Sustainable Organizational Growth Requires Organization Structure to Follow Strategy
Copyright Enterprise Design Labs 2005 - 2018
Imagine a situation where the owner/CEO of a new barbershop business - a 3-year old barber shop for the airport markets in the US 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, its strengths and weaknesses, and how to capitalize on opportunities while mitigating threats. It is of vital importance that the owners understand their organization's existing capacity at the various levels/points where capacity is grown and nurtured; in an enabling environment, in organizations and within individuals.
Current State Assessment
The owner may begin the assessment at the organizational level by assessing the current state of talent in the organization. People are the key strategic resource, and it is essential that the organization effectively utilize the know-how of their employees at the right places.
This involves making assessments of the following factors:
Talent alone however, is not enough to win in this business. From the organization's chosen strategy and strategic positioning; there are a number of other key factors that have to be in place to create a winning organization by influencing growth at various levels including enabling environment, organization and individual levels..
In addition to talent assessment, the owner must assess other factors that contribute to growth in an organization such as capacity development in cross-functional coordination, resource allocation, control and management, and communication.
The policies, practices and systems that allow for effective functioning of an organization or group. These may include 'hard' rules such as laws or terms of a contract, or 'soft' rules like codes of conduct or generally accepted values. This is a critical element in building a winning team or organization; and entails the following:
Combined, these constitute the institutional arrangement which ultimately determines the shop's (team's) performance and ability to win.
Accountability exists when rights holders are able to make duty bearers deliver on their obligations. From a capacity development perspective, the focus is on the interface between service providers and their clients or service providers and oversight bodies. Accountability is important because it allows organizations and systems to monitor, learn, self-regulate and adjust they behavior in interaction with those to whom they are accountable. It provides legitimacy to decision-making, increases transparency and responsiveness, and helps reduce the influence of vested interests.
Accountability is yet another critical element in building a winning team/workforce. This entails addressing issues such as:
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.
In general, the organization's behavior is inconsistent with the organization's verbalized intended goals of sustainable growth. Employees and management are consistently late for work; the shop schedule is not adhered to; this creates a culture that 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 policies such as scheduled operating hours, employee tardiness, and code of conduct, etc.
The ability to influence, inspire and motivate others to achieve or even go beyond their goals. It is also the ability to anticipate and respond to change. Leadership can be held at many levels, and its not synonymous with a position of formal authority. Although leadership is most commonly associated with an individual leader such as president of the company, it can also exist at the enabling environment level and organizational level.
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?
These three levels influence each other in a fluid way - the strength of each depends on, and determines, the strength of the others. The owner may next look at the core issues that represent the domains where the bulk of the change in capacity development happens that seem to have the greatest influence on capacity development at the different levels described above. These core isues include
Existing and Current Capacity Development
By airport concession services standards, such as accessibility (opening hours), ambiance, environment, customer service (reliability and consistency), etc., the shop performance is average to below average for a specialty retail service. The owner, a master barber, is skilled at cutting men's hair of any type, as well as being proficient at straight razor beard/head shaves. The barbers employed in the shop are young and skilled in cutting/shaving head/facial hair of men of with hair of various types (caucasian, black or asian), and knowledgeable about the basic techniques in cutting male head/facir hair.
The company lacks a formal organization structure with well defined and documented roles and responsibilities for its employees and management. The basic functions of executive management such as CEO/President, Owners/Board Members are not being performed. Its not clear what the vision and mission of the organization are and what values guide management decisions. There is no clear communication of organization's official and operative goals to drive identification of the key functional and results areas such as marketing, human resources, and shop operations, etc. that would be needed to successfully implement and execute the strategies to sustain the growth and survival of the business. The current employee turnover is very high; this is a reflection of ineffective hiring practices, and lack of appropriate incentive and reward systems to create an enabling environment where employees can thrive and prosper.
In general, the organization's behavior is inconsistent with the organization's verbalized intended goals of sustainable growth. Employees and management are consistently late for work; the shop schedule is not adhered to; this creates a culture that 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 policies such as scheduled operating hours, employee tardiness, and code of conduct, etc. The shop is constantly in violation of airport concession operating policies and rules such as:
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.
This brief scenario outlines some of the core issues that impact the success of the barber shop team, and some of the critical changes that would give the organization a better chance to see his business bend the revenue curve. 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.
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.