Organization Strategy and Change Models – Part -1
Q1- Whats Organization Strategy?
A-Organization strategy is NOT Vision or Aspiration its NOT “we wish we would be Google some day” – NO.
Its supposed to be a clear definition of where the Org is headed.
It should provide clear linkage to the goals of lower levels – people and processes both.
There should be a clear link – Strategy >> Goals >> Performance.
Q2- Whats the best way to set Organizational Goals? Why do most companies see a gap between long term financials forecast and actual performance?
A-Focus on Assumptions not Forecasts. Ensure the CXO’s don’t give in to their direct reports while defining targets.
CXO Direct reports - beg for lower targets for short term goals so that they and their teams realize their variable pays / bonuses.
CXO’s on the other hand like to project tough targets for - long term.
CXO’s in this manner can ensure their own existence - having dangled long term carrots in front of external stakeholders / management boards.
The end result is – short term goals are always over achieved, resulting in payouts to incompetent CXO DR’s .
While the Long term Goals /Strategic Goals are never achieved – highlighting the gap between Strategy Forecast and Actual Performance.
Q3-Why do the Financial forecasts which are usually trend analysis basis past financial performance not on the mark ?
A- The financial forecasts are on the mark in the short term - but not so in the long term as mostly they are created without inputs from Marketing or external environments.
Also in forecasting the accuracy depends on – level of data mining and the assumptions or hypothesis being tested . Which in most cases are understated.
Q4- What are Organization Change Models? Why are they required – when are they to be utilized?
A- Org change models are utilized to bring about – structured and planned positive changes.
The need for change and reasons why these are recommended are as listed below –
1. Performance / capability / productivity improvement.
2. Align process and people during an M&A.
3. To ascertain impact of changes that are yet to occur. ( Tactical / operational in nature )
4. Determine the success of strategic plan chosen. ( Strategic in nature )
Comment from - Chandrachurh Ghosh •
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Organization strategy should be at its simplest form so that each and every employee can understand and participate with full potential. Simplicity also makes the transition phenomenon quicker and stronger.
> The goal at the top level need not be propagated to the employees. In any case, they do not understand the directives and importance. The goals can be solely based on the long sighted approach of the board, keeping a close focus on the share holder interests. Then the achievable should be chalked-out unit-wise involving the unit heads. The unit heads should have the onus of breaking the achievable into simple goals and should drive each goal as a campaign with regular feedback of ground reality, while keeping the board aware of the hurdles and applicability for fine tuning.
> Long-term financial forecasts can never be accurate due to volatile market parameters, changing priorities, innovations and inventions, political changes, natural - climatic changes etc. Also, to perform a quicker analysis, sampled number of parameters of change and stability are taken into consideration resulting in a forecast with a lot of assumptions.
> Unless and until someone is proposing a new formula for a financial process, he is actually incorporating whatever the industry has already undergone or few brands propose. This is also influenced by writers who are part-timers or even on-lookers when it comes to ground reality. The fact that they have enough time to write books reduces their ability to roll-up their sleeves and wade into the water to check the depth. Wasted brains, who might have actually saved companies from bankruptcy.
> There are various approaches to bring in change in an organization. Those which are successful and widely accepted tend to become models. Each one have their own prospects and constraints. They should be carefully devised as its implementation will differ from organization to organization. These are merely guidelines and the entire draft work should be done as per the organizational requirement. They can be followed whenever a organization-wide change or a change in a larger section needs to be implemented.
> There are three widely used ones. Excuse me as I would not like to propose them.
Reply to Chandra Ghosh –
ReplyDeleteChandra - Long-term financial forecasts can never be accurate due to volatile market parameters, changing priorities, innovations and inventions, political changes, natural - climatic changes etc. Also, to perform a quicker analysis, sampled number of parameters of change and stability are taken into consideration resulting in a forecast with a lot of assumptions.
Rohit – Agreed to the extent of Long term forecasts – those surely have a scope of not being accurate due to external factors .
My earlier post refers to Short Term Forecasts which are in most cases out of line with reality .
Chandra Ghosh -> Unless and until someone is proposing a new formula for a financial process, he is actually incorporating whatever the industry has already undergone or few brands propose. This is also influenced by writers who are part-timers or even on-lookers when it comes to ground reality. The fact that they have enough time to write books reduces their ability to roll-up their sleeves and wade into the water to check the depth. Wasted brains, who might have actually saved companies from bankruptcy.
Rohit –>> Am not in any way proposing a new formula for Corporate Financial Analysis – but rather am appalled to see some organizations not linking their Financial Analysis with current market analysis and basing the Future prospects only on past trends of performance. They shy away from looking further which is why they approach bankruptcy .
Chandra Ghosh -> > There are various approaches to bring in change in an organization. Those which are successful and widely accepted tend to become models. Each one have their own prospects and constraints. They should be carefully devised as its implementation will differ from organization to organization. These are merely guidelines and the entire draft work should be done as per the organizational requirement. They can be followed whenever a organization-wide change or a change in a larger section needs to be implemented.
Rohit ->> There are no models being recommended the discussion was more from a learning perspective to understand which models are considered – why / why not ?