1、Organization: Overview of Core Frameworks,Local Training Module For First-year AssociatesAssociate Handbook,FOREWORD AND OBJECTIVE,This Organization Practice(OP) document provides an overview for use in local training sessions for first-year associates. It is part of a “series on functional areas.”
2、The objective of the series is to introduce McKinsey practitioners to the basics in each of our functional areas of expertise. All the documents in the series are comprehensive in nature and describe the current tools and frameworks in that functional area At the end of this document, you can find a
3、 section describing a selection of the core documents and handbooks that can give you further details on some of the frameworks descried here. All of these documents are now on PDNet; and hard copies of them can be requested from PDNet Express, which will deliver them in 24 hours The contents of thi
4、s document have been adapted for local training sessions through “Switching Tracks” OPs first-year module videotape, which communicates the basic concepts in a concise and visual way using an actual client The Scandinavian Railroad Company. It is 40 minutes long and should be presented in 3 short se
5、gments. Between these segments, the faculty member runs the attached exercises, adds any commentary he/she considers necessary to clarify the concepts, and provides personal experience on selected topics. A copy of the videotape and moderators guide with exercises can be requested from the Firm,This
6、 document seeks to answer 4 questions,SECTION 1 Why do associates need to consider organizational issues in every engagement? SECTION 2 What frameworks do we use to help our clients improve organizational performance? SECTION 3 What role does an associate play in organization work? SECTION 4 Where c
7、an an associate find out more?,CRITICAL ELEMENTS FOR IMPACT,Successful strategy,Efficient operations,Effective organization,We only achieve impact when the organizations we serve are successful in implementing the strategies and operational methods we propose. However, a recent survey of engagements
8、 in which clients failed to implement proposed strategies found, in three cases out of four, that the client organization was not change-ready or even capable of implementing the strategy we proposed. To ensure that we have impact, we need to consider organizational issues as we devise strategies. W
9、e must choose strategies the clients are ready and able to implement or complement our strategy work with investment in building the organizations skills so that the organization can step up to the challenge the superior strategy poses,3 OUT OF 4 STRATEGIES THAT FAIL DO SO BECAUSE OF THE ORGANIZATIO
10、NS INABILITY TO EXECUTE,100%=340 responses,Percent,McKinsey recommendations flawed,Client not change-ready or committed,Organization lacked the capabilities to execute strategy,Other,The demand for organizational work is increasing. Trends in the marketplace and the evolving nature of our clients la
11、rgely explain this increase in demand. The pace of change in the marketplace is accelerating . A strategic choice or an operational innovation evokes a rapid reaction from competitor. Rarely can a durable competitive advantage be found in these choices. Rather it is the development of a unique organ
12、izational capability with the inherent flexibility and commitment to sustain world-class performance that provides durable competitive advantage in these times of rapid change. The clients we serve are changing as well. They have increasingly hired in-house strategic capabilities. Most have built st
13、rategy shops close to the CEO. Few, however, have the in-house capability and objectivity to do the organizational work required to make change happen.,ORGANIZATIONAL WORK GROWING IN IMPORTANCE,Evolving marketplace Quickening pace of strategic adaptation Durable competitive advantage often rooted in
14、 unique organizational capabilitiesEvolving players Many businesses acquiring in-house strategic capability Making change happen remains the “neglected art”,McKinseys engagement mix Percent of time,Increasing demand for help with organization issues and change management,Source: Survey of 23 MGMs ac
15、ross the Firm,The recent evolution in our clients has not been missed by our competitors. Each of our competitors has recently introduced a branded organizational element to their portfolio. Their organizational expertise figures prominently in their marketing campaigns.,COMPETITORS HAVE BRANDED ORG
16、ANIZATION TOOLS,McKinseys consulting approach must evolve as our clients evolve. These changes provoke a shift in the nature of our work and an evolution of the role of the associate on engagements. The increased demand for organizational work impacts associates directly. Associates are drawn into l
17、eadership roles on larger teams at an earlier point in their careers. This places greater emphasis on the need for associates to develop quite soon after joining McKinsey-superb team leadership skills.,EVOLUTION IN McKINSEYS APPROACH,*Survey of 23 MGMs across the Firm,Before we dive into the organiz
18、ation materials, we should announce one critical caveat: the frameworks you are about to see are only as good as the judgment and insight used to fill them out. The frameworks are often mere checklists, useful tools to ensure you do not overlook a key dimension. The OP can provide interview guides a
19、nd questionnaires that you can use to flesh out the frameworks, as well as applied examples in a range of settings. However, almost all organizational issues are “situation dependent”, and almost all client settings are unique. Your judgment, insight, creativity, and organizational acumen will deter
20、mine whether you add value in the client setting .,A CRITICAL CAVEAT,“Garbage in, garbage out”,Organizational practice frameworksChecklistsSurveys, questionnairesApplied examples,Garbage,Good judgment, keen insight, creativity, organizational acumen,Garbage,Client impact,A series of frameworks are a
21、vailable to help clients identify and address organizational limits on effectiveness or obstacles to change. They also point toward solutions. These frameworks help teams answer two fundamental questions: What change is needed? How should the client implement the change? The OP has derived a set of
22、six attributes that characterize high-performing organizations(HPO). By assessing whether your client organization exhibits these six attributes, you can diagnose whether an organizational performance gap exists as well. Additionally, the 7-Ss will help you identify strengths and deficiencies in the
23、 organization. The 7-Ss focus teams on aligning structure, staff, systems, and style to promote behavioral change and build skills in pivotal jobholders. By contrasting the required skill set (at both the organization and the pivotal jobholder level) with the current skill set, you can often clarify
24、 the organizational gap that exists. You complete the diagnostic by filling out the change board. That exercise helps teams understand the organizational skill deficits or resistance to change so they can deliberately plan to build the necessary skills and willingness to change in the organization.
25、Once the gaps have been identified, the team needs to lay out a change program to close the gaps. The transformation triangle highlights the three critical dimensions of any effective change program-top down, bottom up, cross-functional. The proper balance among these dimensions depends on the gap,
26、the client setting, and the competitive context. Every change program contains some mix of six fundamental energizing elements. Each must be considered as we design change programs. This section of the handbook will discuss each framework in turn.,CORE FRAMEWORKS,High-performing organization attribu
27、tes,7-S framework,Winning formula,Pivotal jobs,Design levers,Organizational structure,Staff,Management systems,Leadership style,Change board,Agenda/platform,Direction setting Structuring Bottom-up energizing,Transformation triangle,Energizing elements,The OP undertook a study of 10 high-performing c
28、ompanies, true industry leaders, that we knew very well. The companies had sustained pace-setting performance in their respective industries over 2 decades. These 10 HPOs shared six management attributes, each of which focuses on performance. By comparing your client organization to these HPOs, you
29、may identify opportunities to improve your client organization.,“HIGH-PERFORMANCE COMPANY” ATTRIBUTES,Driven by leaders,Aligned by simple structures and core processes,Based on world-class skills,Rejuvenated by well-developed people systems,Built by relentless pursuit of before-the-fact strategies/v
30、ision,Energized by an extraordinarily intense, performance-driven environment,The first three of the six common management attributes: Driven by leaders. The leaders of these companies had very high performance aspirations. For these leaders there was no such notion as “good enough”. At the center o
31、f these leadership groups, we consistently found demanding, unreasonable CEOs. Built by relentless before-the-fact strategies/visions. HPOs spend their time looking forward, not back. Their strategies drive relentlessly for both profitability and growth. Energized by an extraordinarily intense, perf
32、ormance-driven environment. HPOs have a demanding, occasionally punishing, work pace. There is real accountability, especially at the top. HPOs, while being very good places to work, are not always nice places to work.,ATTRIBUTES OF AN HPO,ATTRIBUTES OF AN HPO (CONTINUED),The HPO research found some
33、thing else common to the HPOs: all 10 were experimenting with self-governance. Self-governance in these HPOs means empowerment with accountability. The HPOs share the common characteristic of involving “a wide range of “or “broad cross-section of” employees in driving for improved performance. Their
34、 goal is to imbue every employee with an owners mind-set. Self governance in these HPOs is different from that practiced in other “engaged and empowered” companies. In HPOs the single-minded objective of empowerment is performance. In the matrix below, the HPOs we studied were all in the top half of
35、 the matrix (high performance); many were reaching, in addition, for the right-hand side of the matrix(engaged and empowered).,PERFORMANCE AND EMPOWERMENT AT HPOs,Most large companies start out in the lower left-hand corner of the matrix (low performance and command-and-control management approach).
36、 We discovered that HPOs that have successfully transitioned to the upper right-hand corner have first achieved high performance and then experimented with and adopted empowerment. Empowerment without first establishing a true performance ethic in the company tends to result in continued low perform
37、ance. If your client falls in the lower left-hand corner of this matrix, it needs to concentrate first on building a true performance ethic. Empowerment, alone, is unlikely to yield performance improvement.,TRANSFORMATION PATH,7-S FRAMEWORK,McDONALDS WINNING FORMULA,Vision : to become the leading re
38、staurant chain in the world,Strategy,Shared values,Skills,Convenient Good quality Consistent Family-oriented environment Fair value,Quality control over all aspects of business Superior site selection Continuous new product development Strong promotion of products and McDonalds image,Quality Service
39、 Cleanliness price,Organizations usually change in response to discontinuities either external shocks (such as deregulation ) or internal changes (such as new leadership) that make it clear that the old , “grooved” way of doing things is no longer winning. The successful ones will create a new winni
40、ng formula that is based on changes in strategy, newer or stronger skills, and/or shared values. Contrasting the new winning formula to the old formula identifies and gauges the change that the organization is considering and defines the vision for the change program. A change vision is a creed that
41、 summarizes what an organization is trying to become and why. As such, it guides organizational priorities by redefining and recombining business objectives, required institutional skills ,and corporate values about what is important around here. A change vision is at the heart of top managements ro
42、le in improving performance and is often the first step. It provides the vital bridge between the initial dissatisfaction with the status quo and the first practical steps taken in a change program the articulation of a clear target that represents something better that is both logically sound and e
43、motionally appealing.,IMPROVING ORGANIZATIONAL PERFORMANCE,Grooved,Redirected,Unfrozen,Discontinuities,External shocks New competitors, economics New technologies Deregulation Internal changes New aspirations New leader,Major change through people,New strategy,New or stronger skills,Shared values,CH
44、ANGE VISION,Certain key people in the organization hold positions that determine success or failure in instituting a new strategy, skill, or shared value. These people fill what we call pivotal jobs. We will only succeed in implementing the change vision if we succeed in changing the behavior of piv
45、otal jobholders. At McDonalds, for example, pivotal jobs include the centralized purchasers of all raw materials for all stores, the store managers, and the hourly employees who take and assemble orders.,PIVOTAL JOBS What people must do,What are they ? Positions that have direct impact on delivery o
46、f value to the customer.Typically they -Design the product -Make the product-Sell the product Positions that must capably master new skills Where are they? Close to the front line,In a recent study at a chain store retailer, the change vision included a significant improvement in in-store convenienc
47、e. Two positions were identified as pivotal jobs the store manager and the area operations manager. This study employed a contrast analysis in two forms. The first considered each element of behavior and defined how the new behavior would need to differ from current practices. A behavior contrast an
48、alysis often proves helpful in defining precisely how the pivotal job- holders need to change.,CONTRAST ANALYSIS Pivotal jobs: store manager, chain retailer,The second analysis contrasted the percentage of time spent on critical tasks under current practices and envisioned in the future.,CONTRAST AN
49、ALYSIS BY PERCENTAGE OF TIME SPENT Pivotal job: area operations manager,100%,Merchant/owner,Coach,Player,Admini-straor,ORGANIZATIONAL DESIGN LEVERS AT McDONALDS,Winning formula,Pivotal jobs,Design levers,Organizational structure,Management systems,Leadership style,Staff,ORGANIZATIONAL DESIGN LEVERS AT McDONALDS,Winning formula,Pivotal jobs,Design levers,Organizational structure,Management systems,Leadership style,Staff,STRUCTURAL OPTIONS,CHANGE BOARD,Skill to be built,* Modified as appropriate for company * E.g., customers, suppliers, trade unions,
