Reference no: EM133437134

Culture is a curious beast. It is difficult to define, harder to manage; yet, always present. Culture has been described as the "invisible hand" that guides our behavior in the absence of leadership. At any given moment, it suggests the behaviors that are appropriate and inappropriate, the compromises we should make or not make, and filters our view of others and the world around us. Culture also binds us into a collective and represents an important component of the identity of an organization. As esoteric as culture is, it is also the single most important strategic component of any organization. If you get culture right, all good things follow. If you get culture wrong, you will struggle with unproductive behavior misaligned with your strategic goals, disengagement, lack of commitment, and consistent human capital problems.For too many organizations, culture is unintentional. It develops over time without much thought to the strategic needs of the organization as a by-product of the decision-making process of leadership and the personal desires of employees. Being intentional about culture begins with an understanding the relationship between strategy, core organizational capabilities, and culture as the starting point for designing a change process to embed or strengthen culture. Organizational Alignment Model Alignment is a simple concept. Everything must work together and not at odds. Imagine, if you will, a car made of the engine of a Bugatti, the interior of a Rolls Royce, the suspension of a Ferrari, and the frame and body of a Maserati. What would you have? Nothing. These components were not designed to work together. Alignment is the process of bringing the components of an organization into congruence with one another and with strategy.

The organizational alignment model was developed as a tool to provide a whole-systems framework for understanding an organization. The framework's value is in understanding the inherent connectedness of an organization. In brief, the framework suggests that to effectively understand your organization, and opportunities for enterprise enhancement, you must examine three essential intersections: (1) Strategy-Core Capabilities; (2) Core Capabilities-Culture; and (3) Cultural organizational design.

In my experience, the linkage between strategy and core capabilities is most frequently left unstated and, therefore, is frequently uncommunicated. Nonetheless, this intersection is critical. Occasionally, organizations have strategies that are truly novel and differentiating. However, more often organizational success is driven by executing an unremarkable strategy flawlessly.

Only by understanding the limited number of core organizational capabilities necessary to allow an organization to effectively and efficiently execute strategy can we consider how to best align the organization to those capabilities.

For example, if your organization focuses on product design, innovation is likely a core capability. If you are an exploration and production company focused on unconventional resource plays, speed and agility will be critical. For a manufacturer, operational efficiency is essential.
Regardless, the number must be limited to those capabilities that are truly essential. Organizations are not designed to support strategies.

They are designed to reinforce the core capabilities necessary for strategic success.

The Process:
Step 1: Defining Core Capabilities
Begin by understanding and codifying the core capabilities essential for the organization to achieve its strategic priorities. When developing the capability framework, you must consider the following.

1. The capabilities should be limited in number. If you identify 10 "essential" core capabilities, you have gone too far. It would be extremely difficult to optimize an organization to more than 4-5.

2. Capabilities must be defined in a manner that represents the appropriate heterogeneity of the organization. Each capability will not have the same relevance for every part of the organization, nor should it; however, each capability should translate, in some way, to most of the organization. (This is less of an issue the more "local" your focus).

3. Strategic priorities are not capabilities. Core capabilities are the organizational "strengths" necessary to achieve strategic priorities. For simplicity of the storyline, you need to differentiate priority from capabilities.
4. If the relationship between a proposed capability and strategy (or strategic objectives) cannot be explained, it is probably not a core capability.
5. Capabilities, themselves, are not about differentiation. Rarely do organizations differentiate on the list of capabilities. They differentiate on how effective they are at each one.

Step 2: Defining Culture
With the capability framework developed, you can begin evaluating culture. Although most organizations have an existing list of organizational values, it is important to take a step back and attempt to define culture relative to the capabilities that have been defined. The outcome will likely overlap somewhat with the existing list of values. However, this process allows you to develop a more nuanced list and more specific definitions that highlight the intersection of the core capabilities and culture. You conclude this effort with a quick evaluation of the current state of the organization relative to the needed culture. General principles include:

1. Core capabilities cannot simply be renamed as a cultural value. Innovation = Innovative Culture.
2. Culture is embodied in the collective behavior of leaders. What would you expect leaders to do to support a capability? This can help define the cultural dimension.
3. The focus will be on culture as it needs to be rather than culture as it is. This is essential.
Step 3: Identify Barriers to Alignment and Opportunities for Improvement
It is time to address the obvious and essential question, what do you need to change to bring the organization into alignment with core capabilities and culture? The answers to this question will inform the change agenda. Not everything identified will be a priority and not everything will be addressed. However, you do need to identify the high priority barriers to embedding culture organization requires.

So, what is a barrier? In short, a barrier is anything in the organization that sends the message that the culture that is needed is not valued or supports a different culture. These barriers can fall into three categories (1) behavior of leadership, (2) organizational structures, policies, practices, and procedures, (3) the needs and skills of the employees.
Here are a few generic examples.
• We say that agility (speed) is important; however, we are slow to act due to multiple layers of hierarchy (barrier between capabilities and structure)
• We say we need to value teamwork and collaboration (OneExxonMobil); however, we are only rewarded individually creating competition. (barrier between culture and process)
• We say we value empowerment; however, the preferred leadership style minimizes autonomy (barrier between culture and style of management).
• We say leadership is a core capability; however, too many people are moved into leadership roles without proper preparation. (barrier between capability and people's skills)

While these examples are simplistic, they represent a flavor for the types of barriers that will be identified. It is important to be comprehensive at this stage. Although cultural misalignments are frequent, you should also check for other misalignments (people-organization; organization-capabilities; people-capabilities).