Who Can Benefit
• Customers who want a clear value proposition that aligns to their needs
• Shareholders who want sustainable, profitable growth
• Executives who want both a systemic (holistic) and a systematic (linear) approach to strategy and actions
• Leaders of Business Units, Regions or Functions who want to create an aligned, high-performing enterprise
• Employees who are waiting for clear, authentic direction. Choices lead to engagement and execution
What You will Learn
• The importance of choosing
• Models for making clear choices
• Methods for understanding the connections between choices
• The power of winning aspirations
• The importance of customer segmentations and insights
• How to create a competitive advantage
• Methods for deciding on the right value propositions
• How to select the right criteria to design your organization
• The power of business models
• How to categorize work to create maximum efficiency and effectiveness
• How to choose the right structure for your organization
• How to create processes and linkages that cut across structure
• Methods to align recognition and rewards with strategic choices
• How to align talent management to your strategic choices
The Central Goal
Sustainable
ProfitableGrowth
Strategy must create both sustainability and scalability
You Already Know What Does NOT Work
Chasing the individual components of strategy does not work.
Unfocused, reactive behavior wastes resources and discourages employees
Beware the Simple Solution
“For every complex problem there is an answer that is clear, simple…and wrong.”
There are no silver bullets
H. L. MenckenWriter, Editor, Satirist
Lead From the System Level
Copying a best practice from another company doesn’t work. What you need is a best system.
- Dave UlrichAuthor, Speaker
Sustainable, profitable growth requires sustained effort at the system level
Here’s What Works
Strategy is the process of choosing what NOT to do
“Strategy is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.“
- A. G. LafleyFormer P&G CEO
Strategic Choices
Strategy is a series of integrated choices
Five Strategic Choices
1. Who are we and how do we create differentiated value for our target customers?
2. What unique capabilities and activities create value? How do we best organize to deliver value to our customers?
3. How will we create alignment through processes and linkages that cut across the structure?
4. How will we align recognition and rewards to our strategic choices?
5. What people-processes must we create to support our strategic choices?
How to Choose
As leaders, we have an unlimited number of options from which to choose.
How do you know which choices are right?
With so many choices, how will you choose?
Why We Need Models
• Models provide a framework for decision-making – we begin by deciding how we will decide.
• Models create common language for the choices to be made.
• Models align decisions with strategy – all choices cascade from one another, starting with the strategy.
• Models balance the natural tension between alignment and flexibility.
• Once decisions are made, models provide criteria to evaluate outcomes, understand root causes and make adjustments.
Star Model
Organization Design Criteria
Structure
Process
People
Rewards
Strategy influences how to make trade-offs between various organizational options
Structure determines the placement of authority in the organization
Processes cut across an organization’s structure and determine it’s functioning. Vertical processes allocate scarce resources while lateral processes enable effective work flow
Rewards align the goals of Team Members and managers with organizational goals. Rewards must be congruent with structure and processes to implement strategy effectively
People processes produce the talent that is required by the strategy and structure of the organization
Source: Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges by Amy Kates and Jay R. Galbraith
Strategy
Strategy is a Series of Choices
How will we win?
How will we win?
What management systems are required?
What management systems are required?
What is our winning
aspiration?
What is our winning
aspiration?
What capabilities must be in
place ?
What capabilities must be in
place ?
Where will we play?
Where will we play?
The right playing field: Where we will compete: our geographies,
product categories, consumer segments, channels and vertical stages of production.
The unique right to win: Our value proposition Our competitive advantage
The support systems: Systems, structures and measures
required to support our choices
The set of capabilities require to win: Our reinforcing activities Our specific configuration
The purposeof the enterprise: Our guiding
aspirations
Source: Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin
Project Overview
Fact-based Analysis
• Strategic Alignment• Five Forces• External Scan• Internal Scan• Interviews• Gap Analysis• Business Implications• Current Work• SWOT Analysis• Key Issues
Design Decisions and Metrics
StrategiesKey Initiatives,
Programs / Projects
• Discovery Workshop• Purpose / Vision• Goals• Business Model
Definition• Activities• Processes
• Same Store Sales• Net Revenue• Net Promoter Score• Employee
Engagement & Retention
• Number of ready-now leaders
Metrics
2. Strategy 2
2.1
2.3
2.2
3. Strategy 3
3.1
3.2
3.3
1. Strategy 1
1.1
1.2
1.3
Discover Design Deploy
Impl
icat
ions
Develop
Discovery: Gather Data
Before we can make data-driven decisions, we need…
data!
Discover Phase
External Environmenta
l Scan
• Porter’s Five Competitive Forces
• Current State Stakeholder Analysis of Shareholders, Customers, Regulators and Communities in which we work
Outcome Analysis
• Desired Stakeholder outcomes for Shareholders, Leaders, Customers, Employees and Communities
• Desired Metrics• Gap Analysis
between Current Metrics and Desired Metrics
Discover
Internal Environmenta
l Scan
• SWOT Analysis• Current State
Stakeholder Analysis of Leaders and Employees
• Leadership Interviews
• Current Strategy• Assessment of
Integration, Complexity and Customer-Centric
• Current Business Model
• Current Capabilities, Activities and Processes
• Current MetricsRequirementsResults
Porter’s Five Competitive Forces
Industry Rivalry
Buyers(Buying Power)
Substitutes
(Threat of Substitutes)
Potential Entrants(Threat of Mobility)
Suppliers(Supplier Power)
Bargaining power of suppliers:• Supplier concentration• Availability of substitute inputs• Importance of supplier’s input to buyer• Supplier’s product differentiation• Importance of industry to suppliers• Buyer’s switching cost to other input• Suppliers’ threat of forward integration
Rivalry among existing competitors:• Number of competitors (concentration)• Relative size of competitors (balance)• Industry growth rate• Fixed cost vs. variable cost• Product differentiation• Diversity of competitors
Threat of substitute products or services:• Relative price of substitute• Relative quality of substitute• Switching cost to the buyer
Bargaining power of buyers:• Number of buyers relative to sellers• Product differentiation• Switching costs• Buyer’s profit margins• Buyer’s use of multiple sources• Buyer’s threat of backwards integration• Importance of the product to the buyer• Buyer’s volume
Threat of new entrants:• Barriers to entry:
• Economies of scale• Product differentiation• Capital requirements• Switching cost to buyers• Access to distribution channel• Government policies
• Incumbent’s defense of market share• Industry growth rate
Source: Competitive Advantage by Michael Porter
Project Overview
Fact-based Analysis
• Strategic Alignment• Five Forces• External Scan• Internal Scan• Interviews• Gap Analysis• Business Implications• Current Work• SWOT Analysis• Key Issues
Design Decisions and Metrics
StrategiesKey Initiatives,
Programs / Projects
• Discovery Workshop• Purpose / Vision• Goals• Business Model
Definition• Activities• Processes
• Same Store Sales• Net Revenue• Net Promoter Score• Employee
Engagement & Retention
• Number of ready-now leaders
Metrics
2. Strategy 2
2.1
2.3
2.2
3. Strategy 3
3.1
3.2
3.3
1. Strategy 1
1.1
1.2
1.3
Discover Design Deploy
Impl
icat
ions
Develop
Dis
covery
Design Phase
Strategy
• Strategic Intent, Purpose, Vision & Values
• Where to Play / Target Segments and Customers
• How to Win / Value Proposition / Differentiation Strategy
• Goals• Metrics
Macro Structure
• Business Model
• Org Design Criteria / Required Capabilities
• Management Systems
• Activities and Processes Mapping
• Categorization of Work
• Processes and Lateral Linkage
Micro Structure
• Organizing Structure
• Governance / Decision Rights
• Information Management
• Program Management
• People• Rewards
Design
Choice 1
Who are we and how do we create differentiated value for
our target customers?
Choice #1
Who are we and how do we create differentiated value for our target customers?
Customer Segment
Competitive AdvantageWinning Aspiration
Value Propositions
Start with Our Aspiration
How will we win?
How will we win?
What management systems are required?
What management systems are required?
What is our winning
aspiration?
What is our winning
aspiration?
What capabilities must be in
place ?
What capabilities must be in
place ?
Where will we play?
Where will we play?
The right playing field: Where we will compete: our geographies,
product categories, consumer segments, channels and vertical stages of production.
The unique right to win: Our value proposition Our competitive advantage
The support systems: Systems, structures and measures
required to support our choices
The set of capabilities require to win: Our reinforcing activities Our specific configuration
The purposeof the enterprise: Our guiding
aspirations
Source: Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin
It’s not About the Boxes
If you start strategic design with Org charts, you’re…
…dead meat.
Strategy Flows from a Higher Purpose, Focused on Customer Needs
What is an Aspiration?
Less about us…
Grow our market share in the China medical device market (internally-focused)
Serve superior coffee sourced from the world’s best global production regions (product-centric)
Grow earnings per share by greater than ten percent (performance-centric)
More about the customer…
Alleviate pain, restore health and extend life (Medtronic)
To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time (Starbucks)
Ladies and Gentlemen serving Ladies and Gentlemen (Ritz-Carlton)
Winning Aspirations Begin with the Customer in Mind
The Purpose of an Aspiration
“It is impossible to have a great life unless it is a meaningful life. And it
is very difficult to have a meaningful life without meaningful
work.”
- Jim Collins
Where will we Play?
How will we win?
How will we win?
What management systems are required?
What management systems are required?
What is our winning
aspiration?
What is our winning
aspiration?
What capabilities must be in
place ?
What capabilities must be in
place ?
Where will we play?
Where will we play?
The right playing field: Where we will compete: our geographies,
product categories, consumer segments, channels and vertical stages of production.
The unique right to win: Our value proposition Our competitive advantage
The support systems: Systems, structures and measures
required to support our choices
The set of capabilities require to win: Our reinforcing activities Our specific configuration
The purposeof the enterprise: Our guiding
aspirations
Source: Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin
Sustainable, Profitable Growth
Where will we Play?
CustomerSegmentation
The central goal
Which Segment?Based on research of attitudes,
behaviors and firmographics /demographics of target
customers
Sustainable, Profitable Growth
CustomerSegmentation
The central goal
• Geography• Product Category• Channel• Vertical/horizontal
in the value chain
Which Segment?Based on research of attitudes,
behaviors and firmographics /demographics of target
customers
Where will we Play?
How will we Win?
How will we win?
How will we win?
What management systems are required?
What management systems are required?
What is our winning
aspiration?
What is our winning
aspiration?
What capabilities must be in
place ?
What capabilities must be in
place ?
Where will we play?
Where will we play?
The right playing field: Where we will compete: our geographies,
product categories, consumer segments, channels and vertical stages of production.
The unique right to win: Our value proposition Our competitive advantage
The support systems: Systems, structures and measures
required to support our choices
The set of capabilities require to win: Our reinforcing activities Our specific configuration
The purposeof the enterprise: Our guiding
aspirations
Source: Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin
Value
Benefits - Cost = Value
Competitive Advantage
Valu
e
Cost
Marg
in
Valu
e
Cost
Marg
in
Valu
e
Cost
Marg
in
Value
Cost
Margin
Average Competitor Cost Leader Differentiator
To be Sustainable, You Must Choose Between Cost Leadership or Differentiation
Four Competitive Strategies
Overall Low-Cost Provider
Broad Differentiator
Focused Low-Cost Provider
Focused Differentiator
Competitive AdvantageM
ark
et
Covera
ge
Cost Leader DifferentiatorLi
mit
ed R
ange o
fM
ark
et
Sect
ors
Bro
ad R
ange o
fM
ark
et
Sect
ors
Source: Essentials of Strategic Management by John Gamble and Arthur Thompson Jr.
Sustainable, Profitable Growth
CompetitiveAdvantage
CustomerSegment
The central goal
Type of advantage
Low cost Differentiated
Bro
ad
Nar
rowS
cop
e o
fad
van
tag
e
How will we Win?
• Geography• Product Category• Channel• Vertical/horizontal
in the value chain
Which Segment?Based on research of attitudes,
behaviors and firmographics /demographics of target
customers
Sources of Advantage
How The Firm WinsHow The Firm WinsCost Cost
DifferentiationDifferentiation
Cost Scale Learning Linkages Pattern of capacity
utilization
Integration Timing Policies
Differentiation Product features andperformance
Services provided Intensity of an activity Content of an activity Technology employed Information employed Process Training and employee
skill
Linkages Timing Location Learning Interrelationships Integration Scale Institutional factors Branding
Source: Competitive Advantage by Michael Porter
A Value Proposition is…
EITHERA statement that summarizes why a customer should buy a product or use a service. It describes what we stand for relative to the benefits sought by the customer. It is the answer to the customer’s question “why should I buy from you?”
ORA differentiated bundle of products and/or services that create value for target customers.
The Results of Choice #1
• Your Winning Aspiration
• Customer Segments with Research-Based Insights
• A Competitive Advantage
• Value Propositions
Who are we and how do we create differentiated value for our target customers?
Choice 2
What unique capabilities and activities create value? How
do we best organize to deliver value to our customers?
Choice #2
What unique capabilities and activities create value? How do we best organize to deliver value to our customers?
Structure
Categorization of WorkOrganizational Capabilities /
Design Criteria
Business Model
Capabilities
How will we win?
How will we win?
What management systems are required?
What management systems are required?
What is our winning
aspiration?
What is our winning
aspiration?
What capabilities must be in
place ?
What capabilities must be in
place ?
Where will we play?
Where will we play?
The right playing field: Where we will compete: our geographies,
product categories, consumer segments, channels and vertical stages of production.
The unique right to win: Our value proposition Our competitive advantage
The support systems: Systems, structures and measures
required to support our choices
The set of capabilities require to win: Our reinforcing activities Our specific configuration
The purposeof the enterprise: Our guiding
aspirations
Source: Playing to Win: How Strategy Really Works, A.G. Lafley and Roger L. Martin
Capabilities are NOT Competencies
CAPABILITIES ≠ COMPETENCIES
Capabilities belong to organizations
Competencies belong to individuals
The Context of Organizational Capabilities
Target Customers
Who, specifically is our target customer and what benefits do they seek?
Competitive Advantage
How do we differentiate ourselves in the eyes of our target customers?
Value Proposition / Offerings
What do we / can we offer benefits that our target customers value?
Capabilities
In order to deliver value, what specifically do we have to be good at – better than our competition?
What are Organizational Capabilities?
Capabilities are integrated processes, systems, and abilities. In order to be differentiating, they must be unique to your company and difficult to replicate. They are created by an organization (never sourced). Differentiating capabilities are developed, perfected and protected within the company.
If a capability is not unique, is easily copied or can be bought in the marketplace, then it is not differentiating. A Primary Value-Add of HR is the Creation of Corporate Capabilities
“How to Win” Decisions Create Different Capability Requirements
Different Competitive Strategies Drive Different Capability Requirements
Which capabilities
are important
to your company
depends on your
differentiation strategy.
Star Model
Organization Design Criteria
Structure
Process
People
Rewards
Strategy
Organization Design Criteria
Organization Design Criteria
• Strategy drives organizational choices• Strategic Choices become capability requirements• The unique capabilities required to execute against
our differentiation strategy determines the design of the organization
Strategy
Organizational Capabilities = Design Criteria
Guidelines: Writing Good Design Criteria
Guideline Poor Criteria . . . Better Criteria . . .
1. Specific: not too broad, measurable
Make the best products
Design products that meet the needs of our target accounts
2. Differentiating: not simply table stakes
Use technology effectively
Create technology solutions that support our clients in servicing their customers
3. Actionable: start with a verb Be a good organization to work for
Build a reputation as a good community citizen in our key communities
4. Future oriented: aspirational Reduce costOperate state-of-the art, cost-effective customer service centers
5. About Capability: not activity Select the best people Create a leadership pipeline
to support global growth
Source: Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges by Amy Kates and Jay R. Galbraith
Capabilities Define Competitive Activities
Target Customers
Who, specifically is our target customer and what benefits do they seek?
Competitive Advantage
How do we differentiate ourselves in the eyes of our target customers?
Value Proposition / Offerings
What do we / can we offer benefits that our target customers value?
Capabilities
In order to deliver value, what specifically do we have to be good at – better than our competition?
Activities
Categorization of Work
• No company can (or should) be world-class at everything. It is important to be most effective at work that differentiates the company.
• Not all work is equal. While work may be essential, not all work directly creates differentiated value for the target customers
• Work can be categorized as competitive (directly impacts the customer experience), enabling (enables competitive work), essential (such as payroll) or compliance (we do it because we are required to do so).
• Strive for effectiveness with competitive and enabling work. Strive for efficiency with essential and compliance work.
Work Categorization
CompetitiveActivities
(Greatest Return)
EnablingActivities
Compliance(No Return, but high risk)
EssentialActivities
Does this work directly make our strategy happen?
Does it directly impact our value offering(s)?
Will it create sustainable differentiation? If we were forced to give up control of work, would this be the last thing we would give up?
Are the outputs of this process used by or consumed by Competitive Work?
Does it enable Competitive Work?
Does the corporation consider this an enabler because of its values/ beliefs?
Do we do this because we don’t want to go to jail or get fined?
If allowed, would we stop doing this work?
Is it essential to the business, but not to gaining market share?
Is it only a potential disadvantage?
Could we afford to be at par with our competitors?
Effectiveness EfficiencySource: AlignOrg Solutions
Sourcing Decisions
Outsource to a Strategic Partner
(Develop Best Strategic Vendors)
Deliver Internally
(Develop Best Internal Capability)
Outsource to Low-Cost Provider
(Develop Most Cost-Effective &
Compliant Source)
Maintain Internally
(Must be at least On-Par with the
Industry)
Enabling Work
Essential & Compliance
Work
Unique / Proprietary Activities
GenericActivities
NOTE: Always maintain
Competitive work internally
The Business Model
What is a business model?• A business model is a logical description
of customers, value offerings, infrastructure and financial viability.
• It provides a very high-level map of work processes that create value and support the strategy. It indicates linkages between processes.
The Business Model
Source: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers by Alexander Osterwalder and Yves Pigneur
Key Partners Key Activities
Cost Structure
Key Resources
Value Propositions Customer Relationships
Channels
Customer Segments
Revenue Streams
Distributors
Mid-Small
Customers
Products (Chemicals, Machines , Tools)
Sales Reps
Distributors
Wide range of
floor care
products
Full machine
line-ups
Indirect
channel,
DistributorsDistributors’
sales
Sales
Technical
support
Training &
SeminarDistributor
Support
Providing
solutionProviding
solution
JBMA (Japan
Building
Maintenance
Association)
Value chain
Sales
promotion
Training
Machine
CTS
Advertising
Agency
Value chainRD&E
Machine
maintenance
service
Tradeshow
Advertising
Technical
support
Advertising
Example
Technical
Support
Structure
Organization Design Criteria
Structure
Strategy
Structure Choices Depend on…
Activities
• Structure defines capabilities, which imply activities, which are part of a larger business model. These decisions drive structural choices. Creative, customer-centric businesses tend to organize around customer segments and geographies while a product-centric businesses tend to organize around products.
Size & Complexity
• Start-ups need more generalists and less structure. Global Organizations need high overarching structure with local flexibility. Span of control may shift as business units, regions and functions grow.
Culture
• Are you an autocratic culture or a more egalitarian culture? What is your organization’s readiness for different structural options?
History
• Structures evolve over time. Because of decisions made in the past, it might be more difficult to shift the organizational structure.
Personnel
• Some organizations make structural decisions around strong personalities. This can lead to choices that are less efficient and effective.
Sm
art
er
Ch
oic
es
Poore
r C
hoic
es
Some Structure Options
CEO
Cardio-vascular
Diabetes Neuro
Product Structure
CEO
Americas EMA ASIA
Regional Structure
GM
R&D Ops Marketing
Functional Structure
GM
HealthCare
Education Gov.
Market (Customer Segment) Structure
GM
New Prod. Dev.
Order Fulfillment
Customer Acq.
Process Structure
CEO
BU President
Regional Head
Functional Head
Matrix Structure
Regional Functional
Support
Advantages / Disadvantages of Structural Choices
Option Advantages Disadvantages
1. Function Organized around major activity groups such as research and development, operations, marketing, finance, human resources, etc.
Increased knowledge sharing within functions
Ability to build depth and specialization—attracts and develops experts who “speak the same language”
Leverage with vendors Economies of scale Standardization of processes and
procedures
Difficult to manage diverse product and service lines
Cross-functional processes cause contention
Different departments have different priorities; the customer's interest can get overlooked
Integration tends to occur only at the leadership team level
2. GeographyOrganized around physical locations such as states, countries, or regions
Local focus and customization Relationships with active local
governments Reduces transportation costs
Difficult to mobilize and share resources across regional boundaries
3. ProductOrganized into product divisions, each with its own functional structure to support product lines
Rapid product development cycles Focus allows for "state of the art" research Profit and loss responsibility for each
product is located at the division level with a general manager
Positive team identity develops around product lines—clear line of sight between decisions and success of business
Divergence among product lines in focus and standards
Loyalty to product division may make it hard to recognize when a product should be changed or dropped
Duplication of resources and functions Lost economies of scale when functions
are spread out Multiple points of contact for the customer
4. CustomerOrganized around major market segments such as client groups, industries, or population groups
Customize for customers Build in-depth relationships and customer
loyalty Create more value-added product and
service bundles and solutions Avoid commoditized products and
competition on price alone
Divergence among customer/market segments in focus and standards
Duplication of resources and functions Challenge of measuring customer
profitability and identifying appropriate segments
Source: Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges by Amy Kates and Jay R. Galbraith
The Evolution of Dance:Organizational Structure
Start-up
Bureaucratic
Functional
Divisional (Business Unit or Product)
Matrix
Siz
e &
Com
ple
xit
y o
f th
e O
rgan
izati
on
The Results of Choice #2
• Organizational Capabilities
• Design Criteria
• Categorization of Work
• Business Model
• Initial Organizational Structure
What unique capabilities and activities create value? How do we best organize to deliver value to our customers?
CAUTION: To create sustainable, profitable growth, you cannot stop here. You have to dig into the details: processes, linkages, rewards and people strategies.
Choice 3
How will we create alignment through processes and
linkages that cut across the structure?
Choice #3
How will we create alignment through processes and linkages that cut across the structure?
Processes
Linking Mechanisms
Processes
Organization Design Criteria
Structure
Process
Strategy
What is a Process?
“Process is a series of connected activities that move information up and down and across the organization. This includes work processes…It also includes management processes…”
- Jay GalbraithDesigning Your
Organization
Roles & Responsibilities
Business Units
P&L responsibility.
Choices & trade-offs
Regions
Local leadership,
execution and expertise
Functions
Excellence, standard-setting &
harmonization
Begin in broader swaths
Processes Link & Align
Vertical Processes Lateral Processes
• Allocate funds & talent• Business planning• Budget planning
• Workflow• Hand-offs• RACI
Structure defines shape. Processes define flow.
Map the Processes
Process maps define work flow, activities and linkages
RACI Charts
R = ResponsibilityResponsible for making and/or carrying out the decision. If more than one person is responsible, they all have to agree to the decision.
A = Accountability May not make the decision, but will be ultimately held Accountable
C = Consult Must be Consulted and give input before the decision is madeI = Informed Needs to be Informed about the decision after it is made
RolesRole 1 Role 2 Role 3 Role 4
Key Decisions
Create Job Description C A I A
Set Salary for Role R C A ISource Candidates
for Role R C I A
Screen Candidates R C A I
Swim Lanes
Current State
Desired State
Importance of Alignment
Alignment Creates Agility
Current State
Desired State
Operating Mechanisms
Regional orFunctional Plan
Annual Operating Plan
Strategy
QBRs
Strategic Direction
Individual Objectives
Linkage Choices
Com
ple
xit
y
Effectiveness
LOWER
LOWER
HIGHER
HIGHER
Rules & policies
Informal networks
Liaison roles, job exchange
Cross-discipline teams
Matrixorganizatio
n
Team-Level Alignment
The Results of Choice #3
• Definitions of Roles & Responsibilities
• Process maps – SIPOCS and Swim Lanes
• RACI Charts
• Operating Mechanisms
• Linkages
• P-GRPI
• Alignment
How will we create alignment through processes and linkages that cut across the structure?
Choice 4
How will we align recognition and rewards to our strategic
choices?
Choice #4
How will we align recognition and rewards to our strategic choices?
Reinforcement based on emotional needs
Reinforcement based on rational needs
Star Model
Organization Design Criteria
Structure
ProcessRewards
Strategy
Rewards begin with Metrics
You can only manage what you measure…
…and you can only recognize and reward what you measure.
Reinforcement
For a reinforcement theory, see:
http://www.slideshare.net/tloyd/abcsquared
What Motivates Your Employees?
1. Praise and recognition
2. Personal and written thanks by one’s manager for good performance
3. Public praise for good performance
4. Morale building meetings to celebrate successes
5. Pay for Performance
Recognition
Positive Immediate Certain
Negative Future Uncertain
Rewards
• Whose behavior / results should be rewarded?
• How do you reward geographies and functions for business unit growth and profitability?
• How far down in the organization do rewards cascade?
• What key behaviors are measured and reinforced?
• What is the evaluation process?
The Results of Choice #4
• Recognition and reward systems
• Reward structures
• Reward and recognition budgets
How will we align recognition and rewards to our strategic choices?
Choice 5
What people-processes must we create to support our
strategic choices?
Choice #5
What people-processes must we create to support our strategic choices?
Human Resources philosophies, policies, procedures and processes
Star Model
Organization Design Criteria
Structure
Process
People
Rewards
Strategy
Change Management
Communication
What could go wrong?
Why decisions don’t get made
What Stands in the Way?
• Choices do not get made– Continual study of
unresolved “issues”– Decision gridlock
• Choices appear to get made, but fall apart– Weak consensus– False consensus
• Choices are not robust– Invalid data– Untested inferences
• Choices get made, but action is not timely– Drawn-out choice process– Time consuming “buy-in”
process
• Choices are not sufficiently focused– Choices not clear on what
will “not” be done– Too much flexibility results
in limited differentiation
What next?
How do we get started?
Project Overview
Fact-based Analysis
• Strategic Alignment• Five Forces• External Scan• Internal Scan• Interviews• Gap Analysis• Business Implications• Current Work• SWOT Analysis• Key Issues
Design Decisions and Metrics
StrategiesKey Initiatives,
Programs / Projects
• Discovery Workshop• Purpose / Vision• Goals• Business Model
Definition• Activities• Processes
• Same Store Sales• Net Revenue• Net Promoter Score• Employee
Engagement & Retention
• Number of ready-now leaders
Metrics
2. Strategy 2
2.1
2.3
2.2
3. Strategy 3
3.1
3.2
3.3
1. Strategy 1
1.1
1.2
1.3
Discover Design Deploy
Impl
icat
ions
Develop
DRAFT: Project Plan
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Phase 6
Phase 7
Phase 8
Design team develops a clear understanding of stakeholder requirements, gains clarity around the value offering and design principles. Categorize work activities. Organizing rationale is discussed and agreed-upon.
Any outstanding organizing rationale work is completed. Begin detailed analysis around the volume of work and where to best source that work Process redesign is initiated.
Choose stakeholders and design team members. Contract around problem statements, project goals and process to be followed. Launch stakeholder. Conduct Executive Stakeholder interviews.
Conduct workshop for design team. Create understanding and alignment around approach and tools.
Continue Phase 4 activities. Gain clarity around decision rights. Map RACI.
Create first draft of new design for consumption and discussion.
Update roadmap draft. Provide budget guidance.
Begin socialization of roadmap.
Resources
Video:
YouTube Video: The Inspirational Power of Purpose (30 Minutes)
YouTube Video: Business Model Canvas Explained
Harvard Business Publishing video on Porter’s Five Forces
Books:
Playing to Win: How Strategy Really Works
Designing Your Organization: Using the STAR Model to Solve 5 Critical Design Challenges
Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers
Purpose: The Starting Point of Great Companies
Competitive Strategy: Techniques for Analyzing Industries and Competitors
Bringing Out the Best in People
Other resources:
Beam, Inc. Blog on Depth & Duration of Innovation & Transformation
AlignOrg Solutions