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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 local training sessions for first-year associates.It is part of a“series on functional areas.”The
2、objective of the series is to introduce McKinsey practitioners to the basics in each of our functional areas of expertise.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 sectio
3、n describing a selection of the core documents 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 them in 24 hoursThe contents of this document
4、have been adapted for local training sessions through“Switching Tracks”OPs first-year module videotape,which communicates the basic concepts in a concise and visual way using an actual client The Scandinavian Railroad Company.It is 40 minutes long and should be presented in 3 short segments.Between
5、these segments,the faculty member runs the attached exercises,adds any commentary he/she considers necessary to clarify the concepts,and provides personal experience on selected topics.A copy of the videotape and moderators guide with exercises can be requested from the Firm,This document seeks to a
6、nswer 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 role does an associate play in organization work?SECTION 4 Where can an associate find ou
7、t more?,McKinseys mission is to have lasting and substantial impact on our clients.To succeed,we need to work all three of the critical elements:choose the best strategy,develop world-class operations,align the organization.These three elements both reinforce and constrain each other.The best strate
8、gy is only relevant if it is operationally and 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 would be wrong,however,to believe that yo
9、u 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,Effective organization,We only achieve impact when the organizations we serve are successful in implementing the strategies a
10、nd operational methods we propose.However,a recent survey of engagements in which clients failed 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,
11、we need to consider 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 organizations skills so that the organization can step up to the challenge the superior strategy pos
12、es.,3 OUT OF 4 STRATEGIES THAT FAIL DO SO BECAUSE OF THE ORGANIZATIONS INABILITY TO EXECUTE,100%=340 responses,Percent,McKinsey recommendations flawed,Client not change-ready or committed,Organization lacked the capabilities to execute strategy,Other,The demand for organizational work is increasing.
13、Trends in the marketplace and the evolving nature of our clients largely 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 advantage be found i
14、n 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 advantage in these times of rapid change.The clients we serve are changing as well.They have increasing
15、ly hired in-house strategic capabilities.Most have built strategy shops close to the CEO.Few,however,have the in-house capability and objectivity to do the organizational work required to make change happen.,ORGANIZATIONAL WORK GROWING IN IMPORTANCE,Evolving marketplaceQuickening pace of strategic a
16、daptationDurable competitive advantage often rooted in unique organizational capabilitiesEvolving playersMany businesses acquiring in-house strategic capabilityMaking change happen remains the“neglected art”,McKinseys engagement mix Percent of time,Increasing demand for help with organization issues
17、 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 has recently introduced a branded organizational element to their portfolio.Their organizational expertise figures prominently in their m
18、arketing campaigns.,COMPETITORS HAVE BRANDED ORGANIZATION TOOLS,McKinseys consulting 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
19、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-superb team leadership skills.,EVOLUTION IN McKINSEYS APPROACH,*Survey of 23 MGMs acr
20、oss the Firm,Before we dive into the organization materials,we should announce one critical caveat:the frameworks you are about to see 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 dimensio
21、n.The OP can provide interview guides and questionnaires 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 judgment,insight,creativity,and or
22、ganizational acumen will determine whether you add value in the client setting.,A CRITICAL CAVEAT,“Garbage in,garbage out”,Organizational practice frameworksChecklistsSurveys,questionnairesApplied examples,Garbage,Good judgment,keen insight,creativity,organizational acumen,Garbage,Client impact,A se
23、ries of frameworks are available to help clients identify and address organizational limits 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 change?The OP ha
24、s 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 organizational performance gap exists as well.Additionally,the 7-Ss will help you identify strengths and defi
25、ciencies in the organization.The 7-Ss focus teams on aligning structure,staff,systems,and style to promote behavioral 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
26、clarify the organizational gap that 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 skills and willingness to change in the organizat
27、ion.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 of any effective change program-top down,bottom up,cross-functional.The proper balance among these dimensions depends on the gap,th
28、e client setting,and the competitive context.Every change program contains some mix 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-
29、S framework,Winning formula,Pivotal jobs,Design levers,Organizational structure,Staff,Management systems,Leadership style,Change board,Agenda/platform,Direction settingStructuringBottom-up energizing,Transformation triangle,Energizing elements,The OP undertook a study of 10 high-performing companies
30、,true industry leaders,that we knew very well.The companies had sustained pace-setting performance in their respective industries 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 op
31、portunities to improve your client organization.,“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-the-fact strategies/vision,Energized
32、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 very high performance aspirations.For these leaders there was no such notion as“good enough”.At the center of these leadership gro
33、ups,we consistently found demanding,unreasonable CEOs.Built by relentless before-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-driven environment.HPO
34、s 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 OF AN HPO,ATTRIBUTES OF AN HPO(CONTINUED),The HPO research found something else common to the HPOs:all 10 we
35、re experimenting with self-governance.Self-governance in these HPOs means empowerment with accountability.The 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 owners
36、 mind-set.Self governance 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 top half of the matrix(high performance);many were reaching,in a
37、ddition,for the right-hand side of the matrix(engaged and empowered).,PERFORMANCE AND EMPOWERMENT AT HPOs,Most large companies start out in the lower left-hand corner of the matrix(low performance and command-and-control management approach).We discovered that HPOs that have successfully transitione
38、d to the upper right-hand corner have first achieved high performance 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-hand corner of t
39、his 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,McDONALDS WINNING FORMULA,Vision:to become the leading restaurant chain in the world,Strategy,Shared values,Skills,Convenien
40、t Good qualityConsistent Family-oriented environmentFair value,Quality control over all aspects of businessSuperior site selection Continuous new product developmentStrong promotion of products and McDonalds image,Quality ServiceCleanlinessprice,Organizations usually change in response to discontinu
41、ities either external shocks(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 is based on changes in strategy,newer or stronger skills,and/or sh
42、ared values.Contrasting the new winning formula to the old formula identifies and gauges the change that the organization is considering and defines the 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 organiz
43、ational priorities by redefining and recombining business objectives,required institutional skills,and corporate values about what is important around here.A change vision is at the heart of top managements role in improving performance and is often the first step.It provides the vital bridge betwee
44、n 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 and emotionally appealing.,IMPROVING ORGANIZATIONAL PERFORMANCE,Grooved,Redirected,Unfrozen,Disco
45、ntinuities,External shocksNew competitors,economicsNew technologiesDeregulation Internal changesNew aspirationsNew 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
46、 in instituting a new strategy,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 McDonalds,for example,pivotal jobs include the centralized purchasers of all raw mat
47、erials for all stores,the store managers,and the hourly employees who take and assemble orders.,PIVOTAL JOBSWhat people must do,What are they?Positions that have direct impact on delivery of value to the customer.Typically they-Design the product-Make the product-Sell the productPositions that must
48、capably master new skillsWhere are they?Close to 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 operations manager.This study employed
49、 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 analysis often proves helpful in defining precisely how the pivotal job-holders need to change.,CONTRAST ANALYSISPivotal jo
50、bs:store manager,chain retailer,The second analysis contrasted the percentage of time spent on critical tasks under current practices and envisioned in the future.,CONTRAST ANALYSIS BY PERCENTAGE OF TIME SPENTPivotal job:area operations manager,100%,Merchant/owner,Coach,Player,Admini-straor,ORGANIZA
