Organization OverviewofCoreFrameworks LocalTrainingModuleForFirst yearAssociatesAssociateHandbook FOREWORDANDOBJECTIVE ThisOrganizationPractice OP documentprovidesanoverviewforuseinlocaltrainingsessionsforfirst yearassociates Itispartofa seriesonfunctionalareas TheobjectiveoftheseriesistointroduceMcKinseypractitionerstothebasicsineachofourfunctionalareasofexpertise AllthedocumentsintheseriesarecomprehensiveinnatureanddescribethecurrenttoolsandframeworksinthatfunctionalareaAttheendofthisdocument youcanfindasectiondescribingaselectionofthecoredocumentsandhandbooksthatcangiveyoufurtherdetailsonsomeoftheframeworksdescriedhere AllofthesedocumentsarenowonPDNet andhardcopiesofthemcanberequestedfromPDNetExpress whichwilldeliverthemin24hoursThecontentsofthisdocumenthavebeenadaptedforlocaltrainingsessionsthrough SwitchingTracks OP sfirst yearmodulevideotape whichcommunicatesthebasicconceptsinaconciseandvisualwayusinganactualclient TheScandinavianRailroadCompany Itis40minuteslongandshouldbepresentedin3shortsegments Betweenthesesegments thefacultymemberrunstheattachedexercises addsanycommentaryhe sheconsidersnecessarytoclarifytheconcepts andprovidespersonalexperienceonselectedtopics Acopyofthevideotapeandmoderator sguidewithexercisescanberequestedfromtheFirm Thisdocumentseekstoanswer4questions SECTION1Whydoassociatesneedtoconsiderorganizationalissuesineveryengagement SECTION2Whatframeworksdoweusetohelpourclientsimproveorganizationalperformance SECTION3Whatroledoesanassociateplayinorganizationwork SECTION4Wherecananassociatefindoutmore McKinsey smissionistohavelastingandsubstantialimpactonourclients Tosucceed weneedtoworkallthreeofthecriticalelements choosethebeststrategy developworld classoperations aligntheorganization Thesethreeelementsbothreinforceandconstraineachother Thebeststrategyisonlyrelevantifitisoperationallyandorganizationallyfeasible Theoptimalorganizationaldesigndependsuponthestrategicrequirementandtheoperationalmethodsoftheclient Thisdocumentfocusesononevertexofthistriangularrelationship Itwouldbewrong however tobelievethatyoucanachievetheimpactweseekbyfocusingononevertex Weneedtoconsiderallthreeineverystudy CRITICALELEMENTSFORIMPACT Successfulstrategy Efficientoperations Effectiveorganization Weonlyachieveimpactwhentheorganizationsweservearesuccessfulinimplementingthestrategiesandoperationalmethodswepropose However arecentsurveyofengagementsinwhichclientsfailedtoimplementproposedstrategiesfound inthreecasesoutoffour thattheclientorganizationwasnotchange readyorevencapableofimplementingthestrategyweproposed Toensurethatwehaveimpact weneedtoconsiderorganizationalissuesaswedevisestrategies Wemustchoosestrategiestheclientsarereadyandabletoimplementorcomplementourstrategyworkwithinvestmentinbuildingtheorganization sskillssothattheorganizationcanstepuptothechallengethesuperiorstrategyposes 3OUTOF4STRATEGIESTHATFAILDOSOBECAUSEOFTHEORGANIZATION SINABILITYTOEXECUTE 100 340responses Percent McKinseyrecommendationsflawed Clientnotchange readyorcommitted Organizationlackedthecapabilitiestoexecutestrategy Other Thedemandfororganizationalworkisincreasing Trendsinthemarketplaceandtheevolvingnatureofourclientslargelyexplainthisincreaseindemand Thepaceofchangeinthemarketplaceisaccelerating Astrategicchoiceoranoperationalinnovationevokesarapidreactionfromcompetitor Rarelycanadurablecompetitiveadvantagebefoundinthesechoices Ratheritisthedevelopmentofauniqueorganizationalcapabilitywiththeinherentflexibilityandcommitmenttosustainworld classperformancethatprovidesdurablecompetitiveadvantageinthesetimesofrapidchange Theclientsweservearechangingaswell Theyhaveincreasinglyhiredin housestrategiccapabilities MosthavebuiltstrategyshopsclosetotheCEO Few however havethein housecapabilityandobjectivitytodotheorganizationalworkrequiredtomakechangehappen ORGANIZATIONALWORKGROWINGINIMPORTANCE EvolvingmarketplaceQuickeningpaceofstrategicadaptationDurablecompetitiveadvantageoftenrootedinuniqueorganizationalcapabilitiesEvolvingplayersManybusinessesacquiringin housestrategiccapabilityMakingchangehappenremainsthe neglectedart McKinsey sengagementmixPercentoftime Increasingdemandforhelpwithorganizationissuesandchangemanagement Source Surveyof23MGMsacrosstheFirm Therecentevolutioninourclientshasnotbeenmissedbyourcompetitors Eachofourcompetitorshasrecentlyintroducedabrandedorganizationalelementtotheirportfolio Theirorganizationalexpertisefiguresprominentlyintheirmarketingcampaigns COMPETITORSHAVEBRANDEDORGANIZATIONTOOLS McKinsey sconsultingapproachmustevolveasourclientsevolve Thesechangesprovokeashiftinthenatureofourworkandanevolutionoftheroleoftheassociateonengagements Theincreaseddemandfororganizationalworkimpactsassociatesdirectly Associatesaredrawnintoleadershiprolesonlargerteamsatanearlierpointintheircareers ThisplacesgreateremphasisontheneedforassociatestodevelopquitesoonafterjoiningMcKinsey superbteamleadershipskills EVOLUTIONINMcKINSEY SAPPROACH Surveyof23MGMsacrosstheFirm Beforewediveintotheorganizationmaterials weshouldannounceonecriticalcaveat theframeworksyouareabouttoseeareonlyasgoodasthejudgmentandinsightusedtofillthemout Theframeworksareoftenmerechecklists usefultoolstoensureyoudonotoverlookakeydimension TheOPcanprovideinterviewguidesandquestionnairesthatyoucanusetofleshouttheframeworks aswellasappliedexamplesinarangeofsettings However almostallorganizationalissuesare situationdependent andalmostallclientsettingsareunique Yourjudgment insight creativity andorganizationalacumenwilldeterminewhetheryouaddvalueintheclientsetting ACRITICALCAVEAT Garbagein garbageout OrganizationalpracticeframeworksChecklistsSurveys questionnairesAppliedexamples Garbage Goodjudgment keeninsight creativity organizationalacumen Garbage Clientimpact Aseriesofframeworksareavailabletohelpclientsidentifyandaddressorganizationallimitsoneffectivenessorobstaclestochange Theyalsopointtowardsolutions Theseframeworkshelpteamsanswertwofundamentalquestions Whatchangeisneeded Howshouldtheclientimplementthechange TheOPhasderivedasetofsixattributesthatcharacterizehigh performingorganizations HPO Byassessingwhetheryourclientorganizationexhibitsthesesixattributes youcandiagnosewhetheranorganizationalperformancegapexistsaswell Additionally the7 Sswillhelpyouidentifystrengthsanddeficienciesintheorganization The7 Ssfocusteamsonaligningstructure staff systems andstyletopromotebehavioralchangeandbuildskillsinpivotaljobholders Bycontrastingtherequiredskillset atboththeorganizationandthepivotaljobholderlevel withthecurrentskillset youcanoftenclarifytheorganizationalgapthatexists Youcompletethediagnosticbyfillingoutthechangeboard Thatexercisehelpsteamsunderstandtheorganizationalskilldeficitsorresistancetochangesotheycandeliberatelyplantobuildthenecessaryskillsandwillingnesstochangeintheorganization Oncethegapshavebeenidentified theteamneedstolayoutachangeprogramtoclosethegaps Thetransformationtrianglehighlightsthethreecriticaldimensionsofanyeffectivechangeprogram topdown bottomup cross functional Theproperbalanceamongthesedimensionsdependsonthegap theclientsetting andthecompetitivecontext Everychangeprogramcontainssomemixofsixfundamentalenergizingelements Eachmustbeconsideredaswedesignchangeprograms Thissectionofthehandbookwilldiscusseachframeworkinturn COREFRAMEWORKS High performingorganizationattributes 7 Sframework Winningformula Pivotaljobs Designlevers Organizationalstructure Staff Managementsystems Leadershipstyle Changeboard Agenda platform DirectionsettingStructuringBottom upenergizing Transformationtriangle Energizingelements TheOPundertookastudyof10high performingcompanies trueindustryleaders thatweknewverywell Thecompanieshadsustainedpace settingperformanceintheirrespectiveindustriesover2decades These10HPOssharedsixmanagementattributes eachofwhichfocusesonperformance BycomparingyourclientorganizationtotheseHPOs youmayidentifyopportunitiestoimproveyourclientorganization HIGH PERFORMANCECOMPANY ATTRIBUTES Drivenbyleaders Alignedbysimplestructuresandcoreprocesses Basedonworld classskills Rejuvenatedbywell developedpeoplesystems Builtbyrelentlesspursuitofbefore the factstrategies vision Energizedbyanextraordinarilyintense performance drivenenvironment Thefirstthreeofthesixcommonmanagementattributes Drivenbyleaders Theleadersofthesecompanieshadveryhighperformanceaspirations Fortheseleaderstherewasnosuchnotionas goodenough Atthecenteroftheseleadershipgroups weconsistentlyfounddemanding unreasonableCEOs Builtbyrelentlessbefore the factstrategies visions HPOsspendtheirtimelookingforward notback Theirstrategiesdriverelentlesslyforbothprofitabilityandgrowth Energizedbyanextraordinarilyintense performance drivenenvironment HPOshaveademanding occasionallypunishing workpace Thereisrealaccountability especiallyatthetop HPOs whilebeingverygoodplacestowork arenotalwaysniceplacestowork ATTRIBUTESOFANHPO ATTRIBUTESOFANHPO CONTINUED TheHPOresearchfoundsomethingelsecommontotheHPOs all10wereexperimentingwithself governance Self governanceintheseHPOsmeansempowermentwithaccountability TheHPOssharethecommoncharacteristicofinvolving awiderangeof or broadcross sectionof employeesindrivingforimprovedperformance Theirgoalistoimbueeveryemployeewithanowner smind set Self governanceintheseHPOsisdifferentfromthatpracticedinother engagedandempowered companies InHPOsthesingle mindedobjectiveofempowermentisperformance Inthematrixbelow theHPOswestudiedwereallinthetophalfofthematrix highperformance manywerereaching inaddition fortheright handsideofthematrix engagedandempowered PERFORMANCEANDEMPOWERMENTATHPOs Mostlargecompaniesstartoutinthelowerleft handcornerofthematrix lowperformanceandcommand and controlmanagementapproach WediscoveredthatHPOsthathavesuccessfullytransitionedtotheupperright handcornerhavefirstachievedhighperformanceandthenexperimentedwithandadoptedempowerment Empowermentwithoutfirstestablishingatrueperformanceethicinthecompanytendstoresultincontinuedlowperformance Ifyourclientfallsinthelowerleft handcornerofthismatrix itneedstoconcentratefirstonbuildingatrueperformanceethic Empowerment alone isunlikelytoyieldperformanceimprovement TRANSFORMATIONPATH 7 SFRAMEWORK McDONALD SWINNINGFORMULA Vision tobecometheleadingrestaurantchainintheworld Strategy Sharedvalues Skills ConvenientGoodqualityConsistentFamily orientedenvironmentFairvalue QualitycontroloverallaspectsofbusinessSuperiorsiteselectionContinuousnewproductdevelopmentStrongpromotionofproductsandMcDonald simage QualityServiceCleanlinessprice Organizationsusuallychangeinresponsetodiscontinuities eitherexternalshocks suchasderegulation orinternalchanges suchasnewleadership thatmakeitclearthattheold grooved wayofdoingthingsisnolongerwinning Thesuccessfuloneswillcreateanewwinningformulathatisbasedonchangesinstrategy newerorstrongerskills and orsharedvalues Contrastingthenewwinningformulatotheoldformulaidentifiesandgaugesthechangethattheorganizationisconsideringanddefinesthevisionforthechangeprogram Achangevisionisacreedthatsummarizeswhatanorganizationistryingtobecomeandwhy Assuch itguidesorganizationalprioritiesbyredefiningandrecombiningbusinessobjectives requiredinstitutionalskills andcorporatevaluesaboutwhatisimportantaroundhere Achangevisionisattheheartoftopmanagement sroleinimprovingperformanceandisoftenthefirststep Itprovidesthevitalbridgebetweentheinitialdissatisfactionwiththestatusquoandthefirstpracticalstepstakeninachangeprogram thearticulationofacleartargetthatrepresentssomethingbetterthatisbothlogicallysoundandemotionallyappealing IMPROVINGORGANIZATIONALPERFORMANCE Grooved Redirected Unfrozen Discontinuities ExternalshocksNewcompetitors economicsNewtechnologiesDeregulationInternalchangesNewaspirationsNewleader Majorchangethroughpeople Newstrategy Neworstrongerskills Sharedvalues CHANGEVISION Certainkeypeopleintheorganizationholdpositionsthatdeterminesuccessorfailureininstitutinganewstrategy skill orsharedvalue Thesepeoplefillwhatwecallpivotaljobs Wewillonlysucceedinimplementingthechangevisionifwesucceedinchangingthebehaviorofpivotaljobholders AtMcDonald s forexample pivotaljobsincludethecentralizedpurchasersofallrawmaterialsforallstores thestoremanagers andthehourlyemployeeswhotakeandassembleorders PIVOTALJOBSWhatpeoplemustdo Whatarethey Positionsthathavedirectimpactondeliveryofvaluetothecustomer Typicallythey Designtheproduct Maketheproduct SelltheproductPositionsthatmustcapablymasternewskillsWherearethey Closetothefrontline Inarecentstudyatachainstoreretailer thechangevisionincludedasignificantimprovementinin storeconvenience Twopositionswereidentifiedaspivotaljobs thestoremanagerandtheareaoperationsmanager Thisstudyemployedacontrastanalysisintwoforms Thefirstconsideredeachelementofbehavioranddefinedhowthenewbehaviorwouldneedtodifferfromcurrentpractices Abehaviorcontrastanalysisoftenproveshelpfulindefiningpreciselyhowthepivotaljob holdersneedtochange CONTRASTANALYSISPivotaljobs storemanager chainretailer Thesecondanalysiscontrastedthepercentageoftimespentoncriticaltasksundercurrentpracticesandenvisionedinthefuture CONTRASTANALYSISBYPERCENTAGEOFTIMESPENTPivotaljob areaoperationsmanager 100 Merchant owner Coach Player Admini straor ORGANIZATIONALDESIGNLEVERSATMcDONALD S Winningformula Pivotaljobs Designlevers Organizationalstructure Managementsystems Leadershipstyle Staff ORGANIZATIONALDESIGNLEVERSATMcDONALD S Winningformula Pivotaljobs Designlevers Organizationalstructure Managementsystems Leadershipstyle Staff STRUCTURALOPTIONS CHANGEBOARD Skilltobebuilt Modifiedasappropriateforcompany E g customers suppliers tradeunions CHANGEBOARD CHAINRETAILEREXAMPLE Deliveringin storeconvenience CHANGEBOARD CHAINRETAILEREXAMPLE Deliveringin storeconvenience Lockinsupport Createsharedresponsibilityforprogress Buildasuccessmodelfrombelow Forceawarenessofrealities Restructurefieldorganization Toanswerthequestion Howshouldchangehappen theOPdevelopedthe organizationaltransformationtriangle thatsummarizesthethreebasicmanagementtaskswhendealingwithchange Theirrelativeemphasismayvary butallthreeofthemhavetobemanagedtoachievefundamentalbehavioralchange TRANSFORMATIONTRIANGLE Thewell knownGE workout changeprogramincludedelementsfromeachdimensionofthetransformationtriangle GE WORKOUT Top downdirectionsetting cultureshapingNo 1orNo 2ineverybusiness speed simplicity self confidence DelayeringBestpracticesworkshops Bottom upperformanceimprovementTownmeetings 2 to5 dayinteractivesessions Brandname qualityprocessesOperations unit by unitredesign CoreprocessredesignProjectteamstoidentifycross functionalissuesProcessmapping Theclientshouldseekanappropriatebalanceacrossallthreedimensionsofthetransformationtriangle Overrelianceonanydimensionwillimpedechange BALANCEON3DIMENSIONSISKEY TheOPhasdefinedawidearrayofchangeapproaches Eachchangeapproachstrikesauniquebalanceamongthedimensionsofthetransformationtriangle Yourchallengeisfindingthechangeapproachthatstrikesthebalanceappropriateforyourclientsituation OVERVIEWOF5PERFORMANCECHANGEAPPROACHES Nomatterwhatchangeprogramisselected thefollowingsixenergizingelementsshouldbeaddressed Byaddressingeachone theclientbuildstheenergyrequiredtomakeorganizationschange ENERGIZINGELEMENTS Ambitious measurableobjectivesReinforcingfeedbackConsequences WinningformulaWinningleadershipgroup Doer drivenFact basedPeople intensive Newmind setNewskills behavior SystemsandprocessStructureRoles BuildcommitmentEstablish2 wayflowManageexpectationsInspireaction TheOPhasawealthofexperienceandresearchtosupportthedesignofeachelementofachangeprogram WorldbenchmarksProjectperformanceindicatorsframeworkPerformancemapsPerformancecontractsproformaBestpracticeexamples LeadingforsuccessCEOtime leveragemanual AnalyticaltoolkitframeworkAnalyticalproblemsolvingworkshop datatochart videoandworkbooksClientadvocacyvideosSkill will diagnosticContinuousimprovementprinciplesworkshopBestpracticeexamples CoreprocessredesignExampleroledescription 7 S checklist Communicationscoordinationteam jobspecificationsCommunicationschannelsauditStakeholderanalysisCommunicationsplanCommunicationsworkshopBestpracticeexamples POSSIBLEACTIVITIES TOOLS Frameworkfordesigningskill buildingprogramsDiscretetrainingmodules managementskills MFS leadershipskills LFS buildinghigh performingteams projectmanagementguide designingongoingimprovementDiscretetools RJDs time usagelogs change readinesssurveys signalingchangetoolkit howtorunatrainingworkshopBeliefs behavior promptsheet staffactivitysurveyBestpracticeexamples Account based actionlearning program Multinationalskillteamswith6crediblechampionsPiloteffortwithleadershiptogetbuy inandadvice Theleaderskillforbecoming 1billionPresidentassponsor InputAccountplansPeopletrainedOutputsPriceShare Awarenessbuilding President sroadshowSkillbuildingthroughworkshopsReinforcementthroughVBSSnetworkbulletins AccountteamsGlobalaccountmanagersAccountplanning VBSS Associateswilloftenstepuptomanagerrolesonengagementsthataddressorganizationissuesand orimplementchange Theseengagementsofteninvolvemultipleclientteams Associatesassumeresponsibilityformanagingoneormoreoftheseclientteams Theseengagementsalsoseektheactivesupportofabroadersetofclientmanagers Associatesassumeresponsibilityfordevelopinginfluentialrelationshipswithcriticalclientmanagers Engagementswhichfocusonorganizationissuesthereforeprovideexceptionalopportunitiesforassociates ASSOCIATESASSUMEMANAGERROLESINORGANIZATIONENGAGEMENTS Traditionalviewofteamroles Teamrolesonorganizationengagements Theeffectiveassociatemanagerservesthreefunctions Theassociatemanagerbuildsandsustainseffectiveclientteamsthatdefine plan andimplementthechange Theassociatemanagerleadsproblemsolvingonmultipleclientteams Theassociatemanagerforgesaconsensusofsupportforthechangevisionamongcriticalclientmanagersandensuresthatmanagersmaintaintheenergylevelrequiredtoeffectthechange Allthreefunctionsarecriticaltosuccess However inengagementsthataddressorganizationissuesand orimplementchange buildingandsustaininganeffectiveteamisoftenthenecessarypreconditiontosuccessintheotherfunctions Theclientteamprovidesthecriticalinsight knowledge andskillsrequiredtosolvetheorganizationalprobl