For any business that wants to embark on a transformation journey, we have developed a comprehensive framework called S.C.O.R.E. based on five critical elements (Strategic Thinking, Competing Values, Operating Model, Reconfigured Organization, and Exponential Technology)
In this article, we describe the “C” of S.C.O.R.E. which are the competing values. Keep in mind that our “C” includes an expanded version that additionally includes change management, culture, and communication apart from the competing values.
So, let us first start with competing values.
Developed by Kim S. Cameron and Robert E. Quinn, Competing Values Framework is a tool to map organizational orientation towards the market, management as well as its own teams. Based on two coordinates: Stability-Flexibility on one coordinate, and Internal-External focus on the other coordinate, it creates a quadrant to categorize all organizations in either of the four blocks based on their orientation:
Let us look at each of the orientations separately.
The first quadrant that we will look at, is the “Control” quadrant. It is for organizations that are focused more internally and are seeking stability of operations. These organizations are highly rule-based and have robust governance with a strong hierarchy. Their performance is primarily focused on gaining efficiency, reducing costs, and improving timeliness. The essence is all around stability, uniformity, and consistency. The leadership orientation is around controlling costs and improving efficiency. Their role is primarily to coordinate and organize and ensure stable operations.
The orientation conditions under “Control” are the best for shared services work. Rule-based, management by control and focus on efficiency are usually the management systems of shared services. Most KPIs (Key Performance Indicators) are optimization, the volume of handled transactions, and efficiency. For rule-based transactional and administrative activities, “Control” orientation provides a robust governance mechanism.
The second quadrant is “Compete” where the organization is focusing on stability but at the same time, it looks at the external market to compete. FMCGs, F&B companies, retail and fashion companies are found in this category. An FMCG company has a strong organizational structure, distribution network, and cost management but at the same time, they perennially keep producing new types of shampoos and shower gels to remain competitive in the market. While they introduce new products, they also sunset some old, not-doing-so-well products. The focus is on market share, achieving targets, and profitability. Their approach is highly customer-centric. The leadership is usually hyper-competitive and driven to win in the market.
One of the areas that many businesses are dabbling in is big-data analytics. This is the data that is produced externally by consumers, users as well as IoT devices when they interact with the digital medium and transmit data in the internet world. Much of this data is unstructured and obviously, outside the firewall of organizations.
Industry experts are predicting that the next round of competitive advantage is going to come to the companies that can efficiently mine big data and extract meaningful insights that can help their business.
While marketing and customer/user experience (CX/UX) are the teams that are most strongly associated with the data, businesses need to develop specialized skills as well as include functions like IT, finance, sales, customer support, and shared services in this cross-functional endeavor.
As you can see from the competing values quadrant for “Compete” is quite different from “Control”. This means that separate multi-functional teams with their own performance matrix and “compete” leadership must be planned under the broader shared services if they really want to succeed in this space.
The third quadrant we look at is “Create”. In this category, the companies tend to be innovative and entrepreneurial. Based on flexibility and focusing externally to compete. Typically, in this category, we see a lot of start-ups and scale-ups. We also see design companies, system integrators as well as consulting companies who belong to this category.
Even in large companies, functions or departments may fall under this category when they undergo “Transformational Change” temporarily. During the transformation stage, departments would need to forego their traditional command-and-control approach and focus more on a transformation-project-based approach.
When a business wants to experiment and adopt new technology, conduct a new transition, or experiment for a new service line, it must adopt the workings of this quadrant. The focus should be on agility and achieving a transformation vision. They must not shackle themselves with a command-and-control structure. In fact, many companies get it wrong, especially during the “stability” phase of a business transition. Once the implementation is done, a few months are required before a certain level of stability is achieved. It is during this period; the parent organization wants to exercise its command-and-control approach to the newly formed capabilities function instead of keeping the focus on achieving transformation first.
The last quadrant is about “Collaborate”. This category focuses on flexibility and internal organization. The idea in this category is to foster partnership and collaboration amongst multiple parties. The automotive industry, hypermarket chains, and pharmaceutical industries belong to this category. Ford Motor Company does not make its own steering wheels but gets its manufacturing from another company and through contract manufacturing. Similarly, chips in a Samsung television are made by another company. But the way they partner and work together gives a semblance of a highly synchronized and integrated eco-system of multiple companies.
The focus of the companies tends to be on developing human-centered capabilities and achieving high levels of effectiveness. Value drivers are communication, commitment to the purpose, and overall development.
Many companies these days consider strategic alliances and joint-ventures, even mergers, and acquisitions to augment their own capabilities through partnership with another company. Unfortunately, most of the businesses especially mid-sized to large ones try to enforce their own command-and-control structure on the partnerships. And this usually ends up badly for both parties. Come to think of it, even contract documents can be construed as command-and-control instruments.
For partnerships to work, the most fundamental aspect of two companies working together is trust and commitment to a common goal. Structure and governance are absolutely crucial for these partnerships to work as they provide guidelines and rules of engagement. At the same time, members from the two companies need to come together to collaborate and build the partnership together.
Whenever multiple parties are involved, command-and-control does not work!
Most shared services engage multiple parties and yet it is the command-and-control framework that it defaults its managing style too.
Some companies use the “Control” performance measures and are successful but when you look under the surface you will most certainly see that there is a strong expertise development and commitment to effectiveness that produces superior performance.
So, this was an overview of the Competing Values Framework.
Apart from the 4-block framework, there are three other aspects that we evaluate on “C” of SCORE.
There are several kinds of changes that take place during a transformation. Businesses need to move from their current state to a future state. These future state elements include structural changes like moving office spaces or changes in policies, on the other side there are cultural, and skills changes that need to be exercised on employees. Usually, the process and policy changes can be implemented through a series of steps and habits. Behaviors and human values take much longer and need special interventions and persuasion techniques to become effective. Here, we evaluate the behavioral and power skills of individuals that need to be developed. We evaluate the influencing power and the ability to overcome resistance. We look at stakeholder management and its depth of commitment. We look at employee engagement and experience. This is a critical component of competing values configuration especially as it deals with people and leadership. There are multiple models that can be deployed. Krüger-Ross Change Curve, William Bridge’s Transition Model, PROSCI approach, Agile, ADKAR, and various industry-leading methods exist. GE had developed a model called CAP (Change Acceleration Process) which was very handy to use for large-scale transformations.
The next element is culture. As work transfers from one group of people to another and most often to a new location, the cultural orientation can change dramatically. That is why a cultural transition must be planned separately. When an individual belongs to a function their goals and objectives are different, their career development paths are varied, and the performance measurement system is usually different from an individual who belongs to shared services. There are various organizational cultural models that can be utilized. Richard Barrett’s Culture Model, Edgar Schein’s Organizational Culture, and McKinsey’s Organizational Health Index are a few examples of the various models that can be deployed
Last but not least, part of the competing values is communication. Communication is a vast area. In this category, we examine any element of communication that impacts or need to be used to drive a transformation. Leadership announcements, all-employee broadcasts, townhall, sharing redundancy news, developing a shared vision, mobilization and synchronization are all parts of this category. Communication needs to have empathy, honesty, boldness and must be bi-directional. An in-depth approach and robust framework are necessary to increase the effectiveness.
For any transition, one of the most critical elements must be the human angle, orientation, their behavior, and their reactions. That is why, it is important to develop a deep understanding of the current psyche of individuals whether it is due to their company’s orientation, their culture, and their behavior. Accordingly, the leadership must lay down a plan and effort required to transition these individuals to a targeted future state.