Organizational Development Definition

Organization development definition is not very difficult. It is simply a planned effort to increase the organization’s effectiveness and capability. Organizational development brings changes to the attitudes, values and beliefs of organization, so that people can adapt to new technologies and challenges of the business. OD includes both inventions and innovations along with the involvement of major stakeholders and people in the organization in the process of growth and development.

The other definition for organizational development is when two or more people function together to achieve a common goal i.e. success as defined by the key performance indicators of the organization. Organizational development (OD) is the long range effort to solve the problems in the workplace.

According to practical experience, OD can also be defined as the process of working together with organizations, organization leaders and organization groups in bringing systematic change to the root problems and hence increasing productivity and employee satisfaction. OD offers three things: what we do, how we do and the results we get. By properly understanding all three aspects, you can solve critical aspects of the organization. We can say hundreds of definitions for OD but it can be simply summarize as the process for a group to achieve its goals, mission and vision in the most effective and efficient manner possible.

It can also be defined as the process in which the organization develops the capability and capacity of individual workers and managers most effectively and efficiently to provide mission work that can be sustained in the long term. This definition connects OD with the mission and vision dreamed by the founders. It is a complex strategy that brings changes in each and every aspect of the organization. OD is the process which is designed to produce the particular kind of end result.

OD involves following four components: organizational reflection, system improvement, planning and self-analysis.

OD is termed as a growing field that is responsible for many new approaches which includes positive adult development. Does OD bring any effectiveness in organizational profitability? Yes of course. It plays major role in business profit.

Advantages of organizational development

o It improves organizational communication.
o Enhances the intelligence, leadership and managerial ability of the organization.
o OD assists for managerial development, especially for newly appointed managers.
o Sets goals for future and brings new ideas and plans for organizational development.
o Brings effectiveness in terms of business growth and profit.

Given the present situation of businesses at this time, how can you implement this in your organizational setting? How can you deal with problems that arise in organizational change and development?

Visit the Transformational Leadership Blog at http://www.mightyrasing.com to get tips for organizational culture and development. Subscribe to the blog and get FREE LEADERSHIP RESOURCES.

Author: M Rasing
Article Source: EzineArticles.com

How to Audit Your Business Strategy

Why conduct a business strategy audit?

Nearly all the major initiatives undertaken by corporate executives today are called “strategic”. With everything having high strategic importance, it is becoming increasingly difficult to distinguish between the many priorities and imperatives that are initiated in organisations. When everything is clearly strategic, often nothing strategic is clear. When everything is designated as a high priority, there are, in reality, no priorities at all.

However, when the overall strategic direction is clearly understood by everyone in your organisation, the following benefits occur:

  • organisational capabilities will be aligned to support the achievement of your strategy
  • resources will be allocated to different business processes in priority order – according to the importance of that process and its contribution to competitive advantage
  • your company or organisation can excel in the market place or in its business/commercial sector.

The purpose of a strategy audit is to arm managers with the tools, information, and commitment to evaluate the degree of advantage and focus provided by their current strategies. An audit produces the data needed to determine whether a change in strategy is necessary and exactly what changes should be made.

Defining a Strategy Audit

A strategy audit involves assessing the actual direction of a business and comparing that course to the direction required to succeed in a changing environment. A company’s actual direction is the sum of what it does and does not do, how well the organisation is internally aligned to support the strategy, and how viable the strategy is when compared to external market, competitor and financial realities. These two categories, the internal assessment and the external or environmental assessment, make up the major elements of a strategy audit.

The outline that follows is derived from The Business Strategy Audit (see References). It’s intended to give you a clear idea of how to set about conducting a self-assessment audit in your own organisation, without the need for any additional training or external consultancy support. But note that this outline does not include the range of Questionnaires and Checklists and the detailed guidance to be found in the full, 124-page Audit.

Part 1 ~ The External Environmental Assessment

A conventional corporate mission is to provide distinct products and services to customers at a value superior to that offered by competitors. Without a strategy, valuable resources will be diluted, the work of employees will be unfocused, and distinctiveness will not be achieved. The external environment assessment provides any business with a critical external link between its competitors, customers, and the products/services it offers.

The fundamental reason for examining an organisation’s environment in the process of clarifying strategy can be summarised thus:

  • Ensure that the company is meeting the needs evident in the environment
  • Prevent others from meeting those needs in a better way
  • Create or identify ways to meet future or emerging needs.

The success or failure of a company often depends on its ability to monitor changes in the environment and meet the needs of its customers and prospective customers.

An organisation’s business environment is never static. What is viewed as uniqueness or distinctiveness today will be viewed as commonplace tomorrow as new competitors enter the industry or change the environment by modifying the rules by which companies compete. Consequently, an effective strategy will do more than help a company to stay in the game. It will help it to establish new rules for the game that favour that company. Successful companies do more than simply understand their environments. They also influence and shape the circumstances around them. Companies that fail to influence their environments automatically concede the opportunity to do so to their competitors.

Steps in conducting an environmental assessment:

Step 1: Understand the external environment at a macro level

The first step in the environmental assessment is to develop a basic understanding of the trends and issues that will significantly change, influence, and affect the industry. The overall industry understanding comes from looking at the elements that influence the environment.
These elements include:

  • Capital markets
  • Industry capacity
  • Technological factors
  • Pressure from substitutes
  • Threat of new entrants
  • Economic factors
  • Political factors
  • Regulatory factors
  • Geographic factors
  • Social factors

A useful framework to understand these issues comes from answering the following questions. They should be posed directly when used in an interview, and indirectly when analysing data:

  • What is the long-term viability of the industry as a whole, and how do capital markets react to new developments?
  • What trends could change the rules of the game?
  • Who are the industry leaders? What are they doing? Why?
  • What are the key success factors in the industry?
  • What developments could allow a company to change the rules of the game?
  • Five years from now, how will winners in the industry look and act?
  • What is the reward (and/or cost) of being a winner/loser within the industry?
  • Where has the industry come from?

Step 2: Understand the industry/sector components in detail

Industry/sector components are normally broken down as follows: competitors, customers and stakeholders. Questions that should normally be asked of each key competitor include:

BUSINESS REVIEW

Strategy Issues:

  • What is the strategy of each competitor? Where do they appear to be heading?
  • What is their business emphasis?
  • Do they compete on quality, cost, speed or service?
  • Are they niche or global players?

Capabilities:

  • What do they do better than anyone else?
  • Where are they weaker than others?
  • Where are they the same as others?

Business Objectives:

  • Who are their primary customers?
  • What types of business do they not do or say no to?
  • Who are their major partners? Why are they partnering? What do they gain from it?
  • What are they doing that is new or interesting?

FINANCIAL REVIEW

Financial Strength – Internal:

  • How much cash does each competitor generate annually?
  • What are the drivers behind their financial success (from a cash perspective)?
  • How do they allocate resources (funds)?
  • How fast are they growing and in what areas?

Strength as Perceived by Capital Markets:

  • Are competitors resource constrained or do they have strong financial backing?
  • Is this perception consistent with the internal analysis? Why or why not?
  • How has the company performed in the financial markets? Why?
  • What constraints/opportunities do they have with respect to financial markets? Why?

ORGANISATION REVIEW

Top Management:

  • Has management kept the company at the forefront of the industry? Why or why not?
  • Are the key players seen to be moving the company forward?

Organisation:

  • Is the company centralised or decentralised?
  • Does the corporate parent act as a holding company or as an active manager?
  • Is the organisation perceived as being lean and able to get things done?

People:

  • How many people are employed? Is the company over-or under-staffed?
  • Are people managed to achieve mainly business objectives, human objectives or some of both? How does this affect the company?
  • What skills are emphasised during recruitment?

Culture:

  • Is the culture results-oriented?
  • Bureaucratic?
  • Flexible?

Similar lists of questions should be developed for customers and stakeholders (or see the full Audit for ready-made questionnaires).

Step 3: Integrate the components into an environmental picture

Once the findings of the stakeholder analysis, customer analysis and competitor analysis (above) have been collected, audit team members should step back and integrate the data. Integrating the different components will help the team to understand the overall environment in which the business operates.

This integration should take place at two levels: assessing where the industry is heading and the likely impact of that direction on the company, and combining the organisational assessment with the environmental assessment.

The Business Strategy Audit offers a detailed framework for analysing this data. In brief, it should highlight significant changes in the environment, and the impact of those changes on the company’s competitive position within the industry. It should address the fundamental question of how the company can influence its environment in the future, and what the business will need to look like if it is to thrive in the future.

In addition, the analysis should highlight the requirements and capabilities that are needed within the company to meet external demands. These requirements and needs should then be matched up with the current capabilities outlined in the organisation assessment. This will enable the team to determine the overall alignment of the company’s strategy to its environment.

Part 2 ~ The Organisational Assessment

Once the company’s environment has been examined and analyzed, managers should consider the qualities and characteristics of the organisation itself that influence what can be accomplished in terms of strategy. This section is about organisational assessment. The steps shown here will provide insights into the effectiveness of the company’s current strategy, and provide guidelines for increasing strategic effectiveness.

  • Strategy Clarification. Strategy clarification helps the leadership team determine what business they are in, the direction of the business, and framework or criteria for making strategic decisions in the future. If people at any level of a business are unclear about any of these three areas, it is difficult for them to focus their attention, cooperate with other teams, and organise their efforts to gain competitive advantage in the marketplace.
  • Viability and Robustness. Measuring viability and robustness helps a leadership team test strategies and ideas against future world scenarios to determine whether the strategies can be achieved and sustained. By looking at both market and financial viability and robustness in different scenarios, a management team can see what will create advantage in the future and what key measures need to be implemented to monitor changes in business conditions.
  • Business Processes. The term business process refers to the overall work flow within a company and includes elements such as product design, manufacturing, and delivery. A good process analysis will help a leadership team to see what must be done given the company’s strategy, and how those processes can be improved.
  • Capabilities. Capabilities are bundles of separate skills required to deliver the products or services that give a business competitive advantage. There are two parts of a capability assessment. First, the capabilities needed to execute the strategy must be determined. Second, the current level of ability in terms of those capabilities must be assessed. Without knowing what capabilities should be focused on and improved, competitive advantage will be difficult to achieve.
  • Organisation Design and Resourcing. This part of the analysis looks at alignment issues between the environment, the strategy, the skills required to achieve that strategy, and the organisation structure. During this step, a management team can design an organisation that aligns systems in a way that will allow them to execute a strategy. Unless the systems within a business are aligned to improve effectiveness or efficiency, strategy statements are merely plaques on the wall that are seldom realised.
  • Culture. Culture refers to the set of shared values that influence behaviour and direction over time. The style of management and the beliefs and assumptions commonly held by people in the organisation must be determined in order to ensure alignment and execution of the strategy.

Having completed each of these assessments, they must be integrated by the audit team. In this process, audit team members should attempt to answer one fundamental question: Is our strategy in alignment with the external environment?

To answer this broad question, the following issues should be addressed:

  • Do our capabilities match our customer requirements?
  • Do we offer something required by our customers that is better than the offerings of our competitors?
  • How are customer demands changing?
  • How are competitors changing?
  • How are our internal capabilities evolving to keep pace with those changes?

Depending on the answers to these questions, the team can implement the changes dictated by the audit. In making these changes, three issues should be considered:

Structure follows strategy – This means that current organisational boundaries and structures should not be allowed to determine the selection of a competitive strategy. Rather, the environmental and organisational assessments that you have just conducted should determine and drive strategy selection.

Plans for change must be widely owned – Those people ultimately responsible for implementing strategy (typically front-line employees) should be consulted for their ideas about what changes should be made and how they should be made. Otherwise, very little change is likely to happen.

Implementation should start with what is core to gaining advantage – In other words, start with core business processes, ‘pick the low hanging fruit’ first, make those changes that will make the most visible difference.

In addition, it may be useful to know that the following are the most common mistakes made by teams conducting business strategy audits:

  • Expecting all data to be equally useful
  • Do nothing with the audit findings
  • Failing to link other support systems (rewards, administration, etc.) to strategy
  • Not thinking strategically about what processes and capabilities to keep in-house and what to outsource
  • Failing to prioritise those core processes that must be world-class
  • Failing to match internal capabilities with customer requirements
  • Failing to communicate audit findings and strategy changes to people throughout the organisation is a clear and simple language

Andrew Carey is editor of the full-length Business Strategy Audit referred to in this article. It is published by Cambridge Strategy Publications (http://cambridgestrategy.com). Andrew has worked as a writer, editor, marketing consultant, publisher, team facilitator and business development adviser. He is also a practising psychotherapist.

Author: Andrew T Carey
Article Source: EzineArticles.com

Organizational Culture Change – 6 Advantages to Enhance Performance

If you don’t know where you’re going, any road will get you there! What the rabbit said to Alice is also true when reversed. If you don’t know where you are now, you’ll never get where you want to be.

This is what happens to some managers and organizations. They’re working to achieve goals and enhance performance. But 80% of their endeavors generate 20% results or even less. That’s not because their goals aren’t properly set. They are. The only thing lacking is a precise bearing. Standing precisely here, what would be the most effective way to reach that future?

So, having your goals set and preparing to change, spend 15 minutes to assess your organizational culture. Why? Because culture is found to make the difference. It is why up to 70% of organizational culture change programs fail. Wouldn’t it be great to avoid just that? Make your change endeavors more effective, aiming for 20% endeavors generating 80% results, and take your current organizational culture into account. Learn the current potential and possible resistance right here, right now, before your feet. Knowing it is dealing with it. Overcome resistance and mobilize your organization’s potential. It is a powerful starting point for successful change. Leave no sooner than after you’ve done this!

Are you ready? Just follow me!

Fifteen minutes will do for managers and staff to assess their organizational culture quickly, easily and reliably. The Organizational Culture Assessment Instrument (OCAI) is developed by professors Kim Cameron and Robert Quinn and is a validated research method. No wonder that the OCAI is currently used by over 10,000 companies worldwide. How come that this instrument takes only so little time and is still valid?

The Competing Values Framework

Cameron & Quinn learned from statistical analysis that out of a list of thirty-nine indicators of effectiveness for organizations, only two dimensions made the difference. So four quadrants were constructed, corresponding with four organizational culture types that differ strongly on these two dimensions:

  • Internal focus and integration VS External focus and differentiation
  • Stability and control VS Flexibility and discretion

Organizations in the two left quadrants are internally focused, like: What is important for us and how do we want to work? The two quadrants on the right consist of organizations that are externally focused on: What is important for the market, competitors and customers? The upper quadrants desire flexibility, while at the bottom organizations value stability and control.

In short, the four archetypes of culture are:

1. Clan Culture: A friendly, people-oriented working environment where colleagues have a lot in common, similar to a family. They value teamwork and consensus. Executives are seen as mentors or father figures. There is great involvement. Success is defined as addressing the needs of clients and caring for people.

2. Adhocracy Culture: A dynamic and creative working environment. Employees take initiatives and risks. Leaders are seen as innovators. Experiments, innovation and prominence are emphasized. Success is growth and creating new products or services.

3. Market Culture: A results-based organization that emphasizes finishing work and getting things done. People are competitive and focused on goals. Leaders are hard drivers, producers, and rivals at the same time. Market penetration and stock are the definitions of success.

4. Hierarchy Culture: A formalized and structured work environment. Procedures are leading. Leaders are efficiency-based coordinators. Keeping the organization functioning smoothly is most crucial. Reliable delivery, smooth planning and low costs define success.

Of course these descriptions are a bit short and therefore monochrome. They’re just meant to give you a quick glimpse of the four types. You can check a more extensive and nuanced explanation about the OCAI.

Six key features

To find your organization’s core values and thus the dominant culture type, you need to complete a short survey. Just assess the following six features of organizational culture:

  • dominant characteristics
  • organizational leadership
  • management of employees
  • organization glue
  • strategic emphases
  • criteria of success

The organizational culture assessment shows four statements for each of the above key features of culture. By dividing 100 points over these four descriptions, you’ll get a weighed assessment of the current culture mix.

Just like in reality you don’t need to choose just one culture type. Reality is ambivalent and so is organizational culture. The Competing Values Framework states that the values and the corresponding organizational cultures compete with each other. Organizations can spend their money, attention and time only once, so they tend to emphasize certain values. Quinn and Cameron found that flexible organizations are the most effective, which sometimes leads to contradictory behavior. Research shows that there is no single “best” culture type. The best mix of culture types depends on the situation. In a saturated market for instance, you could flourish with a competitive market culture, while this culture would produce opposite effects in a start up company that thrives on innovation, creativity and serving new developing markets.

You can find your unique culture mix of for instance, people-oriented clan culture and results-oriented market culture. Knowing your specific mix of internal focus and flexibility (clan culture) versus external focus and stability (market culture), you can prepare a successful pathway to the preferred situation.

In the assessment you also define the preferred situation. Just rate the six key aspects of organizational culture again, but this time you keep the preferred future in mind. You divide 100 points while you imagine it’s five years from now and the desired situation has come true.

The outcome!

Now you know where you stand and where you want to go! In just 15 minutes an entire team or organization can assess their starting point and their goal.

Before there was an automated version of the OCAI, it was a lot of work to calculate the profiles by hand. Nowadays, there’s an online automated OCAI tool available that is free for individual participants and at a very reasonable price for teams and organizations.

Using this online tool, every participant receives their personal profiles of current and preferred culture by email. A team of participants can discuss their personal profiles and create a joint profile as a basis for their change program.

In case of large corporations with a great number of participants, you can work with the collective profile, constructed by averaging all the individual results. This provides a clear, quantified starting point for change.

A culture profile gives a lot of quantified information:

  1. The dominant culture and its strength
  2. The difference between present and preferred culture
  3. The congruency of the six features
  4. Comparison with the average for the sector or industry group
  5. The developmental phase of the organization

ad 1: Imagine that you have a very dominant market culture (48 out of 100 points): this indicates that people experience a culture of competition and getting things done.

ad 2: For instance, you see that employees would prefer 10 points more of a people oriented clan culture. The difference between current and preferred profiles indicates your organization’s readiness to change (or their current discontent) and gives an impression what kind of change or approach would be motivating.

ad 3: Congruence means that the 6 key features of culture align, so that they all emphasize, for instance, market culture. Mostly this works smoothly, while incongruence means that there are inconsistencies that can take a lot of time, energy and so on.

ad 4 and 5: It’s interesting to compare your culture profile with your economic sector and see how mature your organization is. Cultures evolve over time from extreme flexibility to more stability and an external orientation.

Qualitative fine tuning

Once you have this quantified picture, you might color and detail it with some qualitative information. Instead of doing interviews through the organization, as some consultants tend to do, you could simply settle for an OCAI workshop. Interviews are not only a lot of work but also produce loads of information that is difficult to standardize or combine to a meaningful whole. Working with your results in an OCAI workshop is adding qualitative information, fine-tuning your profile, understanding it better and working on consensus about the current and preferred situation. When this is accomplished, you mobilize people’s readiness to change. That’s a lot of potential to work with. It’s great energy to start a change, I can tell from experience.

In my next article I will tell you how you can work with your results and start your change program effectively with the OCAI workshops.

6 Advantages to Performance

Conclusively, diagnosing and changing organizational culture can actually pay off if it’s done correctly. Don’t neglect culture since it’s such an important factor. Let culture work for you and enhance performance.

As a consultant guiding organizational change I got enthusiastic about using the Organizational Culture Assessment Instrument. A discriminate factor for success that beforehand was considered “vague” and impossible to manage, was made easy to grasp and even utilize, mobilizing employees beyond their “normal” resistance to change.

The OCAI has 6 advantages that help organizations enhance performance:

  1. It’s focused: it measures the six key dimensions that were found to make a difference in organizational success.
  2. It’s timely: both assessing and developing a change strategy can be accomplished in a reasonable period.
  3. It’s involving: either by including all personnel or those who give direction and guide change.
  4. It’s quantitative: based on figures, completed by qualitative information when working with the results to establish the desired changes.
  5. It’s manageable: it can be implemented by a (management) team; outside consultants aren’t necessarily needed.
  6. It’s valid: the OCAI is validated and people recognize their outcomes.

So if you’re planning a roadmap to change, spend 15 minutes on your current position. Any traveler can tell what a big advantage you gain to take the best possible road, avoid roadblocks and actually reach your preferred future.Use these 6 advantages of the OCAI and enhance organizational performance.

Marcella Bremer MScBA is a consultant, trainer and writer in the field of organizational culture. She’s always been fascinated by the human mind and human behavior. She explores the field of change, leadership, management and organizational culture.

She’s especially fond of the Organizational Culture Assessment Instrument because it works quickly and easily. The OCAI can be found online for teams and organizations and is also used for research purposes.

It’s free for individual respondents, so assess your organizational culture today in 15 minutes at OCAI online.

Author: Marcella Bremer
Article Source: EzineArticles.com