Strategic Change Management Proposal & Case Study
An SF Bay Area organization, with a lack of innovative leadership, was evaluated and a strategic change management plan was pitched. The organization utilized this information to produce a myriad of employee-first programs.
In an organization that lacks diverse leadership, a strategic change management initiative using the McKinsey 7 S Model is proposed. An analysis of the organization using the McKinsey model resulted in a bottom-up leadership approach to ensuring diversity while reducing the diversity paradox. By encouraging the implementation of an emerging leaders’ program, the organization will see an increase in diverse leadership over the next decade. Analytical findings included a strong culture, prominent shared values, challenging systems, and opportunities for improvement within leadership, structure, and staff. Application of the McKinsey 7 S with iterations using PDCA as the program scales proved to be the best method of implementation.
Keywords: leadership, change, McKinsey 7 S Model, bottom-up, diversity, culture
Organization (NGO), a Department within Non-Profit Organization, is known for their value proposition. An organization comprised of 5,000 staff members, 1200 supervisors/managers, 3,300 individual contributors strives for change . Currently, they are faced with two dominant challenges; COVID-19 and dragging their feet on the continuous issue of systematic oppression . For this initiative we will focus on the latter by increasing leadership diversity.
With over 30% of the staff population considered to be an ethnic minority, developing within the organization is a logical step . In doing so, we can strive to eliminate the diversity paradox, increase psychological safety/trust, and shift the focus to an infinite future (Hofstra et al., 2020). Therefore, Learning Development goals for fiscal year 2021 (FY21) should include the development of an emerging leaders’ program focused on lower-level underrepresented staff to pilot in FY22.
“…we can strive to eliminate the diversity paradox, increase psychological safety/trust, and shift the focus to an infinite future…”
Overall, fulfilling this initiative would bring forth a truly diverse organization, increase innovation while removing silos, and help to break down the diversity-paradox (Hofstra et al., 2020). However, this is an uphill battle, likely to be fought one program/silo at a time. By utilizing a well-rounded analysis with the McKinsey 7 S Model, we can hope to propel the organization forward by acquiring enough information to make an economically strategic decision (Cross, 2020).
Selection of McKinsey’s 7 S Model for Proposed Change
The biggest problem in organizations are likely to be a misalignment of the segments outlined by McKinsey (Higgins, 2005). Thus, regardless of the time it takes to implement the change, each step in the process will be beneficial. While this may further complicate things, Higgins (2005) also mentions that if most of the segments are aligned the initiative can still be successful, “they simply need to be sufficient” (p.7). Likewise, this framework provides a steady roadmap to analyze, implement, and evaluate change which can appeal to leadership for purposes of buy-in and return on investment (ROI) (Zentner, 2015).
Using McKinsey, the simple implementation of this framework may propel the organization further forward than the initiative suggests. Similar to the case study of Intuit referenced by Higgins (2005) by implementing strategy in an effort to align the segments, “profits jumped 40% to 50%” (p.8). Lastly, “virtually everything an organization does is covered within the (model),” (Higgins, 2005). Using this model will leave no stone unturned in the transformational initiative proposed.
Overall, after reviewing the models of choice, McKinsey has enough detail and cultural implication intertwined that it would be the best for the proposed change. The other models of choice seem a bit lackluster. For example, PDCA is great for quick thinking without much time for strategy but that is not conducive to the NGO culture (Maruta, 2012). However, by combining the strategy of McKinsey at implementation and the experimental design of PDCA at scale, an organization could maintain the change (Burke, 2017; Maruta, 2012). That said, PDCA alone would be best used for a culture that emulates feedback, responsibility, and accountability (e.g. Netflix) (Group 3, 2020). Kotter, and his sense of urgency, may seem like the best choice according to those who have compared all of the models however, it simply wouldn’t work on a decentralized organization where steps can be skipped and employees lack the opportunity for input (Galli, 2018). The Lewin framework would work best for a forced change on a large organization, such as a software update (Group 3, 2020). Overall, McKinsey is the best option to initiate the change at the NGO.
“…by combining the strategy of McKinsey at implementation and the experimental design of PDCA at scale, an organization could maintain the change…”
Strengths & Weaknesses
The development of the McKinsey 7 S Model was centered around organizational transformation therefore, it has larger considerations and more detail than most other methods (Galli, 2018). Before the change implementation begins there is an assessment, highlighting the “strengths and weaknesses in the seven core dimensions of the organization or project team” (Galli, 2018, p.129). Each component is interchangeable (Higgins, 2005;Cross, 2020). For example, as noted by Higgins (2005), “resources have replaced skills,” and as noted by Cross (2020), “there’s an opportunity to build on the author’s interpretation of styles (shifting) to culture.” However, this model focuses in on the systems and skills the staff contain as opposed to the people, climate, or culture within an organization (Galli, 2018). With 7 different components implementing the framework is quite time consuming, all seven aspects need to be analyzed and sufficiently aligned in direction of the change (Galli, 2018; Higgins, 2005).
As Cross (2020) states in his presentation it could be seen as preferred to, “view styles in the realm of culture.” In that the framework doesn’t touch upon the culture of the organization. It was suggested in our group matrix that we increase the employee engagement within this model along with a focus in the cultural components (Group 3, 2020). This improvement to the model will be followed when applying it to the initiative.
McKinsey needs more specificity from the change implementation team (Group 3, 2020). In that, each of the segments need to be properly defined in relation to the organization of focus. While this can be a benefit, it can be a challenge for those who are not familiar with every aspect of the organization or, rather, for those who believe a chair, is a chair (Cross, 2020). Therefore, adjustments will be made when applying the model to the initiative through the utilization of smaller groups.
Strategic Application
Shared Values, Strategy, and Skills
The mission, values and vision of the NGO are innovation and leading a revolution in an age-old industry. This blends in with the values of the Organization such as; the pursuit of knowledge and making the world a better place (Non-Profit Organization, 2020). These “espoused values” can be seen as a strength (Schein, 2010, p.15).
The skills and strategy of NGO reside in research and healthcare. These skills can be seen as the world-renowned faculty and drive for innovation. Whereas the strategy can be seen through ASSET 1 and ASSET 2, monopoly of ASSET 3, and compulsory accumulation of ASSET 4* (Wilson, 2010). The skills, strategy, and shared values for this initiative do not need to be changed rather, they will assist (e.g. diversity breeds innovation, etc.)
*this has been censored for client’s privacy.
Structure
The hierarchical structure within the NGO isn’t necessarily a problem for this initiative to move forward as we are only referring to the staff population. The structure has been put in place for a reason as, per the culture, most endeavors are a one and done. I.e. once a leader / committee selects a process it is solidified for around a decade before changes are considered. All in all, the structure is ridged or, not easily adaptable as Organization “believes” they have no competition as an employer . Likewise, NGO does not adhere to any market demand or changes unless legal action is imminent. Cross-functional work is few and far between, staff tends to hoard their duties. For this initiative, the structure as a whole is too big to change but the structure within our silo has potential. By creating a flatter structure, with more cross-functional collaboration, we can lead by example and other units will follow .
Overall, the organizational structure needs to change as a whole from the Organization level to include more of a lattice than a ladder (Benko, 2010). This lattice will promote cross-functional roles, increase professional development opportunities, diversity, and retention by giving employees a better understanding of the organization and the opportunities within it. However, a structural change seems impossible with current leadership as they have mid-eighties era mindset of industrialization (Sinek, 2019). The Non-Profit Organization’s Board continually refuses organizational change, any Organization-wide initiative proposed in this realm has not prevailed (Board of Trustees, 2020). Therefore, the best course of action is an informal approach that leads to data-driven changes throughout a small part of the organization in hopes of building bottom-up change (Heyden et al., 2016).
Systems
Most systems are implemented well and if under the right silo, such as IT, it’s routine maintenance, upkeep, and updates are useful. That said, the system for hiring new staff and ensuring accountability is a challenge (Cross & Braswell, 2019). To be a truly diverse organization how we hire needs to shift from nepotism to experience/skill set with a data driven foundation (Cross & Braswell, 2019). Likewise, hiring managers need to be accountable for hiring diverse personnel (Cross & Braswell, 2019). There is an opportunity here for HR and legal review all policies for potential discrimination, social injustice, etc. and then implement responsibilities that affect hiring manager’s performance reviews and bonuses (i.e. forcing them to be accountable for their actions/hires).
“To be a truly diverse organization how we hire needs to shift from nepotism to experience/skill set with a data driven foundation. Likewise, hiring managers need to be accountable for hiring diverse personnel.”
Styles / Culture and Staff
As stated by Cross (2020), “culture is a combination of core competencies, strategy, and staff.” NGO does not have any core competencies. (Yes, you read that right.) The “embedded skills,” are Machiavellian tendencies and petty put-downs are frequently seen as a positive correlation with rank and tenure (Larson, 2017; Schein, 2010, p.15). Likewise, the “rules of the game,” are simple, stay in your lane and don’t question those above you in the hierarchy (Schein, 2010, p.15). Whereas this portion of the culture is a challenge, culture can also be viewed as a strength.
In relation to the initiative, culture plays a big part and staff at all levels are very engaged with the topic of diversity, equity, and inclusion . The ‘helping culture’ is likely to want to help, or be of service to, the organization and local community (Larson, 2020). This suggests that they would promote any change that impacts social justice positively and would not be a form of resistance (Larson, 2020). Therefore, engaging lower-level staff will be pivotal in ensuring the success of this initiative.
“Therefore, engaging lower-level staff will be pivotal in ensuring the success of this initiative.”
As previously stated, staff are an important stakeholder to ensure success of this change. As stated by Cross (2020) managers are, “instrumental,” but NGO’s managers are likely narcissistic and the current “problem” faced by most staff (Larson, 2017, 2020). That said, as learning and development leaders we know that managers are crucial to change, retention, engagement, and the overall culture of the organization (Cross, 2020). Therefore, although management needs improvement, the initiative must involve, engage, and motivate them as well.
Proposed Program
Developing an emerging leaders’ program focused on base-level employees would improve the organizational culture tenfold and could be facilitated within HR’s Learning Development Team. The program would be simple, develop lower-level staff in underrepresented groups to ensure diverse organizational leaders in the future. By developing this program and focusing on underrepresented minorities we would ensure a truly diverse leadership team and innovative culture. However, due to the challenges of the organizational structure and culture, the program would pilot in one silo of the organization to be planned through FY21. The inaugural class would graduate Summer of FY22.
“The program would be simple, develop lower-level staff in underrepresented groups to ensure diverse organizational leaders in the future.”
The program would comprise of mentorship, seminars, rotations, and instruction. This could involve a myriad of leadership essentials such as; public speaking, influence, crucial conversations, career planning, etc. This program has a high ROI by increasing both engagement and retention and improve cross-functional collaboration. Similarly, for those who become alumni, both boomerang employees and diverse leaders within the community would increase.
Incentives for the lower-level staff participants would include a certificate of completion, a broad understanding of leadership essentials, and a breadth of knowledge through all organizational sectors (e.g. finance). Incentives for current leaders would include contributing to the future leaders and thus the organization, recognition, networking, and expanding their knowledge or skillset through mentorship or teaching. Lastly, incentives for the C-Suite would include ROI in the form of retention, engagement, diversity, innovation, inclusion, and (likely) positive publicity.
Role of Leadership
The role of leadership (all levels of management) in this effort is extremely important. According to Basford & Shaninger (2016) the “influencer model,” is still successful. Therefore, based on the model, the leadership would need to emulate all four “building blocks of change,” in order to ensure success of the initiative (Basford & Shaninger, 2016). While being role models by participating in the proposed suggestions they also need to reinforce the importance of the suggested initiatives by giving their employees/those participating the time to do so (Basford & Shaninger, 2016). Likewise, they need to understand the change fully to influence the staff (Basford & Shaninger, 2016). Ideally, leaders would take the extra step to become a mentor or instructor within the program. Doing so would ensure their understanding, support as a role model, and skill development (Basford & Shaninger, 2016). Without their support there would be an increase in resistance throughout the organization.
Potential Resistance
Lack of Leadership Self-Awareness
As previously noted, there is a lack of capable leaders at the top of the organization. Therefore, few leaders are required to influence the inaugural change. However, there is a more concerning issue of ‘need for control’ that most leaders display. It seems as though they are fearful of losing their position if they do not have control and therefore portray a sense of insecurity. This notion has hindered leadership from moving forward on larger initiatives that require a cross-functional consensus because each leader of each function wants to be in control. While there is statistical and data-based evidence to suggest that leadership should lead this initiative, their insecurity and lack of self-awareness causes infinite uncertainty resulting in unreliability (Cross, 2020).
A modification of the McKinsey model to remedy this situation, would be to initiate in a small group then scale to other groups within the Department and eventually the entire Organization. In order to create a wider coalition without the support of leadership, the base line employees and middle management will have to drive the change initially proving the value of the program.
Organizational Limitations
Rooted in the hierarchy, climate, and rigid decentralized structure of the organization, limitations are aplenty. Therefore, as stated by Naval Commander, Dr.Abrashouff, “an approach focused on purpose rather than chain of command” is necessary (Labarre, 1999). Enacting this initiative within one small group and proving cross-functional/collaborative success will encourage other units to follow suit . Therefore, a proposed change to the model would be a decentralized implementation following the modification previously stated of starting small and then expanding to scale. In combination with that alteration, using PDCA to revise each year as other programs across the Organization are likely to surface before the close of FY22.
Resources and Relevance
The McKinsey 7 S takes a while to analyze and each segment needs to be in adequate alignment before the change can take place or prosper (Galli, 2018). This analysis, if taken of the whole organization in detail, would put a strain on resources and, with the COVID-19 impending deficit, more resources cannot be acquired. Also, with the industry already moving at a glacial pace, this initiative may take five or more years to implement (Galli, 2018; Group 3, 2020). The decentralized organization currently fails in cross-functional understanding and communication which McKinsey needs to thrive, align the segments, and succeed (Group 3, 2020; Higgins, 2005; Zentner, 2015). Furthermore, if one segment falters there is then a higher likelihood for others to follow suit (Zentner, 2015).
Lastly, is this model relevant to Organization when they are known for the PDCA or Design Thinking way of operating? Likewise, with the workforce and work world changing seemingly daily, this model may be seen as outdated by leadership (Zentner, 2015). However, for the last few years NGO has failed to implement Lean Methodologies/Six-Sigma cross-functionally (Lynn, 2020; Ramos, 2020). It seems as though they bit off more than they could chew by using a form of PDCA for a decentralized sizeable non-profit. Therefore, by implementing the change using McKinsey in a silo of the organization that communicates well and then adapting using the PDCA as needed throughout, this could prosper as a mixed-model-method.
Conclusion
In conclusion, using a mixed-model method seems to be the best adaptation for this particular change management initiative at this organization. Therefore, by initiating the proposed program utilizing the McKinsey 7 S Model as a framework and iterating as the emerging leaders’ program scales using PDCA, NGO-wide implementation will take 5 or more years to complete without stretching resources. In addition to the proposal, the analysis revealed interesting findings about leadership, systems, structure, and culture providing an opportunity for improvement. Overall, vast changes need to be made to ensure consistent innovation.
This case study was conducted in August of 2020 while I was a student at Johns Hopkins University, in fulfillment toward a graduate degree. For references and questions, please contact me directly.
I hope this gives you an idea of how you can implement organizational change within your organization.
