November 13, 2018
Setting your sights on specific revenue or sales targets, a desired market position, and other types of goals is a critical part of strategy. Goal setting helps clarify an organization’s direction and what its needs are if it is to deliver optimal value. But to focus on goal setting to the exclusion of other strategic considerations would be a mistake.
In addition to setting strategic goals, it’s important to examine how the organization’s design affects its ability to meet those goals—and to be willing to undergo change when necessary to adapt the design.
In particular, there are two aspects of strategy that have a direct connection to organization design: attention to outcome and to differentiation.
A small business owner we know recently set and achieved some major goals, which resulted in rapid growth for his company. But despite the positive growth, the achievement of the objectives threw the company into a tailspin. It wasn’t set up to handle the increased pace of production. The owner had to temporarily slow down growth in order to set the business to scale without imploding.
Often, companies of any size will define strategic goals and objectives without clarifying the implications that will result from achieving them. For example, will the organization need to enter new markets to meet these goals? Will work need to happen faster or in greater volume? Thinking through the consequences of goal achievement will help you determine whether and how the organization may need to transform if the strategic objectives were to be met.
Another important element to consider is differentiation. Why do your customers choose to do business with you? Your organization’s design needs to reflect the answer to this question. For example, if you are competing on quality, the organization must have the resources in place to produce and/or deliver truly exceptional products.
We once worked with an industry-leading manufacturer that also had entered the white-label business. It started getting negative feedback from one of its white-label customers about the quality of the products being delivered. It turned out that the company’s machines were not capable of producing at the precise tolerances needed to produce the quality this customer wanted. The company was not set up to win on the point of differentiation it had led its customer to expect.
There are, of course, different ways to respond to such a situation. There may be cases in which it makes sense to differentiate the company in some other way. But in most cases, it’s more efficient to stand firm on one’s market position and come up with innovative ways for your organization to deliver on its promises than try to differentiate in new ways every time someone comes along to challenge you.
Once you’ve determined how your organization needs to be set up to support strategic goal achievement and differentiation, you will need to implement these changes. Care must be taken to do so in a way that maintains strategic alignment through all parts of the organization.
This execution demands a solid understanding of how goal setting and differentiation affect a company’s six organizational systems as defined in our firm’s Rubik’s Cube organization design model: work processes, structure, information and metrics, people, continuous improvement, and culture. Designing your organization with these systems in mind will help ensure that the goals you set out to achieve will lead to positive outcomes, enabling your company to maintain its chosen position in the market.