Article Review: “How to Implement a New Strategy Without Disrupting Your Organization”

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Every business is a living organism, necessitating adaptations in order to thrive under current conditions, and new organizational forms are the rapidly multiplying mushrooms that populate the business landscape. Too often, however, the new organizational structure creates a fresh host of problems, often worse than the ones they were intended to solve. Kaplan and Norton (2006), in this article, raise the question: Is a complete structural organization always the best way to achieve the desired change? For example, a company that markets “custom jeans” would be hard-pressed to create each pair of jeans from raw fabric for each client; it would be too time-, labor-, and money-intensive. Rather, they would use a basic template, and allow customers to select a few options—high or low rise, boot or straight cut, narrow throughout or with curves built-in. Similarly, when facing a new organizational strategy for one’s particular company, re-inventing the wheel is both expensive and time-intensive, and the product is a question mark: Will this new structure even work? Like their cohorts in the clothing world, companies should perfect the art of “tweaking the template,” by developing a strategic system that will seamlessly integrate the structures.

Kaplan and Norton (2006) do not believe that total organizational change is necessarily the right tool to unlock value in an organization, citing the time and money invested in a total structural change for middling to poor results. They propose a new way of looking at structural change that mirrors the jeans example given above: while companies have been investing time and money into creating a structure that is the best fit for their strategy, Kaplan and Norton (2006) have seen far more effectiveness when companies first choose a structure that works (the template in the jeans example), then customize a strategic system that will integrate that system with the pre-existing structure, or template. By maintaining some of the trappings of the previous structure, Kaplan and Norton suggest companies can cut down on retraining time for employees, eliminate or temper the cost of having to replace IT systems, buildings, etc., and perhaps even salvage one of the most important resources of all—tacit knowledge, lost when “disaffected employees” move to other jobs or other companies.

To prove their point, Kaplan and Norton (2006) examine two vastly different organizations—the DuPont Engineering Polymers and the Royal Canadian Mounted Police—with decentralized units needing more cohesion with the corporation. Rather than seeking to implement a structural change achieved by redrawing hierarchies, sliding the same old beads along the same abacus hoping for a moment of synergy, these organizations chose to use the balanced scorecard strategy management system, integrating this system into the needs of their organization, tailoring it to fit.

Of course, in order to achieve the desired result, choosing the system that is the right fit is of paramount importance. Management systems often tend to focus on the financial, but Kaplan and Norton (2006) caution that this is short-term and narrow thinking. Over the past two decades, Total Quality Management emerged, to broaden what the system addressed, but these systems still focused merely on the tactical and operational. Kaplan and Norton (2006) are proponents of the balanced scorecard framework as a way to bring strategy into the system. The balanced scorecard system is a strategy map, as well as a way to create a common language for assembling information and creating an action plan based on the information presented in the balanced scorecard. Essentially, this is a three-column chart with the goal (“strategy map”), the numbers/important phrases pertaining to the goal, such as measures and targets (“balanced scorecard”), and then the initiative to get to the goal (“action plan”). This basic template lends itself to countless morphs that can change based on each company’s overall goals.

For example, DuPont’s strategy map has five key themes, modeled as a vertical chain of four cause-and-effect relationships, and several areas where recursive arrows point to the interrelated aspect of some theme. Having the company’s most key objectives codified, organized, and displayed, using a common language, led to productive discussion and dialogue among major stakeholders that sprang from shared understanding and helped them articulate their overall goals. At the RCMP, on the other hand, the group had a clearly articulated vision—“safe homes, safe communities”—yet struggled with the logistics of applying that mission statement across a large landmass using limited resources. Using the balanced scorecard approach, the RCMP was able to break the vague promise of its mission into specific, actionable statements. In coming up with specific action plans to address these statements, cross-departmental conversation was enabled among previously isolated units. Over the time of the initiative, Canadians’ perceived satisfaction with the RCMP rose significantly. The power of articulating themes, then designing specific actionable steps to address those themes, is a new tool that companies should consider before turning their old headquarters space into a Starbucks.

Reference

Kaplan, R. S. and Norton, D. P. (2006, March). How to implement a new strategy without disrupting your organization. Harvard Business Review.