Why failing to focus on the organisation can lead to strategy failure
McKinsey write about the dangers of ignoring organisation growth when developing a new business strategy (the where’s and hows of growth). Without considering the impact of the new strategy on the organisation, processes and structures “that are well suited to today’s challenges may well buckle under the strain of new demands”. Organisations should ask 3 questions to ask before implementing a new strategy.
1. Is the structure appropriate for the strategy? An organisation’s structures (and culture) evolve over time based on the existing needs of the business. However, these same structures can stifle the possibility of growth. Any established structure will have a built-in inertia. Management need to understand how best to adapt, change or even work around the existing structures in order to bring about the new strategy.
ii. Are the processes ‘fit for purpose’? Organisational processes evolve to fit the current purpose of an organisation. Start ups, for example, tend to be informal. This allows a collegiate approach to decision-making. However, as the start up moves to the next phase, informal processes not only are no longer inappropriate but could hold back growth. A meeting with 5 can be informal, a meeting with 25 cannot.
iii. Have your people the capabilities? As a business grows, so does both its complexities and ambiguities. Capabilities that were appropriate for a simple organisation tend to be lost in a growing organisation. If the business does not give its employees the ability to cope with the new complexities, even successful employees will flounder or even fail.
Creating a new strategy is exciting for a management team. Creating a new organisation to implement that strategy may not be as sexy but it is equally as important.