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Organization:OverviewofCoreFrameworks,LocalTrainingModuleForFirst-yearAssociatesAssociateHandbook,1,FOREWORDANDOBJECTIVE,ThisOrganizationPractice(OP)documentprovidesanoverviewforuseinlocaltrainingsessionsforfirst-yearassociates.Itispartofa“seriesonfunctionalareas.”TheobjectiveoftheseriesistointroduceMcKinseypractitionerstothebasicsineachofourfunctionalareasofexpertise.AllthedocumentsintheseriesarecomprehensiveinnatureanddescribethecurrenttoolsandframeworksinthatfunctionalareaAttheendofthisdocument,youcanfindasectiondescribingaselectionofthecoredocumentsandhandbooksthatcangiveyoufurtherdetailsonsomeoftheframeworksdescriedhere.AllofthesedocumentsarenowonPDNet;andhardcopiesofthemcanberequestedfromPDNetExpress,whichwilldeliverthemin24hoursThecontentsofthisdocumenthavebeenadaptedforlocaltrainingsessionsthrough“SwitchingTracks”OPsfirst-yearmodulevideotape,whichcommunicatesthebasicconceptsinaconciseandvisualwayusinganactualclientTheScandinavianRailroadCompany.Itis40minuteslongandshouldbepresentedin3shortsegments.Betweenthesesegments,thefacultymemberrunstheattachedexercises,addsanycommentaryhe/sheconsidersnecessarytoclarifytheconcepts,andprovidespersonalexperienceonselectedtopics.AcopyofthevideotapeandmoderatorsguidewithexercisescanberequestedfromtheFirm,2,Thisdocumentseekstoanswer4questions,SECTION1Whydoassociatesneedtoconsiderorganizationalissuesineveryengagement?SECTION2Whatframeworksdoweusetohelpourclientsimproveorganizationalperformance?SECTION3Whatroledoesanassociateplayinorganizationwork?SECTION4Wherecananassociatefindoutmore?,3,McKinseysmissionistohavelastingandsubstantialimpactonourclients.Tosucceed,weneedtoworkallthreeofthecriticalelements:choosethebeststrategy,developworld-classoperations,aligntheorganization.Thesethreeelementsbothreinforceandconstraineachother.Thebeststrategyisonlyrelevantifitisoperationallyandorganizationallyfeasible.Theoptimalorganizationaldesigndependsuponthestrategicrequirementandtheoperationalmethodsoftheclient.Thisdocumentfocusesononevertexofthistriangularrelationship.Itwouldbewrong,however,tobelievethatyoucanachievetheimpactweseekbyfocusingononevertex.Weneedtoconsiderallthreeineverystudy.,4,CRITICALELEMENTSFORIMPACT,Successfulstrategy,Efficientoperations,Effectiveorganization,5,Weonlyachieveimpactwhentheorganizationsweservearesuccessfulinimplementingthestrategiesandoperationalmethodswepropose.However,arecentsurveyofengagementsinwhichclientsfailedtoimplementproposedstrategiesfound,inthreecasesoutoffour,thattheclientorganizationwasnotchange-readyorevencapableofimplementingthestrategyweproposed.Toensurethatwehaveimpact,weneedtoconsiderorganizationalissuesaswedevisestrategies.Wemustchoosestrategiestheclientsarereadyandabletoimplementorcomplementourstrategyworkwithinvestmentinbuildingtheorganizationsskillssothattheorganizationcanstepuptothechallengethesuperiorstrategyposes.,6,3OUTOF4STRATEGIESTHATFAILDOSOBECAUSEOFTHEORGANIZATIONSINABILITYTOEXECUTE,100%=340responses,Percent,McKinseyrecommendationsflawed,Clientnotchange-readyorcommitted,Organizationlackedthecapabilitiestoexecutestrategy,Other,7,Thedemandfororganizationalworkisincreasing.Trendsinthemarketplaceandtheevolvingnatureofourclientslargelyexplainthisincreaseindemand.Thepaceofchangeinthemarketplaceisaccelerating.Astrategicchoiceoranoperationalinnovationevokesarapidreactionfromcompetitor.Rarelycanadurablecompetitiveadvantagebefoundinthesechoices.Ratheritisthedevelopmentofauniqueorganizationalcapabilitywiththeinherentflexibilityandcommitmenttosustainworld-classperformancethatprovidesdurablecompetitiveadvantageinthesetimesofrapidchange.Theclientsweservearechangingaswell.Theyhaveincreasinglyhiredin-housestrategiccapabilities.MosthavebuiltstrategyshopsclosetotheCEO.Few,however,havethein-housecapabilityandobjectivitytodotheorganizationalworkrequiredtomakechangehappen.,8,ORGANIZATIONALWORKGROWINGINIMPORTANCE,EvolvingmarketplaceQuickeningpaceofstrategicadaptationDurablecompetitiveadvantageoftenrootedinuniqueorganizationalcapabilitiesEvolvingplayersManybusinessesacquiringin-housestrategiccapabilityMakingchangehappenremainsthe“neglectedart”,McKinseysengagementmixPercentoftime,Increasingdemandforhelpwithorganizationissuesandchangemanagement,Source:Surveyof23MGMsacrosstheFirm,9,Therecentevolutioninourclientshasnotbeenmissedbyourcompetitors.Eachofourcompetitorshasrecentlyintroducedabrandedorganizationalelementtotheirportfolio.Theirorganizationalexpertisefiguresprominentlyintheirmarketingcampaigns.,10,COMPETITORSHAVEBRANDEDORGANIZATIONTOOLS,11,McKinseysconsultingapproachmustevolveasourclientsevolve.Thesechangesprovokeashiftinthenatureofourworkandanevolutionoftheroleoftheassociateonengagements.Theincreaseddemandfororganizationalworkimpactsassociatesdirectly.Associatesaredrawnintoleadershiprolesonlargerteamsatanearlierpointintheircareers.ThisplacesgreateremphasisontheneedforassociatestodevelopquitesoonafterjoiningMcKinsey-superbteamleadershipskills.,12,EVOLUTIONINMcKINSEYSAPPROACH,*Surveyof23MGMsacrosstheFirm,13,Beforewediveintotheorganizationmaterials,weshouldannounceonecriticalcaveat:theframeworksyouareabouttoseeareonlyasgoodasthejudgmentandinsightusedtofillthemout.Theframeworksareoftenmerechecklists,usefultoolstoensureyoudonotoverlookakeydimension.TheOPcanprovideinterviewguidesandquestionnairesthatyoucanusetofleshouttheframeworks,aswellasappliedexamplesinarangeofsettings.However,almostallorganizationalissuesare“situationdependent”,andalmostallclientsettingsareunique.Yourjudgment,insight,creativity,andorganizationalacumenwilldeterminewhetheryouaddvalueintheclientsetting.,14,ACRITICALCAVEAT,“Garbagein,garbageout”,OrganizationalpracticeframeworksChecklistsSurveys,questionnairesAppliedexamples,Garbage,Goodjudgment,keeninsight,creativity,organizationalacumen,Garbage,Clientimpact,15,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.,16,COREFRAMEWORKS,High-performingorganizationattributes,7-Sframework,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Staff,Managementsystems,Leadershipstyle,Changeboard,Agenda/platform,DirectionsettingStructuringBottom-upenergizing,Transformationtriangle,Energizingelements,17,TheOPundertookastudyof10high-performingcompanies,trueindustryleaders,thatweknewverywell.Thecompanieshadsustainedpace-settingperformanceintheirrespectiveindustriesover2decades.These10HPOssharedsixmanagementattributes,eachofwhichfocusesonperformance.BycomparingyourclientorganizationtotheseHPOs,youmayidentifyopportunitiestoimproveyourclientorganization.,18,“HIGH-PERFORMANCECOMPANY”ATTRIBUTES,Drivenbyleaders,Alignedbysimplestructuresandcoreprocesses,Basedonworld-classskills,Rejuvenatedbywell-developedpeoplesystems,Builtbyrelentlesspursuitofbefore-the-factstrategies/vision,Energizedbyanextraordinarilyintense,performance-drivenenvironment,19,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.,20,ATTRIBUTESOFANHPO,21,22,ATTRIBUTESOFANHPO(CONTINUED),23,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).,24,PERFORMANCEANDEMPOWERMENTATHPOs,25,Mostlargecompaniesstartoutinthelowerleft-handcornerofthematrix(lowperformanceandcommand-and-controlmanagementapproach).WediscoveredthatHPOsthathavesuccessfullytransitionedtotheupperright-handcornerhavefirstachievedhighperformanceandthenexperimentedwithandadoptedempowerment.Empowermentwithoutfirstestablishingatrueperformanceethicinthecompanytendstoresultincontinuedlowperformance.Ifyourclientfallsinthelowerleft-handcornerofthismatrix,itneedstoconcentratefirstonbuildingatrueperformanceethic.Empowerment,alone,isunlikelytoyieldperformanceimprovement.,26,TRANSFORMATIONPATH,27,28,7-SFRAMEWORK,29,30,McDONALDSWINNINGFORMULA,Vision:tobecometheleadingrestaurantchainintheworld,Strategy,Sharedvalues,Skills,ConvenientGoodqualityConsistentFamily-orientedenvironmentFairvalue,QualitycontroloverallaspectsofbusinessSuperiorsiteselectionContinuousnewproductdevelopmentStrongpromotionofproductsandMcDonaldsimage,QualityServiceCleanlinessprice,31,Organizationsusuallychangeinresponsetodiscontinuitieseitherexternalshocks(suchasderegulation)orinternalchanges(suchasnewleadership)thatmakeitclearthattheold,“grooved”wayofdoingthingsisnolongerwinning.Thesuccessfuloneswillcreateanewwinningformulathatisbasedonchangesinstrategy,newerorstrongerskills,and/orsharedvalues.Contrastingthenewwinningformulatotheoldformulaidentifiesandgaugesthechangethattheorganizationisconsideringanddefinesthevisionforthechangeprogram.Achangevisionisacreedthatsummarizeswhatanorganizationistryingtobecomeandwhy.Assuch,itguidesorganizationalprioritiesbyredefiningandrecombiningbusinessobjectives,requiredinstitutionalskills,andcorporatevaluesaboutwhatisimportantaroundhere.Achangevisionisattheheartoftopmanagementsroleinimprovingperformanceandisoftenthefirststep.Itprovidesthevitalbridgebetweentheinitialdissatisfactionwiththestatusquoandthefirstpracticalstepstakeninachangeprogramthearticulationofacleartargetthatrepresentssomethingbetterthatisbothlogicallysoundandemotionallyappealing.,32,IMPROVINGORGANIZATIONALPERFORMANCE,Grooved,Redirected,Unfrozen,Discontinuities,ExternalshocksNewcompetitors,economicsNewtechnologiesDeregulationInternalchangesNewaspirationsNewleader,Majorchangethroughpeople,Newstrategy,Neworstrongerskills,Sharedvalues,CHANGEVISION,33,Certainkeypeopleintheorganizationholdpositionsthatdeterminesuccessorfailureininstitutinganewstrategy,skill,orsharedvalue.Thesepeoplefillwhatwecallpivotaljobs.Wewillonlysucceedinimplementingthechangevisionifwesucceedinchangingthebehaviorofpivotaljobholders.AtMcDonalds,forexample,pivotaljobsincludethecentralizedpurchasersofallrawmaterialsforallstores,thestoremanagers,andthehourlyemployeeswhotakeandassembleorders.,34,PIVOTALJOBSWhatpeoplemustdo,Whatarethey?Positionsthathavedirectimpactondeliveryofvaluetothecustomer.Typicallythey-Designtheproduct-Maketheproduct-SelltheproductPositionsthatmustcapablymasternewskillsWherearethey?Closetothefrontline,35,Inarecentstudyatachainstoreretailer,thechangevisionincludedasignificantimprovementinin-storeconvenience.Twopositionswereidentifiedaspivotaljobsthestoremanagerandtheareaoperationsmanager.Thisstudyemployedacontrastanalysisintwoforms.Thefirstconsideredeachelementofbehavioranddefinedhowthenewbehaviorwouldneedtodifferfromcurrentpractices.Abehaviorcontrastanalysisoftenproveshelpfulindefiningpreciselyhowthepivotaljob-holdersneedtochange.,36,CONTRASTANALYSISPivotaljobs:storemanager,chainretailer,37,Thesecondanalysiscontrastedthepercentageoftimespentoncriticaltasksundercurrentpracticesandenvisionedinthefuture.,38,CONTRASTANALYSISBYPERCENTAGEOFTIMESPENTPivotaljob:areaoperationsmanager,100%,Merchant/owner,Coach,Player,Admini-straor,39,40,ORGANIZATIONALDESIGNLEVERSATMcDONALDS,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Managementsystems,Leadershipstyle,Staff,41,42,ORGANIZATIONALDESIGNLEVERSATMcDONALDS,Winningformula,Pivotaljobs,Designlevers,Organizationalstructure,Managementsystems,Leadershipstyle,Staff,43,44,STRUCTURALOPTIONS,45,46,CHANGEBOARD,Skilltobebuilt,*Modifiedasappropriateforcompany*E.g.,customers,suppliers,tradeunions,47,48,CHANGEBOARDCHAINRETAILEREXAMPLE,Deliveringin-storeconvenience,49,50,CHANGEBOARDCHAINRETAILEREXAMPLE,Deliveringin-storeconvenience,Lockinsupport,Createsharedresponsibilityforprogress,Buildasuccessmodelfrombelow,Forceawarenessofrealities,Restructurefieldorganization,51,Toanswerthequestion,“Howshouldchangehappen?”,theOPdevelopedthe“organizationaltransformationtriangle”thatsummarizesthethreebasicmanagementtaskswhendealingwithchange.Theirrelativeemphasismayvary,butallthreeofthemhavetobemanagedtoachievefundamentalbehavioralchange.,52,TRANSFORMATIONTRIANGLE,53,Thewell-knownGE“workout!”changeprogramincludedelementsfromeachdimensionofthetransformationtriangle.,54,GE“WORKOUT!”,Top-downdirectionsetting/cultureshapingNo.1orNo.2ineverybusiness“speed,simplicity,self-confidence”DelayeringBestpracticesworkshops,Bottom-upperformanceimprovementTownmeetings:2-to5-dayinteractivesessions“Brandname”qualityprocessesOperations:unit-by-unitredesign,CoreprocessredesignProjectteamstoidentifycross-functionalissuesProcessmapping,55,Theclientshouldseekanappropriatebalanceacrossallthreedimensionsofthetransformationtriangle.Overrelianceonanydimensionwillimpedechange.,56,BALANCEON3DIMENSIONSISKEY,57,TheOPhasdefinedawidearrayofchangeapproaches.Eachchangeapproachstrikesauniquebalanceamongthedimensionsofthetransformationtriangle.Yourchallengeisfindingthechangeapproachthatstrikesthebalanceappropriateforyourclientsituation.,58,OVERVIEWOF5PERFORMANCECHANGEAPPROACHES,59,Nomatterwhatchangeprogramisselected,thefollowingsixenergizingelementsshouldbeaddressed.Byaddressingeachone,theclientbuildstheenergyrequiredtomakeorganizationschange.,60,ENERGIZINGELEMENTS,Ambitious,measurableobjectivesReinforcingfeedbackConsequences,WinningformulaWinningleadershipgroup,Doer-drivenFact-basedPeople-intensive,Newmind-setNewskills,behavior,SystemsandprocessStructureRoles,BuildcommitmentEstablish2-wayflowManageexpectationsInspireaction,61,TheOPhasawealthofexperienceandresearchtosupportthedesignofeachelementofachangeprogram.,62,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,63,64,Account-based“actionlearning”program,Multinationalskillteamswith6crediblechampionsPiloteffortwithleadershiptogetbuy-inandadvice,Theleaderskillforbecoming$1billionPresidentassponsor,InputAccountplansPeopletrainedOutputsPriceShare,AwarenessbuildingPresidentsroadshowSkillbuildingthroughworkshopsReinforcementthroughVBSSnetworkbulletins,AccountteamsGlobalaccountmanagersAccountplanning,VBSS,65,Associateswilloftenstepuptomanagerrolesonengagementsthataddressorganizationissuesand/orimplementchange.Theseengagementsofteninvolvemultipleclientteams.Associatesassumeresponsibilityformanagingoneormoreoftheseclientteams.Theseengagementsalsoseektheactivesupportofabroadersetofclientmanagers.Associatesassumeresponsibilityfordevelopinginfluentialrelationshipswithcriticalclientmanagers.Engagementswhichfocusonorganizationissuesthereforeprovideexceptionalopportunitiesforassociates.,66,ASSOCIATESASSUMEMANAGERROLESINORGANIZATIONENGAGEMENTS,Traditionalviewofteamroles,Teamrolesonorganizationengagements,67,Theeffectiveassociatemanagerservesthreefunctions:Theassociatemanagerbuildsandsustainseffectiveclientteamsthatdefine,plan,andimplementthechange.Theassociatemanagerleadsproblemsolvingonmultipleclientteams.Theassociatemanagerforgesaconsensusofsupportforthechangevisionamongcriticalclientmanagersandensuresthatmanagersmain

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