Fit to compete

I am Mike Beer, Professor Emeritus at the Harvard Business School, where I have taught and researched the problem of organizational effectiveness, organizational change, and organization development. My topic today is the subject of the book, 'Fit to Compete,' published in January 2020.

Think of yourself - when you want to achieve something, whether it's with your body (athletic, perhaps), or if it's with your profession (setting professional goals), you have to develop capabilities that are necessary to achieve what you want to achieve. You have to fit yourself to your goal. That is precisely the topic of this conversation, except it's with regard to organizations, which follow the same principle. In order to fit yourself to what it is you want to become, you need information. You need information about how you're doing, how well you're performing, what aspects of your performance are fitting what it is you want to be, or the ability to do that. I'm now going to describe in more depth what I mean by an organization being 'fit to compete'.

An effective organization, and I might add, a human organization (that is, one that is humanized, where people feel they are part of the organization), those organizations are 'high-fit' systems. All the elements you see on this slide have to fit each other, and have to fit everything thereabout, in order to achieve effectiveness and humanity in the organization. The problem in most organization change efforts - that are aimed at improving the performance of the organization, its effectiveness and performance, or its culture, its humanity - are typically more top-down, and that does not work very well because they do not enable the leader to see and change the whole system. One of the elements of any system is that it is hidden to some extent from everybody in the organization. The leaders don't see the whole system, the people in the organization do not see the whole system. They see the part of the organization in which they are deeply embedded. Top-down leaders (in particular) don't understand the whole system, because they are insulated from hearing what is really going on, I'm going to come back to that. You see that there has to be a leadership direction. What is the purpose of this organization? Is it just to achieve shareholder value, or are there other purposes? Surely, it has to achieve and execute its strategy, but are there clear values that management has articulated? I'm going to go down the right side. What is the organization's architecture? How is it organized, how is it managed, how is it led? Those are critical elements, the structure and processes (which you see next) all have to fit the direction that management has articulated. If the direction is not clear (purpose, strategy and values), you can't design the organization to achieve what you're trying to achieve. How is that organized? To what extent is it able to get people involved and working, in the direction that part of the organization requires? How is it being controlled? What are the data? What is the information that is being used, to decide whether we're performing well? If you're a purpose-driven organization (trying to do more than just meet shareholder value), you need information about how your employees feel, about how your customers think, about what society and the community think of your organization, what your suppliers think of the organization. You need different types of information depending on your purpose and strategy. Also that relates to how you reward your managers and your employees, you're rewarding them on the things you want. We know that you have to reward on the things you want, because you will get what you reward. By 'reward' I mean not just monetary rewards, I mean motion, general recognition of what people are doing to perform well, to do well by the organization. In fact, monetary rewards (in my experience) are often not the main reward you can provide. In fact, sometimes those monetary rewards (and this is a whole separate subject) lead people to do the wrong thing. You need to be aware of other rewards and how they fit, and you need to understand your people, their capabilities. You need to hire them for the capabilities you want, you need to develop those capabilities, leadership, marketing capability, whatever the capabilities are that you need, all organizations obviously need leadership, and you need to be aware of their feelings. How do they feel about the organization, do they trust, are they committed? Those are critical elements of success that often are hidden, and not known, another reason why you need honest conversations.