A strategic approach to designing organisations that perform

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Frank Susini.gifEvery company (and even departments such as Procurement), irrespective of size or type, needs an effective strategy to be competitive and successful in the marketplace.  "The organisational strategy becomes a 'journey map' to guide the company towards clearly defined goals and objectives that will create value for all its stakeholders and entrench a way of thinking that is focused on creating long-term sustainability" Frank Sussini, a strategist at DayFive told Smart Procurement

Such a strategy will, taking cognisance of various internal and external environmental factors, flow out of four key elements namely, (i) the company's vision, (ii) the company's mission (its Raison d'être), (iii) the company's brand promise, and (iv) the company's values.  Collins & Porras refer to this collectively as the 'Core Ideology' of an organisation.  Core ideology defines the enduring character of an organisation - a consistent identity and behaviour that transcends products or market lifecycles, technological breakthroughs, management fads, and individual leaders.  These four elements may collectively seem like a trivial set of statements or propositions, however, if carefully crafted, they are the key to designing a successful organisational strategy and unlocking (dare one say unleashing) the embedded potential that lies therein.

In this article a specific process, based partly on previous corporate strategy development and implementation work and partly on work undertaken recently at the South African Mint, is used to illustrate how to define and implement certain aspects of corporate strategy in an organisation.  The more recent process at the SA Mint was undertaken by Frank Susini together with and under the auspices of Dr. Andre Parker (a recognised authority and thought leader on what makes organisations 'world class').  Part of the process outlined herein was implemented across the Executive to Middle Management and Supervisory Levels of the SA Mint (comprising some 500 employees) and took approximately six months to complete.

It should be noted that whilst this is a robust and generic process, it delivers unique, tailor-made specific results for individual organisations. Also, this process can be adapted to divisions/departments within an organisation, and thus optimisation can be achieved within a unit, without tackling the whole 'organisational beast' at once.

Case Study:  SA Mint Strategy Development and Implementation

In 2007, Susini and Parker joined forces to redesign and implement the corporate strategy of the SA Mint.  At that stage the organisation did have a strategy, but it was not clearly defined or contextualised.  Also, there was little evidence of a methodological approach and/or structure that focused on conveying and implementing this strategy and ensuring that performance was strategy driven and effectively managed.  In order to correct this, a strategic review had to be undertaken, which, in turn, was translated into the organisation's performance management system.

In short, the process of designing a unique corporate strategy entails the following main steps:
  • Define the Core Ideology of the Company:  This comprises of defining the company's core ideology, i.e. Vision, Purpose, Brand Promise and Values.  It is a process which must be undertaken through dialogue, debate and negotiation at Executive Management Level, as it is the company's executives who are the key link between its major stakeholders (shareholders, employees, customers, suppliers, government and relevant industry lobby/interest groups).  The output of this exercise is a clear view of:
    • the direction the company sees itself going in the future;
    • the company's raison d'etre (the purpose that justifies its existence);
    • the underlying value proposition that the company offers its customer; and
    • the handful core values that define how the company behaves in any given circumstance.
  • Establish the Key Strategic Themes: This is a continuation of the process of dialogue, debate and negotiation at Executive Management Level.  The focus, however, now shifts towards the surfacing of the key strategic themes or key strategic thrusts that the organisation will actively engage in.  These key strategic themes/thrusts become the root which drives all processes and activities within the organisation and which form the basis of designing a performing organisation.  Each strategic theme is then further developed in terms of identifying specific strategies that will be employed to enable the organisation to achieve its strategic goals.
  • Organisational Design: The organisational design process ensures that, having established the core ideology of the company, the strategic themes/thrusts and the resulting specific strategies, the company is able to deliver and achieve its desired outcomes and results.  The desired outcomes/results must fully account for the requirements of each of the major stakeholder groups as applicable.  The alignment process comprises the following core elements:
    • Organisational Blue Print:
      This part of the process is based on the principle that 'structure follows strategy'.  The blue print seeks to identify not only the optimum structure, but what the optimum process configuration for the company is and what the optimum job designs are, given the required suite of organisational competencies.  The organisational blue print is one of the physical building blocks that allow the corporate strategy to become realisable in practice. (Here is a Formula 1 Grand Prix analogy: The team principal and shareholders have a vision, clear purposes, a set of values, brand promise and strategy (all aimed at winning the world championship title).  It has the necessary (limited) resources (money, equipment, people, IT, etc) but must now structure the team in the manner most efficient to deploying all its resources in such a way that it stands a realistic chance of winning the world championship title, always remembering that it has to do this within a limited budget.  It must have just the right amount of people, doing the right things, at the right time and in the right sequence, including (during races) the occasional frenetic pit stop which in 6 or 7 seconds could make the difference between winning and losing a race and ultimately winning or not winning the championship.)  So too will an efficient structure be a critical building block in an organisation achieving its strategic goals.
    • Strategic Human Resource Management Process Blue Print:
      This process focuses on the so-called 'rules of the game'.  It is that aspect of organisational design that concerns itself with and focuses on the in-house rules of engagement and the psychological contract between the organisation and its employees.  Part of the rules of engagement will be the set of enabling policies that define all critical and sub-critical controls required, and the determination of the risk management framework, amongst others.  It is also about creating an environment conducive to organisational performance management through a performance management system that is strategy driven as opposed to tactically/operationally driven.

      Fig 1 FS.pngFigure 1: Example of performance metrics framework

      It is further, in part, about creating an internal brand that employees associate with and what makes employees want to associate with the company and be part of the company's future; about attracting, rewarding and retaining competent staff; and ensuring that one has 'round pegs in round holes'.  (World-renowned former CEO of General Electric, Jack Welsch, recognised as one of the world's most eminent and successful corporate leaders, is of the view that the Strategic Human Resource Management Process is a key organisational competence that any organisation wishing to gain an edge over its competitors should develop and hone.)
  • Organisational Alignment:
    The process of alignment entails several key aspects, namely:
    • Leadership alignment - here the main focus is to ensure alignment amongst the company's leaders, and that at all leadership levels (as defined by the company), the core ideology is fully communicated, unpacked and understood, in preparation for the next phase;
    • Communication strategy - here the key thrust is to clearly communicate the core ideology of the company and to test for understanding at all levels of the organisation, encouraging a process of vertical and horizontal dialogue and debate;
    • Culture and/or Climate Development and Assimilation - here the focus is to begin a process of understanding the current organisational culture and climate (typically through professionally crafted survey instruments and statistical analysis) and to begin a process of creating the foundations for change, followed by an implementation process of moving a critical mass of employees and leaders towards a new desired end-state (revitalised culture or climate or both), again through a consultative and participative process; and
    • Renewed Commitment - a resultant state characterised by the free and willing 'buy-in' of the aforementioned critical mass of people, that is sufficient to overcome the natural organisational inertia acting against significant change through a process of influence and example.
  • Organisational Value Streams:
    The last building block deals with identifying what is deemed of value to each significant stakeholder group and then to identify how that value will be developed/created and enjoyed by those stakeholder groups in a manner that such groups perceive a sustainable increase in value earned in terms relevant to themselves.  In respect of shareholders this may be measured in terms of certain agreed financial (and other) parameters.  In respect of employees this may, for example, be measured in terms of personal wealth creation, opportunities for growth and development, and organisational transparency. And so each stakeholder group's needs for value creation will be identified and strategies determined to realise those needs.  It is also important at this stage to understand why each stakeholder group perceives value in the manner that it does, and thus not to just cognitively know what the value creation elements are.
At the SA Mint, the key thrust was to refine the Core Ideology, develop the Key Strategic Themes and Strategies and to translate that into the Performance Management System from Executive Management down to Supervisory Levels.  This entailed only selected elements of the overall process outlined above, but continues to be a sterling work-in-progress at the Mint.

Fig 2 FS.pngFigure 2:  Key themes of the organisational design process

From the above, it is clear that this is not a simple short-term exercise, and that it requires ongoing review and several iterations over time, indeed, becoming a 'way of life' in the organisation.  It is therefore not something that should be taken lightly or done hastily.

The above graphic encapsulates the key themes of this process.  If you require any additional information, or need help to optimise your strategic plan, contact Frank Susini at www.dayfive.co.za or +27(83) 607 0777.

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