This is the third in a series of articles on corporate transformation, focused on my experience in the GCC. In the first article I developed a framework to define the current state of a company: leader, obsolete, stressed, and distressed. Identifying the current state then allows me to select a strategy type to develop: innovate, transform, transition, and turnaround. In the second article I introduced the first phase of strategic planing, which is the organizational diagnostic. This  first phase determines which of the four states the company is currently in. In this third article I describe the main phase of strategic planning that I use.

Organizational triage

The organizational diagnostic will usually result in identifying some quick wins that will have a material impact on the business. When a company calls in external executive management to manage change there are usually two main reasons:

1. The existing executive management is competent in its job and just needs support planning and executing change while they continue to run the business; and/or
2. The existing management cannot or will not effect change.

Which scenario is present will come out during the organizational diagnostic phase. If the second scenario is present it is critical to resolve the issue immediately. This leads to two immediate tactical changes necessary for the development and execution of a transformation / turnaround strategy.

Weeding out toxic personalities

When executive management will not change it is usually due to toxic personalities. I define a toxic personality in this context as executives who are manipulative, liars and master performers. They make it look to their superiors that they are working with the best interest of the company while actually working in their own best interest. You can recognize them because they try and control information flows.

The first step is the identification of  people who are poisoning the culture, eradicating morale, and getting in the way of effective decision making and execution. GCC society is one of social support. Unfortunately, if taken too far, this can lead to not responding appropriately to unacceptable behavior. A person who deliberately acts in a manner not consistent with the best interests of the company will see such hesitance as weakness. This will in turn reinforce their negative behavior, increasing both the frequency and severity of it .

My experience is that it is a mistake to try to rehabilitate such people if they are in a senior position as by this point in their career it has become part of their character. The first, and only, response to fix this issue is the immediate termination of any executives who behave in this manner. The organization will not be able to survive change unless this is done. The organizational diagnostic should already have identified such people.

Dissipating authority improves institutional competence

When there is a lack of institutionalization the delegated authorities of the company are not explicitly clear. The challenge in this case is not toxic personalities but arrogance. I define arrogance in this context as someone whose opinion of their abilities is far in excess of their actual ability. They get in the way of change because of their closed minds, insisting that they are right and not even listening to others, and they therefore hog all the decision making. A good example of this behaviour is termed “mansplaining.” Google it.

Arrogance leads to the development of a cult of personality and an ensuing power center, or worse, two competing power centers. Deadlock ensures with nobody being held accountable. Although a lack of an effective authorities matrix is a main cause it is a mistake to create a full authorities matrix at this point.

First, the relevant authorities need to be established but without assigning them to positions yet. Next, the institutional decision making structure needs to be defined. What I mean by this is that some authorities are effective by delegating them to a single person, others would need joint decision making between two people, and the most significant should be made by committees via majority vote. Under no circumstances should a minority be able to block the necessary changes needed to transform / turnaround the company. Only once the structure is defined should the authorities be assigned. Creating proper authority structures, such as committees, helps to dissipate the power centers, which diminishes the negative effects of arrogance in a single person.

It was not initially intuitive that this was the right path as I feared bureaucracy. But with experience I found out that deferred decision making did not usually exist because of complexity, but because a few people created roadblocks and this created a bottle neck with a lack of accountability.

There are two more decisions to be made here to make the above viable. The first is to understand that the first attempt at institutionalizing authorities will invariably not solve all challenges. A process for receiving feedback and using that as a basis to evolve the authorities matrix is critical. The second decision is how to protect this process from being corrupted. For example, a COO should feel comfortable disagreeing with the CEO without having to fear reprisal. The board of a subsidiary should be able to make decisions without being micro-managed by the board of the parent.

Adaptive planning and responsive execution

In this section I’ll describe my strategic planning process for corporate transformation. I’ll skip over the conventional strategic planning parts of this process  and focus on the important differences that have helped me to succeed.

Planning team selection

I always select the the planning team from my client’s current employees. It has never made sense to me to have one set of people develop a plan and a different set of people to execute it. My view is that by using a team comprised of the client’s employees I can achieve three main objectives:

• Knowledge transfer to the client’s employees.
• Faster buy-in of the plan due to employees being invested in the plan.
• Decreasing the client’s cost and dependence on my services for the current engagement.

My role is to lead the team, not to simply provide a 200 page presentation deck that regurgitates the ideas of the employees using fancy phrases. I am a firm believer in Ralph Nader’s philosophy:

The function of leadership is to produce more leaders, not more followers.

Strategy philosophy

Adaptive strategy construction, which I have covered previously in a separate article, allows for the development of plans under high information uncertainty. This is usually the case when I get called in. Rather than develop a full, static strategic plan from conception to final implementation, an adaptive plan is developed that allows for changes as information is collected during the inter-laced execution phase. This reduces the risk of committing to a complex set of inter-dependent changes that might end up to be sub-optimal or even harmful. At some point there will usually be a need to take such a leap, but by then enough information has been collected and the strategic planning team have built up enough experience to handle that step with a much higher probability of success.

There are two main challenges here. The first is identifying a small set of KPIs to measure success or failure, and understand what happened and why it happened. The second is to ensure that an effective decision making process is in place to adapt the strategy to such feedback in a timely manner. I will provide examples for different scenarios in subsequent articles.