How to Evaluate the Office of Strategy Management: Early Years
Discover the most common challenges your company may face when implementing its Office of Strategy Management and how to overcome them. Evaluate how much your OSM follows the best practices and execute your strategy successfully.
In general, when implementing an Office of Strategy Management (OSM) within an organization’s structure, it may face an internal resistance to the changes it wishes to execute. In fact, the establishment of an OSM implies, in itself, a significant change because of the following:
- It is a new organizational unit that seeks to create new interactions and relationships among functions, processes and people which were previously not communicated.
- If implemented correctly, the OSM will report directly to the CEO (or the business unit’s director), which lends it the necessary authority level to insert itself into the organization’s most critical decisions.
- The OSM has new and concrete responsibilities that affect the autonomy and authority of other executive team members.
The OSM is inevitably the leader in charge of managing the connection between strategy and operations throughout the organization. This is due to its role as driver and coordinator of the organization’s performance and its privileged position in regards to the organizational hierarchy.
Similarly, the OSM represents the launch of an internal change agenda that combines new business tools designed to translate the strategy to operational terms with the organizational performance changes that are required to achieve a disciplined execution of the strategy.
Social and Technical conflicts
When looking to implement a change plan, the OSM faces two kinds of systems that are present in every organization: social and technical.
An organization’s social system represents the culture and conduct norms that define how an organization behaves. It reflects how its employees adopt new ideas, how they collaborate internally, how they communicate and interact and how its leaders work amongst themselves.
On the other hand, the technical system refers to the business tools and processes that an organization uses to manage itself. In the case of the OSM, the technical system includes tools such as the Balanced Scorecard, strategy maps, strategy review meetings, individual scoreboards and project management methodologies.
These two systems may be in conflict each other. This dissonance can be felt more noticeably at the top levels of the organization, where it manifests itself in the way leaders collaborate amongst themselves and with the OSM. For example, many executives may show resistance to the new levels of accountability, transparency and clarity of the strategy that the OSM promotes, they may decide to limit their contributions during strategy review meetings, or may decide to use scoreboards or metrics that are unaligned to the strategy. Likewise, the OSM’s broad range of influence may cause conflicts with the functional structure that characterizes most modern organizations. There may even be leaders who, accustomed to doing things their own way, see the OSM as a threat to their autonomy.
In other words, the incorporation of an OSM may be thwarted by an apathetic or hostile attitude from the executive team members and the prevailing leadership culture. Additionally, it may face obstacles in its implementation if the Balanced Scorecard has not been developed correctly.
Evaluating the Office of Strategy Management
It is advisable for the OSM to perform self-evaluations regularly. An average questionnaire is between 20 and 30 questions long for each process the OSM performs. These must be directed to discovering the reality of how the OSM executes its functions.
To balance this analysis, the OSM may ask a second series of questions to know the degree to which the organization’s prevailing culture thwarts the efforts undertaken to execute the strategy. Beer and Eisenstat developed a list of six “silent killers” (situations or conditions that significantly hinder strategy execution):
1. Top-down or laissez-faire leadership style: The leader does not delegate the initiative responsibilities or does not involve others in identifying and solving problems.
2. Inefficient executive team: The team does not spend sufficient time discussing and reformulating the strategy, or does not possess the necessary capabilities to generate constructive discussions during their meetings.
3. Unclear strategies and conflicting priorities: The executive team or managers do not know or do not agree on the strategy, or their priorities considerably differ from the corporation’s.
4. Deficient vertical communication: Lower levels of the organization do not know or understand the strategy or values, or there isn’t an effective feedback mechanism to know the strategy implementation’s effectiveness.
5. Poor coordination among functions or business units: The organization’s structure is not aligned to the strategy or the executive team does not promote coordination amongst the units.
6. Inadequate lower-level leadership skills and development: Those responsible for key functions or business units do not behave in a way consistent with the strategy.
Five steps to evaluate the Office of Strategy Management
It is recommendable for the OSM to perform quarterly or biannual diagnostics to evaluate the technical performance of its administration system and its effectiveness in driving change. To do so, we recommend following the next five steps:
1. Select the OSM’s area of responsibility to evaluate: For example: initiative management, strategic analysis, organizational alignment, etc.
2. Perform a technical evaluation: All those who are involved in the evaluated process must be interviewed and the documents related to the process must be analyzed with the purpose of answering the question “Is the process working?”.
3. Evaluate the impact of each “silent killer”: The OSM must analyze if the evaluated process generates the necessary behaviors to drive strategic performance. This step should be performed in conjunction with the second step.
4. Analyze and rank the efectiveness of the process in both the social and technical domains: The information obtained must be carefully evaluated to detect patterns and develop a point of view of the performance of the process.
5. Develop an action plan to present to the executive team: This plan must explain what conditions cause the main problems and suggest corrective actions that drive the evaluated process’s effectiveness. The action plan should generally contain recommendations for both the social and the technichal domains. Its success depends on the support it receives from the executive team.
This may be the most challenging step of the evaluation process. What to do if it is the CEO (or the executive team) who is responsible for the poor performance? If this is the case, we recommend presenting the findings as a result of information gathered through an objective and systematic process (not through opinions). This presentation may be done in a confidential manner. Likewise, the OSM may seek the support of a trusted key executive when presenting the results to lend the findings more credibility and influence.
Even though it is important to respect the existing organizational culture, a transformation inevitably requires the organization to develop new behaviors and structures. The OSM must have the appropriate authority and tools, like the OSM diagnosis, to know how well it is performing its functions. It is important to keep in mind that an OSM whose influence is weak cannot drive strategic performance; on the contrary, it represents a waste of valuable resources.
What to do?
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Author: Trissa Strategy Consulting
Source: Pateman, Andrew. "Overcoming the Barriers to Change When Implementing Your OSM." Balanced Scorecard Report (2007): 1-6. Online journal.