Leading the journey to create sustainable value for multiple stakeholders requires the flexible combination of leveraging the forces and facilitators of change with leadership activities and behaviors, organizational culture, and individual leader characteristics. The Leading Transformation Framework is composed of 14 components described in the 14 chapters of the [Re]Create book. The application of the framework concepts is addressed by our 14 digital learning and application labs that help guide the [re]design and transformation of your organization to create sustainable value for multiple stakeholders. Note – the concepts in Chapter 6 are split between two labs, #6 Organization Systems (below) and #15 Leadership System Design Lab.
Leaders who have successfully led organizations to achieve sustainable excellence focused their time on nine key activities (Latham, 2013a, 2013b). These nine key activities form a leadership system (2-10). Leadership is part art and part science; the leadership system is the science of leading transformation. The leadership system is the centerpiece of the Leadership Framework, and stakeholder value is the centerpiece (focus) of the leadership system. The leadership system is composed of nine interrelated components that describe WHAT leaders do. While these are presented in sequence, the actual use of the leadership system is often iterative, and you can begin and end anywhere on a given day.
The center of the system is an understanding of stakeholders and their needs, wants, and desires. This understanding informs all eight other components starting with the compelling directive that incorporates the stakeholders (2) into the purpose, mission, vision, and values of the organization (3). This directive, in turn, is the starting point for the development of a focused strategy (4) that will address the stakeholder requirements.
Once the foundation is established, the workforce is enabled, empowered, and engaged (5) to carry out the strategy in a way that is consistent with the compelling directive. Also, this workforce executes the operations of the organization to deliver the products and services in a way that creates value for the multiple stakeholders. At the same time, they continuously improve the organization systems and processes by designing and redesigning them to improve performance (6). The success of the strategies, people, and systems is measured by a comprehensive scorecard (7) that provides feedback on both the performance and the progress in each area.
This information is then analyzed and reviewed as part of a collaborative performance review process (8) that translates the information into a deeper understanding of the organization and informs changes to operations and strategy. Based on the organization’s performance review, individual performance is reinforced with rewards and recognition as well as remediation (9). The last component is a continuous learning and improvement process (10) that is embedded in all the essential systems and processes.
The leadership system is energized by the collaborative leadership style (11) that describes HOW leaders do the activities in the leadership system. These activities and behaviors become embedded in the culture of service (12) that increases the sustainability of the transformation. The individual leader (13) often has to personally change to be credible and effective. The journey (14) is planned, tracked, managed, and adjusted to achieve sustainable excellence. The management design framework (15) guides the continual [re]design of systems throughout the organization to improve performance and keep them relevant in a continuously changing world. The journey of [re]creating the organization never ends.
Forces for Change Lab #1
While the motivation for change varies widely, there must be enough tension to overcome the inertia of satisfaction with the status quo. The framework starts with identifying the forces of change specific to your organization and context. What are the external “pushing” forces for change? What are the “pulling” forces of change? What is the vision of a new desired future? Are these sufficient to overcome the inertia of the status quo? How can you leverage these forces to move your organization forward?
Stakeholder Value Lab #2
The focus of a transformation to sustainable excellence is to increase the value created for multiple stakeholders, including the workforce, customers, investors, suppliers and partners, community, and environment. The focus on stakeholder needs and relationships helps provide a common alignment point for the strategy, systems, scorecard, and overall organization design for sustainable excellence. In short, high- performing organizations create an efficient system and value for other stakeholders such as suppliers and partners, society, and the environment. The task here is to understand the stakeholders’ needs and desires.
Compelling Directive Lab #3
The needs of the stakeholders inform the creation of a “compelling directive.” The format of the compelling directive varies but typically consists of the organization’s purpose, mission, vision, and values. The vision describes the desired reality. The vision is an essential part of creating positive tension, a vital force of change to overcome resistance to change. The compelling directive builds a bridge between the stakeholders and the strategy.
Focused Strategy Lab #4
How will the organization achieve the desired reality described in the compelling directive? The focused strategy translates the compelling directive and stakeholders’ needs into more specific goals, objectives, and clear expectations. The key here is to focus on a FEW critical goals at a particular point in time. Some organizational transformations require hundreds of changes. Success depends on picking just a few of those to work on at a time and then actually executing the plan, then working on the next priorities as the journey unfolds. The focused strategy is continuously evolving to meet current requirements and challenges. The focused strategy aligns the priorities through the organization and provides the foundation to enable, empower, and engage the workforce.
Enable, Empower, Engage Lab #5
While many leaders claim that their people are their most valuable asset, their actions often tell a different story. High-performing organizations develop and engage their workforce to accomplish the strategy. Creating an engaged workforce consists of (a) acquiring and placing talent, (b) developing (enabling) and empowering people, (c) involving and engaging the workforce at all levels, and (d) addressing the whole person. Acquiring and retaining the best talent is a challenge for most organizations. The best people will only work for organizations where they feel valued, enjoy their work, and achieve their full potential in a win-win arrangement. Note: If you don’t need the best people, then consider automating the work.
Organization Systems Lab #6
The focused strategy also drives the implementation of action plans to accomplish the strategy. There are typically two types of strategy deployment projects — those focused on new products and services, and those focused on building the organization systems to develop, produce, deliver, and the products and services. Even new product launches are organization systems that need to be designed or redesigned to achieve a particular goal. The deployment of the strategy focuses on the [re]design and further development of one or more key systems to achieve an objective. The Design Framework, combined with a focus on system design provides the structure to design, develop, and deploy any new or redesigned initiative or system in the organization. The only way we know if our redesign efforts are improving performance is to measure performance.
Comprehensive Scorecard Lab #7
The progress and performance improvements resulting from the deployment of the action plans are measured and tracked by a comprehensive scorecard that measures the stakeholders, strategy, and systems. The comprehensive scorecard goes beyond a simple bottom line to a deeper understanding of the organization as a system. This includes both current performance and performance trends over time. Measuring performance and comparing your organization’s performance to other high-performing organizations helps create dissatisfaction with the status quo and is a vital part of creating tension: productive tension. The scorecard is designed to facilitate dialogue during the periodic organization performance reviews.
Organization Performance Review Lab #8
Scorecard results are analyzed and periodically reviewed by the leaders at all levels who then revise the action plans and operations as necessary to accomplish the strategy. While much of the learning during these reviews is limited to single-loop learning and keeping things on track, occasionally the dialogue will result in an examination of the underlying assumptions and double-loop learning that enables the team to address root causes and prevent similar future problems. This fact-based approach to management includes organization performance analysis that informs the reinforcement of the desired behaviors.
Align, Coach, Appreciate Lab #9
There is an old saying, “What gets measured gets done and what gets rewarded gets repeated.” Reinforcing behavior is based on progress towards the overall strategy and includes recognition, rewards, promotions, and sometimes the removal of individuals. All too often, incentive systems are counter-productive and drive behaviors that are inconsistent with the overall compelling directive and strategy. So caution is warranted when evaluating and incentivizing performance. High-performing organizations align their incentives to ensure individual performance is supporting the best overall system performance.
Learn and Improve Lab #10
Successful leaders of transformation are never satisfied with the organization’s performance and learn from experience. To fully develop the organization’s systems, culture and individuals requires that the organization learn not only from their successes but also from their failures. Organizations that have achieved sustainable excellence by learning from success and failure did so using four common methods or approaches: strategic management cycle, organization assessment and improvement, continuous improvement, and benchmarking. These methods are often integrated into the other eight leadership system components.
Collaborative Leadership Style Lab #11
The framework offers leader behaviors that support the leadership system to achieve sustainable excellence. You might consider these the art of leading transformation — or HOW leaders accomplished the activities. The collaborative style includes nine behaviors. Leaders establish their credibility by role modeling the behaviors and actions they want to see in the new organization. Organization architect leaders respect everyone, which helps them develop collaborative relationships to [re]design and transform the organization. OAs are great communicators and deliver a consistent message regardless of the situation. At the same time, they hold people accountable for the changes. They are systems thinkers who are always learning from their involvement in the design and change activities. It is a style that helps people create the organization that they want. This style, along with the activities shapes the culture.
Culture of Service Lab #12
Ultimately, sustaining excellence requires that the new systems, processes, and practices become habitual and embedded in the culture. Culture is composed of values and norms that are manifested in the rituals, heroes, and symbols. Organizations that have achieved sustainable excellence have five cultural characteristics in common. They are a complementary combination of valued employees who trust each other and work as a team. At the same time, this trusting team is focused on delivering excellence to the customer. In the end, individuals working together are the essence of any sustainable change.
The Individual Leader Lab #13
Organization architects have five common characteristics that increase the odds of achieving and sustaining high performance: purpose and meaning, humility tempered by confidence, integrity, systems perspective, and motivational and attitudinal patterns. While the other leadership components of system and style are visible and observable, this one is below the surface. What would it take to make this leadership style authentic for you? What motivates you to do the key activities?
Facilitators of Change Lab #14
Some leaders of successful change doubted they could do it. It can seem overwhelming. There are a few critical facilitators of change to help you along the journey. First, you are not alone, so start by developing your team of organization architects. Second, begin with the senior leadership team so you will have credibility and personal knowledge to lead the journey. Then develop a plan to guide your [re]design and transformation. There is an old saying, “If it has been done, it must be possible.”
Leadership System Design Lab – Coming Soon in 2020!
Reaching your organization’s full potential requires custom systems that fit your unique organization and situation “like a glove!” The Leadership System Design Lab is an applied “learn by doing” experience where you develop your design skills while you design a leadership system for yourself and/or your organization. Creating sustainable organizational change requires a broad, systems thinking approach. The Design Lab follows the D4 + I approach and uses the Design Framework to guide the development of a custom leadership system to fit your unique needs and context. The Design Framework provides a flexible structure to design, develop, and deploy any new or redesigned initiative or system in the organization. Consequently, what you learn designing your first system can be used to design systems throughout the organization.
Latham, J. R. (2013a). A Framework for Leading the Transformation to Performance Excellence Part I: CEO Perspectives on Forces, Facilitators, and Strategic Leadership Systems. Quality Management Journal, 20(2), 22
Latham, J. R. (2013b). A Framework for Leading the Transformation to Performance Excellence Part II: CEO Perspectives on Leadership Behaviors, Individual Leader Characteristics, and Organizational Culture. Quality Management Journal, 20(3), 22