How strategy implementation works in a dual operating system

How strategy implementation works in a dual operating system

+++++ please follow the link in the comments for an english version of this article +++++

Agile strategy implementation using Kotter’s dual operating system is an ideal approach for breaking up entrenched organisational structures. This is a wake-up call to everyone tired of organisation charts and longing for alternative organisational forms, so that necessary strategic change can happen at significantly greater speed.

Successful strategy implementation in a dual operating system

Harvard professor emeritus John P. Kotter, one of the world’s leading thinkers in leadership and change management, proposed the dual operating system as an accelerator of change in a Harvard Business Manager article back in 2012. He advises organisations to use two parallel operating systems to run the business: one handling daily work efficiently and reliably—Run the Business—and another developing strategic initiatives and implementing them much more successfully—Develop the Business.

Three core elements form the second operating system

Provided corporate strategy is clearly defined, it is then implemented through an agile network. This network comprises three core elements:

1. Strategic clusters. A strategic cluster brings together a strategy’s thematic cornerstones, for example market strategy. A cluster team of three to at most five people coordinates all strategic projects and initiatives within that cluster.
2. Strategic projects and initiatives. Several strategic projects and initiatives together make the overarching cluster concrete. There is considerable dynamism here. Strategic projects are not static. They have defined starts and ends, are newly formed and launched, and dissolve again—either because they have succeeded or because new insights lead to a deliberate early stop: fail fast, cheaply and often!
3. Central coordination of strategic clusters. Central coordination stimulates exchange and alignment between the strategic clusters.

John P. Kotter defines five basic principles for well-functioning dual operating systems, which I will not discuss further here:

1. An army of volunteers rather than compulsory assignment to strategy implementation
2. An “I want to” rather than an “I have to” mindset
3. People driven by head AND heart, rather than head alone
4. Leadership rather than management
5. Close integration of the two operating systems

Four success factors derived from practical implementation

My own experience implementing agile networks points in particular to the following success factors:

1. It does not work without central coordination of strategic clusters.
But only as much coordination and central direction as necessary. This means NO traditional project management office that smothers everyone’s motivation with thick folders of project management and reporting standards. It also means NO central reporting to the executive team through central strategy coordination. In the Chinese whispers of strategy project reporting, only half-truths usually reach the top. Instead, encourage open exchange between clusters and ensure feedback to the first operating system through regular dialogue formats.
2. Strategy implementation is not solely the boss’s responsibility.
Break up entrenched organisation-chart structures and deliberately avoid staffing strategic cluster teams exclusively with top management. Give emerging leaders and high-potential employees a chance to prove themselves in cluster coordination. The second operating system is an ideal stage beyond the formal hierarchy. As an executive team, you can divide responsibilities so that each executive participates in one cluster. This guarantees extra motivation: how often does a non-manager in the line organisation have the chance to discuss things on equal terms with executives in a cluster team and shape their own working environment’s future?
3. Let go and thereby increase implementation speed.
Let cluster teams decide which strategic projects and initiatives start and finish when. Deliberately give them design freedom within the strategic guardrails. Cluster teams act as the “executive team of their strategic cluster”, with the greatest possible decision-making authority. Abandon old-fashioned strategy PowerPoint marathons in which the executive team, seated at freshly laid tables with coffee and biscuits, receives presentations from the next management level showing perpetually green status lights. Delegate that entirely to the strategic cluster teams! Ideally, they are dynamic enough to know and try other methods for getting an overview of their cluster’s ongoing projects. When executives can tolerate not making every decision themselves, and accept that they do not need to know every decision made by cluster teams, implementation gains speed.
4. Broad, cross-functional participation and volunteering matter.
Create opportunities for broad, cross-functional participation in implementing strategic projects and initiatives. Recruit volunteers from the line organisation, the first operating system. The perceived privilege of being involved in important activities has always inspired people to volunteer for tasks beyond their actual work. No extrinsic incentives are needed. In the first operating system, line managers in particular must experience incentives that make it worthwhile to let their good volunteers move, at least temporarily, into the second operating system.

If your corporate strategies are not to disappear into consultants’ and staff departments’ glossy slides and permanently green status lights, the agile strategy implementation outlined above is a promising alternative. It includes a proving ground, visibility and motivation for your high-potential employees!