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Organization: Overview of Core Frameworks Local Training Module For Firstyear Associates Associate Handbook FOREWORD AND OBJECTIVE This Organization Practice(OP) document provides an overview for use in local training sessions for firstyear associates. It is part of a ―series on functional areas.‖ The objective of the series is to introduce McKinsey practitioners to the basics in each of our functional areas of expertise. All the documents in the series are prehensive in nature and describe the current tools and frameworks in that functional area At the end of this document, you can find a section describing a selection of the core documents and handbooks that can give you further details on some of the frameworks descried here. All of these documents are now on PDNet。 and hard copies of them can be requested from PDNet Express, which will deliver them in 24 hours The contents of this document have been adapted for local training sessions through ―Switching Tracks‖ — OP’s firstyear module videotape, which municates the basic concepts in a concise and visual way using an actual client — The Scandinavian Railroad Company. It is 40 minutes long and should be presented in 3 short segments. Between these segments, the faculty member runs the attached exercises, adds any mentary he/she considers necessary to clarify the concepts, and provides personal experience on selected topics. A copy of the videotape and moderator’s guide with exercises can be requested from the Firm This document seeks to answer 4 questions SECTION 1 Why do associates need to consider organizational issues in every engagement? SECTION 2 What frameworks do we use to help our clients improve organizational performance? SECTION 3 What role does an associate play in organization work? SECTION 4 Where can an associate find out more? McKinsey’s mission is to have lasting and substantial impact on our clients. To succeed, we need to work all three of the critical elements: choose the best strategy, develop worldclass operations, align the organization. These three elements both reinforce and constrain each other. The best strategy is only relevant if it is operationally and organizationally feasible. The optimal organizational design depends upon the strategic requirement and the operational methods of the client. This document focuses on one vertex of this triangular relationship. It would be wrong, however, to believe that you can achieve the impact we seek by focusing on one vertex. We need to consider all three in every study. CRITICAL ELEMENTS FOR IMPACT Successful strategy Efficient operations Effective organization We only achieve impact when the organizations we serve are successful in implementing the strategies and operational methods we propose. However, a recent survey of engagements in which clients failed to implement proposed strategies found, in three cases out of four, that the client organization was not changeready or even capable of implementing the strategy we proposed. To ensure that we have impact, we need to consider organizational issues as we devise strategies. We must choose strategies the clients are ready and able to implement or plement our strategy work with investment in building the organization’s skills so that the organization can step up to the challenge the superior strategy poses.. 3 OUT OF 4 STRATEGIES THAT FAIL DO SO BECAUSE OF THE ORGANIZATION’S INABILITY TO EXECUTE 100%=340 responses Percent McKinsey remendations flawed Client not changeready or mitted Organization lacked the capabilities to execute strategy Other 1784035The demand for organizational work is increasing. Trends in the marketplace and the evolving nature of our clients largely explain this increase in demand. The pace of change in the marketplace is accelerating . A strategic choice or an operational innovation evokes a rapid reaction from petitor. Rarely can a durable petitive advantage be found in these choices. Rather it is the development of a unique organizational capability with the inherent flexibility and mitment to sustain worldclass performance that provides durable petitive advantage in these times of rapid change. The clients we serve are changing as well. They have increasingly hired inhouse strategic capabilities. Most have built strategy shops close to the CEO. Few, however, have the inhouse capability and objectivity to do the organizational work required to make change happen. ORGANIZATIONAL WORK GROWING IN IMPORTANCE Evolving marketplace ?Quickening pace of strategic adaptation ?Durable petitive advantage often rooted in unique organizational capabilities Evolving players ?Many businesses acquiring inhouse strategic capability ?Making change happen remains the ―neglected art‖ McKinsey’s engagement mix Percent of time Increasing demand for help with organization issues and change management Crafting the answer Helping implement change 10 years ago Today 23557745Source: Survey of 23 MGMs across the Firm The recent evolution in our clients has not been missed by our petitors. Each of our petitors has recently introduced a branded organizational element to their portfolio. Their organizational expertise figures prominently in their marketing campaigns. COMPETITORS HAVE BRANDED ORGANIZATION TOOLS Consulting firm Product Client example BCG Time –based petition GE General Systems Process redesign UPRR Booz Allen Continuous improvement Exxon United Research Process redesign and facilitation Mobil Delta Point Transformational change SmithKline Beecham McKinsey’s consulting approach must evolve as our clients evolve. These changes provoke a shift in the nature of our work and an evolution of the role of the associate on engagements.