Tuesday, March 10, 2020

Connecting Relevant Dots of Organizational Strategy, Structure and Business Performance

The holistic performance management approach is fundamental to “keep the end” in mind, make a significant digital shift.

Traditional management runs in silos; silos introduce lots of delays, waste, queues, and bottlenecks. The linear business system perception needs to be replaced by the adaptive digital system viewpoint. Digital management needs to be holistic and informative for overcoming the challenges brought by “VUCA” new normal.

You can only manage what you measure. Performance Management is a holistic management discipline that needs to connect many relevant dots such as dynamic strategic planning or organizational structure tuning to involve business development, enablement, and enhancement. The correlation between strategy, structure, and performance can be figured out via logical reasoning and insightful inquiries.

How much does the strategy impact on business performance? Strategy management and performance management need to work neck to neck, ensuring key stakeholders are bought in, aligned and equipped to execute and ensure value/benefits/outcomes are realized. Translate strategy into operational terms and evolve digital flow, make the strategy everyone’s daily work and a continual process mobilizing change and unlock collective performance. Developing the strategy through wide participatory processes and well-defined performance indicators greatly increase the likelihood that the well-set strategy is implemented with measurable results. Performances are not just numbers with metrics, they are numbers in context, results related to your business goals both at the strategic and operational level.

In practice, on the strategy execution side, the organization needs to think about what metrics and KPIs could be used to communicate the strategy to the business management and keep track of strategy execution effectively. Metrics will be different for each functional unit dependent upon which role they play in executing the overall strategy. The silo-based approach to assume that the organizational performance is the sum of pieces is incorrect. The strategically oriented performance indicators should capture the flow - the responsiveness, changeability, and agility of the organization, for measuring the business’s growth potential. The business leaders need to clarify how they will measure success in strategy management by taking an integrated system approach, and every step is essential in reaching a specific outcome, bringing a holistic perspective and optimal result.

How much does the structure impact on business performance? To create synergy and unlock performance, businesses need to fine-tune their organizational structure and business system in achieving high performance and reaching the next level of business maturity. The reality in most organizations though is the performance which is forcibly jammed within an existing organizational structure with silo functions and overly rigid hierarchy, and very few companies are truly leveraging organizational development (OD) resources wisely to unleash business potential.

It’s the work of the business management to keep tuning organizational structures, enforce accountability, help people navigate through difficult changes and achieve their goals, deliberately make the close structural alignment among the company’s strategic direction. Business management needs to demonstrate a willingness to explore legitimate systemic issues beyond the performance, understand the technique and psychology behind changes and make continuous performance improvement.

What is the cause and effect relationship between strategy and structure that impact business performance? Corporate performance management is not just about managing numbers with metrics, At its core, performance management is about creating a work environment that helps the company meet its business goals. The incomplete strategy often causes the misalignment of organizational structures and functions and leads to poor performance. The silo structure locks business performance. A well-defined strategy-structure-performance management system will assign accountability for business initiatives and make business progress more transparent, measurable. The organizational performance can be significantly improved by identifying clear goals and priorities, having the right people on the right bus at the right time, and framing the right incentive and rewarding system.

Cause-effect is tricky because there are multitudes of causes and multitudes of effects which only become apparent as the observer changes how they describe the performance system (organizations, structures, elements, environments, etc). Develop dynamic strategy, keep tuning organizational structure, strike the right balance between centralized efforts and decentralized efforts, build up clear milestones with short, medium and long term performance goals, and set the right metrics which can help to get some objective perspectives on action-effect, as a result of executing against the strategic plan.

The holistic performance management approach is fundamental to “keep the end” in mind, make a significant digital shift, take a multidimensional approach, and connect all-important dots with multifaceted perspectives to drive an iterative business continuum.


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Awaiting for your new post
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