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Step four in the transition from functional to business leadership

By IMD Professor Michael D. Watkins - October 2014

As they move up the corporate ladder, managers become increasingly responsible for creating the organizational context in which business breakthroughs can occur. They are responsible for laying the foundations for superior performance, and they must become the "architects" of business success.

Until this point, business leaders had built their careers brick-by-brick within a single function, like bricklayers building a wall. But in their new roles they must understand how all the key elements of organizational architecture interact: strategy, structure, systems, processes and skill bases. They must become experts in the principles and architecture of organizational design, business process improvement and human capital management.  

Unfortunately, few high-potential leaders get much training in organizational theory and practice. They are therefore generally ill equipped for their new role as architect of the organization.  

The move from bricklayer to architect is the fourth of the seismic shifts along the route from functional to business leader, which we have been addressing in this series of articles. 

Being an effective architect 

The key elements of a business organization—the strategy, structure, systems, processes and skill bases noted above—must not only match the demands of the environment, they must fit among themselves. Effective organizational architects understand this need for "fit." They know that changing one piece may mean changing many or even all, because they are linked in intricate and important ways.  

Effective architects also recognize the need to match change strategy to the situation they are facing. They know that some changes are best launched with a new strategy or structure, while others are best pursued through an early focus on improving processes or upgrading skill bases. They design the right sequencing strategy and progressively focus on the right elements of the architecture to create momentum and lay the foundations for still more change.

Ineffective architects, especially those in a hurry to make their marks, tend to take a one-size-fits-all approach. They focus on changing the strategy and/or the structure because those elements are relatively straightforward to shift. Creating a new strategy, for example, is fairly easy. Communicating it down through the organization and working through the implications for the other elements of the organization is much more challenging.  

Changes in organizational structure, for example moving from a functional structure to a product-focused one, or from the existing structure to a matrix, are likewise easy to initiate. But they can have profound and unforeseen impacts on the organization. 

Avoiding the "quick-win" trap 

Going for a quick win can lead to error. To avoid this, business leaders must understand the fundamental nature of the change that they are being asked to lead. 

In my book The First 90 Days, I developed the STARS framework—Start-up, Turnaround, Accelerated Growth, Realignment and Sustaining Success. One of its premises is that there are many kinds of change.  

In a turnaround scenario, when there is a disaster in progress, the strategy is not working and nor is the team. So new people are needed, and then once there is a new strategy, it will be possible to think about the structure. That can make complete sense.  

But in a realignment scenario, where you are not in a major crisis, the strategy may not be the issue at all. The underlying culture may have some issues, or some key processes might not be functioning as they should. 

Leaders need to get to grips with the fundamental drivers of what is going on in the business and what really needs to change. Working with culture and processes, getting to the guts of the organization, can be difficult; it is hard work and it takes time. But if this work is not done, then a disconnect is being created within the organization that over time can lead to a schism.  

Becoming an effective architect involves thinking about all the different elements of the organization, and how they influence each other, rather than focusing on the individual bricks. This shift is therefore often a significant challenge for executives transitioning into a business leadership role. 

Michael D. Watkins is Professor of Leadership and Organizational Change at IMD. He co-directs Transition to Business Leadership, a program designed for experienced functional managers who either have recently transitioned or will soon transition into a business leadership position.  

SEVEN SEISMIC SHIFTS is a trademark of IMD – International Institute for Management Development

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