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 / Autumn 2007 / Issue 48(originally published by Booz & Company)


Exercising Common Sense

Cross-organizational teams should be aggressively recruited, and participation presented as an up­ward career move. One client we worked with, the chief executive officer of a 100,000-person organization, asked managers to submit a one-page description of why they should be part of the team that supported the transformation. The fax machines were whirring all night. The program leaders received 1,400 applications for fewer than 100 team positions. People were jockeying to participate rather than keeping their heads down because they recognized the reality of this new world; they understood that being part of the effort meant becoming more relevant to the organization’s future.

Providing forums for senior leaders and transformation sponsors to talk honestly about what’s working –– and what’s not — gives them an opportunity to get involved in the process. As one CEO noted, “You need to have real debates. Good teams fight and argue about how to do things.” Frank and fearless discussion also helps the or­ganization identify under-the-radar stumbling blocks as they arise.

The characteristic mistake we see in this domain occurs when senior leaders in functions or business units continue to focus primarily on running their business, delegating the transformation effort to someone lower in their organization. An enterprise-wide transformation that alters the business model and the operations of the organization requires integrated teams whose work together lasts throughout the duration of the journey. Line managers who delegate the transformation but who don’t visibly take part in those cross-functional teams are not providing the full ownership that the initiative requires.

5. Senior leaders focus on augmenting capabilities along with cutting costs. The prospect of working to create a better future is highly motivating for most employees, whereas the prospect of cutting costs is not. As a result, efforts to massively change the cost structure of an organization must always be set within the positive context of building new skills. The bottom-line part of the change equation can be clearly quantified, which is one reason many senior leaders emphasize it. But articulating a commitment to building new capabilities is equally important and provides a much greater incentive for people to support change.

One of our clients was particularly clear about laying out the capabilities that the company would need to move forward: nontraditional marketing expertise, capacity for managing outsourcing, and brand focus. By articulating these skills and connecting them to the larger strategic vision, he was able to convince employees that the transformation offered them a chance to build their experience and skills while also setting a new course for revenue growth. This helped people understand what the changes would offer them personally in terms of learning, growth, and a stronger personal platform.

Starting with Capabilities
One typical mistake occurs when senior leaders focus first on cost reduction, deferring capability build­ing to a later stage. They often believe that once the cost cutting is complete, they’ll have the time and energy to focus on everything else. But step-change transformation is not possible without new capabilities. And if those new capabilities aren’t articulated from the start, and a plan for their development is not put in place, the slimmed-down company will not be transformed. An organization that fails to develop a positive and forward-looking future vision is likely to shrink under the pressure of simply cutting costs.

6. “Moments of truth” are recognized and shared in order to demonstrate commitment. A “moment of truth” is a revelatory incident or event, either deliberately engineered or recognized when it occurs, that highlights precisely what needs to change in an organization. These often originate with executive leaders and later cascade down through layers of the organization via retelling of the story. For one CEO, the moment came at a meeting when the transformation team unveiled its first progress report. It was focused on cutting capabilities as a corollary to cutting costs. The CEO (as he later recalled it) suddenly saw that this solution would drain the organization of the very skills it needed to survive the change intact. “Wait a minute,” he said. “I thought our strategy was to do more with less, not less with less.”

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