Daryl Conner’s extensive thought leadership on creating nimble organizations has the potential to breathe new life into the dinosaurs of the Fortune 1000 and S&P 500.
As a preface, let’s just level-set. Why should leaders and boards care about an organization’s ability to change? Is it a real issue?
The Innosight study, “Creative Destruction Whips through Corporate America,” indicates that:
“the 61-year tenure for the average firm in 1958 narrowed to 25 years in 1980—and to 18 yearsnow.” (2012)
The authors offer a warning to executives: “At the current churn rate, 75% of the S&P 500 will be replaced by 2027.”
So, risks of declining performance are pretty big and they exceed the usual tenure of a CEO—surely this risk sits at board-level purview.
The Innosight study also proposes three questions that the CEO and executive committee should ask themselves. I found the second question to be arresting: “How fast do we have to change to maintain our position within our industry?”
How fast indeed? And how does an organization change fast, repeatedly, and consistently? It needs to become “nimble.”
Daryl’s very precise definition of “nimble,” covered in the first post, is deliberate. This is not your usual corporate jargon about “strategic agility” or “innovation” and not about (as is widely misunderstood) creating a “start-up mentality.”
It is about creating and sustaining an organizational DNA that views change as a constant, as part of the daily activities of leaders, managers, and employees.
In this post, we explore the role of the board and the senior leadership team in establishing and fostering a nimble organization—an organization that will still be thriving 18+ years from now.
Daryl, talking about the many concurrent strategic imperatives that executives have to lead takes me to a trend toward Enterprise Portfolio Management, where we see even board-level committees assembled to track the organization’s top strategic imperatives. Do you see this as a way of managing nimble as a concurrent top priority?
Yes, building nimble capability must be managed at this level. It is a multi-year initiative and requires purview at the senior most levels of the organization. Without this attention it will fail.
Furthermore, building nimble capability then can be integrated into many of the other ongoing initiatives.
And, by the way, establishing a standing oversight office at the executive level is a key element of a nimble strategy for leading change. I call it “Portfolio” in the model. Back in 2004, we launched the first Strategy Realization Office. This body, more expansive than a conventional PMO, really tracks implementation, at a high level, to breakthrough risks and to ensure that the benefits of the key strategic initiatives are realized. This level of executive purview changes the game.
In fact, do we even need board-level purview?
Yes, we do. To be a nimble organization, in my view, there must be board-level accountability.
An organization’s nimbleness should be so embedded that it can survive the transfer of power from one CEO to another. The only things that make it through a CEO transition are board-level priorities.
The real issue for the board is whether it is going to take on the responsibility to add another filter when hiring the next CEO. Without a doubt, the candidate must be technically competent and, yes, culturally consistent. The bigger question is, “Is this person prepared to drive and sustain a nimble organization?” Is the board intentionally hiring for that competency?
If someone is brought in who is profitable this year but unable to drive nimbleness, it means that whatever he or she is using as a solution to drive profitability has a limited shelf life, and there will be no infrastructure for constant transformation.
Conner Partners began working with organizations to establish Strategy Realization Offices 10 years ago. Would you take a moment to explain how these are different than conventional Project Management Offices and how an SRO can contribute to building a nimble organization?
We built the Strategy Realization Office structure to give leaders two things: oversight on their most strategic imperatives and line of sight on benefits realization.
Conventional PMOs are assembled on project funding and adjourned on installation. This kind of timing mindset does not serve leaders who need to manage continuity of business performance all the way through to full realization of the initiative’s promise.
There is always strategic change in organizations. It is a fact of life now. We need permanent structures to manage it.
More to come
In the next post, Daryl talks about tackling the strategy to become nimble. We discuss what leaders can do and how to start on a long-term strategy to create a nimble organization.
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