Structure Follows Strategy, in Strategy Driven Enterprise Organizations
Copyright Enterprise Design Labs 2005 - 2018
:Imagine a situation where the owner/CEO of a new barbershop business - a year old barber shop for the airport markets in the US - at O'Hare airport is faced with flat sales and revenue, high employee turnover and high customer attrition rate. The management wants to address these strategic issues and transform the organization into a winning one in two years. There are many things the owner can do; but s/he has to first take stock i.e., assess the current state of the organization in terms of its current capacity development level, and its strengths and weaknesses.
Current State Assessment
The owner may begin the assessment at the organizational level by assessing the current state of talent in the organization. This involves making assessments of the following factors:
Talent alone, however, is not enough to win in this business; because from the organization's chosen business strateggy and strategic positioning there are a number of other key factors that have to be in place to create a winning organization. It is of vital importance that the owners understand their organization's existing strengths as measured by the level of influence on capacity development in other core issues areas in addition to human resource/talent such as:
Existing Capacity - Current State
By airport services and concession standards, such as accessibility (opening hours), ambiance, environment, customer service (reliability and consistency), etc., it is an average or below average specialty retail service. The owner, a master barber, is skilled at cutting both male/female hair, as well as providing straight razor beard shaves. The barbers employed in the shop are young and skilled in cutting the various types of hair, and knowledgeable about the basic techniques in cutting male/female hair. The company lacks the organization Operating Model to develop the capacity to scale and grow the company.
In general, the organization's behavior is inconsistent with the organization goals because the culture is not supportive of the organization's strategy and its successful execution. The organization is constantly In violation of its airport concession contractual obligations, and its own published operating hours. The shop constantly opens late in the mornings; fails to have liners in the thrash bins and waste baskets at the barbers' stations; and fails to maintain clean and tidy workstations and shop, another clear violation of airport concession rules as well as general sanitary norms. The owner and employed barbers are constantly late or not showing up for booked appointments and keeping the customers waiting for long hours.
The company doesn't have well defined and documented roles and responsibilities for the executive and management positions such as CEO/President, Owners/Board Members, as well as functional areas such as marketing, human resources, and operations. This is manifested in poor leadership (lack of clearly defined and communicated vision, mission, values, etc.), ineffective hiring practices, lack of planning (budgeting, action plans, operations plans, etc.) adversely affecting the successful implementation and execution of the company's strategies.
Capacity Development - Institutional Arrangement Core Issues Story
The owner can build on existing skills, knowledge and expertise of the barbers in the shop. Expand capacity through training and workshops for the barbers, as well as developing organization's culture by involving them in daily drills and practices to improve the shops ability to deliver consistently high quality services in addition to products to win. The owner for example, must ensure the barbers in the shop and other workers in the relevant functional areas in the company have well defined roles (optionally documented), and are happy with their respective assigned roles and responsibilities. The owner must also ensure the employees are accountable and have a sense of ownership for their work. The owner must have well defined and articulated organizational values, and ensure the organization's rules including the shop practices derive from these organizational values which are lucid and fairly implemented. The owner must also focus on whether the right incentives are in place. This could be a system of awards and bonuses connected to shop results - and not individual performance, transparent and commonly agreed upon principles dictating how barbers join and leave the shop, access to ongoing education and training, etc. Furthermore, it is vital to develop and agree on an operations plan and strategy for engaging different classes of customers (i.e., customers that have preference for a particular barber, customers that want some social interaction, customers that are on a schedule or in a rush, etc.), which includes clearly defined playbook, expectations of shop employees, etc. Combined, these constitute the institutional arrangement which ultimately determines the shop's (team's) performance and ability to win.
Capacity Development - Leadership Core Issues Story
Apart from the institution arrangements, the owner/shop manager must analyze the leadership structure of the shop. A winning workforce in the shop needs a focused and motivated team lead or shop manager who not only inspires when the shop loses one or two customers, but who also maintains the momentum and continues to fight even when the shop is gaining customers. In addition to the manager/lead it is important that other barbers assume leadership roles as needed. For instance, when facing losing a customer because long waiting time for a particular barber, can that barber position others who have less workload, to alleviate the problem and win the customer? Are there clear lines of communication between the owner and manager, the manager and the lead as well as other barbers on the shop floor? And what if the manager or one of the barbers is suddenly injured/ill?
Capacity Development - Accountability Core Issues Story
Accountability is yet another critical element in building a winning team/workforce. Are feedback mechanisms in place among the barbers, management and customers and partners/supporters? Do they all have voice in the major decisions that affect the team, such as resource allocation, picking new barbers, developing younger barbers, and supporting community events? Within the team itself it is imperative that the owner/coach establish a system to gather feedback and suggestions from the barbers and act on those.
This brief scenario outlines some of the core issues that impact the success of the barber shop team. Of course, beyond the control of the owner and barbers or customers are contextual issues such as injuries/illness, weather, airport conditions, etc., that might affect the outcome of a given customer episode. However, within a reasonable time frame that enables these basic changes to take root, the owner has a better chance to see his business bend the revenue curve.
I am a computer scientist interested in modeling of complex business systems, and model-driven analysis and evaluation of strategic management and operations management and the interplay between them. Specifically, I am interested in the use of modeling to improve understanding of strategy, its formulation, implementation and execution, and the interplay between intended strategy, emergent strategy and leaning to inform better strategic decision-making.