When a company struggles to execute on a strategy, all too often the first reaction is to redraw the organization chart. This is costly and often ineffective. Rather than tinker with structure and incentives, organizations should look at the inner workings of the company and pull more effective levers, such as decision rights, information flow, and motivators. We are so emphatic with our clients that "it's not just about structure" that during a recent discussion with one CEO he asked, "You do address structure too, right?" We do, of course, but we believe it is only one component of what enables an organization to execute.
In our 2008 article "The Secrets to Successful Strategy Execution" we explained how executives can understand the "DNA" that makes up their organizations: not just the lines on the org chart but the way decisions are made, how information flows, and what motivates people. Then, they can use this understanding to clear the way so they are able to carry out their strategy.
Since the article was published, we've talked with many readers who want to know more about how the ideas can be applied in their own organizations. We developed an Idea in Practice that provides a glimpse of how one organization overcame the obstacles preventing it from executing a critical and game-changing strategy. Executives at the Europe-based industrial goods company identified the cultural and organizational issues standing in its way and altered decision rights and the flow of information rather than making costly and disruptive changes to its formal organization structure.
There are several critical lessons from this company's experience in the Idea in Practice. Here is a preview:
Find a common language. Make sure everyone can talk about the execution issues you face in the same way.
Walk the talk. People at the top of the organization need to believe in the changes and visibly support them so that the rest of the organization is motivated to change behavior.
Focus on both organizational and behavioral changes. It is more effective to change both rather than focusing on one or another.
Know your organization. There is no one-size-fits-all approach to improving an organization's ability to execute. You must find what works for you.
To learn more about how your company can improve its ability to execute, read the Idea in Practice and please share what you learn along the way.