Why Strategic and Organizational Change Must Happen Together
Why the organization that got you here won’t get you there
As organizational transformation consultants, we’re often invited to help functions, departments, and teams of all kinds within massive enterprises recover from failed strategy implementations. Regardless of the industry or organization, the narrative of each failure follows a familiar arc. A “new strategy” is developed over several months of backbreaking creative and consensus-building efforts. It ultimately results in a key artifact (usually an exceedingly beautiful deck of slides) that clearly articulates a smart and cogent shift in priority. There is (seemingly) buy-in from all the key players and generally a sense of, “Okay, this makes sense. Now we just have to implement it.” Inevitably, the strategy fails to manifest in any major positive changes and after 18–36 months of middling returns, it’s decided that a shift in strategy is needed and the cycle begins anew.
Why isn’t articulating a strategy enough? Why does it often fall down during implementation? What’s actually going on here?
New Strategy and Old Ways of Working
Mike Tyson likely wasn’t talking about organizations when he quipped, “Everyone has a plan until they get punched in the mouth.” If a carefully crafted strategy document is the plan in the aforementioned quote, then bringing that plan into contact with the rest of an organization is the punch in the mouth. Regardless of how inclusive the process was for developing the strategy, how many rounds of revision it went through, and how many senior leaders pledged to support it, the reality is that most deliberately developed strategies don’t survive contact with the rest of the organization — never mind the market.
The organizational environment into which a strategy needs to be implemented is one characterized by increasing complexity, volatility, uncertainty, and ambiguity. The conditions that organizations and leaders must navigate, both internally and externally, are only growing more difficult to predict and control. This diminishes the likelihood that the “right” people can make all the “right” decisions at the “right” time to successfully implement a strategy.
In a bygone era it may have been possible to play the role of leader as chess grandmaster. They saw the future more clearly than their opponent and could move their discrete pieces to and fro until declaring victory. As complicated as chess is, it still consists of a knowable subset of components that follow specific rules of engagement. Modern organizations are more like chaotic weather systems or biological ecosystems, neither of which can be known or driven like a game of chess. Instead, they may be influenced or managed, at best. This means leaders must adopt a different posture in order to meaningfully influence the way the work unfolds — a conscientious gardener rather than an all-knowing chessmaster. A chessmaster thrives when they can see the future better than their opponent and make one correct decision after another. A gardener must instead retain a posture of curiosity, of noticing, and of continuous interaction with the garden’s complex system. Put plainly, a strategy cannot be “chessmastered” into business outcomes because the organization and market in which it must be operationalized are much more like a garden than a game.
What does this mean for how we think about the implementation of strategy? To start, we should swap “implementation,” which implies a one-time activity, for “implementing,” which suggests ongoing and unceasing effort.
Any strategy document is a shared artifact filled with creative and nuanced thinking. Given the cross-functional reality of how work gets done in any large bureaucracy, no one team, function, or organization can operationalize a strategy in isolation. Instead, many stakeholders with many incentives (both explicit and implicit) need to simultaneously share responsibility for whether it becomes an animating and unifying force in the organization. How can something that touches so many parts of an organization, with such varied incentives and unique concerns, fulfill the hopes and dreams it was designed to achieve without being ground to a halt by the bureaucracy that originally spawned it?
The Intersection of Strategy and Operating System
An organization’s OS ultimately determines whether the intentions embedded within a shift in strategy find fertile soil and grow or fall upon the ground and whither. An OS comprises the assumptions, principles, practices, and behaviors that are encouraged, supported, and rewarded across multiple facets of an organization. It is the mostly invisible yet pervasive milieu that every employee of an organization simultaneously exists in and helps create.
Developing and implementing a strategy is an attempt at being deliberate about what an organization is going to do and how it’s going to do it. An organization’s current OS is always perfectly optimized for the results it’s currently getting. In this way, strategy and organizational operating systems are intimately connected, whether that connection is explicitly called out or not. Said another way, if we try to operationalize a new strategy into an organization’s original OS, which presumably created the need for a shift in strategy in the first place, then we risk being thwarted by the very forces that prompted our desire to change.
Therefore, for a new strategy to change the course of an organization or team, it must go hand-in-hand with holistic OS change.
How Legacy Operating Systems Sabotage Strategy
First, bureaucracy optimizes for minimizing risks of commission, rather than risks of omission. The risks of taking the wrong action are talked about openly but there’s rarely much conversation about the risk inherent in failing to do something — and the latter can create equally problematic outcomes. This inability to notice the opportunity costs at play manifests as an unwillingness to do things that are unproven or unknown in favor of just doing what is already being done but (hopefully) slightly better. To the extent that a strategy represents an organization’s intention to step into the unknown, it’s going to bump up against this propensity for not taking risks and all the rigamarole, theater, and political shenanigans that inevitably accompany such risk aversion.
Second, most large bureaucracies struggle with having a coherent approach to enterprise-wide problems. Employee identities are often more strongly aligned with business area, function, or program than to the overall enterprise. Making an initiative “cross-functional” often means guaranteeing every possible faction equal representation, so working groups and meetings quickly inflate to untenable sizes. A new strategy can’t simply be a statement of what an organization needs to do; it must describe key challenges and opportunities that can only be handled by a truly coherent coalition with shared goals, values, and ideas about how to best pursue this work. Addressing this type of cross-functional challenge in the same way other “cross-functional” challenges are typically approached is likely to create a slow-moving morass of committees and status meetings.
Third, formal structures and value-creation structures are often disconnected in traditional bureaucracies and there’s very little ability to dynamically team around new opportunities. Bureaucracies grow and ossify as the work of the organization becomes more known and the focus (perhaps rightfully!) shifts to extracting efficiency even over investigating new opportunities. In some cases, the rigid structures and policies that typify bureaucracies do make certain types of tasks and work more efficient. However, a shift in strategy inherently presupposes organizational mobility. It requires a restructuring of teams, workflows, decision rights, and mindsets toward fluidity and a willingness to handle ambiguity as a new and unknown domain is mapped. Handing a mandate of change to a bureaucracy that has been optimizing for efficiency is like expecting someone who has been training intensely to run a 100 meter sprint to run a marathon instead. The will and the motivation might be there, but the muscles and the cardiovascular ability have simply been optimized for something else.
Organizational Transformation Is Strategy Implementation
Strategic shifts are the perfect time to unlock larger organizational change — and actually require organizational change to be successful. Much of the time, organizations are simply propelled forward by inertia. The bigger and more bureaucratic an organization, the more inertia it has. It takes something special to disrupt that force and steer momentum in a new direction. A deliberate attempt to chart a new strategic path, whether organizationally or within a specific function, is precisely the type of event that can interrupt the status quo. How can this interruption be used as an opportunity to upgrade your OS, and how can this newly upgraded OS unlock the potential your strategic shift represents?
Allow teams pursuing new strategic imperatives to operate outside the usual bureaucratic environment. Strategic pivots require speed, and nothing prohibits organizational speed more than red tape. To the extent that a new strategy requires teams to do new work, try to protect those teams from the bureaucratic stranglehold that will inevitably try to bring them into the fold. Giving these teams and initiatives breathing room will not only set them up for greater success, but will also advance the cause of chipping away at the most pervasive organizational debt. Nothing shines a light on stale bureaucracy more than proof that meaningful work can happen quicker, with less pain, and without causing harm to the rest of the organization.
Use a shift in strategy as a platform for rapid and deliberate experimentation. Making room for meaningful experimentation can catalyze progress toward a new strategic direction. Rapid iteration and learning is the backbone of strategic implementation. No matter how good the thinking was that went into the articulation of a strategy, it’s impossible for it to fully predict the future. Good strategic implementation strives to validate or invalidate the assumptions upon which it’s built as quickly as possible. Pursuing the strategy then becomes a fluid and ever-evolving process that finds new opportunities that never could have been predicted when the original thinking was being done.
Start the way you intend to finish. A strategy designed to allow an organization to adapt to the market cannot be executed by an organization that cannot adapt to the strategy. Just as no organization has successfully transitioned to more agile ways of working through waterfall practices, it’s safe to surmise no organization trying to become more fit for complex and uncertain realities has done so through command-and-control, plan-and-predict, bureaucratic methods. To that end, implementation of a strategy is unlikely to be a linear process. It’ll have stops and starts, loop back on itself, and reveal things that were impossible to predict when the strategy was originally drafted. The grace and adaptability of your approach to bringing a new strategy to life will largely determine whether or not it’s successful.
A Shift From Strategy to Meta-Strategy
Disruptive reorgs, monumental pivots in strategy, and other “big moves” are signs that an organization is operating (and struggling) under a legacy operating system. Proponents of these approaches always underestimate the amount of unproductive churn they generate and overestimate how much they will fundamentally change an organization’s trajectory. Organizations that have transcended these dramatic interventions have built operating systems that allow them to be constantly sensing, responding, and experimenting with what the market is telling them. They understand that it’s not about perfect execution of a strategy, but rather the imperfect yet ever-better implementation of a meta-strategy — the ongoing care and maintenance of their evolutionary organizational operating system. They no longer need dramatic swings in strategy, because they are able to pursue opportunities at the drop of a hat and pivot away from dead-ends before they become an existential crisis. This is where true opportunity lies; this is what the best companies in the world have uncovered; and this is what you and your organization can achieve by uniting strategy implementation with holistic organizational transformation.
Sam Spurlin is a Partner at The Ready, an organizational design and transformation partner that helps you build a better way of working. We work with some of the world’s largest, oldest, and most inspiring organizations to help them remove bureaucracy and adapt to the complex world in which we all live. Learn more by subscribing to our Brave New Work podcast and Brave New Work Weekly newsletter, checking out our book, or reaching out to have a conversation about how we can help your organization evolve ways of working better suited to your current reality.
Thank you to Zoe Donaldson and Alastair Steward for their editing and feedback prowess. Any particularly cogent bits are likely covered in their fingerprints and the mistakes are purely my own.
