In the course of my career, I have either been part of or have had opportunities to witness the knee-jerk reaction of business leaders to organizational challenges. These challenges can simply be categorized as either Performance or Opportunity Gaps.
Company A: The CEO of an organization I consulted for vented his frustration about how employees were not meeting targets. He had committed to the board that Production Line 2 would run at 95% capacity by Q3, it was operating at 64% as at end of Q2.
Company B: I worked as part of the senior management team of an organization with a mandate to drive down the cost of maintaining assets and increase customer satisfaction. Year on year the targeted ratios were not achieved. These are examples of performance gaps: the difference between the current business strategy and objectives and actual performance.
Company C: A senior colleague who worked for a multinational and sector leader in Nigeria told me how her high flying boss was unceremoniously exited because he missed the chance of buying the manufacturing plant of an indirect competition up for sale in another region. This is an opportunity gap, it exists when performance meets or exceeds current goals but the business is not capitalizing on strategic opportunities such as new market or technology.
How did competition react? For Company A, the line manager who had been trained outside the country on the efficient use of Production Line 2 was frustrated on the job by peers and senior colleagues out of envy. He was poached by a competitor. Investing in your employees is just half of the equation, providing an enabling environment that encourages performance completes the equation. That company suffered losses, but they had been sleeping.
In the second story of company B, the competition used a different business model. It partnered with the product manufacturer in Japan, signed Memorandum of Understanding on after-sales service, and established mobile workshops on clients’ sites manned by manufacturer’s technicians! Consequently asset downtime was reduced with minimal disruption to clients’ operations, planning was easier as the asset. Maintenance cost is pre-agreed. Did I mention the service provided was critical to clients’ operations? We lost the businesses. We were gutted, but we had been sleeping.
The opportunity gap in story C is the missed chance of penetrating a region with high potential for consuming the product. A new entrant in the industry bought the production plant and expanded its activities to that region. It gained market share and became the market leader. That organization was the market leader but fell asleep and lost its position to competitors.
These organizations had already lost something vital. One or more of these variables seem to have suddenly purchased a one-way ticket to the left side of the mathematical number line: corporate image, market share, profitability, proprietary leadership, customer fidelity, and internal stakeholders’ value perception. In many cases, a desperate bid to reverse the damage ensues and the misguided “strategic action” may include:
- Exit employee(s) with oversight function adjudged to be responsible for the failure: Corporate Scape-Goat Syndrome
- Deploy new and/or sophisticated technology and/or Change business models (re-organization). This is usually a copy of such technology and/or business model used by successful competition: Corporate “Famzing” Syndrome
- Transform product or service through enhancement, addition, deletion, infusion, etc.
While all or any of the above may seem expedient and propel the organization towards its goals, they are never nearly enough as a lasting solution to keep abreast of competition and regain lost grounds. As such, proceeding with an action plan no matter how good it looks on paper without getting to the root cause(s) is antithetical to meeting corporate objectives.
It is important that the organization, as a matter of necessity, involve as many internal line/process owners as necessary. It may also be helpful to involve external stakeholders in this process. Hierarchy in the organization should be de-emphasized and attention paid to the line/process owners who are critical source data to empirically ascertain “how we got here” before proffering solutions where feasible.
Where the organization relies only on decisions made by its leadership to resolve critical business challenges, it is on a self-imposed fast track journey to imminent business paralysis or at best avoidable underperformance.
A combination of deliberate actions including root cause analysis, awareness of strengths, weaknesses, opportunities and threats, consensus building, and clarity of purpose to all stakeholders is germane to renewal.
Alignment of the Organization’s Components
Strategy answers the questions of how the business will compete. The formal Organization includes structures, systems, rewards, etc. Culture is the informal but vital part which concerns norms, values, attitude, and behavior of the people. Capabilities consider skills, know-how, abilities of the organization’s human resource. Alignment of strategy, formal organization, culture, and capabilities must be proven:
- To what extent do the skills, abilities, and motives of employees fit with the task requirements?
- To what extent do organizational arrangements fit with the task requirements?
- To what extent does culture fit the task requirements?
- How are individual needs met by the formal organization?
- How are individuals motivated to accomplish their tasks?
- How are individual needs met by informal culture?
- Are the goals, reward, and structure consistent with those of the formal organization?
At the head of successful innovation and change are strategy and formal organization while at the heart are people and culture. There must be a marriage of action regarding strategy, culture, formal organization, and people’s capabilities. Maintaining this congruence is the most critical responsibility of executive leadership for a viable competitive advantage.
Organizations must, therefore, have a deliberate continuous renewal strategy by often scanning the internal and external environments even when in an obvious position of strength on all performance markers. This allows for continuous improvement in processes, structures, culture, capabilities, and organizational learning.