Executive Summary
Nearly every organization is grappling with huge strategic challenges, often with a need to reimagine its very purpose, identity, strategy, business model, and structure. Most of these efforts to transform will fail. And, in most cases, they miss the mark not because the new strategy is flawed, but because the organization can’t carry it out. To survive this pandemic, leaders must confront the reality of their competitive environment and the hidden barriers that make their organization ineffective. If your strategy is failing and you don’t know why, look for these hidden barriers in your organization: unclear values, ineffective senior team, ineffective leadership style, poor coordination, inadequate leadership development, and inadequate vertical communication.
Nearly every organization is grappling with huge strategic challenges, often with a need to reimagine its very purpose, identity, strategy, business model, and structure. Most of these efforts to transform will fail. And, in most cases, they will miss the mark not because the new strategy is flawed, but because the organization can’t carry it out.
The Covid-19 pandemic undoubtedly presents the biggest challenge institutions of all types have faced in over a century. Leaders will have to reimagine their strategy and values in the context of the “new normal” we are entering, requiring organizations to fundamentally transform their systems of organizing, managing, and leading to enable effective execution of the new direction — and do it quickly. In this crisis speed is essential.
My experience in working and studying corporate transformations points to the six common interrelated reasons for failures — I call these hidden barriers. Leaders often don’t know — and sometimes do not want to know — about hidden barriers that stand in the way of their institution’s transformation. People do not speak up about these barriers, fearing career derailment and even firing (think Boeing, Wells Fargo, Volkswagen, and many others). That in turn makes it impossible for senior teams to learn about barriers and change them.
To survive this pandemic, leaders must confront the reality of their competitive environment and the hidden barriers that make their organization ineffective. Let’s look at the six barriers:
Hidden barrier #1: Unclear values and conflicting priorities
Often, the underlying problem is not this or that strategy, but rather the process by which the strategy was formed — or the lack of any such process. In these cases, strategy is often developed by the leader along with the chief strategy or marketing executive and only then communicated to the rest of the senior team for discussion. If the whole team is not involved clarity and commitment are not possible.
Your organization is suffering from this barrier if you notice any of these signs:
- Lack of clearly defined and articulated direction — strategy and values — to guide organizational behavior.
- Conflicting priorities, conflicts over resources, and poor execution of strategy, due to functions and businesses each championing their own priorities.
- People feeling overloaded, due to everything being labeled a priority.
Hidden barrier #2: An ineffective senior team
Top-team ineffectiveness was reported by lower levels in almost all the organizations we studied. Most of the time, this ineffectiveness comes from the top team not speaking with a common voice about strategy and value. The organization-wide consequences of this were low trust, low commitment to strategic decisions, and different and sometimes conflicting understandings of what the strategy even was. In all these cases, the leaders and their senior teams had not solved the fundamental problem of getting everyone on the senior team in the room to talk about the right things in the right way — honestly and constructively.
Your organization is suffering from this barrier if you notice any of these signs among the senior team:
- Most of the time spent in meetings is spent on information sharing and updates on short-term operational details — sometimes known as “death by PowerPoint” — rather than on confronting and resolving tough strategic and organizational issues.
- There is little constructive conflict in meetings. The real decisions get made outside the room.
- Members of the senior team don’t speak with a common voice about strategy and priorities.
Hidden barrier #3: Ineffective leadership styles
When it comes to individual leadership, there are two ineffective styles: a top-down approach that does not involve team members sufficiently and a laissez-faire, nonconfrontational style. We’ve found you can attribute either style to the leader’s personal aversion to conflict or to the lack of a clearly defined process for opening a constructive debate and carrying it through to a decision (in other words, a decision-making process). As a result, the leader doesn’t learn about what members of the senior team or lower levels really think about what’s not working and why.
Your organization is suffering from this barrier if you notice any of these signs:
- The leader tends to get lost in the operational details and works “one level below their pay grade.”
- The leader is not visible. They spend relatively little time on communicating overall strategy or direction or on forcing constructive debate in order to resolve contesting views.
- The leader does not confront issues or people directly to resolve festering conflicts.
Hidden barrier #4: Poor coordination
Coordination across silos — functions and business units or geographic regions at the corporate level critical to effective execution of strategy — is always a challenge. Ineffective senior teams whose members defend their fiefdoms are unable to agree on how to reorganize and reshape the culture to overcome naturally occurring obstacles to coordination and collaboration. If there’s friction, then the cross-boundary team structure for integrating value-creating activities either does not exist or is flawed and the lack of honest, collective, and public conversation prevents the organization from recognizing and correcting those flaws.
Your organization is suffering from this barrier if you notice any of these signs:
- It is painfully hard to execute on cross-functional, business, or geographic initiatives, often even despite good personal relationships.
- Work on horizontal cross-boundary teams is seen as secondary to meeting the goals for one’s own unit (e.g., function, business, or region).
- The roles, responsibilities, and decision rights of functions, business units, or regions are unclear.
Hidden barrier #5: Inadequate leadership development
Research has shown that leaders usually develop not through training, but by carrying out challenging new assignments. This requires managers to sacrifice for the larger good by giving up their high potential leaders to other parts of the organization for their development. When this doesn’t occur naturally and regularly it is tied to three hidden barriers already discussed: An ineffective senior team (#2) in a siloed organization with “fiefdoms” (#4) that does not have the perspective or capability to define collaborative organizational values and behaviors it expects of leaders (#1), nor to design a talent-management system that enables the cross-boundary developmental assignments required to develop general management ability.
Your organization is suffering from this barrier if you notice any of these signs:
- It keeps coming down to the same usual suspects when something important needs to get done.
- Too few opportunities are provided for leadership and management development.
- The senior team does not review leadership talent regularly or offer career paths that enable the development of general management capabilities.
Hidden barrier #6: Inadequate vertical communication
Inadequate honest vertical communication is like a bad game of Telephone. The necessary information about an organization’s strategic direction and values does not circulate from the senior team to the lower levels and the necessary information about the barriers to that direction and those values is not recirculated from the lower levels to the senior team. Rather than productive conversation, there is increased confusion.
Your organization is suffering from this barrier if you notice any of these signs:
- There are few forums for upward communication in which managers and associates can openly and publicly communicate with senior management in a low-risk environment.
- Open, public discussion of difficult issues goes against the cultural grain.
- Senior leaders rarely if ever ask lower levels to tell them about problems that stand in the way of the company’s effectiveness or how those problems can be improved.
The inability to confront the first five hidden barriers, and to foster an honest conversation about them between the top team and lower levels, makes it impossible to transform the hidden barriers into the strengths your organization needs to survive the Covid-19 crisis.
Start with an assessment. If you recognized your organization in each or most of the six hidden barriers described above, your organization is probably having a hard time transforming itself in some important way. If most of the items in any given hidden barrier category are true, that particular barrier is playing a strong role in undermining the effectiveness and agility of your organization.
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