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Corporate Success

iUniverse, Inc.

Contents

Preface..............................................xiiiAcknowledgments......................................xvIntroduction.........................................xvii1. Strategy x Adoption = Results.....................12. Change-Enabling Milieu............................153. Psychological Connection..........................654. Structural Connection.............................855. Contractual Connection............................101Conclusion...........................................129About the Author.....................................137Glossary.............................................139Bibliography.........................................141Index................................................143

Chapter One

Strategy

Organizations develop and implement strategies to solve a specific business problem. The problem can be one of many (e.g., losing market share, decreased revenue, or decreased profitability). Once a problem is identified, stakeholders fixate on the numbers—the business results. They ask fundamental questions, such as, "What is happening in the market?" "How are our competitors doing?" and "How can we stay ahead of the pack?" If the current results are not satisfactory, stakeholders start to think about ways for the organization to be more successful—to obtain better results. The dissatisfaction with the current state or the desire for a vision of a better future creates the impetus for change. Energy is unleashed, strategic momentum is built, and the organization starts to explore new ways of becoming successful.

Organizations design and implement strategies to take advantage of opportunities. An agile organization has the ability to identify and decisively seize opportunities in the market. Organizations may want to aggressively enter new markets, rapidly establish and scale up a new business, and perhaps bet heavily on new technology. This becomes the strategic intent of the organization—the ambitious and compelling dream that energizes the organization in pursuing success. The strategic intent provides the emotional and motivational fuel for the journey to the future. Strategies are designed, developed, and implemented to realize these dreams. It all comes down to business results—the current results and the desire for improved results.

In today's highly competitive environment, companies that become complacent are the losers. Global competition, technology, and fewer barriers to entering the market force organizations to constantly evolve, deploy new functionalities, acquire new capabilities, or migrate existing capabilities and compete in new markets, to name but a few demands. These potential changes have to translate into business strategies to make them executable—to make them real and able to achieve the desired results.

In slower times, organizations could develop their strategies, create barriers for others to enter their markets, and implement and allow their strategies to unfold and realize over time. For many companies, this is no longer feasible. Organizations and strategies have to yield results faster than ever before. The speed factor significantly raises the bar for strategy development and implementation. Now more than ever, organizations have to select the right strategy, develop it fully, implement it effectively, and obtain results expediently.

A change in strategy represents a change in direction or focus, and subsequently a change in behavior. In very small companies, this does not present a big problem—everybody knows what they are trying to accomplish and what they have to do to make it happen. As organizations grow and layers of complexity are added, it becomes harder to execute a change. In mature organizations with a high level of institutionalization, change becomes even more cumbersome. The challenge is to be as nimble and agile as a small organization while taking advantage of the organization's mature capabilities. Strategies are only successful if they yield results. Despite huge organizational investment in strategy management, only approximately 37 percent of strategies realize their intended results. The other 63 percent vary from partial success to outright failure (Mankins & Steele, HBR, January 2006). I have looked at strategies that did not yield the intended results and next describe the range of outcomes.

Some organizations develop and implement a new strategy. However, the strategy does not yield the expected results, although the strategy implementation went smoothly and the execution was done well. For example, an organization planned to increase revenue by $400M through mergers and acquisitions (M&A) but fell short on the delivery. This happens frequently due to a wide array of circumstances. In this situation, the combined revenue potential was overestimated and overlapping markets were not visible during the due diligence phase of the merger.

Organizations develop and implement a new strategy but fail to implement it fully. For example, a large health-care system on the West Coast suspended the implementation of electronic clinical medical records after completing a quarter of all their hospitals. This may happen when the designed strategy only gains partial traction, which may result in partial implementation. Partial implementations happen frequently, are costly, and never deliver the expected results.

A strategy can fade away when an organization develops and launches this new strategy with big fanfare but lets it "hang out to dry" over time. It often happens that once the strategy has been launched, it faces several challenges. Maintaining momentum, producing the expected results, and sustaining support by the leadership are just a few of the challenges. Rather than addressing these challenges, the leaders of the organization simply stop talking about it. They turn their attention to day-to-day operations and choke the strategy to death with their silence. This fading is visible when sponsorship for the strategy is tracked over time. Support for the strategy never gains traction at the lower levels and loses sponsorship at the top. When this happens, the new strategy just slowly fades away.

Some strategies are outright abandoned before realization. A strategy to increase revenue through an M&A failed due to a lack of trust. An M&A between a national accounting firm and a smaller regional accounting firm was stopped just before the final stage when new information related to liabilities surfaced. The national accounting firm was going to assume the liabilities of the smaller regional firm during the M&A. A lack of transparency with regard to the critical liabilities created a significant lack of trust, killing the M&A and the strategy to increase their revenue.

In another situation, a large regional health-care provider launched a strategy to centralize their accounting/billing functions. They abandoned the strategy midway when it became apparent that the individual hospitals would have to give up control over their billing functions, and they were not ready to agree to that. Their refusal brought the implementation to a halt, and the organization abandoned the strategy. Consequently, the large regional health- care provider lost hundreds of millions of dollars due to...