Strategic Challenges.

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”     –Michael Porter

In todays organizations change is necessary if you want to succeed in a tough world. However, we don’t like to change things and feel most comfortable when we are staying in the comfort zone. Leaders are aware of this problem and are prepared to cope with these challenges.

“Habits keep us doing what we always do. We resist being pushed in new directions that make no sense to us. We cling tenaciously to what we value and fear might be lost. To behave otherwise is somehow less than human”. (John P. Kotter)

From his book; ‘Accelerate’, John P. Kotter reveals how the best companies focus and align their people’s energy and urgency around what Kotter calls the Big Opportunity.

An organizations strategy is important for the business. A company’s strategy describes what to do to reach their goal and what choices to be made on it’s way.

Kotter; “Strategy is a term used loosely to mean high-level policies designed to help you successfully achieve your most important goals, or, in a competitive context, to help you win”.

Hierarchies is a challenge in organizations and if used wrong, creativity and innovation will be a challenge. Kotter; “Hierarchies with great management processes and good leaders on top are not built for leaping into a creative future. Innovation requires risks, people who are willing to think outside their boxes, perspectives from multiple silos, and more. Management-driven hierarchies are built to minimize risk and keep people in their boxes and silos. To change this more than incrementally is to fight a losing battle”.

Kotter present the dual operating system. The basic structure is self-explanatory with hierarchy on one side and network on the other side. Kotter explain; “The hierarchy part of the dual operating system differs from almost every other hierarchy today in one very important way. Much of the work ordinarily assigned to it that demands innovation, agility, difficult change, and big strategic initiatives executed quickly – challenges dumped on work streams, tiger teams, or strategy departments – has been shifted over to the network part”.

Here the author makes us aware that this system losen up and is better able to perform what it is meant to be and designed for. Because of the losing up effect you will be doing your job great as well as making incremental changes to then improve further efficiency, and because of this you are handling the strategic initiatives which also helps the company dealing with predictable adjustments like routine IT uppgrades.

The principles of a dual operating system:

-Many people driving important change, and from everywhere, not just the usual  few appointees. Kotter makes us aware that it all starts here. For more speed and agility to occure, a fundamentally different way of gathering information and decision making is needed as well as implementing decisions which have some strategic significance. Kotter; “You need more eyes to see, more brains to think, and more legs to act in order to accelerate. You need additional people with open mind and new eyes and additional good working relationships with others in order to be creative and innovate, from the insiders”.

-A “get-to” mindset, not a “have-to” one. Force is not an option if you want to achieve change. Inspiration is a better solution, and by giving people a choice where they feel they truly have permission to step forward and act is a better way. Kotter; “The desire to work with others for an important and exciting shared purpose, and the realistic possibility of doing so, are the key”.

-Action that is head and heart driven, not just head driven. People have feelings. Kotter; “You must also appeal to how people feel. As have all the great leaders throughout history, you must speak to the genuine and fundamental human desire to contribute to some bigger cause, to take a community or an organization into a better future”.

-Much more leadership, not just more management. In this system, the author talks about competent management. Leadership is needed as well as the guts of the engine are managerial processes. Kotter; “Yet in order to capitalize on unpredictable windows of opportunity which might open and close quickly, and to somehow spot and avoid unpredictable threats, the name of the game is leadership, and not from one larger-than -life executive”. The game is about vision, creativity, passion, inspiration, innovation, agility, opportunity, celebration, relationships, compensation and accountability to a plan.

-An inseparable partnership between the hierarchy and the network, not just an enhanced hierarchy. Kotter; “The two systems, network and hierarchy, work as one, with constant flow of information and activity between them-an approach that succeeds in part because the people essentially volunteering to work in the network already have jobs within the hierarchy”. Kotter, shows us that based on these principles, a dual system is different from that on the hierarchy side when it comes to the action. Kotter; “Because action within networks accelerates activity, especially strategically relevant activity, I call it’s basic processes the Accelerators“.

Kotter’s eight accelerators: 1) Create a sense of urgency around a big opportunity, 2) Build and evolve a guiding coallition, 3) Form a change vision and strategic initiatives, 4) Enlist a volunteer army, 5) Enable action by removing barriers, 6) Generate (and celebrate) short-term wins, 7) Sustain acceleration and number, 8) Institute change.

Let us take a closer look at Kotter’s accelerators:

1- Create a sense of urgency around a big opportunity. This accelerator is focused on creating as well as maintaining a strong sense of urgency among as many people as possible around a Big Opportunity an organization is facing. Kotter; “This is, in many ways, the secret sauce which allows behaviour to happen that many who have grown up in mature organizations would think impossible”.

2- Build and evolve a guiding coalition. In this accelerator, the urgency is to build the core of the network structure, which will evolve to take form into a stronger network later. People are eager and motivated from across the organization and they feel the urgency. Kotter; “These are individuals from all silos and levels who want to help you take on strategic challenges, deal with hyper-competitiveness, and win the Big Opportunity”. In this situation we can see people who want to lead as well as to be change agents. People are eager to work together in team and learn how to work effectively. People from different levels of silos gives effort to work well together. Kotter; “But under the right conditions – with urgency around a Big Opportunity as a crucial component – they will learn how to work together in a totally new way”.

3- Form a change vision and strategic initiatives. Here the guiding coalition clarifies the vision which fits a big strategic opportunity together with selecting strategic initiatives which moves you in the right direction toward the companies vision. Kotter; “When you first form a dual system, much of this, especially the initiatives, may already exist, created by the hierarchy’s leadership team. But the initiatives the nascent network side attacks first will be those that individuals in the guiding coalition have great passion to work on”.

4- Enlist a volunteer army. In the fourth accelerator, the author makes us aware that the guiding coalition together with others who wish to help and communicate information about the change vision and the strategic initiatives to the company, may lead to large numbers of people who are interested in buying into the whole flow of action.

5- Enable action by removing barriers. Kotter; “Much of the action here has to do with identifying and removing barriers which slow or stop strategically important activity”.

6- Generate (and celebrate) short-term wins. Kotter; “The sixth accelerator is about everyone on the network side helping to create an ongoing flow of strategically relevant wins, both big and very small”. The author say that the wins are possible for all the people in the entire organization and the importance of celebrating even if it is in small ways. Kotter; “These wins, and their celebration, can carry great psychological power and play a crucial role in building and sustaining a dual system”.

7- Sustain acceleration. In this stage, accelerator 7 keeps the entire system moving. All the energy is focused on new opportunities and challenges and the people find a motor to help all the other. Kotter; “Accelerators keep going, as needed, like spark plugs and cylinders in a car’s engine. It is the opposite of a one-and-done approach and mindset”.

8- Institute change. Accelerator 8 helps institutionalize the wins as well as integrating the wins into the hierarchy’s processes, procedures, systems, and behavior- in effect, here you are also helping to infuse the changes into the culture of the organization. Kotter; “When this happens with more and more changes, there is a cumulative effect. After a few years, such action drives the whole dual system approach into an organization’s very DNA”.

From this article; The Greatest Barriers to Growth, According to Executives (Harvard Business Review, by Chris Zook) the author tells us that the greatest barriers in organizations lies inside their own four walls. Zook; “It’s a common story in business today. Eighty-five percent of executives say that the greatest barriers to achieving their growth objectives lie inside their own four walls, according to research by Bain & Company. In the largest companies, this rises to 94 percent of executives who believe that their most difficult challenges are internal, not external”.

Zook describes five ways that bureaucracy distorts behavior in your organization; The first one is, distortion of speed:  Zook; “Young, founder-led companies often set the speed in their competitive arenas-speed to recognize the need to change, interpret how, decide on what, and react. Young insurgents whose speed allows them to get ‘inside’ of the decision cycle of a large, slow incumbent competitor can reap an enormous advantage”.

Distortion of motive: Tells us that young organizations has no place to hide and in this situation the founder knows everything. Zook makes us aware that the meritocracy may flourish when things are transparent. Zook; “Yet, as companies grow, promotions fall in line with corporate processes, complex ‘balanced’ scorecards of performance, and regression to the mean”.

Distortion of time: The author is in this case talking about the executives self-awareness. Here the management teams need to look into the use of their time as well as the use of their money which they have to be very careful about. In this case you can start with three questions: How much time do they spend with top customers?  How much time do they spend with high potential employees?  How much time do they spend on solving the firm’s top five challenges? Zook say that if they honestly ask these questions themselves, you will soon see the first step to take.

Distortion of decisions: The author suggests to start your assault on the decision distortions of bureaucracy with your five or ten most important types of decisions. Zook; “Map out how they are really made and how many people are involved. Then attack what will emerge clearly as obvious root causes of distortion: decisions that should be pushed to the front line with a few vital guiding principles, decisions that should have many fewer people involved, and decisions where it’s unclear who actually decides”.

Distortion of information: Zook illustrates that the information is better remembered in small companies as well as the intimacy and ground knowledge are second nature. “Yet, as companies grow this becomes increasingly difficult”. More thoughts from Zook; “But there are other, simpler ways to renew this aspect of a founder’s mentality and its connection to the front line. We have seen management teams benefit greatly from setting up ways for them to ‘drop in’ on customer calls, or call-centre service discussions.

“Difficulties mastered are opportunities won”    –Winston Churchill

Strategic challenges are important for companies to succeed.

Inger Lise E. Greger, MSc. Change Management