By Karla Norwood, President, and Jim Cardwell, CEO, Cardwell
When organizations decide to implement sweeping changes to their business model, as in entering new SEGs, process improvements, mergers or acquisitions, software conversions, or any other major changes to their revenue stream or operational efficiencies, there is a great deal of stress on the organization to make the "shift." Chances are, these new initiatives will require employees to modify, or change drastically, how they currently do their work. How fast will your organization be on the “same sheet of music” to use these new models of work and decision-making?
The first step toward increasing your organizational speed to reach your goals is to begin thinking of your company as a hologram—via the hologram theory.
What is the hologram theory? If an individual cuts a small piece of a hologram—like the kind found on credit cards—the piece will maintain the entire image of the hologram. The “intelligence” of the entire image is in every bit of material making the whole.
Think of the benefit if every team member—or even every employee—had a shared understanding and appreciation of the many different factors and influences affecting the business. Instead of thinking in primarily functional ways, the whole team has the ability to see the big picture—and make better decisions because of their knowledge.
Creating an “Organization Hologram” will result in a thriving organization because your member loyalty is increased, flexibility and speed are accelerated, and better decisions are made at all levels. These positive behaviors reflect a clear understanding of your company’s business model.
How is an Organization Hologram created? First, there must be a clear understanding of your organization’s business model.
In her article “Why Business Models Matter” (Harvard Business Review, May 2002 ), Joan Magretta explains that a business model is more than:
“… images on a white board covered with arcane mathematical formulas. A good business model answers Peter Drucker’s age-old questions: Who is the customer? And what does the customer value? It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the economic logic that explains how we can deliver value to customers at an appropriate cost?”
Next, your business model must be communicated to others. The greatest communicators in history—whether politicians, business executives, or religious leaders—were, in fact, great storytellers who could lead large groups of people to do extraordinary feats. Magretta notes that business models are really stories that explain how the enterprise works. She writes:
“All new business models are variations on the generic value chain underlying all businesses. Broadly speaking, this chain has two parts. Part one includes all activities associated with making something (designing it, purchasing raw materials, manufacturing, etc.). Part two includes all the activities associated with selling something (finding and reaching customers, transacting the sale, distributing the product, or delivering a service).”
Your business model may create extraordinary member value through any one, or combination, of these elements.
The clearer your business model is regarding how value is created and the faster the business model “story” is communicated, the sooner behaviors leading to improved member loyalty, accelerated flexibility and speed, and better decision-making at all levels will be realized.
When business models don’t work, it’s because they fail the narrative test (the story doesn’t make sense), the numbers test (the Profit &Loss statements don’t add up), or the employee test (employees don’t understand what part they play in the business model story).
The successful implementation of an Organization Hologram is when all employees make decisions and behave in ways that support your company’s model story.
How can a company leader make a difference? Most executives can develop a good business model—the story makes sense and the profit and loss statements add up. But the success of any new change to the business model is only created through an Organizational Hologram when employees make decisions and behave in ways that support the “new” business model.
William Bridges wrote Managing Transitions, a compelling book describing how to engage employees around new or existing business models. He describes the importance of being able to effectively communicate the answers to Five Ps:
- What is the “rational” logical Purpose of the business model? How do the numbers make sense?
- What is the “emotional” Picture of the business model? How will employees and customers behave?
- What is the clear and measurable Plan to accomplish this?
- What Part does each employee and customer play in the Plan?
- What is Past that employees and customers will no longer need to do?
The Organizational Hologram is created when all leaders (executives, managers, and supervisors) associated with the change believe in and can communicate the answers to these Five Ps. In addition, all company leaders should have a key role in helping articulate the answers to each question.
Company leaders can help sustain the Organizational Hologram through the development and implementation of an enterprise wide performance system that effectively supports the constant communication, adjustment, and alignment of employee behaviors and expected results to your business model.
A few parting thoughts for developing and improving your business model:
- Privately write down your company’s business model “story.” Answer the Five Ps (Purpose, Picture, Plan, Part, Past) for your organization. What are the connections? What are the disconnects?
- Spend a few minutes and ask each person on the executive team to describe your organization’s business model “story,” and answer the Five Ps. What are the connections? What are the disconnects?
- Put together a representative cross section of employees and ask each employee to describe your organization’s business model and answer the Five Ps. What are the connections? What are the disconnects?
- Develop a summary of the connections and disconnects.
- Work with the executive team to determine an approach that minimizes the disconnects and leverages the connections found throughout your organization.
- Work with the other members of the executive team to implement an enterprise wide performance system that strengthens your company’s Organization Hologram and supports instant adjustment and communication of the business model as well as continually answers the Five P Questions.
Once the Organization Hologram is formed, everyone in your organization will observe that the organization has successfully changed—member loyalty is increased, flexibility and speed has accelerated, and faster and better decisions are made at all levels. Your company will be able to change direction whenever needed—and everyone will follow.
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