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Information on Professor Robert G. Barnwell's ongoing research of NYSE-listed companies and best practices within strategy execution, implementation and change management.
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2. Strategy Execution & Strategic Change Management Contact: Robert G. Barnwell CUNY Baruch Colleges Zicklin School of Business One Bernard Baruch Way, Box B10 New York, NY10010 Tel.(917) 771-4628 [email protected][email_address] 3. Executive BiographyROBERT G. BARNWELL The strategy execution and strategic change management study is being managed and supervised by Robert G. Barnwell. A clinical professor in the MBA program of CUNY Baruch Colleges Zicklin School of Business, Robert is also a regularly invited guest speaker at such universities and business schools as Harvard, MIT, Stanford, and the Wharton School of Business.In addition to his academic and research experience, Robert has considerable strategy consulting and corporate finance experience working with companies undergoing significant strategic, operational and financial change. Robert is the author of the forthcoming book,A Lead, Follow or Get the Hell Out of the Way: Driving Rapid and Lasting Strategic Change (Summer 2011.)Robert completed his masters degree in business administration at New York University and received his undergraduate degree from Georgetown University in Washington D.C. To learn more about best practices in strategy execution and strategic change management or to participate in the study, please contact Robert via e-mail at[email_address]or by telephone at (917) 771-4628. 4. Strategy Execution & Strategic Change Management MEETING OBJECTIVES
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Strategy Execution & Strategic Change Management CONTENTS 6. Strategy Execution & Strategic Change Management ABOUT THE STUDY Curious about why strategy execution programs and strategic change initiatives werent more successful, professor Robert Barnwell began to study the existing research on the subjects of strategic change management and strategy execution. What he found was a largely universal and broadly agreed-upon framework that crossed several disciplines, including project management, change management, Management by Objectives/Results, and strategy execution (see Section IV).Assuming that this basic framework isnt to blame, something else (or some other combination of factors) must be responsible for the disappointing lack of success To find out, Robert is supervising an ongoing study focused on identifying the most successful strategy execution and strategic change programs currently being employed within large publicly-listed corporations with a focus on how these initiatives are being managed and implemented. 7. Fall 2009 Spring 2010 Summer 2010 Fall 2010 Spring 2011 Launch Study Perform comprehensive review of existing literature and research and meet withparticipating companiesto scope study. Field Studies Identify 6-12 leading best practices and beginfield tests with participating companies. Accelerate Research Expandcorporate interviewsandsurveys ; and secure roles asobserverandscholar-in-residence .Performassessments and reviewsas requested. Publish Initial Findings Publish findings (executive briefings, articles and books) following comprehensive dissemination of initial findings to corporate participants. 8. Strategy Execution & Strategic Change Management GETTING INVOLVED
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Section I 10. Strategy Execution & Strategic Change Management LEVEL & DURATION OF RESULTS Level of Impact disagreeagreestrongly agree Significant Notable/As Expected Limited None Negative Duration ofResults Long-lasting (2-years+) Modest (12-24 months) Rapidly Dissipated (less than 12 months) No impact Of the strategic initiatives youve been involved in the past 10-years, how would you characterize the level and duration of the typical results? 11. Strategy Execution & Strategic Change Management COMMON OBJECTIVES What have been the most common three (3) direct objectives of any strategic change initiatives youve led or been involved with over the past 5-years?
12. Strategy Execution & Strategic Change Management PLANNING & DEVELOPMENT
The planning and development of recent strategic change initiatives have included(select all that apply): 13. Strategy Execution & Strategic Change Management LEADING CHALLENGES What have been some of leading hurdles to achieving the level and duration of resultsof these objectives?
14. Strategy Execution & Strategic Change Management CONTRIBUTORS TO SUCCESS Which do you believe to be the 3 most important components of a successful strategicchange program and which do you feel are the 3 least important?
15. NOTES 16.
Section II 17. Corporate Strategies are intellectually simple, their execution is not.The question is, can you execute? Thats what differentiates one company from another.
18. Unfortunately, for the vast majority of companiesand their executives, the answer to this questionis a resounding No. 19. less than 10% of the strategies effectively formulated are effectively executed. Robert Kaplan, Harvard Business School well-formulated business strategies fail 90 percent of the timedue to poor implementation Raymond E. Levitt and William Malek, Stanford University Companies typically realise only about 60% of their strategys potential value because of failures in planning and execution. Economist Intelligence Unit survey 20. SIDELINED BYWEAK STRATEGY EXECUTION
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John Kotters Leading Causes of Transformational Failure 22. Carl von Clausewitz On War and FrictionCarl Philipp Gottlieb von Clausewitz (1781-1831), author ofVom Kriege , ( On War ), introduced military strategists to the concept of friction which he described as theforce that resists all action.It makes the simple difficult and the difficult seem impossible. Put simply, friction refers to the challenges encountered when a strategy that requires the coordination and collaboration of a large group of different units meets the harsh realities of the battlefield.Von Clausewitz identified a number of sources of friction, including:The Fog of War or the inherent confusion during battle and difficulty of gathering reliable information; indecision by frontline officers; lack of proper arms, munitions and equipment (resources); lack of proper coordination; unclear or overly-complex battle plans; and inadequate communications.Von Clausewitz found that friction becomes particularly problematic with regard to the officers two or three ranks below the field general who originally conceptualized the strategy. 23. NOTES 24.
Section III 25. Strategic Change Management & Corporate Revitalization TRADITIONAL FRAMEWORK
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Section IV 31. BEST PRACTICES A Few Highly-Focused Objectives A proper diagnosis typically leads to a small number of obvious prescriptive alternatives.However, the patient can only survive a handful of individual treatments at any one time and still expect to survive.Similarly, study participants have told us that it is critically important to triage business challenges and opportunities so that leadership can focus only on those that represent the highest payoff and potential for success. The most successful companies in our study were those that concentrated on one or two (and in no case more than 3) headline objectives at any given time .Once these had been accomplished, many began turning their attention to the next best 2-3 opportunities and then the next.However, at any particular point in time, the entire organization is crystal clear on the 2-3 objectives that are currently most important. 32. BEST PRACTICES Construct a Framework Whatever the initiative, research participants extolled the virtues of creating or borrowing a formal framework, including: change management, Activity Based Costing (ABC), Business Process Reengineering (BPR), Manufacturing Process Improvement (MPI), Lean Six Sigma, GE Workout initiatives, JIT & Lean Manufacturing, and Value Based Management (VBM.) A successful management framework spells out the various steps and stages of an initiative, the necessary resources, a schedule of completion, and helps identify the individuals who should be responsible for completing the various tasks . By providing a structured recipe, formal frameworks increase the rate of success, accelerate and enhance results, eliminate and reduce associated risks, minimize required resources, improve communications and planning, and reduce complexity. 33. BEST PRACTICES Put It In Writing A goal without a [written] plan is just a wish . While weve taken liberties with Antoine de Saint-Exuperys (1990-1944) original quote, it serves to illustrate the importance of putting the action plan in writing. The process of crafting a written plan requires both thoughtfulness and specificity.It should identify, communicate and clarify the underlying need for the performance improvement program, the programs principle objectives, supporting initiatives, individual responsibilities and accountabilities, resource allocations, reporting and meeting requirements, a schedule of key milestones/accomplishments, and associated performance metrics.Importantly, the written plan will also serves as a checklist for all that has been done and all that remains to be done. 34. BEST PRACTICES Get Ugly Despite the best crafted plans and formal frameworks, strategic change, particularly in a time of business uncertainty, is a messy affair. As German Field Marshall Helmut Karl Bernhard Graf von Molke (a disciple of von Clausewitz) pointed out,No battle plan survives contact with the enemy. Recognizing this, Moltke prepared his officers to adapt to the complexity and unknown variables that would unfold on the battlefield variables which werent anticipated when the initial battle plans and scenarios were envisioned. Similarly, no matter how elegant a change strategy may first appear,corporate leadership must be prepared to deviate from or abandon aspects of the plan as information and the environment dictate .Inevitably,every performance improvement program requires continual course corrections the process is rarely straightforward and never pretty . 35. BEST PRACTICES Search and Destroy Thesuccess of any performance-improvement program is as much a function of what the leadership team chooses not to doas it is a function of what the team does. Most strategic change and performance-improvement programs are characterized by profound resources constraints particularly in terms of time and capital.To address these constraints and to enhance operating efficiencies, several companies (as well as Jim Collins, author ofGood to Great ) have suggested maintaining a stop doing list.From a macro-view, the stop doing list may include non-core businesses, assets, projects, product lines, or markets that should be divested or abandoned.From a micro-view, the list often includes the elimination of unnecessary organizational layers and low or no-value operational or job processes. More important than an actual list, however, is the willingness to embrace the mindset required to aggressively seek out and eliminate low-value and value-destroying activities . 36. BEST PRACTICES The Strategic CFO Among the highest performing companies within our study, the outmoded view of the Chief Financial Officer as the green eye-shade wearing head bean-counter is long dead.ACFO capable of assuming a significant strategic role offers a huge advantage over competitors with less-strategic CFOs .In addition to providing traditional financial and managerial accounting information, the CFO supports strategic planning through insights afforded by market intelligence, competitor benchmarking, and a thorough understanding of the companys leading revenue and cost components.Further,a strategic CFO actively participates in leading the day-to-day execution of performance improvement initiativeswhile refining performance metrics, improving resource allocation, and cascading expected results into financial projections and the budgeting process. 37. BEST PRACTICES Action Talks. Bullshit Walks. Your actions speak so loudly, I cant hear what youre saying . The organization is looking to senior leadership to see if their actions match their words. People are skeptical.They wont believe in any new initiative unless they see immediate, notable, and tangible results and then regular results at short intervals throughout the continuation of the program. Employees are accustomed to a regular stream of changes that never seem to have any impact on their day-to-day jobs or, apparently, on the companys performance.Unless you demonstrate otherwise, and demonstrate it repeatedly, people will ignore the program until it and you simply go away. 38. Permission to Fail Required In addition to requiring regular progress reports and meetings, Geoff Merszei, former CFO of Dow Chemical, explains that the heads of Dows individual businesses are also required to obtain his advancedpermission to failto meet their agreed upon goals and targets. When individual business heads seek his permission to fail, Dows CFO and CEO have the opportunity to provide (i) any necessary resources or (ii) intervene with any cross-business conflicts to help the business get back on track .If nothing can be done to meet the originally scheduled objective, advanced warning allows the team tocoordinate with other businesses whos own initiatives are at riskdue to possible inter-dependence with the trailing business.BEST PRACTICES 39. BEST PRACTICES A Culture of Accountability The written action plan has each managers name next to a given task.A name not a title.The action plan and progress reports are circulated broadly.Everyone knows whosperformingand whos not.Peer pressure can be brutal. The program and individual projects cant be managed by committee which, all too often, permit people to avoid, or be shielded from, having their name associated with decisions or responsibilities. The program needs to be more important than any single individual.If someone isnt performing, there needs to be some consequence.This may take the form of an informal discussion, formal performance-review, removal from a critical project, reduction in bonus, a job reassignment, or even termination . 40. BEST PRACTICES External Perspectives While Chesley Sully Sullenberger, Captainof US Airways Flight 1549,began the decent to safely glide and land the disabled Airbus A320 onto the Hudson River on January 15, 2009, his head continued to rise and fall as he and his flight crew double-checked the information provided by the flight-deck gauges against the view outside the cockpit window. By accurately achieving proper airspeed, glide path, pitch and wing level, Captain Sully and his crew were able to land the aircraft on the river without the loss of a single life.Several CEOs in our research report the importance of doing much the same (albeit on a much less dramatic scale.)Unfortunately, the internal perspectives of a Company and its competitive environment are not always in sync with reality.Recognizing this, many successful leaders regularly solicit external perspectives from external board members, CEOs of non-competing companies, trusted consultants and advisors, interim managers, external hires, and debt and equity analysts. 41. NOTES 42.
Section V 43. Strategy Execution & Strategic Change Management THE STRATEGY AUDIT Based upon our initial research findings,academic and professional experience, and the contribution of leading consultants, academics and current and former CEOs, weve developed a strategy audit comprised of ~225 questions to help Companies assess both their strategies and execution management.The audit addresses such topics as competitive environment, strategy development, strategic leadership and management, strategy execution and implementation, communications and risk management practices.The following section presents 55 representative questions from the audit (which we will continue to refine and expand as our research progresses.)A copy of the entire audit may be found in the appendices of Roberts forthcoming bookLead, Follow or Get the Hell Out of the Way: Driving Rapid and Lasting Strategic Performance(Spring/Summer 2011) or upon request ([email protected]).Alternatively,interested companies are also invited to contact Robert and the research team about conducting a strategy review or audit for a modest stipend . 44. COMPETITIVE ENVIRONMENT
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46. STRATEGY DEVELOPMENT
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48. STRATEGIC LEADERSHIP & MANAGEMENT
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50. STRATEGY EXECUTION & IMPLEMENTATION
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52. ORGANIZATIONAL ALIGNMENT
53. STRATEGIC COMMUNICATIONS
54. RISK MANAGEMENT
55. NOTES 56.
Appendices 57. Appendix Two: RECOMMENDED READING Hrebiniak, Lawrence G.Making Strategy Work:Leading Effective Execution and Change .Philadelphia, PA: Wharton School Publishing, 2005. Kaplan, Robert S. and David P. Norton.The Execution Premium: Linking Strategy to Operations for Competitive Advantage .Cambridge, MA: Harvard Business School Press, 2008.Kotter, John.Leading Change .Cambridge, MA: Harvard Business School Press, 1996. Morgan, Mark; Raymond E. Levitt and William Malek.Executing Your Strategy: How to Break It Down and Get It Done .Cambridge, MA: Harvard Business School Press, 2007. Neilson, Gary L. and Bruce A. Pasternack.Results: Keep Whats Good, Fix Whats Wrong, and Unlock Great Performance .New York, NY: Crown Publishing, 2005. Tabrizi, Behnam N.Rapid Transformation: A 90-Day Plan for Fast and Effective Change .Cambridge, MA: Harvard Business School Press, 2007. 58. NOTES