We meet a lot of CEOs who are frustrated by the pace of change in implementing a matrix or globally integrated organisation, this has serious implications for the success of their businesses.
The business reasons for becoming more integrated are compelling; global customers, cross functional projects and the synergies that come from sharing learning and resources make a more integrated organisation imperative to future success.
The CEO has communicated this clearly and aligned their organisational structure; two years later people are still complaining that things are not clear decisions have got slower and change is moving at a glacial pace. Perhaps you have a talent problem?
Here are seven reasons why CEOs are often frustrated at how long the change takes:
1. They started earlier than almost everybody else; the CEO and their direct reports are involved in very early stage in developing the rationale of the change. They will have seen significant analysis, probably involved strategy consultants, socialised the ideas and really got their heads around the change well before it was announced to anyone else. It’s not unusual for them to be 12 to 24 months ahead of the thinking of the rest of the people in the organisation.
2. They don’t personally need more clarity. For many CEOs, once the idea is clear, they are the kind of people who would just go and execute without the need for lots of support and clarity (that’s why they are CEOs). The can underestimate the support and permission that many others need to execute on an idea.
3. Their world doesn’t change very much. If you are the CEO you don’t have multiple bosses in the structure (and you already are used to working with a board), you still find it easy to get things done and people pay attention to what you say. CEOs may underestimate the impact that the matrix has all people in the middle of the organisation because to them day-to-day operations are not very different.
4. They hear challenges to operating the structure as personal criticism. Because moving to a matrix was their idea or initiative, when they hear managers say for example “things are not clear” they take this as a criticism of their strategy. Quite often when managers complain about a lack of clarity it is not about the strategy but about the competing goals that are normal when you work two or more bosses. The issue is reconciling these different perspectives, not changing the overall strategy.
5. They naturally take the overall perspective. A lot of the difficult challenges in execution come from different assumptions about how the strategy should be implemented; different functional perspectives, business unit goals, cultural preferences etc. can lead individuals to have different and strongly held perspectives on business issues. The CEO is often the point at which all of these strands come together, so that by the time the issue gets to them, the solution is pretty simple. Further down the organisation different measures, incentives, careers and other considerations can make it feel much more complex. Many escalations and conflicts can feel trivial to a CEO.
6. They underestimate the costs and difficulty. Introducing a more integrated organisation is a massive, multi-year change project, it requires not only changing the strategy and structure but aligning business systems, skills and ways of working. Changing the systems alone can cost a large business tens or hundreds of millions of dollars and take five years or more. Changing people and culture can take even longer and usually attracts much less investment.
7. They have moved on to something else. CEOs spend their time looking at the future, in their mind matrix implementation is done and they are moving on to the next business challenge.
Given all this, it’s not surprising that CEOs, from their perspective, get frustrated by what they see as the slow pace of change.
If this is not managed effectively CEOs may conclude that they have a calibre problem, particularly in their middle management population. They often respond to high levels of escalation and dissatisfaction by increasing control and even micromanagement. This can create a negative spiral of increasing control and reducing empowerment.
Part of the answer is in engaging the CEO and their direct reports actively in the transformation process to accelerate the rate of change.
Part of it is in systematically working on all of the four elements of the change process – strategy, structure, systems and skills in parallel. There is a common tendency to underestimate the impact on systems and skills.
Part of it is training the middle managers in how to manage their escalation and upwards interactions to break any negative cycles and create increasing confidence and empowerment.
A frustrated CEO is in nobody’s interests. Even though it’s understandable, we need to put plans in place to minimise the chance that this will happen.