Tuesday, December 22, 2020

Leading Change: Focus on Desired Outcomes First, Not Activities

Source: pixy.org

MIT Senior Lecturer and management consultant Elsbeth Johnson has written an interesting article for Strategy+Business about why many strategic transformation efforts fail (though I'm not a fan of the article title).  She argues that we often blame middle managers for resisting change efforts and putting up various obstacles.  However, she finds fault with senior leaders when examining many failed organizational change initiatives.  Johnson argues that leaders aren't focusing on the right type of work when launching transformation efforts.  She argues that leaders jump into the planning and execution of activities too quickly, rather than stepping back and clearly articulating the desired outcomes first.  She explains: 

Be clear about what you want. A new strategy needs to specify a target outcome — i.e., the change leaders want to produce — and, ideally, that target outcome should have three features. It needs to be outcome-based, not activity-based; it needs to have a financial target (such as improving operating margin by 20 percent); and it needs to be ambitious enough, with a sufficient time frame, to create fundamental, not merely cosmetic, change.  A target outcome with these three components enables managers to identify the projects, initiatives, and work streams that should be tackled — at different levels and in different parts of the business — in order to deliver it.

Johnson argues that leaders default to working on activities because that work is easier and more enjoyable for many individuals than clarifying priorities, persuading others to change, and motivating people to work toward ambitious new goals.  

The trap leaders fall into is their desire to specify activities rather than the outcomes these activities will deliver. In my experience, they do this because they find this work is easier and more enjoyable. Their “laziness” here is that they prefer to default to this simple, enjoyable work — picking projects to work on — when they ought to be doing something very different: clarifying and selling the change.

For example, the senior leadership team of a midsized technology company whose growth was plateauing had agreed the firm needed a radically different strategy. They’d asked me to help them develop the new strategy — including agreeing on the critical outcomes it should deliver and then making some clear choices about target markets and segments. But before these decisions had been fully discussed, let alone agreed upon, this senior team jumped to activities. One of the team members remarked: “There is one acquisition I think we should look at again,” while another said, “We need to work out the details of that China joint venture before the end of this quarter.”

These individual activities might well have turned out to be important, but they were just that — activities. They represented the “how” of the strategy, rather than the “what” or “why.” And until the team had clarity on what the strategy should deliver — in this case, we decided on a target of 12 percent return on capital within four years — it was premature to make any decisions about how that outcome might be delivered. Before deciding on the China joint venture or a particular acquisition, the team needed the 12 percent outcome nailed down.

The problem here is how a lot of leaders define work. A member of this same team asked me at the end of one strategy session, “When are we going to decide what we’re actually going to do?” — by which he meant deciding on which activities to pursue. That is what too many senior leaders still consider to be “work” — when what they should be doing is the work of clarifying and articulating the outcomes a change will produce. If leaders are primarily using their time to choose activities, not only does that deny managers — the people closer to the operations and the customers — the opportunity to choose how the strategy will be delivered, it also invariably means that leaders don’t have the time to work on clarifying and selling the change, which is work that really only those executives can do.

It may sound simple and obvious, but my experience does suggest that many organizations suffer from a lack of alignment regarding goals, priorities, and expectations.  Leaders often overestimate how much alignment actually exists...and they overestimate by a wide margin in many instances.  

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