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Making Strategy Work: Informal Forces and Information Sharing By Lawrence G. Hrebiniak  Everyone knows something about formal methods of fostering communication and coordination. Yet managers in our surveys still listed poor information sharing as a huge problem in executing strategy. Why?
Because something else must be happening to affect or negate the formal methods. Because knowing what the methods are (for example, a matrix) and knowing how to make them work are two separate issues. Because managers may or may not be motivated to share information and make strategy work. In my experiences with strategy execution, I have found that managers know the terminology of information sharing and coordination. Everyone has IT systems and formal databases. Everyone knows what an integrator does. Many managers tell me constantly that their companies have been "matricized" in some way. Yet problems with information processing and knowledge sharing persist. This is so because there are informal forces at work that affect the outcomes. Let me share with you what some of these forces or issues are. Poor Informal Contact The simplest and most common form of information sharing is probably informal contact, regardless of the formal methods employed. People talk to people to seek information and solve problems. A manufacturing manager in New York or Detroit calls or sends a fax to a counterpart in Tokyo, Mexico City, Sao Paulo, or San Francisco. Delivery dates or scheduling problems are discussed and ironed out. A consultant in Germany calls a colleague in Paris to seek help with a client's particularly bothersome problem. A physician doing research in a major pharmaceutical company in Pennsylvania calls an expert in statistics in Germany to help with an important research question. Informal, direct contact between or among managers is arguably the most common form of everyday communication and coordination. Yet even this simple tactic cannot work without some basic underlying prerequisites for success. Knowing whom to contact, for example, is basic yet critical. Knowing the people, positions, and responsibilities in other locations is necessary for informal contact to work. This seems basic, and yet consider the following comment from a manager in a Wharton executive program: "I really wanted to help (a client company) get a nice loan package for his operations in Brazil. But I must admit I didn't know the person who handles this type of loan there, so I mailed the materials I had to the "loan manager" in Sao Paulo. I really don't even know if anyone got the papers or helped the customer." One remedy is obvious: Publish a directory listing key personnel in different geographical locations, showing their responsibilities and areas of expertise, a la McKinsey. Go Direct — Not Through Channels People who can solve problems without getting approvals galore or going through their bosses, their bosses' bosses, and so on to contact people directly in other offices usually can make informal contact work effectively as a communication and coordination technique. This represents one of the key ideas underlying flat organizations: people can focus directly on a problem without waiting for hierarchical approval. In contrast, the delay of requests as people go through "channels" or undergo numerous checks and approvals often destroys or detracts from the speed and spontaneity of informal, personal contacts. Create a "Common Language" As odd as it may sound, people in the same organization may not be on the same page when sharing information or communicating on important issues dealing with strategy execution. They bring different perspectives, technical capabilities, definitions of key terms, or cultural biases that detract from their ability to see and understand divergent points of view. Selective perceptions caused by functional myopia and regional or global differences get in the way of shared ideas and common understanding. When executing strategy, it is absolutely essential that the strategy be clear, focused, and translated logically into short-term objectives or metrics. It is vital, too, that these objectives and measurements be defined consistently to avoid problems of different, competing views of execution outcomes. Consider a case in which sales performance is measured by revenue, a top-line number, but a function such as manufacturing or an entire division is measured on a bottom-line figure — revenues minus costs. Add to the mix marketing, which is evaluated in part on customer satisfaction. In this case, different metrics almost guarantee different views of strategy execution and reliance on competing performance measures. Sales focuses on volume. It is accused routinely of selling anything and making deals with little concern for costs or the bottom line. Production feels that sales is "giving the shop away." Marketing cares about customers and feels that no one else gives a hoot. Conflicts between or among the functions are a common occurrence. The division manager sees the conflicts as detracting from divisional performance. The solution? Focus on common, consistent measures of performance. Define or operationalize the measures carefully. Develop some shared objectives. Place constraints on unilateral, independent measures of performance. Make sales responsible for margins, not just volume. Decide whether costs or customer satisfaction is the driving force behind execution decisions. Determine how and when the functions should cooperate to achieve important results and then hold them accountable. This is not a case where people should be working alone together. |
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