change. Their definition of project success had to change. all had to be aligned to a foresight that had a estimate attached. When my small international nonprofit decided that we needed to grow by ten times in ten years it set off a flurry of action by our It staff who quickly realized that facts technology was going to be a significant success factor. Inadequate It would kill performance and never allow us to move forward.

One of the most difficult challenges for a nonprofit is putting a estimate on its foresight statement. However, without it, it is categorically nothing more than a restatement of its mission, and gives no clear benchmark for success.

#9 - Listen, Be Patient, And Receive Input

Let's be clear. Major transformational change is difficult. It is risky. It is often costly in terms of people's lives and life styles. It does not happen overnight. For leadership it never fast enough. For the rank and file it is always too fast. But Henry Ford may have put it best when he said: "If there is any one private of success, it lies in the quality to get the other person's point of view and see things from that person's angle as well as from your own."

A school district adopts a new vision, hires a new superintendent, and embarks on a process to transform itself. Who is it that will ultimately settle success? Will it be the teachers and principals that work with students every day, or the administrators who reside two or three layers above the fray of daily school life?

One of the most appealing stories of enterprise transformation was a Seattle based savings and loan. It was going broke and a new management team was brought in to turn it around. The general process was to fire all the loan officers and vice presidents. But this team decided to try a separate approach. Instead it embarked on a major retraining of staff. The effect was one of the fastest turnarounds in local banking history. Few citizen were laid off or fired, and the new management team was very successful.

The nonprofit world has a major asset when it comes to major transformational change. It has a staff that is motivated by mission rather than dollars. Use this sense of mission to drive change, but be patient. Give staff time to process what will be required of them and give them time to "get on board". They will.

#10 Stay The Course

Nonprofit boards are notorious for swaying in the wind when the tide of group plan turns up heat. Boards of group sector organizations are worse. Any major change will cause disruption. This is a painful reality, especially when good citizen disagree and resign. It is hard adequate to find good people, let along good citizen who are willing to work for low wages, long hours, and puny thanks.
School boards set new visions but then fire the new superintendent over the first disruption. Churches set new strategy for growth but fire the preacher because he or she takes it seriously. City councils settle that government needs to run more like a enterprise but then fire the city manager because she instills shop place disciplines and the citizens vent their frustration.
Ultimately, mission and foresight belong to the board. It is their sacred trust to make sure that the foresight and mission go forward. Donors are relying on them. Staff are sacrificing their pro lives for them. When the feathers fly, as they categorically will, stay the course. It is a sacred trust.

Dan Edds is the Managing Director of Praxis Solutions. He holds an Mba from the Albers School of enterprise and Economics at Seattle University, and is a project manager pro (Pmp). In addition, he is a Kaplan Norton Balanced Scorecard Certified Graduate.

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