Building capabilities and changing the organization

June 20, 2024

(This article is based on content that will be covered in the upcoming webinar webinar Driving Change with Data and Diagnostics on Tuesday June 25 that Maura Stevenson and I will be leading.)

Executing a (new) strategy means two things. You have to build new capability required for the strategy. And the organization has to change from the old capability to the new. Capability building and change. Simple enough, and easy to say. So why do most strategy executions fail?

One reason: those two objectives are treated as separate and loosely related rather than closely intertwined and highly interdependent. As a consequence, they are staged sequentially, which loses considerable time. Addressing them sequentially also greatly increases the likelihood neither will be completed effectively: the interdependent learnings from each need to be integrated and adjusted in real time to ensure strategic success.

Change is both a process, and, at the same time, a road map for identifying what needs to change. Change often falls short because we don’t properly specify and follow a robust plan for what is being changed, how it’s supposed to change, and how things are supposed to look when all is said and done. Instead, we act as if we just have to describe the journey, get started, and then miraculously end up at the destination.

Changing organizational capability requires a detailed road map

Changing capability does not happen simply by redefining people’s jobs. Yet many change efforts follow that exact premise. The language is different than that, using phrases like transformation, organization redesign, shifting the operating model, and more. Yet cut through the jargon, and the essence is that we are changing what people do in their jobs.

Change occurs at multiple levels, of which individual role change is only one part:

  • Individual level: What each person is responsible for
  • Team level: What each group of people is responsible for
  • Business unit/department/function level: What has to be done to execute the new business processes – how the teams integrate with each other seamlessly, end-to-end

I’m sure some people reading this will say, “When we work on who is responsible for what among managers and leaders, we of course address the team and business process issues!” To which I say: yes … kind of … sometimes.

It should be enough to make sure everyone at all levels of the hierarchy knows what they are supposed to do. Yet the glaringly obvious evidence is that change efforts almost always fall short in terms of speed, cost and/or meeting strategic and operational goals. So the typical way of doing things has to be missing the mark.

The answer lies in being very specific and detailed as follows:

  • Address job design at the individual level: How does each person’s job change? How do they have to adapt and learn to do the new work?
  • Address team design at the group level: How does the team’s charter change? How does the team have to adapt and learn to do the new work?
  • Address end-to-end business process change at the unit or enterprise levels: How to get everything to work seamlessly across silos, functions, departments, and geographies?

Years ago I made the argument that talent needs to be viewed as an organizational capability, not individual (Talent is an organizational capability). We need to build that capability purposefully and integrated across all the levels where the work happens: individual, team, process, etc. The road map to new organizational capability has to make all those details explicit.

The change process

“Are we managing change, or is the change managing us?” That refrain is often heard in frustration when traditional change management approaches fall short.

Organizational development and change experts hate the term “change management” because it sounds – and acts – as if we are on a simple, deterministic path, going from A to B. So long as we follow the steps of “good” change processes, we should arrive at the destination.

However, change is both a process and what is being built (changed). And, to paraphrase the famous book (Who Moved My Cheese?), organizational change involves moving a whole lot of people’s cheese, at a much grander and more complex scale than traditional change management can address.

For an analogy: the book talked about moving one person’s cheese, like each person’s favorite type of cheese has been altered. When changing organizational capability, it’s like changing every flavor of every cheese and their prices at a big French cheese shop. The owner and all the customers then have to figure out (a) who likes which new flavors, (b) how well each new flavor pairs with food and wine, and (c) their willingness to pay for each one at the new price points. Which takes a long, long time to sort out.

Change models do a great job of describing the stages that people go through emotionally when change is happening. Yet they fail to specify the details on the “from” and “to” in terms of how individuals, teams, and teams of teams figure out how to do the work in aligned ways. It’s like saying, “we’ve changed all the cheeses, and we know it’s going to be a bit challenging for you to figure out the new ones you like, but we’ll just go through some simple steps and in a few weeks time, everything will be sorted out” – when the process is much more complicated and requires months and months to complete, if not a year or longer.

Before and after

Imagine how the system looks just before the launch of a big change, assuming everything is going well in the first place. Everyone knows the role they have to play. Team members have worked out how to coordinate and execute their work internally, and how to be aligned externally with other teams and functions. The leadership and process owners help ensure transfer of the work happens as seamlessly as possible, and decision making is thoughtful and effective, from end-to-end throughout the entire business process.

When the change starts, everything that was previously tightly aligned gets disrupted and needs to be realigned.

  • People have to figure out how to do the new work.That takes time, because everyone approaches their jobs in unique ways. People will have different degrees of skills gaps, and different learning journeys they must traverse to get to the point of doing the new work effectively and efficiently.
  • At the same time the individuals are on their personal learning journeys, the teams they are on parallel learning journeys.There is a large chicken versus egg challenge: the teams can only work everything out once each person knows how to do their part of the new work the right way. Yet the individuals need to understand the new ways in which their expertise can be leveraged on the team – at the same time they are learning about how to do the work themselves.
  • This means that there is an iterative process that constantly crosses the individual and team levels. Initially, individuals’ managers and team leaders make their best assessment about who needs to do what, based on their forecasts for who will (eventually) become expert at which new tasks. Simultaneously, the teams and their leaders make the best forecast about how to divide up the work based on the individual forecasts and knowledge of past team dynamics. Despite people’s best efforts, there is huge uncertainty regarding the forecasts.
  • Once the work starts, people start learning about how to make it all work at the individual and team levels, and have to constantly adjust their expectations and understanding of their own capabilities, and the capabilities of their teams.Some people and teams learn faster than others. People and teams that were forecasted to be expert at certain tasks fall short in some areas, while others emerge as expert in unexpected ways. All of which leads to adjusting how the work is done iteratively, which sets of new rounds of learning as responsibilities shift among team members and across the business processes.

It’s never “one and done” or “set it and forget it”

If what I’ve described above sounds confusing and hard to follow, that’s a good thing. Because that’s the reality of how learning and building robust organizational capability actually happens. I know this from all the work I and my colleagues at the Center for Effective Organizations, and our partners in our client companies, have done over four plus decades.

Senior leaders like to project certainty, and the people they lead want to be reassured. So there is a big premium put on downplaying the uncertainty of getting everything to operate properly in the new system.

The other reason why senior leaders focus on executing the new design rather than embracing the iterative learning and adjustments that are needed comes down to trust and transparency. Senior leaders inherently distrust the people in their organization to put the company’s interests first. They think they need to set big, challenging goals, and then push their people to achieve them, whatever it takes.

The people they lead, in turn, have good reasons to be skeptical of their leaders’ motives. When a new initiative succeeds, the rewards accrue disproportionately to those at the top, and they have to bear the brunt of the adjustment costs for doing the new work. So they have to be supported and listened to constantly along the journey – to ensure their concerns about the change are heard and acted upon. This is especially true because of the real-time learning and adjustments needed which always are immediately apparent to those doing the work, and take a lot longer to bubble up to the senior leadership.

So, despite leadership’s desire, it’s really not possible to “set it and forget it” when it comes to the new work design.The process, and everyone taking part in it from top to bottom and end-to-end, have to be flexible and adaptive, and recognize that the journey is a marathon, not a sprint. A marathon where the actual route taken and conditions encountered are not known at the outset. They are only revealed over time. Success happens when leaders recognize and embrace the ambiguity and flexibility required of them and everyone they lead.

For a deeper dive into this topic, please join Maura Stevenson and me for our webinar Driving Change with Data and Diagnostics on Tuesday June 25, and for the virtual workshop we are leading in September – October Driving Organizational Change with Data.

Click here for the original article on LinkedIn.