As an organization design consultant, people often ask, “So what, exactly do you do?” I reply by explaining organization design and strategic integration. Once I’ve done that, if the person is a business leader they almost inevitably ask, “So Ken, I have my company vision. Now what?”
Is Your Vision Valid?
While they don’t always say they have their vision, they do often say they have their strategy in place. Either way, it’s a very good question—but the answer is not usually so clearly defined. They are hoping to hear about strategy implementation. Instead, we begin here:
- Just because you have your vision does not mean you have a strategy.
- Just because you have a strategy doesn’t mean your strategy is aligned with your organization’s best interests.
Having a deficient strategy does not by any means mean that an organization’s leaders are not qualified or capable. It’s not always obvious when a company doesn’t have an aligned strategy, or even when they don’t have a strategy at all. It can happen even to the largest, most successful organizations, and to very experienced leaders, as we will see shortly.
Will Your Strategy Stand the Test of Time?
One of the things we do at AlignOrg Solutions is strategy validation. We make sure that a company’s strategy is, in fact, a strategy, and not a diversion. We have tools that we use to work through a strategy to ensure that if and when it is implemented, it will actually be relevant and stand the test of the market and industry.
Not long ago, one of country’s leading financial institutions brought us in to help them implement their strategy into their organization design. They already had a defined vision and strategy, which they asked us to review before working on the implementation. Within the first two hours we realized that their strategy was not sound, for three reasons:
- It did not have significant differentiating capabilities,
- It was highly vulnerable to their competition, and
- Apart from their direct competition, there were other players in their space—including Amazon—that were already doing what their long term strategy was planning to create.
I sat down with the CEO and said, “Amazon is not playing in your space right now, but if they decided to tomorrow could they flip a switch and start competing relatively competently?”
He nodded his head a bit and said, “Unfortunately, yes.”
So I asked, “Is your space pretty profitable, sir?”
“Yes, very profitable,” he replied.
“Then what makes you think Amazon or other capable competitors are not going to jump into your space in the next year? Because financially it would be very beneficial for them to do so.”
And he said, “I apologize, but I think we need to stop right where we are and change our schedule. Can we spend the next day with your team and start redefining our strategy?”
Instead of doing strategy integration, we worked with them to rebuild their entire strategic design. Using specific tools and processes to validate and put it to the test, we changed and redefined the strategy and found that their core competencies are actually much different than what they had imagined. They ended up with something completely different, a strategy that had a true, unique differentiating capability.
When Vision and Strategy Fall Short
It’s far more common than you might think, even in very large companies, for leaders to think they have their vision and/or their strategy defined, yet be unable to define their organic blend of differentiating capabilities, core competencies or strategic positioning. As organization design consultants, we always want to make sure a company is differentiated before moving ahead and implementing strategy into organization design.
An organization’s mix of differentiating capabilities and where they position these capabilities are what make them unique and ensure they win in the marketplace. Understanding what a company’s differentiating capabilities are, and what enabling activities support those differentiating capabilities, is one of the building blocks of a true strategy. However, these capabilities aren’t always obvious from the get go. They must be defined, developed, and sometimes even reinvented. For example, a company that is unique in its industry for having customer and technical support far above and beyond that of its competitors might not have recognized that capability as more differentiating even than its product line. In this case, the company’s strategy has been focused on product development while overlooking the great potential of a strategy focused on customer support. This kind of thought process is very often lacking in companies’ vision and/or strategy statements.
The Foundations of Good Strategy
When we work with organizations to develop strategy, we spend a lot of time thinking about these concepts. At this stage, the organizational cube is an invaluable tool. We take an organization through the six sides of the cube (work process, structure and governance, information and metrics, etc.) and determine where the differentiating capabilities are for that organization. Only once we’ve defined and validated the organization’s mix of true differentiating capabilities and strategic positioning do we begin the organization design process.
Will Your Strategy Support Success?
Organization design authority Michael Porter once said, “Strategy is making broad directional resources choices, it is creating a unique position in the marketplace through a mix of activities, it’s creating a fit integration among these activities resulting in competitive sustainability.”
So, you have your vision, or your strategy. But do you really? Without identifying your organization’s differentiating capabilities and core competencies, your strategy might be nothing more than a diversion. Once you have truly identified your strategy or vision and are ready to build the six sides of your organization around it, you will have the foundation for a winning organizational design.
