In this application exercise, you are asked to apply to your organization the concepts and sequence of analytic steps general managers and human resource specialists must follow if they are to diagnose and improve their organization’s capability to implement strategy and satisfy stakeholders. In effect, I am asking
you to document and analyze your own organization’s case, and think about action implications, much in the same way we will be doing in class with cases about other companies.
To align organization and management practices with strategy, managers must be able to
1.
Develop strategy.
2.
Articulate and communicate the strategic task—what the organization and its members must do to implement the strategy.
3.
Define requisite capability levels needed to implement the strategic task.
4.
Collect data about strengths and weaknesses in organizational capabilities.
5.
Diagnose the cause of strengths and weaknesses, particularly why they exist and how they are affecting stakeholder satisfaction—financial performance, customer and employee satisfaction. Look for causes in poor alignment between various elements of organizational architecture and strategy or environment. Of course, poor performance may be a function of poor alignment between strategy and competitive environment—a bad strategy.
That strategy may be bad due to weaknesses in style/leadership behavior.
6.
Design a new organizational model—how the business ought to be organized and managed differently to overcome weakness and bolster strengths in capability needed to implement the strategic task/s more effectively.
7.
Manage a process of organizational change, including the data collection and diagnostic steps above, in such a way that all strengths and weaknesses are revealed, root causes are diagnosed, and the new organization design reflects the diagnosis. Too many organizational changes do not adequately address underlying root problems.
Choosing an Organizational Focus for the Exercise
I suggest that you choose as the focus for the exercise the organization you head or that you serve as a functional or staff executive. If you head or serve a major business unit or sector in your company, then that is the appropriate organization for analysis. If you work at the corporate level, the corporation will be your focus.
To understand how to define a boundary for the analysis, I suggest that you visualize the larger corporation as a pyramid of organizational sub-units. At the bottom are plants, branches, sales districts or functional departments. These are grouped into business units; the business units are grouped into sectors, regions, or the company (depending on the size of your company), and so on.
If you focus your analysis at the corporate or sector level, you should include heads of line and staff units and departments below them whose coordination is essential in accomplishing the “corporate strategic task”—not people and units primarily engaged in implementing the strategy of individual business units or plants.
Ask yourself, what businesses, departments, groups and levels must coordinate their activities to implement the corporate strategy?

If your focus is a business unit, your analysis should include functional heads and those below them whose coordination is key to accomplishing that unit’s strategy.
In large corporations there are many units. I urge you to limit your analysis to those people and groups whose interdependence is essential in implementing and reformulating strategy of your unit.
What Question Should You Answer?
You can begin this analysis in two ways, through a deficiency that you identify,
or by asking the more general question, “Is my organization effective—is it
aligned with strategy?”
Analyses that begin with a defined problem or deficiency are easier to engage. For example, financial performance may be low, or employees or customers are dissatisfied. You now work backwards in the model—from right to left—asking what strengths and deficiencies in capability are causing these problems, and what aspects of organizational architecture are causing these deficiencies in capability and how. Alternatively, you may begin with a deficiency in a capability like coordination.
You then work forward and backward. Working forward, you ask what effect has this had on stakeholder satisfaction? Working backward, you ask what elements of organizational architecture have caused this problem?
Analyses that begin with the general question—is the organization effective—will start on the left side of the diagnostic model with strategy, and move forward or to the right. Having defined the strategy, you will want to ask what capabilities are essential, and then ask whether they exist to the degree needed. When you identify a deficiency, analyze its consequences in stakeholder outcomes, and its causes in the architecture.
Both approaches to this exercise will lead you to answer the same question: is my organization effective—is it aligned with strategy in such a way that all stakeholders are satisfied and committed, and how do I make it more effective?
In the pages that follow, I provide instructions for each step in the exercise.
This exercise is intended to help you apply the thinking in this course to your own organization. It should help you ground the ideas in SHRM, while also yielding some insights for action in your own organization.
You will have to do some work by yourself first. You may want to talk to some people in your organization to collect some data about their perceptions of the organization and you, particularly if you are a key executive. Once the diagnosis is complete, you will want to discuss it with others. Ask them to challenge your assumptions.
After your diagnosis is complete, develop an action plan for redesign and
change individually (application exercise 3 and 4). Does the new design address the diagnosis you presented? Will the change process you propose help others see what you have discovered, and does it involve them adequately in redesign and implementation? Of course, if you want to use this exercise in your organization, you would involve the top team as a group in developing an action plan.
This exercise should produce new insights and desire for change. What are the implications for you when you return (application exercise 5)? If you are the general manager of the organization, develop a tactical plan for yourself. If you are not, how do you help your boss and the top team develop needed insight and motivation to change?

Below are more detailed instructions for moving through four exercises—each designed to help you answer the general question: Is my organization effective?
Remember, if you begin the exercise with a clearly defined deficiency or problem, you will probably start with application exercise 2. You may, however, want to go back to exercise 1 as questions of strategy arise. Both approaches to this exercise should yield the same diagnosis and action plan for change.

We have defined strategy as the means an organization has chosen over time to achieve its goals. For the purpose of diagnosing organizational alignment and effectiveness, we suggest that you consider how top management of your organization has redefined strategy in response to changes in the competitive environment.
If the focus of your diagnosis is a business unit or a corporation that is a single
business unit, you must articulate the basis on which it will be competing in the foreseeable future. It may be helpful for you to ask yourself whether the business is competing on price/cost, product differentiation/innovation, quality, service, or some combination. You may be able to articulate the basis of competition by asking yourself in what way the business is adding value not provided by competitors. That may help you identify which of the strategies above is really essential. Businesses need to deliver some amount of all the above, but it is important that you identify the most important factor.
If the focus of your diagnosis is a multiple business organization, such as a sector or corporation, think of the strategy as the things the corporate entity is uniquely suited to do that will add value to the separate business units (for example, the development and utilization of core technology, a common distribution system, human assets, or the global coordination of product/market strategies).
What the organization and its members must do to implement the strategy. For example, a business unit that intends to compete on the basis of product differentiation will have to develop a stream of new products. A business unit that intends to compete on quality will have to reduce errors in the manufacturing and delivery process. A corporation that intends to exploit a core technology will have to develop that technology through central R&D, help business units learn how that technology might apply to their business and/or exploit the learning of its independent business units with that technology.
Specialized competencies Businesses achieve competitive advantage in accomplishing the strategic task by developing one or more unique competencies— technical knowledge and skills, production skills, selling or distribution capabilities, for example—not easily developed by competitors. Typically these competencies are developed and sustained by organizing and managing people within the distinctive function in a manner that attracts, motivates and develops their specialized competence. What is the unique function critical to accomplishing the strategic task of your organization?
Coordination List the key functions, departments or geographic entities that must coordinate their activities with the specialized function and with each other in
order to perform the strategic task. For example, to achieve a corporate strategy intended to exploit established customer relationships, it may be necessary to integrate the sales activities of separate business units to common customers in an efficient and effective manner. To develop new products based on specialized

technology, marketing and manufacturing must coordinate closely with R&D to introduce products in a timely and cost effective manner.
Managerial competence What special management and interpersonal
competence is needed to accomplish the strategic task. For example, close coordination of functions in the product development process requires teamwork at the top and in lower level product development teams. The top management group will have to be skilled in prioritizing programs and allocating resources across programs. Lower level teams will need teamwork and leadership skills.
Commitment In what groups of employees is commitment to the firm and
motivation to achieve the task particularly important? A quality strategy may require high levels of commitment from production or customer service employees, and a product development strategy may require unusual levels of initiative from product development teams.
Communication How important is it for members of the organization to be able to have an honest, fact-based discussion of typically un-discussible strategic and
managerial issues blocking effectiveness? Non-defensive communication—when both parties confront differences by advocating their view and at the same time inquire into the validity of their view and underlying assumptions —is also critical for ongoing organizational improvement and learning. How much organizational learning is required by your organization to adapt to changing conditions?
Creativity How important is it for your organization to be innovative? In what
areas must the organization be innovative (products, services, processes, administrative systems, etc.)? Not all organizations require equal amounts of creativity. That depends on the industry and strategy. Nor do all organizations require innovation in the same areas or function.
Capacity management If your organization requires considerable crossfunctional or cross-business coordination around key projects or programs, agreement by the senior team about priorities, review of programs and the resources needed to complete them on time is critical to strategy implementation. How
important is capacity management to the implementation of the strategic task?

This step typically requires the collection of data from employees in the organization and from outsiders whose work depends on your organization’s performance, such as external or internal customers. You do not have access to this data now, but we ask that you reflect on the knowledge you have accumulated in your experience with the organization and perhaps make a few calls to solicit honest feedback.
Answer the following questions about deficiencies in capability:
1. How effective is the function whose unique competencies are critical to the execution of the strategic task?
2. Does your organization achieve the coordination or teamwork between functions, businesses, regions, or line and staff departments that you identified as critical to accomplishment of the strategic task?
3. Does the organization have sufficient managerial and interpersonal skills to manage requisite coordination? Examine the skills of the top management team that provides the context for coordination, as well as the skills of broader employee groups.
4. Does the organization have sufficient commitment from employee groups critical to the achievement of the strategic task?
5. Do people in your organization express their viewpoint directly and candidly, and attempt to inquire into the validity of their own viewpoint and that of others?
6. What are the barriers to creativity and innovation?
7. How well does your leadership team develop agreement about priorities and allocate resources? Is there a perceived mismatch between top management’s stated priorities and perceptions of lower levels about adequacy of resources?
Answer the following questions about causes of deficiencies:
Describe which elements of the organization’s architecture—structure, systems, staff,
style, or shared values—are causing deficiencies identified in the preceding questions?
Describe how they are affecting negatively organizational capability.

Focus on elements in your organization's architecture which you identified in the previous exercise as causing lower than required levels of coordination, commitment and competence, communication, creativity, and capacity management. These elements of organizational architecture are not aligned with the strategic task of your business. The next step is to redesign them and develop a strategically aligned organizational model.
Answer the following questions:
1. What changes in structure, systems, staff, style (particularly in the leadership team) or shared values are needed?
2. How would the organization function better after these changes are made? Go beyond simply naming the elements of organizational architecture that need change.
Describe exactly how the things will function differently to increase one or more capabilities.
3. What are the flaws in your new design? What new problems does it create?

You have now developed a model of how your business should be organized and managed to achieve its strategic task. Now you must consider a change strategy that will move the organization toward the model you have developed. If you are not the general manager, how will you develop the motivation to change in your general manager and your team? If you are the general manager, how will you motivate change without dictating it? The following questions may help you develop a
sequence of interventions that will move the organization forward:
1. Are members of the organization, especially key managers and opinion leaders, sufficiently dissatisfied with the status quo? Does energy for change exist? If the answer is no, what interventions should the general manager make to generate energy for change? What will you do?
2. In what way will the top management team and other key employees and constituencies be involved in diagnosis and the development of a strategically aligned organizational model?
Develop a sequence of steps for diagnosing and developing your organization’s capability to implement strategy.

You have identified your organization’s strategy, diagnosed its alignment with the strategy, and developed a preliminary change plan. This is the process of managing organizational effectiveness.
It is the thinking process required of line managers, if they are to develop their organization and its people as a source of competitive advantage. It is also the thinking process human resource executives need to adopt if they want to assist their general manager to implement strategic human resource management. It is now time to asses your role in helping your organization change:
1. If you are the general manager, what are the implications for your own role, particularly your leadership of the organization, and how will you spend your time?
2. If you are not the general manager of the organization, what can you do to help your boss gain new insights about the organization and lead a change process?
3. Plan in concrete terms the first steps you plan to take when you return to your organization to begin the change process. What are the personal and organizational
risks?