Consider the following strategic initiative scenarios:
- Leaders for a mid-sized technology company are enthusiastic that their new business structure will enhance innovation, but find only confusion and resentment from employees.
- An established bank introduces a new target culture, complete with robust communications and a groundbreaking learning program to kick start the necessary behavior change. Six months in, an employee pulse check reveals little positive change in demonstration of target attributes by managers.
- A professional services firm goes through a 2 year, complex and massive reorganization to reduce costs, only to find executives in charge of various divisions reverting to old structures after 6 months.
- A division of a consumer services company adopts Lean Six Sigma and notices productivity doesn’t rise as projected, but employee absences have unexpectedly increased.
What do all of the above example strategic initiatives have in common? They all experienced the unforeseen consequences of implementing organizational change without thinking holistically – or without considering the wisdom of systems thinking.
Take A Holistic View To Avoid Costly Consequences
In the above examples, the first company restructured the entire global enterprise without understanding that cross-functional processes had evolved to fit the old structure. Managers in particular resented executives’ lack of operational understanding and were rightfully frustrated that they hadn’t been asked for their input. In the last example, a company president and his leadership team championed a process improvement effort that demanded significant additional time of their already overstressed branch managers and employees to run and staff Lean/Six Sigma projects. No wonder absenteeism went up – and morale went down.
The best way to avoid these types of unforeseen – and expensive – consequences when implementing your new strategy is to adopt a more holistic way of looking at your organization as a ‘system.’
Systems thinking says in essence that everything in an organization is connected. For a manager to understand how their decision will impact the organization, they need to see their professional worlds as a system of connected people, processes and other elements that link together, interact and impact each other (here is a nicely written article about systems thinking). Without this view, a manager is likely to operate “in a vacuum.” In other words, they may make a decision about their product or team or process (a component of the system) without understanding how that decision will impact other interconnected parts of that system.
You would never (I trust) change the functionality of a product without properly training employees in how to work with that new functionality – because you understand that a new product’s “system” includes the tech support folks who help customers use it effectively.
The same holistic thinking also needs to be applied to larger, more complex and transformative decisions so that your critical efforts to change the business don’t lead to unintended consequences that yield poor results and cost the business.
How To Apply Holistic Thinking To Your Initiative
For each type of organizational change – reorganization, process excellence strategy, culture change, new business strategy, innovation focus, growth focus, and so on – there are impacts and ripple effects to consider. The question needs to be answered:
“What are the likely consequences of this decision on the other parts of the organization, on our people, on our culture, etc.?”
One tried and true tool that can help managers think more holistically about their strategic decisions is the organizational performance model (the “Burke Litwin Model” of Organizational Performance & Change):
By considering how change happens, a manager can proactively evaluate potential consequences of changing one element in the model. Another model from the 1970’s, McKinsey’s Seven S Model, offers a similar opportunity to managers who want to avoid unintended consequences when executing strategic initiatives:
The idea is to answer the question posed above by systematically going through the elements of the Seven S Model, thereby considering consequences on all major components of the organization.
These models are used in Desai Transformation’s Change Strategy Workshop, in which I help your company think holistically and wisely about your next major strategic change initiative (get in touch to learn more).
Think Before You Act
My best advice is to think before you act: leverage these proven models for how to look at an organization more holistically, seek the advice of expert managers and operational employees, and bring in an expert partner early on in the process to help you sort through decisions about what and how to execute a new strategic initiative.