Shape strategy to fi t the people who are going to execute itBuilding organizational insight into strategy development to improve execution success

Will your chosen strategy work with or against the grain of tribal patterns within your organization?

What level of active commitment or opposition is a strategy likely to engender in different parts of your organization?

Is the natural mode of collective behavior within your organization conducive to delivering on a chosen strategy?

Large organizations are exceptionally good at grinding down and dampening the impact of even the best strategies. Most leaders are aware of the organizational drag or friction that limits their success. After all, strategies are executed by people.

Yet, we have had no reliable way of anticipating this friction and building it into an evaluation of strategic options available to leadership. Evaluating strategic options typically involves the external analysis of growth opportunities in the market matched to the internal analysis of portfolio performance. But for most organizations, little or no consideration is given to the capacity of the people to change work practices as required to successfully deliver on the strategy.

The leader’s challenge is heightened where internal or external forces require a shift in strategic direction:

First, a new strategic direction often assumes a • structural shift – from geography to customer for example, or from function to product – which can be impeded or aided by patterns of strong or weak shared identity among different organizational groups

Second, it is often helpful to get an early gauge • of people’s willingness to commit (or likelihood to oppose), a particular strategic direction – not just to appreciate the persuasion or engagement challenge associated with the strategy, but also to fl ag risks that might not be immediately obvious from the standard analyses used to formulate strategy

Third, understanding the way in which people • work together – both within and across teams, tells leadership something about the cultural fi t of a strategy to the way its people work together.

Deloitte’s distinctive approachOver the last two years, Deloitte has invested in a major global knowledge initiative to study the way people work together in large organizations. The As One Flagship Project has created a comprehensive and systematic way of understanding the degree of organizational coherence behind a specifi c set of strategies. This means that leaders have additional information to inform strategy evaluation and execution.

We believe successful collective behavior requires individuals to see themselves as one group (what we call ‘high Shared Identity’), to commit to a common purpose or set of goals (what we call ‘high Directional Intensity’), and to have a similar understanding of how they are to work together (what we call ‘high Common Interpretation’).

The As One diagnostic measures these three factors at all levels of a large organization thus helping the leadership to evaluate strategic options with a better understanding of organizational capability to execute.

The diagnostic is automated, using a web-based front-end to automatically plan and generate the survey, as well as an automated back-end to allow survey data to fl ow directly through our algorithms and into the interactive interface to display results.

This automation allows us to offer a shorter, more cost effective diagnostic process with very short turnaround time to access results. Our leading-edge interactive interface provides a granular view of results, to enable development of targeted and effi cient interventions honing and executing strategy. Importantly, we give full access to the interface to our clients so that they can continue the work beyond Deloitte’s involvement.

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Shared Identity Shared Identity assesses an individual’s affi nity with different groups within the organization. Understanding where individuals feel the strongest affi nity as part of the strategy development process highlights the structural barriers to executing on a particular strategy.

For example in Figure 1, Operations employees show strongest identifi cation with their region, while Sales employees have strongest Shared Identity with their product area. A strategy which required Sales to sell across the portfolio of products into a given territory, or one which required the operations function to specialise by product would be likely to face signifi cant barriers to execution.

We have developed a unique diagnostic process that dramatically enhances our clients’ ability to formulate executable strategies.

Figure 1 – Shared Identity profile: Sales & Operations

Directional Intensity The concept of Directional Intensity assesses the propensity to commit to different strategic goals. Deloitte’s unique approach gets beyond a generic sense of engagement to a more specifi c measure of Directional Intensity that reveals potential resistant communities that need to be engaged or high intensity communities that can be tapped in to.

For example, the Directional Intensity results in Figure 2 reveal a large undecided and opposed group in relation to the goal of transitioning the business to Advisory Services.

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Figure 2 – Directional Intensity results Figure 3 – Distribution of opposed group by function

Figure 3 shows a large number of this opposed group work in Sales & Marketing and a high percentage of this function are opposed to the Advisory Services Strategy.

The Finance function accounts for a small number of opposed people, however this small number represents a large percentage of the function and is therefore potenially signifi cant.

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When we explore the reasons for opposition more closely, we see they are very different for Finance, who don’t believe the goal is in the organization’s best interest (Figure 4) to Sales, who don’t believe this goal is achievable (Figure 5).

It is possible that these resistant groups within Finance and Sales & Marketing may have knowledge of the market or of fi nancial implications of pursuing this strategy that should be taken into account in the strategy evaluation process.

Figure 5 – Sales & Marketing: reasons for oppositionFigure 4 – Finance: reasons for opposition

If their opposition is based on false assumptions, Leadership can take targeted action to address their concerns early to increase Directional Intensity.

As an example, one mode of As One behavior is the Conductor & Orchestra which is characterized by precise execution, clearly defi ned roles and standardized processes. A classic example of Conductor & Orchestra mode is FedEx Ground, where processes are so highly scripted that drivers must always follow the dictated delivery route, and cannot deviate from the required uniform, and sometimes drivers are even followed to ensure compliance to rules. An example of the company’s extreme prescriptiveness is that all drivers are required to follow the ‘little fi nger rule’, which means they must hook their keys onto their little fi ngers when walking to doors to deliver packages. This mode of collective behavior has many advantages – for example it is often successful where cost competitiveness is a strategic differentiator, however its vulnerability lies in its lack of adaptability when faced with disruptive competition.

The eight As One modes create a language for leaders and organizations to speak explicitly and deliberately about how people are to work together at different times.

The different modes of As One behavior

Common InterpretationThe concept of Common Interpretation is used to understand and measure the consistency with which different people in the organization think about working together. The challenge here is that there is no clear taxonomy or universal language around different types of collective behavior. So, we created one.

The Deloitte As One Flagship Project used a robust analytical methodology to identify eight different modes of effective collective behavior. While any of these modes can be successful, there are vast differences among them and organizations that do not share a common default mode of operation often fi nd themselves at cross purposes.

Another mode is Senator & Citizens, which is characterised by self directed and autonomous employees and a culture of participatory democracy. A good example is WL Gore & Associates, a US fi rm that develops fl uoropolymer products for next-generation electronics, medical products, and high performance fabrics. It has grown from a garage start-up to a multi-billion dollar a year organization through its ability to continuously innovate, bringing new products to market on many different fronts.

What is most interesting is that this is able to be done with an exceptionally fl at organization structure where there are no bosses, no chains of command and no direction from senior leadership as to what market it should enter and product lines it should be exploring. United by a common set of values rather than rigid structures, Senator & Citizens models have the fl exibility to organically shift direction – adjusting investment and portfolio mix based on what is emerging in response to market and consumer dynamics. However they are vulnerable to ineffi ciency and are less suited to situations where rapid results are required.

Understanding the default mode of collective behavior within the organization provides the third area of insight needed to determine the fi t of a particular strategy to the people who will be executing on it.

The As One diagnostic adds a new dimension to the fact-base used to evaluate and chart a strategic path for the organization.

By identifying the default and secondary archetypes, strategies can be evaluated more holistically and, if selected, fine tuned for greater resonance and impact.

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Deloitte provides audit, tax, consulting, and fi nancial advisory services to public and private clients spanning multiple industries. With a globally connected network of member fi rms in 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s 169,000 professionals are committed to becoming the standard of excellence.

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For further information, please contact:

Louis GeeringhConsulting Southern Africa LeaderDeloitte Touche TohmatsuSouthern AfricaTel: +27 (011) 209 6332lgeeringh@deloitte.co.za

Gert de BeerHuman Capital DirectorDeloitte Touche TohmatsuSouthern AfricaTel: +27 (011) 8065995gedebeer@deloitte.co.za

Jim Quigley Global CEODeloitte Touche TohmatsuUnited StatesTel: +1 (212) 492 4800jquigley@deloitte.com

Mehrdad Baghai Managing DirectorAlchemy Growth PartnersAustraliaTel: +61 (02) 9322 7980m@alchemygrowth.com