CEO/Board Member Briefing
Implementing Your Strategy

Whether the concern is quality, customer focus, productivity, cycle time, or cost, the underlying issue is performance.

How young companies evolve
Companies begin with what is commonly called “5 guys (and gals) in a garage”. These people are hand picked, and work very closely with each other in a small space, often tripping over each other going about their daily work. Without realizing it, this is a very good thing. They are aligned, integrated, and accountable to each other. Through heroic effort, hard work and chaotic interaction they get their first products and/or services out the door. All in all, to paraphrase a pop saying, good stuff just happens.

Success in the way of sales creates too much work and complexity for the 5 guys as they are wearing “too many hats”. The response to this situation is to bring in people who are specialists in various functions such as sales, marketing, manufacturing, IT, etc. Without realizing it they have shifted to a new model of working together.

Some people label the new model the vertical-functional group model, while others call it the “silo”. Leaders tend to manage themselves vertically and functionally in this model, becoming ever more isolated and insulated from other functional groups.

This works for a while but then trouble appears. Typically goals for each function are determined independent of the other functions. Marketing has its goals, sales its goals, manufacturing its goals and so forth. Each becomes a sort of mini-company of its own.
Typical scenarios include the following: Let’s say sales sells a ton of product but the product can’t be delivered with required quality, on schedule or at a profit. Is that sales fault? No. Here’s where the finger pointing comes in, because that’s the fault of research and development, manufacturing, quality control or distribution, to name a few.

Over time, this model with its structure breeds a sort of contempt between the functional managers, not necessarily because they are not good and likeable people, but because optimization of one function often leads to the sub-optimization of another. Also, they are thwarted in their attempts to get their job done by the very nature of the organizational structure and view of how work gets done. Each manager has his or her goals and must direct resources to those ends. Requests from other managers to handle dependencies are viewed as extra work. Often requests across functions are ignored or not handled. Any functional manager who is frustrated long enough will begin to see other functional managers as the enemy; as people who are intent on stopping their progress (and their career). Now we have a serious breakdown in place that often goes unrecognized, to the detriment of all concerned.

The Red Flag
A failure to deliver on time, with required quality and customer satisfaction is the tip off that something is wrong-----but what? Finger pointing, (which seems like the right thing to do since, “… they didn’t help me and that’s why I couldn’t deliver my part”), leads to a lowering of energy and morale. Attempts to fix things within the model don’t work, reminding us of the old analogy of people shifting the deck chairs on the Titanic. These moves are doomed, leading to even more frustration.

It’s time for a shift to the next model but what model is that, and how do we get there from here?

Stop managing the organizational chart and start managing the business
Before we discuss the model, let’s turn first to the variables that influence organization and individual performance.

In the silo model we typically find managers managing the reporting relationships of the various functions. Take out your organizational chart and look at it. Go ahead; I’ll wait till you get it. Now, what’s missing from this picture that is central to your business success? If you’re like me you are not thinking about the answer but have already peeked at the answer below.

Let’s get horizontal
So what’s missing? Only the customer, the product and the flow of work are missing. When we talk about the flow of work we mean the internal customer-supplier relationships by which products are produced. You may have learned in your schooling that work actually gets done through processes that go across functions. But I’ll bet you your company is not operating this way. This is what is called the horizontal view of an organization and understanding how work gets done is the key to moving to the next level of productivity and success.

Process
Process

Let’s take a look at three of the nine variables of the horizontal model that the CEO must manage to ensure success of her or his company. When the three variables are successfully addressed the CEO and the e-team will have:

• A strategy written in terms of organization wide goals and measures.
• An organization structure and design that will support accomplishment of these goals.
• Clear deliverables from each of the e-team members and they have clarified any resource needs required to produce.
• You are clear what the e-team as a whole is committing to accomplish.

Variable #1 Strategy to Organizational Goals

This variable is fairly straight forward in that CEOs know that they must set organizational level goals. Surprisingly, however as consultants we never assume the e-team is clear and aligned on the goals. Often we find that strategy has not been formulated in operational or measurable terms leaving too much room for misinterpretation.

Action: To assure that the organizational goals you have committed to achieving for yourself and your board are fully understood ask each of your e-team members, on a one to one basis, to tell you those goals. Listen carefully to see if there is alignment or whether there are misinterpretations or misunderstandings. Typically no one wants to appear foolish, ignorant or oppositional in front of their peers so they will go along with the conversations that lead to formulation of goals, forgoing questions that would help them fully understand what is expected.

Summary
In Variable #1 we have a strategy that is reduced to annual goals/measures that have been defined, articulated and communicated. You have ascertained that your e-team members fully understand and agree upon the importance and priority of those goals.
.
1. You have handled their concerns about whether they can in fact deliver.
2. You have the resources required to support delivery.

Goal Implementation Model Nine Performance Variables   Goals Design Manage Org

Variable #2: Organizational Design/Architecture
In order to determine whether your organizational design or architecture will support the accomplishment of the corporate goals, ask yourself the following questions:

1. Have I provided a written organizational structure with reporting relationships defined?
2. Does the structure support achieving goals to which we have committed? (I.e. effectiveness and efficiency of the structure/system)?
3. Does my organization have all of the functional components it needs to achieve its goals?
4. Are all functions presently in place necessary?
5. Is my management philosophy/style in line with achieving goals?
6. Is coordination of action system in place?

Action Steps:
1. Develop a relationship map which shows interfaces between functional departments.

Summary
Organization level goals have been clearly articulated, communicated to your managers and you have secured their commitments to deliver their sub goals.

Goal Implementation Model Nine Performance Variables   Goals Design Manage Org

Variable #3 is managing the above at the organizational level.

Let’s check whether you are actively managing goals, performance, resources, and interfaces of your VPs?

Delegation and Commitment
Creating functional sub goals with commitments from your VPs that support the achievement of the organization wide goals
1. Have roles been defined and clarified?
2. Are responsibilities for each of your reports defined? These include what a given manager will not be doing or have responsibility for managing as well as what they are responsible for overseeing.
3. Have appropriate goals/commitments been set for each manager? This is your requests of each of your managers. Are goals stated in measurable or assessable format?
4. Authority for each role declared: (i.e. budget, decision making, hiring/firing)

Performance:
1. Are commitments tracked/monitored (actual performance along the measurement dimensions established in the sub goals/commitments)?
2. Do you support your VPs when they initiate issues that require your attention?
3. Do you confront urgent issues or concerns with your VPs?
4. Are Operating Guidelines determined and buy-in accomplished so that you can manage the "how we will work together" commitments?
5. Are functional leaders obtaining regular customer feedback from process owners regarding the leaders’ commitments and delivery?
6. Are you, with the help of your board, resetting corporate level goals so that the organization is continually adapting to external and internal reality?

Resource Management: Balancing the allocation of people, equipment and budget across the system.
1. Are you continually assessing/deploying resources so that goals/commitments can be met?

Interface Management (Integration):
1. Are you ensuring that various functions are cooperating/collaborating when they are interdependent (customer supplier relationships)? That the "white space" between functions is being managed.
2. Are you resolving any functional "turf" conflicts and establishing systems and processes to support the collaboration that characterizes efficient, effective, satisfying internal customer-supplier relationships?
3. Are you encouraging your VP's to ensure that various sub-components within their departments are effectively and efficiently working together?

Key Point: Clear Goals, Design and Management processes at the organizational level are the context or driver of human and system performance.

For more information or support assessing your company you can reach us at roblaur@lauridsengroup.com or www.lauridsengroup.com or call us at 408 395-9541.

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