The 10 Principles of Organizational DNA
Anyone
who’s celebrated a significant work anniversary knows just how a
company can change over the years—who has a seat at the table,
what customers expect, the most coveted skills. But there’s just
as much that stays the same: what your brand stands for, the shared
lexicon, your unique culture. We use the term organizational
DNA as
a metaphor for the underlying organizational and cultural design
factors that define an organization’s personality and determine
whether it is strong or weak in executing strategy.
This
year marks the 10th anniversary of our work on organizational DNA.
Since 2004, we’ve analyzed more
than 220,000 online surveys
in which people describe their company’s personality and
performance. Amid the turbulence of changing business environments
and personnel, 10 precepts have remained useful, for empowering
people and unlocking any organization’s potential.
1.
There
are only a few organizational personality types. Every
company may seem unique, but in their enterprise-wide behavior, they
fall into just seven behavioral patterns (in order from the least to
most effective at execution): passive-aggressive, overmanaged,
outgrown, fits-and-starts, just-in-time, military-precision, and
resilient. People who take our online survey continue to identify
their company as one of these archetypes, regardless of industry and
geography. That means that, no matter how pernicious a performance
problem may seem, other companies have undoubtedly faced it before
—and some have prevailed, often by changing their organizational
personality.
2.
Companies
are mosaics of personalities. Most
companies contain a mix of personalities—having two or three, or
more business units that fall under different archetypes. This is
especially true of companies that have made major acquisitions. For
example, a 20-year-old technology powerhouse might be a resilient
organization. But its newly acquired health-tech division matches
the fits-and-starts profile, characterized by smart entrepreneurial
talent but a lack of collective discipline.
3.
Weak
execution is prevalent. The
connection between the organization’s personality type and how
well the organization executes on strategy is always strong. When we
analyzed our most recent data set (more than 20,000 respondents), we
discovered that a whopping 48 percent fit a profile distinguished by
weak execution. And 11 percent fit into the most vexing of those
profiles: the passive-aggressive organization, in which people pay
lip service to results but consistently undermine the necessary
efforts.
4.
Strong
execution is not self-sustaining. The
52 percent of respondents with a strong-execution archetype can’t
afford to be complacent. In our experience, even a company with the
most desirable profile, the resilient organization, must continually
work to stay at the top of its game. For example, its leaders should
relentlessly seek feedback from those closest to the market,
encouraging and acting on criticism from customers and front-line
employees, and taking action to address minor issues before they
become bigger problems.
5.
Performance
is based on interdependent factors. Your
organization’s DNA is made up of four pairs of building blocks:
decision rights and norms, motivators and commitments, information
and mind-sets, and structure and networks. The way that the building
blocks combine determines your company’s aptitude for execution.
It is crucial, then, for companies that want to improve their
execution to consider the building blocks as a whole and not
individually.
6.
The
org chart isn’t the solution. Many
company leaders fall into a common trap: They think that changing
their organization’s structure will solve their problems. They may
remove significant management layers and temporarily reduce costs
that way—but all too soon, the layers creep back in and the
short-term efficiencies disappear. We see structure as the capstone,
not the cornerstone. It’s better to change other formal elements
first, like decision rights, motivators, and information flows, and
then figure out the structural changes needed to support the
revitalized company.
7.
Intangibles
matter. Those
formal organizational DNA elements are attractive to companies
because they’re tangible. They can be easily defined and measured.
But they’re only half the story. Companies often realize this
after they’ve made significant changes—reassigned decision
rights, reworked the org chart, established new incentives, or set
up knowledge-sharing systems—yet don’t see the results they
expect. That’s because they ignored the informal, intangible
elements. These include norms (what people think is the right way to
behave), commitments (the promises people feel motivated to keep)
mind-sets (deeply held attitudes and beliefs), and networks
(connections among employees outside the formal structure). They add
up to influence the ways people think, feel, communicate, and
behave. Until you learn to influence these factors, your efforts to
build performance will bunbalanced.
8.
Decision
rights and information flows deliver.
Decision rights and information traits are twice as powerful as
structure and motivators in driving organizational effectiveness. We
analyzed dozens of strong-execution companies and discovered that
information had the strongest correlation to execution, at 54
percent, and decision rights correlated at 50 percent. Structure
came in at 25 percent. That may be why we see more and more
companies making smart use of digital information technology to
differentiate themselves. But these changes can also be low-tech.
One company boosted its performance by setting up regular meetings
to ensure that people at the top and the bottom of the hierarchy
were regularly talking together, and information flowed more
effectively among them.
9. Informal factors change when you focus on what works. The best approach for improving intangibles like norms and commitments is to use them as a force for transformation. So, instead of trying to change the culture of your company, use your intangible strengths to help improve it. Suppose your company is losing customers despite having a deep commitment to customer service. By focusing attention on a few powerful and positive behaviors, you can draw out that commitment and boost customer retention rates.
9. Informal factors change when you focus on what works. The best approach for improving intangibles like norms and commitments is to use them as a force for transformation. So, instead of trying to change the culture of your company, use your intangible strengths to help improve it. Suppose your company is losing customers despite having a deep commitment to customer service. By focusing attention on a few powerful and positive behaviors, you can draw out that commitment and boost customer retention rates.
10.
High
performance can’t be isolated. Rarely
do departments or business units work in isolation. Changes are more
likely to last when they’re made holistically, across a company or
division. Manufacturing needs to know what sales intends to sell,
and sales, in turn, needs to know what marketing will promote. The
more connectivity among different groups or functions, the more
effective they can become.
http://www.strategy-business.com/blog/The-10-Principles-of-Organizational-DNA?gko=c5b42
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