Companies, like people, have personalities. That’s the idea behind the organizational DNA framework from Strategy&, a member of the PwC network. For more than a decade, we’ve been working with Fortune 500 companies to better understand how these personality types are expressed in their organization’s DNA so that they can improve performance.
As with human genome mapping, knowledge is power: Identifying the precise building blocks that dictate your company’s personality and performance means you can activate the right ones to influence outcomes. Thankfully, organizational DNA is less complex than human DNA; it has four pairs instead of 23. Although fewer in number, they are powerful levers—decision rights and norms, motivators and commitments, information and mind-sets, and structure and networks—that you can use to maximize your resources and better deliver on your strategy.
We’ve identified seven distinct organizational archetypes –three that execute well and four that do not. We see a nearly even split when we analyze our Org DNA Profiler public data set: 48% of respondents fit weak-execution profiles, and 52% are on the strong-execution side. Regardless of an organization’s personality, each type comes with certain characteristics that leaders can tap into, or tweak, to better drive execution. Here’s how.
1. Passive-Aggressive organization: “Everyone agrees, but nothing changes.” This type accounts for 11% of respondents. The weakest at execution, this organization builds consensus easily, but struggles to implement agreed-upon plans. The only way to change that? Give the organization an overhaul. That means addressing all four of the organizational DNA building blocks at once — and allowing the time to do so. One transportation company accomplished the transformation over about five years, shifting from an internal focus to a customer focus by building a credible executive team, defining new measures of performance and compensation, and developing sophisticated information systems.
2. Overmanaged organization: “We’re from corporate, and we’re here to help.” Next up, with 14% of respondents, is the company type that has multiple layers of management and tends to be a highly political environment. Here, structure and decision rights play a key role; in this case, it’s best to move from a bureaucratic culture to one in which relevant decisions are made downstream. One automaker did this by slashing the management layers of its R&D group — from five to three. The move helped speed decision making and enabled the company to more quickly introduce new products and become an industry leader.
3. Outgrown organization: “The good old days meet a brave new world.” This type is also on the weak side when it comes to execution, and 15% of respondents fit here. An Outgrown organization’s challenge is that the company has gotten too large and complex to be effectively controlled by a small team. This type is common among high-growth companies that have become victims of their own success. Addressing the issues requires focusing on several organizational DNA elements, including motivators, important for cultivating leadership at all levels of the company. One high-growth conglomerate created a range of compensation models that better reflected the distinct parts of its business. The different models took into account factors such as competitive dynamics in each market and the time frame over which a business was expected to deliver results.
4. Fits-and-Starts organization: “Let a thousand flowers bloom.” This type of company, where 9% of respondents find themselves, might look as though it has its act together. There are scores of smart, motivated, and talented people — but they rarely pull in the same direction at the same time. The company displays occasional flashes of brilliance, but lacks the discipline and coordination to repeat its successes consistently. As with the Passive-Aggressive organization, nearly every organizational DNA element is in play. One transportation company linked employee activities to corporate goals by reorienting its talent system and tying it to the strategic planning process. Now goals and measures are cascaded to all levels of the organization and are linked to individual performance targets, establishing a clear link between corporate objectives and daily employee activities.
5. Just-in-Time organization: “Succeeding by the skin of our teeth.” Another common personality type (15%), the Just-in-Time organization is stronger at execution, but still faces considerable challenges. Although the company isn’t well prepared for change, it can luckily turn on a dime and deliver. What’s needed is stability and structure; one organizational DNA element that is crucial here is decision rights. In fact, our research reveals that decision rights are one of the most important organizational DNA elements when it comes to strategy execution — twice as important as structure or motivators, for example. By clarifying how and by whom decisions are made and ensuring that decision makers are armed with the right information, companies can begin to institutionalize accountability and process discipline. At the same time, they should maintain the entrepreneurial spirit that is the hallmark of this organization type. One fast-growing technology company addressed this by instituting standard processes and guidelines for scheduling and communication that provided clarity and streamlined activities.
6. Military-Precision organization: “Flying in formation.” This well-oiled machine (10% of respondents) is often driven by a small, involved senior team. This type of organization succeeds thanks to its superior execution and the efficiency of its operating model. To keep things operating so smoothly, the Military-Precision organization needs to pay attention to a number of elements, especially information. Because decision rights tend to be centralized, these organizations need to ensure they are feeding customer and market knowledge to the center. Some companies do this by having their executive teams periodically interact with customers. One financial-services provider commits to a weeklong immersion each year in order to ensure it’s truly in touch with its customers.
7. Resilient organization: “As good as it gets.” This organizational type (which 26% of our respondents fit) is the best we see. The Resilient organization is flexible enough to adapt quickly to external market shifts, yet is steadfastly focused on and aligned behind a coherent business strategy. Now the bad news: Resilient organizations may become complacent. They need to relentlessly sustain their good organizational health. One way to do that is by preparing for the next big war that’s coming to their business or industry. Resilient companies look past their market and the immediate few years in preparing their organizations to compete. A retailer, for example, might do this by continually testing new product offerings to learn about subtly shifting customer preferences and cycling this information back to other parts of the organization where it will inform strategy.
Ready to find out which type of organization yours is? Take our five-minute online assessment.
Gary L. Neilson is a senior partner based in Strategy&’s Chicago office. He has 30 years of experience with the firm, focused on helping Fortune 500 companies with operating model transformation challenges.
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