Organizational Capability Management: The Role of I/O Psychologists in Strategy

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Questions for this Session

As a practitioner, what are some of the challenges you see when it comes to execution of business strategy?

How do you get from higher-level strategy to something that can be executed by the business? How do you go about what it will “really take” to execute the strategy? How do you ensure that plan is successfully executed?

How can I/O psychologists/OD practitioners help? What is the Role of I/O professionals at the table to facilitate the right dialogue & process to achieve the business result.

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The Case for Organizational Capability Alignment

65% of leaders do not consider their own organizations successful at executing their strategies. (AMA, 2012)

Only 17% of senior-level talent leaders indicate their workforce strategy is consistently aligned with their business strategy. (Hewitt Associates & HCI, 2008)

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What are your specific challenges?

What will it really take? What will we do?

How will we get there?

Unclear Strategic Priorities

Lack of ConsensusOn Strategic Priorities

Undefined Capabilities Needed to Execute Priorities

Lack of Strategic Short- and Long-Term Priorities

How to Close theCapabilities Gap?

Are Work Streams investments Justified by value gains?

Unclear path from Work Streams to results…

Need to adapt/refine existing strategy to shifts in the environment

Unclear path from Work Streams to results…

5

Change Execution Model: Four Phases

Full realization of critically important endeavors requires disciplined execution of:• Decide

• Define

• Implement

• Sustain

SUSTAIN

PR

EP

AR

E

DECIDE IMPLEMENTDEFINE

Achieving minimum acceptable realization; no turning back

Achieving realization of intended business benefits

Clarifying what it will take and committing to the path ahead

Reframing, designing the solution, planning how we will get there by when & at what cost

© Conner Partners 2008. All rights reserved.

Re-decide

© Conner Partners 2008. All rights reserved.

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Merck & Co. Model - Work in Progress…

1. Strategic Intelligence

2. Strategy Development

3. Business Portfolio Mgmt

4. Portfolio Resource Allocation Choices

5. Strategy Translation

6. Alignment & Execution Resources

7. Measures & Targets

8. Execute Initiatives

Operating planDashboardsBudgetsP&Ls

Performance metrics

Results

Performance metrics

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Lessons Learned

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Shell Strategic Planning:Scenarios

“OUR GOAL IS NOT TO PREDICT THE FUTURE BUT TO ENABLE POLICYMAKERS TO MAKE RICHER AND BETTER DECISIONS INVOLVING THE FUTURE, AS A RESULT OF HAVING A DEEPER GRASP OF KEY DRIVERS AND KEY UNCERTAINTIES.”

JEREMY BENTHAM, HEAD OF SCENARIOS, STRATEGY AND BUSINESS DEVELOPMENT, ROYAL DUTCH SHELL

March 2013

MountainsThe first scenario, labeled “mountains”, sees a strong role for government and the introduction of firm and far-reaching policy measures. These help to develop more compact cities and transform the global transport network. New policies unlock plentiful natural gas resources – making it the largest global energy source by the 2030s – and accelerate carbon capture and storage technology, supporting a cleaner energy system.

OceansThe second scenario, which we call “oceans”, describes a more prosperous and volatile world. Energy demand surges, due to strong economic growth. Power is more widely distributed and governments take longer to agree major decisions. Market forces rather than policies shape the energy system: oil and coal remain part of the energy mix but renewable energy also grows. By the 2070s solar becomes the world’s largest energy source.

http://www.shell.com/global/future-energy/scenarios/new-lens-scenarios.html

http://youtu.be/jIwzMhDFP2M

Copyright Royal Dutch Shell

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Shell Change Architecture:Successful change requires…

Copyright Shell Organisation Effectiveness

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Shell Change Architecture:Change Health Tracker Process Overview

Dan

ger

Cau

tion

Un

der

Con

trol

Op

tim

ised

SCORING

EXAMPLE

SUGGESTED DIAGNOSTIC PROCESS

Introduce and explain the 10 change principles and the tracker tool

Agree which change programme or project to health track

Take each principle in turn and ask “How well has this principle been applied to the change so far?”Assign a score and move to next oneCapture diagnostic insights on a flipchart as you go

Complete the diagnostic scoring

Step back and draw conclusions

Through discussion, convert diagnosis into a structured set of follow up actions that:- mitigate identified change risks in each change principle- further strengthen and leverage proven strengths of the change programme/project

Programme

Management

Leadership

People

Programme

Management

Leadership

People

4. Implementation driven by leadership as an integrated

whole

3. Diagnostic review of organization capability leading to a prioritized portfolio of interventions

5. Clear understanding of the

case for change, the future

state, the impact on them

and their role in it

7. Involvement of those most

impacted

9. Progress monitored

and used to correct

8. Change plans defined and resourced

1.Dissatisfied leaders personally committed to the change 2. Compelling case

for action among a

critical mass of leadership

10. Sustainable change

celebrated and institutionalised

6. Their psychological responses are

addressed

Copyright Shell Organisation Effectiveness

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Shell Change Architecture:Plan on a Page (POAP) steps for each work stream

Programme Set-up

1Change Programme CharterChange Impact AssessmentChange StrategyChange Implementation PlanDesign Strategy Document Programme Kick off Workshop *Programme OverviewImplementation History Assessment

Change Implementation Plan

Change Health Tracker

Individual Readiness Assessment

Implementation Plan

5 Manage and Document Programme10

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Direction Setting Design & Plan Close OutConsolidation

& Improvement

Mobilisation Delivery TransitionBCIM Workstreams

Close-out, Communicate, Celebrate, Redeploy

Engage Leaders2

3 Stakeholder Engagement Plan

4 Conceptual Design

8 Training

9 Implement Organisation Design

7 Stakeholder Engagement and Communication

6 Change Agent Training 11

Implementation Assessment

Change Health Tracker Communications Health Traker

Communications & Engagement Strategy Stakeholder Analysis & Engagement PlanCommunications Plan

Training StrategyTraining Needs Assessment

Communications & Engagement Strategy Stakeholder Analysis & Engagement PlanProgramme Roles & Responsibilities Matrix Change Agent AssessmentSponsor Assessment

Communicating Change ProgrammeChange Agent AssessmentSponsor Assessment

Context SettingVisioningOrganisational Capability DiagnosticDesign CriteriaDesign Blueprint

After Action Review

Post Organisation Design Capability Diagnostic

Level of Alignment Survey

Preparing the workforce commences in the Design and Plan phase

After Action Review

Transition Project Plan

Programme Roles and Responsibilities

Detailed Design Tools: (Processes, People, Structure, Culture, Leadership)Design ProposalTransition Project Plan

Copyright Shell Organisation Effectiveness

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Fundamental Questions

How well are you positioned to compete in the marketplace? Do you have the resources to play? Is your strategy robust? How well can your organization implement your strategy? Do your actions create the results you want?

IF NOT, YOU HAVE TO CHANGE YOUR STRATEGY, YOUR CAPABILITY, OR BOTH

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Successful Strategy Implementation Requires:Understanding of a Company’s Building Blocks

®CCorporate Governance

Strategy

Financial Capital

Technology

Product Portfolio

Context: Business Environment, Corporate History, Competitive Landscape, Marketplace (s), Regulatory Environment

Strategic Direction

Resources

Policies, Systems and

Processes

Organization Structure

Talent Culture

Leadership

Organization CapabilityBusiness Results

Financial Return

Market Share

Share Price

Reputation

®Parlyle Consulting

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Successful Strategy Implementation Requires:

① Dissatisfaction with the status quo ② Coalition of Leaders

Compelling case for action among a critical mass of leaders

③ Robust Strategy④ Organization Capability Gap Analysis =

portfolio of interventions Policies, Systems, Processes Organization Structure Culture Talent Leadership

⑤ Rigorous ‘Change Management’ of each ‘intervention’

Change itself People’s psychological reorientation to the change

⑥ Metrics to Know You’ve Arrived Quantitative Qualitative

Become Aware of their own dissatisfaction – so much so that they have energy to change

Paradox of Change(‘as-is’ better starting point than ‘should be’)

Move from Beginning, Middle to End of Intervention

Overcome Getting Stuck(Defense Mechanisms/Resistance)

Policies, Systems and Processes

Organization Structure

Talent Culture

Leadership

Action Steps Support Client to:

Desensitize Introjection

Projection Retroflection

Deflection Blurred Boundaries

Intellectualization

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Polling question

1. To what extent are you involved in your organization’s strategic planning process?a) Not at allb) Somewhat involvedc) Very involved

2. How robust is your approach to secure organization capabilities?a) Not so robustb) Somewhat robustc) Very robust

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What is an Organization Capability?

BMS Definition:

• An area of collective ability required of our organization in order to successfully execute the strategy and deliver value

• Not just about people skills--tend to comprise a larger integrated system

• Not about tasks or activities• Capabilities to play...win!

“When we create a system of mutually reinforcing capabilities, we create competitive advantage”1

1”The Coherence Premium,” Paul Leinwand and Cesare Mainardi, Harvard Business Review, June 2010, 86-92

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BMS Organization Capability Framework: An iterative process

• Identify organization capabilities required of strategy

• Define what “good “looks like• Conduct

External Benchmarking

• Assess current and desired capability maturity level, and timing

• Identify actions to close gaps & timing: Organization Capability Plan

• Integrate actions into:• Workforce plan• Learning &

Development• Org Design

• Execute plan• Monitor

Performance• Refresh

regularly

ExecuteIdentify(What do we need?Where is “there”?)

Assess(Where are we

today? Where do we need to be, by

when?)

Prioritize & Action

Plan(What will we do to

get there?)

© 2013 Bristol-Myers Squibb Company

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1

Lessons Learned

Deliberate Alignmentto Strategic Priorities

2Follow the Energy

and embed Organization Capability work in existing sponsored initiatives

Capability Planning allows the organization to deliver its strategic intent…

strategy only creates value if it’s implemented

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How will capability-building work streams translate into detailed work plans?

What will the organization need to look like in terms of structure, processes, skills and culture to achieve strategic priorities? Where are the gaps compared to today’s organization?

Define short and long-term

strategic priorities

Turning Strategy into Action

Examples of Capability Building Work Streams

Redefinition of work activities

Organizational Restructuring

Skill-Building and Alignment

Workforce Engagement

An Integrated Implementation Roadmap provides detailed information about tasks, roles, deadlines and milestones

12-18 Mo. 2-5 years

Are strategic priorities specific enough to be actionable but simple enough to be well understood?

Capability Building Work Streams are defined based on which gaps are most critical to close, considering time and resource requirements.

Current Organization

Organizational Requirements

Vs.

6 months

18 months

2 years

Reorder or modify strategic priorities?

Reorder or modify Capability Building Work

Streams

Investment

Forecasted value creation

© Bristol-Myers Squibb Company & Fisher Rock Organizational Consulting

What will it really take? What will we do? How will we get there?

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WHAT CAN I/O PSYCHOLOGISTS BRING TO THE TABLE?

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I/O Competencies

Process Consulting & Stakeholder Engagement

Organizational Design

Team Building and

Facilitation

Talent Management

Expertise

Research Methods & Analytics

I/O Psychologists bring a wide array of competencies to the table to facilitate the right dialogue & process to achieve the business result.

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Internal and External I/O Partnership: Influence and Power Dynamics

Internals Externals

Customer Intimacy – part of the System

‘Expert’ with external perspective

Internal – External External - External

Work “up” via the hierarchy Networked in to the Top – not part of the hierarchy

Subordinate to the CEO Trusted Advisor to the CEO (safer to speak ‘truth’ to power)

Fixed Cost Variable Cost

Mutual Investment Expendable

Deep Roots in the CultureAnthropologist – external

observer with knowledge of other systems and cultures

Strategic

Operational

Tactical

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A Suite of Tools

What will we do?

Strategic Capability Alignment: Assessment and Report

Leadership Team Offsite

Team Effectiveness: Negotiation Toolbox

Decision-making Network

What will it take? Joint Business-HR

Summit Gap Visioning and

Identification ROI Assessment and

Calibration Tool

How to get there?

Work Stream Roadmap Program Governance

Architecture Roadmap Dashboard and

Processes RACI Project Plans Project Management

Office tools and processes kit

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Assessments to Calibrate Understanding and Commitment

Issue: Leadership Team Alignment to Strategy

Approach/Tool: CAP Assessment and Report

Outcomes: Assessment of Leadership Team Alignment to Strategic Priorities

AP AssessmentSample Questions

The Business Model: What concerns do you have about the potential of your business model for fueling the organization’s growth?

Current Organization Architecture: What competencies are needed by members of the organization in order to be successful? How does this fit with the current skill profile within the various units of the organization?

Current Organization Architecture: What are the requirements of the organization’s leaders to fuel growth for the organization?

Feedback for CEO: What would you like the CEO and others to learn about improving the organization’s performance that they may not already know?

What will we do?

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Strategy Alignment and Work Streams Planning Offsite

Issues: Closing the gap between current and required capabilities, defining capability-building work streams, and justifying strategic priorities

Approach/Tool: CAP Joint HR-Business Summit Agenda

Outcomes: Capability gaps and work streams identified, an aligned understanding and confirmation of short and longer term strategic priorities

Time Agenda Item Intended Outcome Lead9:00 – 9:15 Opening Understand objectives of meeting

Agree on ground rules CEO

9:15 – 9:45 Icebreaker Get comfortable with other attendees and create open and trusting environment

I/O

9:45 – 10:45 Characteristics of high-growth organizations

Understanding of key attributes of high growth organizations

I/O

10:45 – 11:00 Break    11:00 am – 12:00 Present results of

assessments Begin to build understanding, alignment and commitment on strategic priorities. Identify large workstream buckets.

I/O

12:00– 1:30 Break    

1:30 – 3:30 Workstream Planning

Small cross-functional teams draft workstream plans, which include goals, resources, and timeline

Head of HR

3:30 – 4:30 Refinement & Prioritization

Report out of workstream plan. Refinement and prioritization

 

4:30 – 5:00 Next Steps Planning of next steps and clarify accountabilities and resources needs

CEO

Proposed Agenda: Day 1

What will it really take?

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Program Governance

Issue: Translating capability-building work streams into overall charter, roadmap and detailed work plans.

Approach/Tools: Program Governance Architecture

Outcomes: The structure, roles and accountabilities of senior leadership, the steering committee, the core program team and the project teams

Senior Leadership Team

Core Team

Workstream Teams

Steering Committee

Special Advisors

Strategy

Structure and Processes

Talent & Capability

Leadership & Change

Management

Project Teams

Subject Matter

Experts

How will we get there?

Governance Architecture