Thursday, February 16, 2017

Staying Competitive: The Do's of a Strategic Makeover

The challenge to remain competitive today is forcing businesses and organizations, including those in the nonprofit sector, to reconsider the basic concept of strategy.
For example, while the “traditional view of strategy focuses on the degree of fit between existing resources and current opportunities, the application of the concept of strategic intent creates an extreme misfit between resources and ambitions” (Hamel and Prahalad 1989).  Put another way, the concept of strategic intent implies that the important question is not, "How will next year be different from this year?" but, "What must we do differently next year to get closer to our strategic intent?" (Hamel and Prahalad).
While competitive pressures may be the catalyst to a strategic makeover, incorporating strategic intent or other emerging strategic approaches necessitates a change in one’s organizational culture. Bringing about organizational change, however, is one of leadership’s most difficult challenges, not surprisingly, as most often changes are disruptive to current social relationships, damaging to current levels of power and status, and threatening to current reward structures (Cameron 1991).
 So, what steps can management take to successfully lead their organization through a major change in strategic approach?
Of foremost importance is Communication. At the outset, top management needs to “create a sense of urgency, or quasi crisis, by amplifying weak signals in the environment that point up the need to improve” (Hamel and Prahalad).  Moreover, the vision and criterion that will be used to chart progress must be easily understood by every member of the organization so that the staff can be working toward a consistent overall goal.  Visions include the universalistic values and principles that will guide behavior in the future; they evoke deeper meaning than mission statements or goals (Cameron). Under strategic intent, the vision is focused on the essence of winning - Komatsu set out to “encircle Caterpillar;” Canon sought to “beat Xerox;” Honda strove to become a second Ford—an automotive pioneer (Hamel and Prahalad).
The critical importance of adequate and consistent communication in executing organizational change is underscored in a new study, “Where Change Management Fails” underscores (Lippman 2016).  Survey respondents (including 300 managers at U.S. companies with 20 or more employees) were asked: “What is most important when leading your company or team through a major change?”  65% answered “communicating clearly and frequently” – far outdistancing “managing expectations” at 16% and “outlining goals” at 9% (Lippman).
Engaging the organization for change further requires top management to (Hamel and Prahalad):
·       Develop a competitor focus at every level through widespread use of competitive intelligence. Every employee should be able to benchmark his or her efforts against best-in-class competitors so that the challenge becomes personal.
·       Provide employees with training to improve their capacity to adapt and to help ensure that they have the skills they need to work effectively (i.e., statistical tools, problem-solving, value engineering, and team-building).
·       Give the organization time to digest one challenge before launching another. When competing initiatives overload the organization, middle managers often try to protect their people from the whipsaw of shifting priorities.
·       Establish clear milestones and review mechanisms to track progress and ensure that internal recognition and rewards reinforce desired behavior. The goal is to make the challenge inescapable for every­one in the company.
Changing an organization’s culture is a large under-taking, however, these steps can help to bring about a successful transition at a time when competitive pressures are forcing growing numbers of businesses and organizations to consider the need for a strategic makeover.  
Cameron, Kim. Transformational Leadership. Chapter 10 in Developing Management Skills. New York: Harper-Collins, 1991.
Hamel, G. and Prahalad, C.K.   Strategic Intent. Harvard Business Review, May-June 1989.
Lippman, Victor. 2016. “Why Does Organizational Change Usually Fail?  New Study Provides  Simple Answer.”  Forbes, February 8.