« When is a system not a system? | Main | Conceptual Capital versus Intellectual Property »

September 26, 2005

Competency, Competing, and Strategic Behaviors

When we try to discuss organizational performance, it is often through the question of whether the organization's competencies prove to make its competitiveness effective. And these days, the problem of "competition" versus "competency" merits being called interesting especially because we've found out so much more about how being competent doesn't add up to being competitive despite the costs and lost sleep involved.

Sadly for the management teams of most large organizations, there seems to be no way to avoid spending a huge amount of money on the organization's becoming "more competent" -- because not spending the money almost guarantees that it won't happen. Meanwhile, becoming competent takes time and there's a risk of the competency being irrelevant by the time it matures.

What really helps, then, is to understand how investing in competency does begin adding up to being more successfully competitive.

I.

Ideally, it's possible to clearly state what makes up "competency", so that the necessary investments are well-exposed. Without being overly technical right away, most people would agree that in any given circumstance, competency generally means "effective behavior."

One especially intriguing look into the effective behavior issue is the Booz Allen & Hamilton model of organizational DNA, featured regularly in their publication strategy+business... Organizational DNA dwells on how organizational behavior springs from the internal "programming" of the organization, and suggests that reprogramming will invoke different behavior.

Back in the fourth quarter of 2000, Booz Allen stated, "What sets the top performers apart is the 'how' -- the way they organize and operate to realize their aspirations... The solution lies in changing the organizational environment to encourage decision-making that is aligned with the overall objectives of the company."

The Booz Allen model is aimed at producing solutions that improve organizational alignment with strategy. In this general vein, a typical presumption is that management decisions explicitly pursue an "optimal" prescribed behavior only approximated by real behavior awaiting improvement. Everyone is looking for the secret to improvement.

By 2005, extensive field testing of the DNA model allowed Booz Allen to confidently state:

"To change an organization effectively, concentrate on the deliberate design of four key organizational building blocks:

Decision Rights: the rules and mechanics that govern who makes which decisions -- and how.
Information: the metrics that measure performance, and the practices that transfer knowledge.
Motivators: the incentives, objectives, career alternatives, and other elements that drive people's behavior.
Structure: the overall organizational model, including the 'lines and boxes' of reporting relationships and job descriptions."

Naturally, there are many costs associated with the "before-and-after" reprogramming of each of those conditions... However, the focal point of the Booz Allen "DNA model" is more about the flow of what we often call "political capital". This initially appears in the emphasis on decision rights. But in fact, all of the DNA model's four building blocks have been included because they are (arguably) the factors most affecting decisions.

The DNA model points at the way that decisions (not just the rights) are distributed and made by everyone in the organization, with decisions being the driver of how the organization looks and behaves. While the changes the model supports are to affect the environment for decision-making, the point of the Booz Allen approach is to position and exploit decisions themselves as the generator of performance-critical behavior.

The big issue lurking under that idea is about the difference between how suggested corrective (.e., managed) changes to the environment affects performance and how "natural" changes do. Every day, a huge number of intentional but independently made decisions collectively and "naturally" alter the environment. In detailing that organizational environment, the Archestra view finds and describes a set of basic influences "accounting for" the organizational behavior as encountered by strategy. Since we describe that environment differently from the DNA model, the course of managing it could significantly differ as well.

II.

As does the Booz Allen DNA model, the Archestra account emphasizes that several essential functions underlie (i.e., both constrain and support) the organization's potential behavior at any point. And, when that potential behavior is realized, the behavior is the environment for what comes next. But our functions are different.

DNA says that this environment affects decision-making for better or worse. But the Archestra emphasis is that key performance decisions do not just wait for a friendly environment. Instead, strategic alignment means some decision-making -- not all -- has to work on how that behavior is realized from the underlying functions in the first place; while other decision-making is then critically responsible for whether the behavior executes strategy successfully.

To illustrate these two different layers of effects, first we directly call out the basic "modes" of organizational alignment that provide the environment in which strategy must survive.

Within these modes of alignment, there is a hierarchy of influence, with the most dominant at the top and the least at the bottom. In the interplay of these influences, "competency" leverages taxonomy and standards but is largely constrained by culture. Given that, one thing we can point out is that culture largely determines the competitiveness of a competency.

The alignment hierarchy also exposes an additional crucial dynamic. Namely, within the organization's overall functionality, external or exotic influences such as taxonomy or standards are more readily swapped in and out of the organization from one time to another than are more internal or intrinsic influences such as competency or culture. However, once in, external influences are significantly constrained by intrinsic ones.

In the picture, we see specifically what items the influences work on, noting that those items independently change all the time. Overall, the decisions that bring in and/or shape the four "alignment" influences produce the predisposition aspect of the behavioral environment.

III.

Meanwhile: another essential aspect of the organization's behavioral make-up consists of the way the organization responds to the circumstances that it believes it inhabits -- in short (and coining a term), its responsivity. Typically, this responsivity is what the alignment modes must work on, but when they arrive they find natural forces already at work.

The three key natural influencers of "responsivity" are:
- motivators which encourage certain action)
- generators (which enable and manage action)
- indicators (which suggest action)

More specifically, the interplay of those three influencers "maps" the intuitive dimension of responsivity as in the following picture:

Day to day the organization sees itself in a mirror, noticing key elements (of needs, options and requirements), and directly reacting to what it sees.

But the deeper issue is the way that those key elements are linked by the natural influencers, generating the overall intuitive responsivity -- so what are the origins of those influencers?

In the picture, those origins are awareness, execution, and assessment. The next step in discussing "effective behavior" examines those issues.

IV.

Our first illustration above details the underlying four parts of "predisposition". Likewise, the three underlying parts of "responsivity" shown in our second picture can be described more specifically. For that, one approach is to see the parts -- awareness, execution and assessment -- as tendencies or "characteristics" developed from particular organizational activities and observations.

Awareness is developed from the following factors:
- Decisioning
- Modeling
- Measuring
- Communication
The net effect of awareness is to create the "working image" that the enterprise will have of the circumstances within which it believes it operates. The working image presents options of varying attractiveness to the enterprise. The options are thus motivational. This four-tier hierarchy of "awareness factors" also features, from bottom to top, increasing complexity in the development of the working image.

Execution is developed from the following factors:
- innovation
- collaboration
- optimization
- change
The net effect of execution is to proceduralize activity in the cause of "recognized progress." Understandably, these tend to be the major issues on everyone's operational management agenda. The four factors are stacked relative to each other with the most reactive activity (towards progress) at the bottom and the most proactive at the top. All of the factors are about exploiting requirements, and all of them are at risk without "alignment". Arranged hierarchically, each of these four factors is critically dependent on the factor below it in order to be successful at generating maximum impact.

Assessment is developed from the following:
- Value
- Performance
- Quality
- Risk
The net effect of assessment is to establish the meaning of the "current state" and thus validate or challenge the existing perception of needs. In the context of progress (from execution), assessment tries to understand whether the difference achieved is important enough (or not) to defend the means by which it was gained or to change them. While each of the four factors is a kind of importance per se, they are hierarchically ordered with the issue on top being the most indicative of (i.e., directly relevant to) a specific strategy and the one at the bottom being least so (although perhaps more relevant in general to all strategies).

Summarized from the viewpoint of strategy, awareness must offer encouragement; execution must offer enablement; and assessment must offer clear ideas.

V.

The combination of a working image of circumstances, recognized progress, and an accepted meaning of the current state characterizes the intuitive dimension of responsivity. Again, day to day, the organization sees itself in a mirror made up of those aspects and reacts to what it sees.

But for a full appreciation of how that version of awareness, execution and assessment might really play out as behaviors, the following view gives another perspective crucially important to performance management:

As featured above, behavior is coordinated by approvals, assignments and accounting. Together, they make up the political dimension of responsivity, mediating the otherwise "intuitive" responsivity of the organization and intervening between predisposition and actual results.

The most prevalent characteristic of this coordination is that it is negotiated -- not once-and-for-all, but repeatedly and without guarantee of consistency, due to the continual and irregular influence of internal and external change on the organization. Yet the political formatting of responsivity is what most organizations believe will spawn "effectiveness"...

Since this means that the underpinning assumptions and conditions of the strategy might vary beyond expectations, the organization must grapple with how strongly a policy of adherence to strategy will be enforced. Successful enforcement means resolving the tension between the organization's predisposition and its politics. Even more importantly, since intuitive responsivity is continuously forceful at setting things in motion, the balance of predisposition and politics must "train" the intuition towards the strategy instead of away from it.

VI.

Given the above pictures of predisposition and responsivity, our full account of organizational behavior is based on how the two things affect each other.

From a management standpoint, effective Predisposition presents its influences with dependencies summarized as follows:
- Culture's function of granting permissions involves the relative strength of permission granted
- Competency's orchestration of abilities involves the maturity of the resulting combination
- Standards' presentation of rules involves the degree of adoption generated for those rules
- Taxonomy's offer of definitions involves the stability of those definitions across time and place.

Management can deliberately attend to those dependencies. The current predisposition constrains the likely effectiveness of the functions that make up intuitive responsivity -- by the way that strength, maturity, adoption and stablity are established for each function.

On the other hand, political responsivity will counter-offer different criteria of acceptability and importance to shape behavior, whic can pose a significant problem. If positions, assets or stakes are challenged in any combination, their owners may push for settlements, using approvals, assignments or accounting that either ignore effective predisposition or must attempt to change its underlying terms.

Consequently, if politics compromise the optimal predisposition, then the predisposition will compromise the intuitive responsivity that is the real environment for strategy.

As outlined by these worksheets for detailing intuitive responsivity, very many variables can be changed. Management's challenge is to know where, when and why changes occur -- and to control them by type and degree for benefit to supporting the strategy:
- Awareness details, which combine to envision current states
- Execution details, which combine to create future states
- Assessment details, which combine to determine overall status

VII.

In the intuitive responsivity arena, the awareness aspect's hierarchy of factors bears a superficial resemblance to the Booz Allen DNA model, especially in its inclusion of decisioning. But... the set of awareness factors does not Instead, it presupposes that most decisions have both traction and persistence only when the other three "awareness" factors support them, so if you want a new decision to succeed then you have to "tune" the other factors to support it.

Posted by Malcolm Ryder at September 26, 2005 5:36 PM

Comments

Post a comment