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Organization:OverviewofCoreFrameworks,LocalTrainingModuleForFirst-yearAssociatesAssociateH,FOREWORDANDOBJECTIVE,ThisOrganizationPractice(OP)documentprovidesanoverviewforuseinlocaltrainingsessionsforfirst-yearassociates.Itispartofa“seriesonfunctionalareas.”TheobjectiveoftheseriesistointroduceMcKinseypractitionerstothebasicsineachofourfunctionalareasofexpertise.AllthedocumentsintheseriesarecomprehensiveinnatureanddescribethecurrenttoolsandframeworksinthatfunctionalareaAttheendofthisdocument,youcanfindasectiondescribingaselectionofthecoredocumentsandhandbooksthatcangiveyoufurtherdetailsonsomeoftheframeworksdescriedhere.AllofthesedocumentsarenowonPDNet;andhardcopiesofthemcanberequestedfromPDNetExpress,whichwilldeliverthemin24hoursThecontentsofthisdocumenthavebeenadaptedforlocaltrainingsessionsthrough“SwitchingTracks”OPsfirst-yearmodulevideotape,whichcommunicatesthebasicconceptsinaconciseandvisualwayusinganactualclientTheScandinavianRailroadCompany.Itis40minuteslongandshouldbepresentedin3shortsegments.Betweenthesesegments,thefacultymemberrunstheattachedexercises,addsanycommentaryhe/sheconsidersnecessarytoclarifytheconcepts,andprovidespersonalexperienceonselectedtopics.AcopyofthevideotapeandmoderatorsguidewithexercisescanberequestedfromtheFirm,Thisdocumentseekstoanswer4questions,SECTION1Whydoassociatesneedtoconsiderorganizationalissuesineveryengagement?SECTION2Whatframeworksdoweusetohelpourclientsimproveorganizationalperformance?SECTION3Whatroledoesanassociateplayinorganizationwork?SECTION4Wherecananassociatefindoutmore?,McKinseysmissionistohavelastingandsubstantialimpactonourclients.Tosucceed,weneedtoworkallthreeofthecriticalelements:choosethebeststrategy,developworld-classoperations,aligntheorganization.Thesethreeelementsbothreinforceandconstraineachother.Thebeststrategyisonlyrelevantifitisoperationallyandorganizationallyfeasible.Theoptimalorganizationaldesigndependsuponthestrategicrequirementandtheoperationalmethodsoftheclient.Thisdocumentfocusesononevertexofthistriangularrelationship.Itwouldbewrong,however,tobelievethatyoucanachievetheimpactweseekbyfocusingononevertex.Weneedtoconsiderallthreeineverystudy.,CRITICALELEMENTSFORIMPACT,Successfulstrategy,Efficientoperations,Effectiveorganization,Weonlyachieveimpactwhentheorganizationsweservearesuccessfulinimplementingthestrategiesandoperationalmethodswepropose.However,arecentsurveyofengagementsinwhichclientsfailedtoimplementproposedstrategiesfound,inthreecasesoutoffour,thattheclientorganizationwasnotchange-readyorevencapableofimplementingthestrategyweproposed.Toensurethatwehaveimpact,weneedtoconsiderorganizationalissuesaswedevisestrategies.Wemustchoosestrategiestheclientsarereadyandabletoimplementorcomplementourstrategyworkwithinvestmentinbuildingtheorganizationsskillssothattheorganizationcanstepuptothechallengethesuperiorstrategyposes.,3OUTOF4STRATEGIESTHATFAILDOSOBECAUSEOFTHEORGANIZATIONSINABILITYTOEXECUTE,100%=340responses,Percent,McKinseyrecommendationsflawed,Clientnotchange-readyorcommitted,Organizationlackedthecapabilitiestoexecutestrategy,Other,Thedemandfororganizationalworkisincreasing.Trendsinthemarketplaceandtheevolvingnatureofourclientslargelyexplainthisincreaseindemand.Thepaceofchangeinthemarketplaceisaccelerating.Astrategicchoiceoranoperationalinnovationevokesarapidreactionfromcompetitor.Rarelycanadurablecompetitiveadvantagebefoundinthesechoices.Ratheritisthedevelopmentofauniqueorganizationalcapabilitywiththeinherentflexibilityandcommitmenttosustainworld-classperformancethatprovidesdurablecompetitiveadvantageinthesetimesofrapidchange.Theclientsweservearechangingaswell.Theyhaveincreasinglyhiredin-housestrategiccapabilities.MosthavebuiltstrategyshopsclosetotheCEO.Few,however,havethein-housecapabilityandobjectivitytodotheorganizationalworkrequiredtomakechangehappen.,ORGANIZATIONALWORKGROWINGINIMPORTANCE,EvolvingmarketplaceQuickeningpaceofstrategicadaptationDurablecompetitiveadvantageoftenrootedinuniqueorganizationalcapabilitiesEvolvingplayersManybusinessesacquiringin-housestrategiccapabilityMakingchangehappenremainsthe“neglectedart”,McKinseysengagementmixPercentoftime,Increasingdemandforhelpwithorganizationissuesandchangemanagement,Source:Surveyof23MGMsacrosstheFirm,Therecentevolutioninourclientshasnotbeenmissedbyourcompetitors.Eachofourcompetitorshasrecentlyintroducedabrandedorganizationalelementtotheirportfolio.Theirorganizationalexpertisefiguresprominentlyintheirmarketingcampaigns.,COMPETITORSHAVEBRANDEDORGANIZATIONTOOLS,McKinseysconsultingapproachmustevolveasourclientsevolve.Thesechangesprovokeashiftinthenatureofourworkandanevolutionoftheroleoftheassociateonengagements.Theincreaseddemandfororganizationalworkimpactsassociatesdirectly.Associatesaredrawnintoleadershiprolesonlargerteamsatanearlierpointintheircareers.ThisplacesgreateremphasisontheneedforassociatestodevelopquitesoonafterjoiningMcKinsey-superbteamleadershipskills.,EVOLUTIONINMcKINSEYSAPPROACH,*Surveyof23MGMsacrosstheFirm,Beforewediveintotheorganizationmaterials,weshouldannounceonecriticalcaveat:theframeworksyouareabouttoseeareonlyasgoodasthejudgmentandinsightusedtofillthemout.Theframeworksareoftenmerechecklists,usefultoolstoensureyoudonotoverlookakeydimension.TheOPcanprovideinterviewguidesandquestionnairesthatyoucanusetofleshouttheframeworks,aswellasappliedexamplesinarangeofsettings.However,almostallorganizationalissuesare“situationdependent”,andalmostallclientsettingsareunique.Yourjudgment,insight,creativity,andorganizationalacumenwilldeterminewhetheryouaddvalueintheclientsetting.,ACRITICALCAVEAT,“Garbagein,garbageout”,OrganizationalpracticeframeworksChecklistsSurveys,questionnairesAppliedexamples,Garbage,Goodjudgment,keeninsight,creativity,organizationalacumen,Garbage,Clientimpact,Aseriesofframeworksareavailabletohelpclientsidentifyandaddressorganizationallimitsoneffectivenessorobstaclestochange.Theyalsopointtowardsolutions.Theseframeworkshelpteamsanswertwofundamentalquestions:Whatchangeisneeded?Howshouldtheclientimplementthechange?TheOPhasderivedasetofsixattributesthatcharacterizehigh-performingorganizations(HPO).Byassessingwhetheryourclientorganizationexhibitsthesesixattributes,youcandiagnosewhetheranorganizationalperformancegapexistsaswell.Additionally,the7-Sswillhelpyouidentifystrengthsanddeficienciesintheorganization.The7-Ssfocusteamsonaligningstructure,staff,systems,andstyletopromotebehavioralchangeandbuildskillsinpivotaljobholders.Bycontrastingtherequiredskillset(atboththeorganizationandthepivotaljobholderlevel)withthecurrentskillset,youcanoftenclarifytheorganizationalgapthatexists.Youcompletethediagnosticbyfillingoutthechangeboard.Thatexercisehelpsteamsunderstandtheorganizationalskilldeficitsorresistancetochangesotheycandeliberatelyplantobuildthenecessaryskillsandwillingnesstochangeintheorganization.Oncethegapshavebeenidentified,theteamneedstolayoutachangeprogramtoclosethegaps.Thetransformationtrianglehighlightsthethreecriticaldimensionsofanyeffectivechangeprogram-topdown,bottomup,cross-functional.Theproperbalanceamongthesedimensionsdependsonthegap,theclientsetting,andthecompetitivecontext.Everychangeprogramcontainssomemixofsixfundamentalenergizingelements.Eachmustbeconsideredaswedesignchangeprograms.Thissectionofthehandbookwilldiscusseachframeworkinturn.,COREFRAMEWORKS,High-performingorganizationattributes,7-Sframework,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Staff,Managementsystems,Leadershipstyle,Changeboard,Agenda/platform,DirectionsettingStructuringBottom-upenergizing,Transformationtriangle,Energizingelements,TheOPundertookastudyof10high-performingcompanies,trueindustryleaders,thatweknewverywell.Thecompanieshadsustainedpace-settingperformanceintheirrespectiveindustriesover2decades.These10HPOssharedsixmanagementattributes,eachofwhichfocusesonperformance.BycomparingyourclientorganizationtotheseHPOs,youmayidentifyopportunitiestoimproveyourclientorganization.,“HIGH-PERFORMANCECOMPANY”ATTRIBUTES,Drivenbyleaders,Alignedbysimplestructuresandcoreprocesses,Basedonworld-classskills,Rejuvenatedbywell-developedpeoplesystems,Builtbyrelentlesspursuitofbefore-the-factstrategies/vision,Energizedbyanextraordinarilyintense,performance-drivenenvironment,Thefirstthreeofthesixcommonmanagementattributes:Drivenbyleaders.Theleadersofthesecompanieshadveryhighperformanceaspirations.Fortheseleaderstherewasnosuchnotionas“goodenough”.Atthecenteroftheseleadershipgroups,weconsistentlyfounddemanding,unreasonableCEOs.Builtbyrelentlessbefore-the-factstrategies/visions.HPOsspendtheirtimelookingforward,notback.Theirstrategiesdriverelentlesslyforbothprofitabilityandgrowth.Energizedbyanextraordinarilyintense,performance-drivenenvironment.HPOshaveademanding,occasionallypunishing,workpace.Thereisrealaccountability,especiallyatthetop.HPOs,whilebeingverygoodplacestowork,arenotalwaysniceplacestowork.,ATTRIBUTESOFANHPO,ATTRIBUTESOFANHPO(CONTINUED),TheHPOresearchfoundsomethingelsecommontotheHPOs:all10wereexperimentingwithself-governance.Self-governanceintheseHPOsmeansempowermentwithaccountability.TheHPOssharethecommoncharacteristicofinvolving“awiderangeof“or“broadcross-sectionof”employeesindrivingforimprovedperformance.Theirgoalistoimbueeveryemployeewithanownersmind-set.SelfgovernanceintheseHPOsisdifferentfromthatpracticedinother“engagedandempowered”companies.InHPOsthesingle-mindedobjectiveofempowermentisperformance.Inthematrixbelow,theHPOswestudiedwereallinthetophalfofthematrix(highperformance);manywerereaching,inaddition,fortheright-handsideofthematrix(engagedandempowered).,PERFORMANCEANDEMPOWERMENTATHPOs,Mostlargecompaniesstartoutinthelowerleft-handcornerofthematrix(lowperformanceandcommand-and-controlmanagementapproach).WediscoveredthatHPOsthathavesuccessfullytransitionedtotheupperright-handcornerhavefirstachievedhighperformanceandthenexperimentedwithandadoptedempowerment.Empowermentwithoutfirstestablishingatrueperformanceethicinthecompanytendstoresultincontinuedlowperformance.Ifyourclientfallsinthelowerleft-handcornerofthismatrix,itneedstoconcentratefirstonbuildingatrueperformanceethic.Empowerment,alone,isunlikelytoyieldperformanceimprovement.,TRANSFORMATIONPATH,7-SFRAMEWORK,McDONALDSWINNINGFORMULA,Vision:tobecometheleadingrestaurantchainintheworld,Strategy,Sharedvalues,Skills,ConvenientGoodqualityConsistentFamily-orientedenvironmentFairvalue,QualitycontroloverallaspectsofbusinessSuperiorsiteselectionContinuousnewproductdevelopmentStrongpromotionofproductsandMcDonaldsimage,QualityServiceCleanlinessprice,Organizationsusuallychangeinresponsetodiscontinuitieseitherexternalshocks(suchasderegulation)orinternalchanges(suchasnewleadership)thatmakeitclearthattheold,“grooved”wayofdoingthingsisnolongerwinning.Thesuccessfuloneswillcreateanewwinningformulathatisbasedonchangesinstrategy,newerorstrongerskills,and/orsharedvalues.Contrastingthenewwinningformulatotheoldformulaidentifiesandgaugesthechangethattheorganizationisconsideringanddefinesthevisionforthechangeprogram.Achangevisionisacreedthatsummarizeswhatanorganizationistryingtobecomeandwhy.Assuch,itguidesorganizationalprioritiesbyredefiningandrecombiningbusinessobjectives,requiredinstitutionalskills,andcorporatevaluesaboutwhatisimportantaroundhere.Achangevisionisattheheartoftopmanagementsroleinimprovingperformanceandisoftenthefirststep.Itprovidesthevitalbridgebetweentheinitialdissatisfactionwiththestatusquoandthefirstpracticalstepstakeninachangeprogramthearticulationofacleartargetthatrepresentssomethingbetterthatisbothlogicallysoundandemotionallyappealing.,IMPROVINGORGANIZATIONALPERFORMANCE,Grooved,Redirected,Unfrozen,Discontinuities,ExternalshocksNewcompetitors,economicsNewtechnologiesDeregulationInternalchangesNewaspirationsNewleader,Majorchangethroughpeople,Newstrategy,Neworstrongerskills,Sharedvalues,CHANGEVISION,Certainkeypeopleintheorganizationholdpositionsthatdeterminesuccessorfailureininstitutinganewstrategy,skill,orsharedvalue.Thesepeoplefillwhatwecallpivotaljobs.Wewillonlysucceedinimplementingthechangevisionifwesucceedinchangingthebehaviorofpivotaljobholders.AtMcDonalds,forexample,pivotaljobsincludethecentralizedpurchasersofallrawmaterialsforallstores,thestoremanagers,andthehourlyemployeeswhotakeandassembleorders.,PIVOTALJOBSWhatpeoplemustdo,Whatarethey?Positionsthathavedirectimpactondeliveryofvaluetothecustomer.Typicallythey-Designtheproduct-Maketheproduct-SelltheproductPositionsthatmustcapablymasternewskillsWherearethey?Closetothefrontline,Inarecentstudyatachainstoreretailer,thechangevisionincludedasignificantimprovementinin-storeconvenience.Twopositionswereidentifiedaspivotaljobsthestoremanagerandtheareaoperationsmanager.Thisstudyemployedacontrastanalysisintwoforms.Thefirstconsideredeachelementofbehavioranddefinedhowthenewbehaviorwouldneedtodifferfromcurrentpractices.Abehaviorcontrastanalysisoftenproveshelpfulindefiningpreciselyhowthepivotaljob-holdersneedtochange.,CONTRASTANALYSISPivotaljobs:storemanager,chainretailer,Thesecondanalysiscontrastedthepercentageoftimespentoncriticaltasksundercurrentpracticesandenvisionedinthefuture.,CONTRASTANALYSISBYPERCENTAGEOFTIMESPENTPivotaljob:areaoperationsmanager,100%,Merchant/owner,Coach,Player,Admini-straor,ORGANIZATIONALDESIGNLEVERSATMcDONALDS,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Managementsystems,Leadershipstyle,Staff,ORGANIZATIONALDESIGNLEVERSATMcDONALDS,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Managementsystems,Leadershipstyle,Staff,STRUCTURALOPTIONS,CHANGEBOARD,Skilltobebuilt,*Modifiedasappropriateforcompany*E.g.,customers,suppliers,tradeunions,CHANGEBOARDCHAINRETAILEREXAMPLE,Deliveringin-storeconvenience,CHANGEBOARDCHAINRETAILEREXAMPLE,Deliveringin-storeconvenience,Lockinsupport,Createsharedresponsibilityforprogress,Buildasuccessmodelfrombelow,Forceawarenessofrealities,Restructurefieldorganization,Toanswerthequestion,“Howshouldchangehappen?”,theOPdevelopedthe“organizationaltransformationtriangle”thatsummarizesthethreebasicmanagementtaskswhendealingwithchange.Theirrelativeemphasismayvary,butallthreeofthemhavetobemanagedtoachievefundamentalbehavioralchange.,TRANSFORMATIONTRIANGLE,Thewell-knownGE“workout!”changeprogramincludedelementsfromeachdimensionofthetransformationtriangle.,GE“WORKOUT!”,Top-downdirectionsetting/cultureshapingNo.1orNo.2ineverybusiness“speed,simplicity,self-confidence”DelayeringBestpracticesworkshops,Bottom-upperformanceimprovementTownmeetings:2-to5-dayinteractivesessions“Brandname”qualityprocessesOperations:unit-by-unitredesign,CoreprocessredesignProjectteamstoidentifycross-functionalissuesProcessmapping,Theclientshouldseekanappropriatebalanceacrossallthreedimensionsofthetransformationtriangle.Overrelianceonanydimensionwillimpedechange.,BALANCEON3DIMENSIONSISKEY,TheOPhasdefinedawidearrayofchangeapproaches.Eachchangeapproachstrikesauniquebalanceamongthedimensionsofthetransformationtriangle.Yourchallengeisfindingthechangeapproachthatstrikesthebalanceappropriateforyourclientsituation.,OVERVIEWOF5PERFORMANCECHANGEAPPROACHES,Nomatterwhatchangeprogramisselected,thefollowingsixenergizingelementsshouldbeaddressed.Byaddressingeachone,theclientbuildstheenergyrequiredtomakeorganizationschange.,ENERGIZINGELEMENTS,Ambitious,measurableobjectivesReinforcingfeedbackConsequences,WinningformulaWinningleadershipgroup,Doer-drivenFact-basedPeople-intensive,Newmind-setNewskills,behavior,SystemsandprocessStructureRoles,BuildcommitmentEstablish2-wayflowManageexpectationsInspireaction,TheOPhasawealthofexperienceandresearchtosupportthedesignofeachelementofachangeprogram.,WorldbenchmarksProjectperformanceindicatorsframeworkPerformancemapsPerformancecontractsproformaBestpracticeexamples,LeadingforsuccessCEOtime-leveragemanual,AnalyticaltoolkitframeworkAnalyticalproblemsolvingworkshop“datatochart”videoandworkbooksClientadvocacyvideosSkill/will/diagnosticContinuousimprovementprinciplesworkshopBestpracticeexamples,CoreprocessredesignExampleroledescription“7-S”checklist,Communicationscoordinationteam-jobspecificationsCommunicationschannelsauditStakeholderanalysisCommunicationsplanCommunicationsworkshopBestpracticeexamples,POSSIBLEACTIVITIES/TOOLS,Frameworkfordesigningskill-buildingprogramsDiscretetrainingmodulesmanagementskills(MFS),leadershipskills(LFS),buildinghigh-performingteams,projectmanagementguide,designingongoingimprovementDiscretetoolsRJDs,time-usagelogs,change-readinesssurveys,signalingchangetoolkit,howtorunatrainingworkshopBeliefs/behavior-promptsheetstaffactivitysurveyBestpracticeexamples,Account-based“actionlearning”program,Multinationalskillteamswith6crediblechampionsPiloteffortwithleadershiptogetbuy-inandadvice,Theleaderskillforbecoming$1billionPresidentassponsor,InputAccountplansPeopletrainedOutputsPriceShare,AwarenessbuildingPresidentsroadshowSkillbuildingthroughworkshopsReinforcementthroughVBSSnetworkbulletins,AccountteamsGlobalaccountmanagersAccountplanning,VBSS,Associateswilloftenstepuptomanagerrolesonengagementsthataddressorganizationissuesand/orimplementchange.Theseengagementsofteninvolvemultipleclientteams.Associatesassumeresponsibilityformanagingoneormoreoftheseclientteams.Theseengagementsalsoseektheactivesupportofabroadersetofclientmanagers.Associatesassumeresponsibilityfordevelopinginfluentialrelationshipswithcriticalclientmanagers.Engagementswhichfocusonorganizationissuesthereforeprovideexceptionalopportunitiesforassociates.,ASSOCIATESASSUMEMANAGERROLESINORGANIZATIONENGAGEMENTS,Traditionalviewofteamroles,Teamrolesonorganizationengagements,Theeffectiveassociatemanagerservesthreefunctions:Theassociatemanagerbuildsandsustainseffectiveclientteamsthatdefine,plan,andimplementthechange.Theassociatemanagerleadsproblemsolvingonmultipleclientteams.Theassociatemanagerforgesaconsensusofsupportforthechangevisionamongcriticalclientmanagersandensuresthatmanagersmaintaintheenergylevelrequiredtoeffectthechange.Allthreefunctionsarecriticaltosuccess.However,inengagementsthataddressorganizationissuesand/orimplementchange,buildingandsustaininganeffectiveteamisoftenthenecessarypreconditiontosuccessintheotherfunctions.Theclientteam