USING ALL THREE LEVERAGE POINTS
STEP 4: ASSESS FEASIBILITY
Furthermore, consistency over time is critical. Frequent changes in structure, pro-cesses, or leadership behaviour will quickly breed employee cynicism, as they see “flavour of the month” initiatives come and go. To return to an example of a company that seems to have its act together, we look again to 3M, and have produced in Table 8.8 some of the main features of its structure, processes, and leadership behaviour that work together to support its innovative capability.
STEP 4: ASSESS FEASIBILITY
At this point you have made your best estimate of the changes that would be required in your firm’s structure, management processes, and leadership behaviour to implement the strategic proposal that you are examining. Two questions remain: (1) Can these changes
Table 8.8 3M’s Innovative Capability Leverage Point Support for Innovation Organization
Structure
• “Grow and divide”; as businesses grow they are split into smaller units, each a profit centre with an autonomous management team
Management Processes
• 30% of each year’s sales must come from products less than 4 years old. Every business must meet this target.
• “Pacing programs” identify development programs that could make a major difference to the corporation, and these receive priority funding
• “While products belong to businesses, technology belongs to the company,” meaning that technology must be shared.
This is done via numerous scientific forums and technology-sharing awards
Leadership Behaviour
• “Thou shalt not kill a new product idea”
• Acceptance of “well-intentioned failure,” to encourage risk taking
• Leaders must be capable of developing and managing teams
• “People will make mistakes, but they will not be as serious as the mistakes management will make if it tries to tell people exactly how to do their jobs”
• Technical people are encouraged to spend up to 15% of their time on projects of their own choosing
Sources: Adapted from Harvard case 3M: Profile of an Innovating Company, #9-395-016, Bartlett and Mohammed, 1995.
be made in the required time frame? and (2) Will they produce the desired result? The answers are seldom an absolutely confident yes or a definitive no. They are more likely to be an estimate based on the nature and magnitude of the required changes in organi-zational capability (and hence behaviour and culture) that you are trying to bring about, and the extent to which various parts of the organization will embrace or resist the pro-posed changes.
You are likely to find that some of your managers will support the changes you think are necessary, but others may resist. Recall that there is an arrow between management preferences and organization in the Diamond-E framework. This reflects the fact that managers may have strong individual preferences, and may not see the need for change the same way you do. This is a topic that we shall discuss in depth in the last two chapters of the book. For the moment, you should make a first estimate of likely support and resis-tance, and factor your thoughts into Table 8.9.
This is also the time to think hard about the problem of “unintended consequences”
that we discussed earlier. If you change some element of your management processes—the way you pay people, for example—will it really generate the behaviour change that you want or might it produce a rather different reaction? Remember the cautionary tale of Levi Strauss. If you are sure that your change will produce the desired result, record that in the fourth column of Table 8.9. Often the answer is a less confident one, and that lack of certainty needs to be considered when you are judging the feasibility of creating the required new capabilities in the time available.
Congratulations! You have now made it all the way around the Diamond-E and, assuming that you have more than one viable strategic proposal in hand, it is time to make a choice. That is the topic of the next chapter.
Table 8.9 Assessing Feasibility
181 S u m m a r y
SUMMARY
In this chapter we discussed the penultimate step of the Diamond-E analysis, which is to decide if the strategic proposals that looked attractive during your environment, resource, and management preferences analyses could be implemented in the necessary time frame.
This analysis involves identifying the organizational changes that would be necessary in the firm’s structure, management processes, and leadership behaviour to develop the capabilities you will need to support the new strategy. You must then make a crucial judg-ment regarding how likely it is that the proposed changes would have the desired result, and could be implemented in the given time frame. This assessment gives you a basis on which to weigh the risks against the benefits of the proposal.
If you are working through the Diamond-E analysis in the order that we have sug-gested, you may now have several attractive strategic proposals that have made it all the way through your analysis. Choosing between them is the topic of the next chapter.
Notes
1. Reeves, Martin, and Mike Deimler. “Adaptability: The New Competitive Advantage.”
Harvard Business Review 89.7/ 8 (2011): 134–141. Business Source Complete, EBSCO.
Web. 15 Aug. 2011.
2. Bannon, Lisa. “Mattel Plans to Increase Global Sales.” Wall Street Journal Europe (February 11, 1998): U9A. Print.
3. Tichy, Noel, and Ram Charan. “Speed, Simplicity, and Self Confidence: An Interview With Jack Welch.” Harvard Business Review 67 (September–October 1989): 112. Print.
4. Ashkenas, R., et al. The Boundaryless Organization: Breaking the Chains of Organizational Structure. San Francisco: Jossey-Bass Publishers, 1995. Print.
5. Galbraith, Jay R. Designing Organizations: An Executive Guide to Strategy, Structure, and Process. San Francisco: Jossey-Bass Publishers, 2002. Print.
6. Our definition of culture draws heavily on that of Edgar Schein, Organizational Culture and Leadership: A Dynamic View. 3rd edition. San Francisco: Jossey-Bass Publishers, 2004.
Print.
7. Leavitt, Harold J. Corporate Pathfinders: Building Vision and Values into Organizations.
New York: Penguin Books, 1986. 16. Print.
8. Collins, J.C., and Jerry Porras. Built to Last: Successful Habits of Visionary Companies.
London: Century Business, Random House, 1996. 152. Print.
9. Kets de Vries, Manfred F.R. “Transforming the Corporate Mind-set at British Petroleum:
An Interview With Sir David Simon and John Browne.” INSEAD case study 497-013-4 (1997): 10. Print.
10. Goldsmith, Walter, and David Clutterbuck. The Winning Streak Mark II: How the World’s Most Successful Companies Stay on Top Through Today’s Turbulent Times. London: Orion Business Books, 1997. 183. Print.
11. Fischer, L.M. “How Novartis Became Number One.” Strategy and Business (Second Quarter 1998): 70. Print.
12. Galbraith, Jay R. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. San Francisco: Jossey-Bass Publishers, 1995. 89. Print.
13. Tomkins, Richard. “The What, Not the Where to Drive P&G,” Financial Times, September 3, 1998: 16. Print.
14. Procter & Gamble Annual Report. Procter & Gamble, 2011. 4. Web. 29 Sept. 2011.
<www.pg.com>.
15. Taylor, William. “The Logic of Global Business: An Interview With ABB’s Percy Barnevik.”
Harvard Business Review 69 (March–April 1991): 90–106. Print.
16. Davis, S., and D. R. Lawrence. Matrix. Reading, Mass.: Addison-Wesley Publishing Company, 1977. vi. Print.
17. Financial Times, August 13, 1998: 1. Print.
18. Barney, Jay B. Gaining and Sustaining Competitive Advantage. Reading, Mass.: Addison-Wesley Publishing Company, 1997. Print.
19. Collis, J.C. and Cynthia Montgomery. Gaining and Sustaining Competitive Advantage. By Jay B. Barney. Reading, Mass.: Addison-Wesley Publishing Company, 1997: 105. Print.
20. Schlender, Brent. “The New Soul of a Wealth Machine.” Fortune 149 (April 5, 2004):
102–107. Print.
21. Goold, Michael, and Andrew Campbell. “Do You Have a Well-Designed Organization?”
Harvard Business Review 80 (March 2002): 117. Print.
22. Blenko, Marcia W., Michael C. Mankins, and Paul Rogers. “The Decision-Driven Organization.” Harvard Business Review 88.6 (2010): 54–62. Business Source Complete, EBSCO. Web. 16 Aug. 2011.
23. Neilson, Gary L., Karla L. Martin, and Elizabeth Powers. “The Secrets to Successful Strategy Execution.” Harvard Business Review 86.6 (2008): 60–70. Business Source Complete, EBSCO. Web. 16 Aug. 2011.
24. Schlender, Brent. “The New Soul of a Wealth Machine.” Fortune 149 (April 5, 2004):
102–107. Print.
25. Garvin, David A. “The Processes of Organization and Management.” Sloan Management Review 39 (Summer 1998): 33–50. Print.
26. Stewart, Thomas A. “Making Decisions in Real Time.” Fortune 142 (June 26, 2000):
332–334. Print.
27. Harrington, Ann. “Who’s Afraid of a New Product?” Fortune 148 (November 10, 2003):
189–190. Print.
28. Galbraith, Jay B. Designing Organizations: An Executive Briefing on Strategy, Structure, and Process. San Francisco: Jossey-Bass Publishers, 2001. chapters 4 and 5. Print.
183 S u m m a r y
29. For further details, see the Harvard Business School case series, Disney’s “The Lion King”
(A), (B) and (C), by Cate Reavis under the direction of Carin-Isabel Knoop and Professor Jeffery Rayport. 1998. Case numbers N9-899-041,-042 and -043.
30. King Jr., R.T. “Levi’s Factory Workers Are Assigned to Teams, and Morale Takes a Hit.”
Wall Street Journal [New York], Wednesday, May 20, 1998: 1. Print.
31. Pfeffer, Jeffery. “Six Dangerous Myths About Pay.” Harvard Business Review 76 (May–
June 1998): 108–119. Print.
32. Dowd, Jim, and Mary Schweinsberg. “Quest Core Values” (A) and (B), IMD case GM 648-649, 1997.
33. Garvin, D.A. “Leveraging Processes for Strategic Advantage.” Harvard Business Review 73 (September–October 1995): 83. Print.
34. Tichy, N.M., and R. Charan. “The CEO As Coach: An Interview With Allied Signal’s Lawrence A.Bossidy.” Harvard Business Review 73 (March–April 1995): 68–80. Print.
Finally, you may be thinking, after all this analysis, it is time to make a strategic choice.
Indeed, you may be in the happy position of having a very attractive strategic proposal to move forward with, or even several good possibilities from which to choose. This is typi-cally the situation in classroom case analysis, for example, where the discussion focuses on making a particular strategic choice at a particular point in time. Fair enough, for strategy decisions in business sometimes come to such a definitive point as well.
On the other hand, you may have ended up with one or more uncertain propositions and you are faced with trying to decide whether you are ready to go ahead with a major commitment, or perhaps with a trial step, or even to recycle and refocus your analysis to see if you and your management team can come up with some better options. This is quite often the case in business practice and it leads to strategy being formulated and imple-mented in an ongoing process as compared to a one-time analytic master stroke. There are still strategic decisions being made, but they are being made in steps, over time, and they consider developing conditions such as the clarity and urgency of the situation, the readi-ness of the organization, and the capacity of the management team to implement change.
Thus, in this chapter, we begin the discussion of strategic choice by describing the dynamics of strategy formulation over time. We conclude that, whatever the process and dynamics, there are points of time at which considered strategic choice is essential. These junctures are the focus of our attention.