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The strategy is clear, but results remain below expectation.
Growth requires work the current organization was not built to perform.
A change in one part of the organization creates friction somewhere else.
Each element can look reasonable on its own. The diagnosis asks whether the elements fit one another and the strategy. Michael Tushman and David Nadler developed the model to help leaders examine the organization as a system.
The work that must be performed well to create and capture the value promised by the strategy. Examine its uncertainty, required expertise and interdependence.
The capabilities, experience, motivation, credibility and informal influence the work requires.
Roles, decision rights, reporting relationships, incentives, resource allocation and the forums through which work is coordinated.
The shared expectations people learn about how to behave, what is rewarded and what is tolerated.
A performance gap concerns a result below the required level. An opportunity gap concerns value the business could capture but is not yet capturing. Both require a clear account of the required result, the current position and the conditions that must be preserved.
Describe the result required and the result being achieved with comparable measures, populations and periods. Agree what must be preserved, such as safety, quality or customer commitments.
Separate symptoms from causes. Examine recent examples, counterexamples and earlier attempts to change the pattern. Ask what evidence would disprove each explanation.
Consider all six relationships among the four elements. Look for places where the demands of the work conflict with authority, capabilities, incentives or accepted behavior.
Compare alternatives and identify dependencies. Every element does not need to change, but the choices must reinforce one another and address the gap.
The value of the model lies in examining how the elements affect one another. A diagnosis that simply lists observations under four headings can miss the mechanism producing the result.
A team may have the necessary skills but lack the authority or resources to use them.
The work may require experimentation while the funding process demands certainty.
A formal escalation process may exist while accepted behavior discourages disagreement.
What leaders fund, reward and tolerate helps sustain the current pattern. Current arrangements may also protect legitimate commitments to customers, employees or performance. The leadership team must decide what to preserve, what to change and how the resulting choices will be held together.
A shared account of the gap and its causes.
Connected choices about the organization.
A basis for assigning ownership and testing whether the changes work.
The company sought to move beyond selling components to solving more complex customer problems. Change Logic worked with senior leaders to connect the growth strategy with changes to the business-unit structure, capability development and the design of Analog Garage, its innovation unit.