Tuesday, April 21, 2009

Redefining roles at the strategic value level.

When thinking through new responsibilities for senior executives, it’s helpful to classify employees as strategists, developers and operators, rather than using the more traditional labels of executives, managers and workers. The strategists are responsible for creating new business opportunities, the developers are responsible for growing the business and the operators are responsible for running the business. The traditional distinctions between managers and non-managers become increasingly blurred when everyone is responsible for managing some aspect of the enterprise. In this kind of world, it’s more useful to think of managers at all levels in terms of the value they contribute to the organization rather than viewing them as a special, separate class of people.

Managing at the strategic value level today involves four fundamental tasks:

- first, monitoring and influencing the environment to develop new business opportunities;

- second, articulating, modeling and creating ownership for a vision of what the organization aims to accomplish in the future;

- third, attracting and retaining business leaders, matching them with the right assignments and holding them accountable for results; and

- fourth, investing, distributing and balancing resources across the organization’s portfolio of businesses.

When Lew Platt was chairman of Hewlett-Packard, he believed his most important role in strategy formulation was building bridges among the company’s various operations. He said, “My role was to encourage discussion of the overlaps and gaps among business strategies, the important areas that weren’t being addressed by the strategies of the individual businesses.”

Platt’s strategy sessions were aimed at creating new market opportunities by looking at the entire business ecosystem. Most managers were so involved minding their own business they didn't make time to step out of their day-to-day boxes to identify and plan responses to external threats and opportunities. Successful management teams today work together to search their environments for patterns that connect with one another and to develop strategies that take advantage of these linkages. They also seek to gain significant competitive advantage by inventing bridges that create new patterns that didn’t previously exist.

In the past, only those at the pinnacle of the company’s hierarchy engaged in strategic thinking but in today’s flatter, more flexible architecture, that's become the responsibility of the many rather than the few. In the old structure, strategists or planners were seldom responsible for implementing their plans. Today, just thinking strategically no longer suffices; people are held accountable for acting strategically as well.

It often takes a crisis to change a traditional organization because the authority to set strategy and direction is highly concentrated at the top. As a consequence, a relatively small group of people at the top can hold the organization’s capacity to change hostage to their own personal willingness to adapt and to change. However, in practice the actual work of redesigning our musty old management practices is more evolutionary than revolutionary. You can’t take a large, complicated organization and tear up all the track at once. To do so would expose a company to an intolerable level of operational risk. Yet eventually companies must become as purposefully and creatively experimental in thinking about their management systems and processes as they already are in thinking about R&D or new-product development.

It takes time to discover the operating detail of how to make new ideas work in practice. You can see the broad directions, but you can’t see how it’s going to really work. You can’t even understand the secondary and third-level consequences of the design decisions you make. Those have to be discovered through trial and error.

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