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The strategic imperative of the "nimble organization" and the mirage. Interview with Daryl Conner
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Categories: Culture, Strategy, Sponsorship, Leading Change, ROI, Innovation, Change Management, Leadership
| “The mind, once stretched by a new idea, never returns to its original dimensions.” ? Ralph Waldo Emerson
In this post, I interview Daryl about what “nimble” means, why it is a strategic imperative, and why it seems to be so difficult for organizations to get traction with it. For full disclosure, I work with Conner Partners, so I do have a bias. However, Daryl’s work of 40+ years speaks for itself—and you can make up your own mind. Please do share your comments below.
There are many definitions of “agile” and “nimble” in the business world. I know that you have a very precise meaning in mind. Would you share it? Sure. The definition I use is “the organization’s sustained ability to quickly and effectively respond to the demands of change while delivering high performance.” Some would say, “As long as you win the race you are first,” but I view nimbleness as a sustained, competitive, strategic advantage. It’s not enough just to ask, “Did we accomplish more change than our competitors this year?” Becoming truly nimble requires looking at the amount of energy that goes into accomplishing those changes and saying, “Was it optimized?” In his own blog series, Nimble Organization, Daryl explores this further. In post 4 of that series, “Characteristics of Nimble Execution”, Daryl outlines the characteristics of organizations that are nimble at strategy execution:
As he notes, two components work together—environment and application:
How important is nimble for leaders today? I published “Leading at the Edge of Chaos: How to Create the Nimble Organization” in 1998 and I thought then that I was late to the nimble game. But that was wrong. My first book, “Managing at the Speed of Change” (published in 1992), was about understanding how to implement the changes you have in front of you; “Leading at the Edge of Chaos” was about how to prepare for changes you can’t even envision. The responses to the books, and many of the subsequent conversations I’ve had since their publication have been pretty consistent. There is an overwhelmingly positive affirmation of the idea of nimbleness. Leaders often say to me, “That’s exactly right. That’s what we have to do.” I then make the point with them that, if you want your organization to be nimble, you have to treat executing change as a strategic capability. For example, it needs to be something you and your board talk about and take action on. This is when their interest in the idea of nimbleness starts to taper off. When it comes down to actually creating nimble DNA, I’ve found that very few leaders will invest the energy and mindshare that is required. They are so focused on the current change-related challenges that they can’t pick their heads up long enough to attend to a longer view. Even though I‘ve had many such conversations with a wide range of executives, at this point in the discussion, I hear similar views: “Look, we are so overwhelmed with our existing portfolio of changes that you are going to have your hands full just teaching us how to deal with that. Isn’t it possible, Daryl, that if we manage this portfolio better with your help, we’ll automatically be more nimble? Can’t we leave it at that?” My response is always, “Yes, you probably will be more nimble to an extent, but don’t confuse that with deeply embedding nimble DNA—at the level of personal mindsets and organizational structure—enough for people to be able to handle ongoing transformation as the norm. Will you be better prepared for new transitions after executing the changes you have before you? Of course you will, but that’s different than putting a stake in the ground and declaring that “It is imperative to become more intentional about being nimble…On my watch, this is going to happen.” I have unsuccessfully made the case for years that being nimble is a crucial strategic advantage, not a luxury. Not that leaders aren’t responsive to the general notion, but actually following through with all the hard work involved in getting there is often not as well received. Getting a leader’s attention, interest, and enthusiasm isn’t that hard, but not many follow through with what it takes to actually build an enduring legacy of nimble operations. They almost always get diverted by the next crisis. So, why don’t more organizations focus on becoming nimble? There are many reasons, but one is that they fear they will have to stop what they are doing and pick up a separate task called nimble development. That’s not really how it works, however. Shaping a nimble culture requires that leaders still do everything normally required of them, but they do it with the clear intention of fostering a nimble enterprise. For example, if an organization is seeking new talent anyway, why not hire people who have a predisposition for operating in a nimble fashion? Leaders know (or can learn) what those capabilities are and can incorporate a filter for nimble predisposition into their hiring criteria. Instead, I typically meet with leaders one week when they declare they are ready to move ahead with fostering a nimble culture (“We’re doing this!”), but by the next week, they meet with the board and there is a new customer service crisis or some other issue and all of their attention goes to that. I’ve been fortunate over the years to work with several senior executives who were serious about architecting a nimble culture, so I’m not saying it never happens—I’m saying it is rare. Does that mean organizations are not good at juggling multiple strategic priorities? I think it’s more the reverse of that. They think they are so good at pursuing a huge number of priorities that they believe they can just add nimbleness to the ever-growing list of initiatives their organization must then endure. More to come Daryl shared more insights in the interview than can be covered in a single post, including thoughts on how leaders can manage their multiple strategic imperatives andstay focused on building organizational bandwidth and capability for “quickly and effectively responding to the demands of change while delivering high performance,” (i.e., a nimble culture). Want to get started? Do contact Conner Partners directly or give me an email at [email protected] and we’ll find time to chat. Thoughts? Reactions? Please share in the Comments section. Getting something out of this? Please do share with your network by forwarding this post over email or over social media using the buttons. Thanks! |
Posted on: February 07, 2014 04:13 PM
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What is the Board’s Role in Strategy and Strategy Execution? Post 3 of 3
| This post concludes my notes and my observations and comments (indicated by italics) from the panel discussion,“Growth Strategy—the Board’s Role,” run by the Institute of Corporate Directors (ICD). The panel was stellar, with names well known to board and strategy watchers: Thomas O’Neill, Krystyna Hoeg, Stephen Bear, and Ken Smith (bios in Post 1). Overall, I found it a great overview of the most obvious answers to the seven questions, peppered with relevant examples and a few deeply insightful remarks. The bottom line for me? The board members totally “get” the need to be engaged in strategy formulation; however, there was not much conversation about execution. Granted, it was not specifically called out in the abstract but I had hoped it would get more mention. The jury is out for me on what to make of the fact that it didn’t. Question 6: Is scenario planning more popular now? Of course, Stephen Bear kicked off, sharing his deep experience from McKinsey. He noted that, when done well, this is an important strategy formulation tool and that it provides a way to manage the sometimes “schizophrenic tension” between short-term performance expectations and ensuring health over the long term. It is a tool to ensure that we are investing in both at all times. I confess, I lost a little traction with the note-taking here. I am sure Ms. Hoeg and Mr. O’Neill commented, but I caught myself reflecting that this all still falls short of the high-level oversight on realization of results (that I read into “board oversight of growth strategy”) that I was hoping for. I realized that my own biases had shaped my expectations. Question 7: What is the relationship between management and the board regarding strategy development? Do we expect management to resist and object? Do we expect them to say, “It’s my job. If you don’t like it, fire me”? Ms. Hoeg referenced her experience at Shoppers Drug Mart and noted that it was not long ago that the board brought Domenic Pilla into the president and CEO role. They had done so, realizing that a strategic refresh was in order, and recognizing that he would need time to learn the organization and prepare that plan. She noted that management went shopping for a strategic advisor and prepared two or three plans. The board was engaged in these processes. A five-year plan was produced that looked at what the organization could do organically and, alternatively, through mergers/acquisitions. This really served to put the board in a “ready state.” Thomas O’Neill noted that “down the hall” at Loblaw, where he is a board member, they were looking at their strategy. They recognized that the grocery industry had peaked a couple of years ago and was stabilizing around three companies (i.e., “it was time to do a deal”). Loblaw made a bid for Shoppers and the acquisition is underway. Mr. Bear weighed in with the observation that sometimes board members end up asking a lot of questions, sometimes the wrong questions. He cautioned that this can waste precious time. He also noted that, at times, the role of the chairman and CEO is to work with the board members to focus. Mr. Smith invited each panel member to have a “last word” before he opened the floor to questions:
All in all, this event was well worth the time. The opportunity to see how board members think was fascinating and to hear some of their “war stories” was intriguing. I will be attending more of these events. Summary Our interest in such matters tends to track along with the economy. Given that the recovery is in full swing, we are well into transformational growth strategies. Acquisition announcements, such as Sobeys’ purchase of Canada Safeway, Loblaw’s purchase of Shoppers Drug Mart, and many other dramatic shifts, are examples of growth strategies that have our attention. As these proceed into execution, we will have an opportunity to shine the spotlight on the board’s role in this critical step. Presently, I come at this from the perspective of an investor in institutional funds that buy into these corporate strategies. The very sharp point of my own motivation is to gain from these strategies—and when they fail (as they did wildly in the sub-prime mortgage crisis) I know I bear the risk. Chances are, you are in the same boat. I also bring 20+ years of strategy execution experience to the table. I know, viscerally, how difficult this is. What I wonder is, “do boards?” I believe there are ways to provide boards with efficient and insightful means to track execution and to require the organization to build change agility. Here are some examples that would focus their diligence, bring their deep experience to bear, and deepen the organization’s—and the board’s—capabilities:
Over the next several months, the role of the board in Strategy Execution is a theme I will continue to pursue. Thoughts? Reactions? Please share in the Comments section. Getting something out of this? Please do share with your network by forwarding this post over email or over social media using the buttons. Thanks! “A rising tide lifts all boats”—John F. Kennedy Related Posts: |
Posted on: February 01, 2014 03:03 PM
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What is the Board’s Role in Strategy and Strategy Execution? Post 1 of 3
| SOLD OUT! I signed up for this panel presentation, “Growth Strategy—the Board’s Role,” as soon as the fall season schedule from the Institute of Corporate Directors (ICD) came out. Good thing I did—many, it seems, are interested in “practical tips to help boards apply their time and expertise effectively on strategy issues.” In this series, I will share highlights from the line-up of incredible panelists—representing current board engagements on twelve of the most significant organizations in Canada today, including such newsmakers as: BCE, Bell Canada, Scotiabank, Loblaw, Shoppers Drug Mart, Sun Life Financial, Canadian Pacific Railway, and Imperial Oil. My own observations and comments are indicated by italics. For readers whose interest originates out of Change Management, allow me to connect the dots: If we accept that helping people transition through change is an essential part of implementing strategy (often under the logistics of Project Management), then Change Management nests within Strategy Execution. More on this in “Change Management Methodology (Strategy Execution Methodology Series, Post 4).” Please note this discussion moved like whitewater rafting. I have quoted panelists wherever I could capture their words accurately and have paraphrased with as much integrity as possible. Any misinterpretations here are entirely my own. Strategy and its Siamese twin, Strategy Execution For some time, I have been bending the ear of several senior members of my network with the argument that, at a very high level, Strategy Execution must be under the purview of the board. It’s a pretty simple two-part argument: 1. What’s the spend on Strategy Execution? What if it’s $5M or $55M? Given that failure rates on strategic initiatives range from 44-70% (see “Time to kill the 70% phantom failure rate”), there is $2.2M - $38.5M directly at risk. 2. Perhaps even more importantly, does realization of those strategies materially affect the future of the organization? In combination, surely these are equivalent to any of the board’s other responsibilities. To be crystal clear, I am not referring to strategy here (I had assumed that this was under the purview of the board), I am referring to the execution of the strategy (i.e., specifically to tracking high-level risks, progress, and benefits realization). Not as crazy as you might first think. Have a look at BMO’s Performance Committee’s mandate: “responsible for driving enterprise results and taking action on initiatives relating to BMO’s strategic priorities.” No, no, and…maybe I have had varying reactions: · Some give me the standard aloof “brush-off”: “Boards are, of course, responsible for signing off on strategy. Execution, though, is what management is hired for. The board does not mix in with management responsibilities.” (as if this were a written law—it is not). · Some will go further: “Boards have many issues on their agendas, such as performance (aka quarterly results), compensation, and risk management. It is all they can do to keep up with this pace. Not to mention the fact that many do not really know the business or business practice very well.” Much of this disturbs me, and I think it should disturb you too. And, I don’t really buy it. · I had a wonderful conversation with a gentleman who serves on the boards of several mid-sized organizations and he was intrigued. He acknowledged the rebuttals above as standard thinking and their dismissive tone as common. However, he also acknowledged that he shared a level of concern regarding the ability of management teams to undertake transformational strategy and the board’s culpability in that. With this context in mind, I was excited to hear what this panel might say. So, what did they say? This panel really focused more on the role of the board in determining strategy—and they had some interesting things to say about this. They touched down on Strategy Execution only lightly, but it was, I thought, promising. Ken Smith did a solid job of constructing a set of seven questions that would draw out the expertise of the panel. Mr. Smith is an ICD.D and a veteran (25 years) strategy consultant. He was chairman of SECOR consulting and is the author of “Twenty Questions Directors Should Ask About Strategy,” published by the Canadian Institute of Chartered Accountants. The rock stars of the morning were: · Thomas C. O'Neill, F.ICD, chair of BCE and Bell Canada, Director of Scotia Bank, Loblaw, Adecco, and chair of St. Michael’s Hospital · Krystyna Hoeg, Director at Shoppers Drug Mart, Sun Life Financial, Canadian Pacific Railway, Imperial Oil Ltd., and Samuel Son; vice chair of Toronto East General Hospital · Stephen Bear, director emeritus of McKinsey and Company, former member of McKinsey’s Global Board, chair of Princess Margaret Cancer Foundation Question 1: Why is growth important? Thomas O’Neill hit the pressure point with, “if you can’t grow you will lose your growth multiple” and “once Canadian companies reach a certain size they must go outside” with the caveat that the risk increases exponentially. He referenced the recent acquisition of Canada Safeway by Sobeys and the related competitive acquisition of Shoppers Drug Mart by Loblaw as examples of organizations making a move in the rising current economic cycle to create some growth momentum. Stephen Bear addressed the question by focusing on two important issues: - “Quality of growth”: He recommended that organizations be selective in their growth and to focus on geographies or products or other dimensions that will optimize growth. He noted that, at McKinsey, they had to come to terms with the reality that they could not grow more than 10-11% annually due to investments required to inculcate values, mentor, and provide stretch experiences. - Shrink to grow: He gave the example of a conventional oil and gas company that looked at the strategic horizon and the beginning of new technology to access shale gas. Company leaders realized that “they would be pushed to the outer edge of price” if they did not make a move. They made the difficult decision to shift technologies. This required them to shed conventional assets and to use that to buy shale land. This took considerable time and they had to be resilient to the pressures in the market for short-term results. Krystyna Hoeg led into her comment with the caveat that all strategy must start with “understanding what shareholders want” and, more specifically, with “not all growth is good,” (i.e., discrimination is warranted). She noted that “organic growth is usually acceptable and encouraged” and that “the capacity of the organization within the whole picture of what it is being undertaken” is important. This last point, in particular, resonated with me. As consultants, we often see strategy snowball in the execution cycle and see organizations hitting very real capacity issues.
In the next post, I will share the panel’s responses to the remaining six questions. Thoughts? Reactions? Please share in the Comments section. Related Posts: |
Posted on: January 18, 2014 10:50 PM
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Leading strategy? The three key ingredients for rejuvenation. Post 2 of 3
| “You can go to heaven if you want. I'd rather stay in Bermuda.” —Mark Twain There are, of course, many compelling reasons to take a vacation, but here is one that reconciles with your business objectives. Go slow to go fast. To bring our best selves forward to complex and high-pressure strategy, we need clear minds and fulsome spirits. Optimize your rejuvenation We all need to rejuvenate in different ways, of course. However, it seems to me there are three simple, but key, ingredients:
The body has physical needs. There is no point disputing this. “Mind over matter” only works until it matters. When we are physically run down, our bodies shut down for us. Let’s not get there. A few weeks ago, my husband, my two sons, and I took a trip to Bermuda. It’s my homeland; my children were born there, and we lived there for five years in the late nineties. It is at once both familiar and intriguing. For all of us, it was a chance to kick back, sleep, eat, reflect, and explore. It was just what we needed to reenergize ourselves. Decision One: “Go with the flow” The first decision we made was to “go with the flow.” We slept every morning until we weren’t tired anymore. Then we ate, healthy, as needed. Over a couple of days we could all feel our clarity coming back. We became more interested in the events around us, more curious, more demanding. A great golf game for the boys and a little exploring in the city began gearing us all up. Our conversations turned lazily to the issues we have been wrestling with. For our teenage boys it was about how school was going, decisions around course selection, university options, and summer jobs. But without the intensity that pressure brings, our conversations were reflective and interactive. Turning over the issues like rocks on the beach, looking at the implications less passionately, more curiously, more resourcefully, “What do you want to do when you grow up?” became “What are you interested in? What is important to you?” One conversation even turned into “If you were going to get a tattoo, what would you want on your body forever?” Reuniting with our best selves It has occurred to me before that under pressure of strategy execution or any other major change, we lose sight of who we are. We become a product of that environment. We get wound tighter and tighter. Our best selves fade into the background. Returning to familiar things and places reminds us of our best selves. This gives us confidence, inspires us, rejuvenates us. All around us are memories of accomplishment and people who believe in us. This is powerful stuff. It frees us of our insecurities and feeds our courage. Decision Two: Explore The second decision we made was to explore?to do some things we have never done?get outside our comfort zone. I was born on this little rock, 21 miles long and 3 miles wide in the middle of the Atlantic Ocean and I have only been off-shore once before. This year we decided to go whale watching. It was long-time dream of mine and my family humored me. We were all somewhat intimidated. The sea is vast and even six miles off shore is farther than any of us could swim. The thought of seeing wild whales bigger than our 45-foot boat filled us with both awe and fear. Not to mention the risk of being seasick for six hours… Curious to hear about our whale-watching adventure? The only thing better than a real vacation is a vicarious one. Stay tuned for Post 3 next week. Want to subscribe? Sign up top left. Related Posts: |
Posted on: May 02, 2013 08:05 AM
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Leading strategy? The three key ingredients for rejuvenation. Post 2 of 3
| “You can go to heaven if you want. I'd rather stay in Bermuda.” —Mark Twain There are, of course, many compelling reasons to take a vacation, but here is one that reconciles with your business objectives. Go slow to go fast. To bring our best selves forward to complex and high-pressure strategy, we need clear minds and fulsome spirits. Optimize your rejuvenation We all need to rejuvenate in different ways, of course. However, it seems to me there are three simple, but key, ingredients:
The body has physical needs. There is no point disputing this. “Mind over matter” only works until it matters. When we are physically run down, our bodies shut down for us. Let’s not get there. A few weeks ago, my husband, my two sons, and I took a trip to Bermuda. It’s my homeland; my children were born there, and we lived there for five years in the late nineties. It is at once both familiar and intriguing. For all of us, it was a chance to kick back, sleep, eat, reflect, and explore. It was just what we needed to reenergize ourselves. Decision One: “Go with the flow” The first decision we made was to “go with the flow.” We slept every morning until we weren’t tired anymore. Then we ate, healthy, as needed. Over a couple of days we could all feel our clarity coming back. We became more interested in the events around us, more curious, more demanding. A great golf game for the boys and a little exploring in the city began gearing us all up. Our conversations turned lazily to the issues we have been wrestling with. For our teenage boys it was about how school was going, decisions around course selection, university options, and summer jobs. But without the intensity that pressure brings, our conversations were reflective and interactive. Turning over the issues like rocks on the beach, looking at the implications less passionately, more curiously, more resourcefully, “What do you want to do when you grow up?” became “What are you interested in? What is important to you?” One conversation even turned into “If you were going to get a tattoo, what would you want on your body forever?” Reuniting with our best selves It has occurred to me before that under pressure of strategy execution or any other major change, we lose sight of who we are. We become a product of that environment. We get wound tighter and tighter. Our best selves fade into the background. Returning to familiar things and places reminds us of our best selves. This gives us confidence, inspires us, rejuvenates us. All around us are memories of accomplishment and people who believe in us. This is powerful stuff. It frees us of our insecurities and feeds our courage. Decision Two: Explore The second decision we made was to explore?to do some things we have never done?get outside our comfort zone. I was born on this little rock, 21 miles long and 3 miles wide in the middle of the Atlantic Ocean and I have only been off-shore once before. This year we decided to go whale watching. It was long-time dream of mine and my family humored me. We were all somewhat intimidated. The sea is vast and even six miles off shore is farther than any of us could swim. The thought of seeing wild whales bigger than our 45-foot boat filled us with both awe and fear. Not to mention the risk of being seasick for six hours… Curious to hear about our whale-watching adventure? The only thing better than a real vacation is a vicarious one. Stay tuned for Post 3 next week. Want to subscribe? Sign up top left. Related Posts: |
Posted on: May 02, 2013 08:05 AM
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