Matrix management: developing strategy

Implementing matrix management  – wave one:  developing strategy

The first article in the series of blogs that we are running this week on  the four waves of change in implementing matrix management by Global integration CEO and management author,  Kevan Hall.

The process of developing strategy is an extremely time-consuming and intensive process, involving the most senior leaders in the organization.

Our strategic planning process is pretty thorough. It involves our top 30 leaders in the early phases. We follow a 10 -week planning process where we go through a series of six strategic steps facilitated by a leading Business School professor and following Michael Porter’s strategic process. After each stage we went back and worked with our own teams on extensive analysis and preparation work, so that we came to the next workshop armed with real facts and options.

The workshops were residential and we spent two days at each stage discussing options and building agreement on how we should take the business forward.

It was very time-consuming, but an excellent way of getting the whole senior leadership group involved and engaged in the thinking process. By the end of it we had a clear common understanding of the strategy. We were then able to go back into our divisions and departments and begin the more traditional business planning and budgeting for the next year, based around this new strategic framework.

Business Planning Manager, Hospitality Industry, USA

It is hard to quantify the cost of strategy development. The case above included approximately $200,000 of external consulting cost, 360 days of senior management time in workshops, and at least another 360 in preparation and supporting work.

Even without including the work carried out further down the organization on their behalf, this would represent over three person-years of leadership time, and over $2 million in time and consulting cost. By the end of the process each leader involved had participated in 12 days of workshop and at least another 12 days of preparation and thinking.

McKinsey, the consultancy firm, were reportedly paid £5.5m for their advice on the new organizational model, man­agement processes and governance structure of HMRC (the UK government revenue and customs department with 90,000 employees).

This process takes a lot of management time and effort and by the time leaders complete this process they have such clarity on strategy that they sometimes underestimate how new the ideas are to other people.

Too often the strategy is cascaded to the organization in an enthusiastic PowerPoint presentation, or, worse, in an e-mail announcement. Thousands of employees at lower levels in the organization are instantly expected to internalize the thinking and commitment to the new strategy that the senior leaders took months to achieve.

A former head of the US Postal Service replied to an interviewer stating that his strategy of empowerment did not seem to be well understood in the organization with the statement: “How can they say they don’t understand? I sent everyone a memo on it!”

Because the new strategy is now so familiar to senior leader,s they can become frustrated when others don’t seem to grasp it immediately. Some leaders seem to think this is the end of an exhaustive piece of work but in reality this is just the beginning. The difficult work is translating this strategy into reality, and implementation requires that we develop the structure, systems and skills to make the strategy really work.

In one of the seminal articles on the matrix, “Matrix management: not a structure, a frame of mind”, Christopher Bartlett and Sumantra Ghoshal summed up a key challenge:

The problem is that companies are organizationally incapable of carrying out the sophisticated strategies they have developed. Over the past 20 years, strategic thinking has far outdistanced organizational capabilities.

The next three waves of change include building the three key capabilities: structure, systems and skills.