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1、Organization:Overview of Core Frameworks,Local Training Module For First-year Associates Associate Handbook,FOREWORD AND OBJECTIVE,This Organization Practice(OP) document provides an overview for use in lo
2、cal training sessions for first-year associates. It is part of a “series on functional areas.” The objective of the series is to introduce McKinsey practitioners to the basics in each of our functional areas of expertise
3、. All the documents in the series are comprehensive in nature and describe the current tools and frameworks in that functional areaAt the end of this document, you can find a section describing a selection of the core d
4、ocuments and handbooks that can give you further details on some of the frameworks descried here. All of these documents are now on PDNet; and hard copies of them can be requested from PDNet Express, which will deliver t
5、hem in 24 hoursThe contents of this document have been adapted for local training sessions through “Switching Tracks” — OP’s first-year module videotape, which communicates the basic concepts in a concise and visual way
6、 using an actual client — The Scandinavian Railroad Company. It is 40 minutes long and should be presented in 3 short segments. Between these segments, the faculty member runs the attached exercises, adds any commentary
7、he/she considers necessary to clarify the concepts, and provides personal experience on selected topics. A copy of the videotape and moderator’s guide with exercises can be requested from the Firm,This document seeks to
8、answer 4 questions,SECTION 1 Why do associates need to consider organizational issues in every engagement?SECTION 2 What frameworks do we use to help our clients improve organizational performance?SECTION 3 What rol
9、e does an associate play in organization work?SECTION 4 Where can an associate find out more?,McKinsey’s mission is to have lasting and substantial impact on our clients.To succeed, we need to work all three of the cr
10、itical elements: choose the best strategy, develop world-class operations, align the organization.These three elements both reinforce and constrain each other. The best strategy is only relevant if it is operationally a
11、nd organizationally feasible. The optimal organizational design depends upon the strategic requirement and the operational methods of the client.This document focuses on one vertex of this triangular relationship. It wo
12、uld be wrong, however, to believe that you can achieve the impact we seek by focusing on one vertex. We need to consider all three in every study.,CRITICAL ELEMENTS FOR IMPACT,Successful strategy,Efficient operations,Eff
13、ective organization,We only achieve impact when the organizations we serve are successful in implementing the strategies and operational methods we propose.However, a recent survey of engagements in which clients failed
14、 to implement proposed strategies found, in three cases out of four, that the client organization was not change-ready or even capable of implementing the strategy we proposed.To ensure that we have impact, we need to c
15、onsider organizational issues as we devise strategies. We must choose strategies the clients are ready and able to implement or complement our strategy work with investment in building the organization’s skills so that t
16、he organization can step up to the challenge the superior strategy poses..,3 OUT OF 4 STRATEGIES THAT FAIL DO SO BECAUSE OF THE ORGANIZATION’S INABILITY TO EXECUTE,100%=340 responses,Percent,McKinsey recommendations fla
17、wed,Client not change-ready or committed,Organization lacked the capabilities to execute strategy,Other,The demand for organizational work is increasing.Trends in the marketplace and the evolving nature of our clients l
18、argely explain this increase in demand.The pace of change in the marketplace is accelerating . A strategic choice or an operational innovation evokes a rapid reaction from competitor. Rarely can a durable competitive ad
19、vantage be found in these choices. Rather it is the development of a unique organizational capability with the inherent flexibility and commitment to sustain world-class performance that provides durable competitive adva
20、ntage in these times of rapid change.The clients we serve are changing as well. They have increasingly hired in-house strategic capabilities. Most have built strategy shops close to the CEO. Few, however, have the in-ho
21、use capability and objectivity to do the organizational work required to make change happen.,ORGANIZATIONAL WORK GROWING IN IMPORTANCE,Evolving marketplaceQuickening pace of strategic adaptationDurable competitive adva
22、ntage often rooted in unique organizational capabilitiesEvolving playersMany businesses acquiring in-house strategic capabilityMaking change happen remains the “neglected art”,,McKinsey’s engagement mix Percent of ti
23、me,Increasing demand for help with organization issues and change management,Source: Survey of 23 MGMs across the Firm,The recent evolution in our clients has not been missed by our competitors. Each of our competitors h
24、as recently introduced a branded organizational element to their portfolio. Their organizational expertise figures prominently in their marketing campaigns.,COMPETITORS HAVE BRANDED ORGANIZATION TOOLS,McKinsey’s consulti
25、ng approach must evolve as our clients evolve. These changes provoke a shift in the nature of our work and an evolution of the role of the associate on engagements.The increased demand for organizational work impacts as
26、sociates directly. Associates are drawn into leadership roles on larger teams at an earlier point in their careers. This places greater emphasis on the need for associates to develop quite soon after joining McKinsey-sup
27、erb team leadership skills.,EVOLUTION IN McKINSEY’S APPROACH,*Survey of 23 MGMs across the Firm,Before we dive into the organization materials, we should announce one critical caveat: the frameworks you are about to see
28、are only as good as the judgment and insight used to fill them out. The frameworks are often mere checklists, useful tools to ensure you do not overlook a key dimension. The OP can provide interview guides and questionna
29、ires that you can use to flesh out the frameworks, as well as applied examples in a range of settings. However, almost all organizational issues are “situation dependent”, and almost all client settings are unique. Your
30、judgment, insight, creativity, and organizational acumen will determine whether you add value in the client setting .,A CRITICAL CAVEAT,“Garbage in, garbage out”,Organizational practice frameworksChecklistsSurveys,
31、questionnairesApplied examples,Garbage,Good judgment, keen insight, creativity, organizational acumen,Garbage,Client impact,A series of frameworks are available to help clients identify and address organizational limit
32、s on effectiveness or obstacles to change. They also point toward solutions.These frameworks help teams answer two fundamental questions:¶ What change is needed?¶ How should the client implement the ch
33、ange?The OP has derived a set of six attributes that characterize high-performing organizations(HPO). By assessing whether your client organization exhibits these six attributes, you can diagnose whether an organization
34、al performance gap exists as well.Additionally, the 7-Ss will help you identify strengths and deficiencies in the organization. The 7-Ss focus teams on aligning structure, staff, systems, and style to promote behavioral
35、 change and build skills in pivotal jobholders. By contrasting the required skill set (at both the organization and the pivotal jobholder level) with the current skill set, you can often clarify the organizational gap th
36、at exists.You complete the diagnostic by filling out the change board. That exercise helps teams understand the organizational skill deficits or resistance to change so they can deliberately plan to build the necessary
37、skills and willingness to change in the organization.Once the gaps have been identified, the team needs to lay out a change program to close the gaps. The transformation triangle highlights the three critical dimensions
38、 of any effective change program-top down, bottom up, cross-functional. The proper balance among these dimensions depends on the gap, the client setting, and the competitive context.Every change program contains some mi
39、x of six fundamental energizing elements. Each must be considered as we design change programs.This section of the handbook will discuss each framework in turn.,CORE FRAMEWORKS,High-performing organization attributes,7-
40、S framework,Winning formula,Pivotal jobs,Design levers,Organizational structure,,Staff,Management systems,Leadership style,Change board,Agenda/platform,,,,,Direction settingStructuringBottom-up energizing,Transformatio
41、n triangle,,Energizing elements,The OP undertook a study of 10 high-performing companies, true industry leaders, that we knew very well. The companies had sustained pace-setting performance in their respective industries
42、 over 2 decades.These 10 HPOs shared six management attributes, each of which focuses on performance. By comparing your client organization to these HPOs, you may identify opportunities to improve your client organizati
43、on.,“HIGH-PERFORMANCE COMPANY” ATTRIBUTES,Driven by leaders,Aligned by simple structures and core processes,Based on world-class skills,Rejuvenated by well-developed people systems,Built by relentless pursuit of before-t
44、he-fact strategies/vision,Energized by an extraordinarily intense, performance-driven environment,The first three of the six common management attributes:¶ Driven by leaders. The leaders of these companies had v
45、ery high performance aspirations. For these leaders there was no such notion as “good enough”. At the center of these leadership groups, we consistently found demanding, unreasonable CEOs.¶ Built by relentless b
46、efore-the-fact strategies/visions. HPOs spend their time looking forward, not back. Their strategies drive relentlessly for both profitability and growth.¶ Energized by an extraordinarily intense, performance-dr
47、iven environment. HPOs have a demanding, occasionally punishing, work pace. There is real accountability, especially at the top. HPOs, while being very good places to work, are not always nice places to work.,ATTRIBUTES
48、OF AN HPO,ATTRIBUTES OF AN HPO (CONTINUED),The HPO research found something else common to the HPOs: all 10 were experimenting with self-governance. Self-governance in these HPOs means empowerment with accountability. Th
49、e HPOs share the common characteristic of involving “a wide range of “or “broad cross-section of” employees in driving for improved performance. Their goal is to imbue every employee with an owner’s mind-set.Self –gover
50、nance in these HPOs is different from that practiced in other “engaged and empowered” companies. In HPOs the single-minded objective of empowerment is performance.In the matrix below, the HPOs we studied were all in the
51、 top half of the matrix (high performance); many were reaching, in addition, for the right-hand side of the matrix(engaged and empowered).,PERFORMANCE AND EMPOWERMENT AT HPOs,Most large companies start out in the lower l
52、eft-hand corner of the matrix (low performance and command-and-control management approach). We discovered that HPOs that have successfully transitioned to the upper right-hand corner have first achieved high performance
53、 and then experimented with and adopted empowerment. Empowerment without first establishing a true performance ethic in the company tends to result in continued low performance.If your client falls in the lower left-han
54、d corner of this matrix, it needs to concentrate first on building a true performance ethic. Empowerment, alone, is unlikely to yield performance improvement.,TRANSFORMATION PATH,7-S FRAMEWORK,McDONALD’S WINNING FORMULA,
55、Vision : to become the leading restaurant chain in the world,,Strategy,Shared values,Skills,Convenient Good qualityConsistent Family-oriented environmentFair value,Quality control over all aspects of businessSuperi
56、or site selection Continuous new product developmentStrong promotion of products and McDonald’s image,,Quality ServiceCleanlinessprice,Organizations usually change in response to discontinuities – either external sh
57、ocks (such as deregulation ) or internal changes (such as new leadership) that make it clear that the old , “grooved” way of doing things is no longer winning. The successful ones will create a new winning formula that i
58、s based on changes in strategy, newer or stronger skills, and/or shared values.Contrasting the new winning formula to the old formula identifies and gauges the change that the organization is considering and defines the
59、 vision for the change program.A change vision is a creed that summarizes what an organization is trying to become and why. As such, it guides organizational priorities by redefining and recombining business objectives,
60、 required institutional skills ,and corporate values about what is important around here.A change vision is at the heart of top management’s role in improving performance and is often the first step. It provides the vit
61、al bridge between the initial dissatisfaction with the status quo and the first practical steps taken in a change program – the articulation of a clear target that represents something better that is both logically sound
62、 and emotionally appealing.,IMPROVING ORGANIZATIONAL PERFORMANCE,Grooved,Redirected,Unfrozen,Discontinuities,External shocksNew competitors, economicsNew technologiesDeregulation Internal changesNew aspirationsNew
63、leader,,,,Major change through people,,,Newstrategy,,New or stronger skills,Shared values,CHANGE VISION,Certain key people in the organization hold positions that determine success or failure in instituting a new strate
64、gy, skill, or shared value. These people fill what we call pivotal jobs. We will only succeed in implementing the change vision if we succeed in changing the behavior of pivotal jobholders.At McDonald’s, for example, pi
65、votal jobs include the centralized purchasers of all raw materials for all stores, the store managers, and the hourly employees who take and assemble orders.,PIVOTAL JOBSWhat people must do,,,What are they ?Positions t
66、hat have direct impact on delivery of value to the customer. Typically they -Design the product -Make the product -Sell the productPositions that must capably master new skillsWhere are they?Close to
67、 the front line,In a recent study at a chain store retailer, the change vision included a significant improvement in in-store convenience. Two positions were identified as pivotal jobs – the store manager and the area op
68、erations manager.This study employed a contrast analysis in two forms. The first considered each element of behavior and defined how the new behavior would need to differ from current practices.A behavior contrast anal
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