Showing posts with label Decision rights. Show all posts
Showing posts with label Decision rights. Show all posts

September 1, 2008

Reorganizations and Enterprise Architecture

There is an interesting article in Harvard Business Review, June 2008, on “The Secrets to Successful Strategy Execution.” (Gary Nielson, Karla Martin, and Elizabeth Powers)

The article states: “Research shows that enterprises fail at execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness—decision rights and information flows.”

In fact, “employees at three out of every five companies rated their organization weak at execution.”

Hence, the simple answer is the infamous reorganization.

Enterprises are constantly reorganizing (AKA “another REORG”). The reorgs are supposed to make the organization more efficient and effective, but more often than not, it results in instability, confusion, a reshuffling of bodies and a movement of lines on the org chart without any substantial changes to people, process, or technology. At the end of reorg, leadership falsely claims success and starts the process again, of course collecting their mega sized bonus along the way.

What a crock and what a disservice to our customers, employees, partners, and investors.

“Structural measures [reorgs]…seems the most obvious solution and the changes the most visible and concrete…but in so doing, address only symptoms of dysfunction, not its root causes.”

So should we stop reorging?

No. “structural changes can and should be part of the path to improved execution, but it’s best to think of it as the capstone, not the cornerstone…research show that actions having to do with decision rights and information are far more important.”

It sort of obvious, but most organizations still don't get that strategic execution depends on having a good plan to begin with and a sound governance structure to manage it!

Decision rights = sound governance.

Here’s how we should implement decision rights/governance to be more effective at implementing strategy:

“Everyone has a good idea of the decisions and actions for which he or she is responsible.”

“Once decisions are made, they are rarely second-guessed.”

“Managers up the line get involved in operating decisions

“It is more accurate to describe the culture of this organization as ‘persuade and cajole’ than ‘command and control.’”

“The primary role of corporate staff here is to support the business units rather than to audit them.”

Information flows = sound enterprise architecture planning.

Here’s how we should implement information flows/EA to be more effective at implementing strategy:

“Important information about the competitive environment gets to headquarters quickly [and the information plans on how to respond get out from headquarters quickly].”

“Information flows freely across organizational boundaries.”

“Field and line employees usually have the information they need to understand the bottom-line impact of their day-to-day choices.”

“Line managers have access to the metrics they need to measure the key drivers of the business.”

The research seems to clearly demonstrate the EA and governance imperative. Even more importantly though, pure common sense dictates that:

We set a strategic direction—that is through our business strategy and enterprise architecture plans.


We enforce it—that is our governance (for authorizing, prioritizing, funding, controlling, and assessing programs and projects).

Reorganizations do not supplant the need for good planning and governance. Without good planning and governance, reorganizations are leadership’s feeble attempts to do something, anything to change the status quo, and often they result in short-term gains only (and sometimes they do not even do that and result in more harm than good). However, a reorganization that is driven by solid planning and governance can have significant and lasting impact for our transformation efforts.