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Soundview Executive Book SummariesAlan P. Brache, a consultant specializing in strategic and operational improvement, writes that change management initiatives or organizational wellness fads can oversimplify the process. He recognizes that they are noble ideas, but asks, "Do they address the unique needs of your organization?" "Are they sustained long enough to achieve their objectives?"
He compares organizations to humans. Each organ, muscle, bone and nerve plays a unique part within the whole body. A strong contribution from one component cannot make up for deficiencies in others, and understanding each component does not explain the health of the whole person. Body functions are integrated and their interactions are as important as their individual roles. So are the different functions in an organization. By influencing these factors, Brache writes, managers can strive for organizational wellness.
In How Organizations Work, Brache shows companies how they can take a holistic approach to organizational wellness by identifying the different parts that make up the whole. He does this with The Enterprise Model.
The Enterprise Model
Brache's Enterprise Model includes all the variables of a business enterprise. There are four kinds of variables: external variables, or the context in which the organization exists; structural variables including business processes, goals, information management, and organization structure; human variables including leadership, culture, and human capabilities; and variables that are both structural and human, such as strategy and issue resolution. All of these variables work together, and to solve any complex issue, Brache writes, companies cannot address only one. Successful managers of healthy organizations understand that these variables must be treated regularly and holistically to effect change and improve performance.
The external business environment is the context in which a business operates - the areas that can and cannot be controlled. Before focusing on internal variables, Brache writes that an organization must first assess and manage external variables.
The Industry's Value Chain
The first step in addressing external variables is to identify the industry's value chain (notably suppliers and customers) and an organization's current and future place in that value chain. The next step is to identify the other external variables that will have the most influence on a company's business. These external variables include resource providers, competitors, shareholders, the government, the economy, the society and community within which an organization exists, and the parent company.
Once a company's value chain and the other important external variables that affect the success of the business have been identified, an environmental monitoring system must be established. In other words, companies must be sure they have supplemented their internal performance monitors with external performance tracking. Based on information gathered from environmental monitoring, a company must determine future external threats and opportunities and use them to design strategy.
Leadership and Strategy
Next, Brache addresses internal variables. The first is leadership. Leadership is setting an organization's direction and motivating people in that direction. Though all Enterprise Model variables are critical, Brache writes that leadership is "first among equals" and required for development and implementation of all the other components. He offers a four-step plan to address weaknesses in an organization's leadership variable.
Strategy is the framework of choices that determine the nature and direction of an organization. Top management must take the time to develop strategy to position the organization in its external environment and focus decisions, such as who to hire, priority of product development projects, capabilities to build into business processes, the structure of the organization, as well as daily decisions. A strategy must stand up to two reality checks: Will it work? Can we implement it? To address the strategy variable, Brache offers a five-phase plan.
Goals and Measurements
Setting goals and measuring performance range from activity-based costing to the resurgence of Six Sigma. Goals are objectives that reflect what your customers and other external constituencies need so that your organization can thrive. Measures answer the question, "As evidenced by what?" regarding reaching your goals. Brache writes that goals and measurements should be established at five different levels: strategic, business-wide operational, process, departmental, and team or individual goals.
How Organizations Work also focuses on other multi-dimensional plans that can help organizations deal with issues surrounding other internal variables, including culture, human capabilities, business practices, information technology, and organizational structure. The plans for each utilize Brache's holistic approach and provide organizations with the tools to recognize and address deficiencies and improvements.
Why Soundview Likes This Book
How Organizations Work provides companies with a detailed road map that can guide them through making themselves more effective, and delivers the strategies they can use to change their systems and improve their organizations. Brache's analysis is clear and insightful, and his steps for improvements reach far beyond the hype and fads of ad hoc initiatives. This practical guide for organizational transformation presents an integrated framework from which executives and managers can plan rational changes and make them work. Copyright (c) 2002 Soundview Executive Book Summaries