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How important is the organizational strategy to reach the base of the operation?

14/03/2020

organizational strategy

Before we start, I would like to inform you where the content presented here comes from.

It is based on an extensive history of success in implementing continuous improvement activities, supporting the management of transformations and changes in various businesses operating in different cultures located in China, Europe (7 countries), Russia, USA, Argentina and Brazil.

Let us take the following assumption about organizational strategy.

“All companies, in one way or another, have it formal or informal”.

Informally, this can be seen in the guidelines and priorities incorporated in the daily decision-making process. Leaders are the ones who define the pace, direction and dynamics of the organization. Thus, this should reflect the effectiveness of daily operations.

In addition, it incorporates the wishes and desires of its executives and / or shareholders in relation to growth, stability, maintaining profits or increasing competitiveness, etc.

In the end, all of this should translate into a constant search to meet customer expectations.

Formally, strategic plans help to establish the operations plan and prepare an annual budget to feed the financial analysis of business prospects.

In addition, these top management plans can be used to ensure the execution of the strategy and can be translated into a set of imperatives and definers of projects and / or strategic initiatives of the company.

The main point here is to know what are the tools and methods to guarantee an effective execution of the organizational strategy?

So, if you are interested in knowing a little more about it, keep reading the following text.

Article purpose

The main objective of this article is to emphasize how the strategy methodology implemented throughout the organizational structure serves to guide the company’s leadership team in the best ways and in the best decisions to obtain results. Resolutions that, if taken today, will produce the expected results often in the medium or long term.

In addition, a democratic and transparent strategic implementation has been shown to be effective in the engagement and participation of human resources. The so-called empowerment must generate employee participation. Allowing employees access to the company’s strategy, goals, projects and initiatives in a controlled and structured manner is the basis of empowerment, autonomy and effective engagement.

Problem statement

Unfortunately, many of the organizational strategy sometimes reside only in the minds of their managers / leaders. It is used by them to guide ordinary daily decisions, becoming their organizational status power in the organizational structure, to the detriment of employees’ empowerment and autonomy, as an unintended result.

Barriers to execution

The CEO of the company and / or the Directors and Executive Managers want their business strategy to be carried out up to the structure of the organization. Therefore, the ability to execute the organizational strategy depends on the existence of competencies, so that projects, initiatives and actions are effectively implemented, generating the expected results established in the high-level plans that support the promises made in the annual budget.

How difficult is the effective implementation of the strategy?

To better understand the possible difficulties in executing the strategy, in the real world, we must consider, the existing culture to overcome the challenges of execution, the level existing employees skills and the level of employees commitment daily basis, to ensure that plans happen.

The profiles of leaders have a strong influence on the way employees behave. Leaders must encourage and influence employee engagement and participation in the decision-making process.

In the real world, unplanned events happen all the time, deviations and reprocesses slow down actions and, therefore, adjustments in the process flow are necessary to solve problems as they occur.

The lack of an organized structure and methodology for executing the strategy forces leaders to become personally involved in operational issues, in order to direct daily actions.  

On the one hand, those actions, remove from employees the power to move the operational flow on their own initiative.

On the other hand, wasting time with leadership resources in change management initiatives and thinking about the organization in the development of tactics, such as employee training and effective use of lean tools to solve problems and correct deviations.

Therefore, the lack of information often becomes the root cause of employee dependency, preventing leaders from moving forward. As a result, the organization’s execution power decreases due to the lack of resources to deal with several initiatives at the same time.

In addition, there are several paradigms involved in the non-disclosure or non-democratization of the strategic information and / or data within the organization, mainly for the lower level.

One of them, and very strong, is the issue of confidentiality and protection of intellectual property.

In other circumstances, the organizational strategy is not openly disclosed for reasons justified by managers like the fear of allowing lower-level leaders to anticipate and make decisions sooner or at the wrong moment.

This is simply because, due to frequent informal contact with senior management, operational leaders are made aware of their wishes and intentions to bring together certain changes or improvements in the organization. Be it an operational process or organizational issues.

How to ensure strategy execution?

In general, corporations have the need to present shareholders monthly financial results and their performance indicators enlightening by fancy trend charts. At same time they try to adjust the management reports fitting audit requirements or certain corporate finance standard reports.

In this sense, they demonstrate how much the goals set in the operational or budget plans are being met, meeting the expectations of managers with transparency.

Often, publicly traded companies must produce those reports. They are audited and subsequently disclosed to the open stock market. Thus, the requirement of accountability to shareholders is fulfilled.

In general, financial statements are a key part of the organizational strategy and drive companies into results direction.

However, the finance result is the end of the business process and a pure consequence of all actions taken in the backstream of the organization flow.

Besides finance key parameters indicators, below is the list of areas that in turn should also be monitored in order to cover up the entire enterprise performance, there are as follows.

  • Customer Service Performance
  • Logistics and inventory management
  • Total Quality Management
  • Time to market with new products and services
  • On time Delivery of products and services
  • Health, Safety and Environmental Management
  • Evolution of sustainability programs
  • Effectiveness of the purchasing and manufacturing, etc.

Many companies use performance indicators in the areas above to measure the performance of managers and their teams on the journey to deliver the company’s results.

In many cases, they are not even aware of the shop floor problems for several reasons, meaning that the base of operations is disconnected from the rest of the organization.

Making organizational strategy work

In the Methodology of Blindagem de Processos, we advocate the importance of performance indicators being stratified top down in the organization structure in order to become meaningful to each collaborator in their function level.

We believe that using KPI´s to control the key company process properly, the teamwork starts effective driving performance by comparing their achievements against strategy goals.

As long as they start facing daily difficulties to achieve goals problems pops up and start being addressed by the effective use of lean tools and principles where each collaborator can easily understand their contribution level while executing the organizational strategy at the pyramid base level. See in the figure below.

We propose a use of a performance board installed in each functional organization department where a daily stand up meetings take place based visible tables, charts and team notes such as priorities list and action plans.

Much more than problems and results becoming visible we advocate that these flags be used to drive the daily performance improvement of each operational team.

It is not a question of making these colorful and beautiful graphics and signs available in the various “spot management” panels. Much less being able to show the “visits” level of organization and communication in the operation management process.

The correct and well-stratified indicators should serve as an internal reference translated into goals to be delivered by the sector team.

They should be used as indexes of how effective this team is delivering the organization’s strategy at its level of activity.

In this context, these indicators serve for employees to orient themselves and understand how aligned they are with the goals and kPI`s, in their daily work. This is not about publicity.

But how should this process be managed within the various teams of work? What tools should the team used to analyze gaps? Which tools and methods the team used to find the problems root cause and come up with solutions? How the improvements and problem solving can be executed in time and with quality?

Managing processes

The answer is evident. You must understand the root cause of the problem that is preventing the target from being met.

Only from there that, as a team, one can identify the possible solutions that will completely solve the issue, preventing the operation to flow.

Even more than that, it allows to evaluate over the days, if the solution found had the necessary adhesion.

Therefore, after their implementation, they make the indicators park on a new and better level. On this way, the continuous improvements staircase is escalated properly.

This is the famous cycle of continuous improvement and exemplifies the typical use of PDCA  on a daily basis.

This well-conducted process introduces in the management, culture and routine of the run. Implements the method of evaluation and analysis of problems.

In addition, it engages and empowers (empowerment) the basis of the organizational pyramid in its day-to-day business run and support decision making process keeping the flow and operations dynamics in the journey to operational excellence.

Logic effectively democratizes decision-making power and makes the operation self-sustaining, less dependent on third parties, to make it happen.

Moreover, it allows teams to understand how they can contribute to strategic results daily. Thus, promoting engagement in the process of achieving challenges and achieving team goals.

The methodology of Blindagem de Processos, through the tools of lean production, the transformation of culture and the realignment of the leadership profile promotes the use of an execution method that brings with it discipline and organization.

Thus, people understand their responsibilities, learn to make decisions focused on an effective generation of results, in everyday life.

Teamwork

All this is only possible with the effective participation and engagement of all employees and the strong support of senior management, demonstrated with attitudes and effective participation.

One of the great results of this process is the creation of a winning team. This team that improves results every day. It grows and learns new things by becoming its members better and more productive people.

Henry Ford said that.

“You can take my factories from me, burn my buildings, but if you give me my people, I will build all my businesses again”

What makes your company competitive and profitable are the people who make it up. It is the various teams that; trained, committed and aligned with the organizational strategy, enable the journey towards operational excellence.

Luiz Claudio Mattos

Founding partner

Blindagem de Processos