How Can Requisite Organization Help Companies Grow Sustainably in Emerging Market

Speaker A Of AMG Consulting.

Speaker B If you know her, to know her is to love her. She's a very good, clear thinker. She's always a little unsure of her English. She has beautiful the thing she has is a soft voice. What Azasena wants us to know is that the main focus of her firm is to help companies grow and transform their organizations into healthier systems. And that means aligning the business strategy and with organization, capabilities, culture and so I'll just take it away.

Speaker A Okay, I have some notes in order to support my presentation. So excuse me, but I'm going to read it somehow. The purpose of this presentation is today is to raise a question to you that is, how can Ro help companies grow sustainably in emerging markets? And at the same time, we would like to share with you an integrated transformation model that we have developed based on our 25 years of experience in the field. So let me start with some context information. As you may know, Latin America has 600 million people. Its territory is larger than China and the US. Together. It is the fourth economy in the world. And in the past decade, 70 million people became new middle class consumers. The demand of commodities from Asia has enabled gross domestic product to raise. But we need a dramatic increase of productivity rates to ensure a sustainable economical development. Our region is rich in natural and human resources beyond calculation, but also has one of the highest inequality indexes in the world and high levels of public and private corruption. The challenge for economical growth is to add value to our primary products, but at the same time be able to grow with equity. To achieve that, we need a real revolution in the way that businesses are managed. We strongly believe that companies and its executives can make it possible if they use their power to build requisite organizations and value based businesses. As a company, we are strongly committed to that purpose and we have dedicated over 25 years of our professional life to help our clients make that happen. So we think that Ro can make a great contribution to this purpose. And let me read that first statement just in order to emphasize its potential to create better organization and a better world to live. The first one said that Ro provides a leadership approach based on sacred trust and principles related to human being conception, freedom, equality and mutual respect. A frame of reference for business executives to exercise their social power reinforcing democracy and justice. A conceptual basis to define value group strategies accordingly with increasing complexity of business environment, a scientific system to create competitive advantages and jeweler and efficient strategy execution. So yes, next, what is our challenge? Our challenge is make CEOs and executives feel the same passion for Ro principles as we do. Position Ro as a strategic framework capable to solve today's business problems and concerns. Put the analog, please. In our market we have seen two main business challenges. On the one hand, companies that are growing very fast in local and international markets by an organic strategies and by merchant and acquisition processes. On the other hand, we have companies that need to develop to innovate the value proposition to customer to market in order to gain competitive differentiation. And these are both business challenges that we as a company addressed with our work. So both problems involve an absolute complexity and most of the times requires a systemic transformation. The next one please. Based on 35 years of our experience we developed an integral approach and we are constructed eating in daily basis because it's a dynamic process you can see I'm going to simplify the model but it has different dimensions. Firstly, we can differentiate a central part that is in which resides were located the essentials of the company, the definition of his vision, mission and values and the core capabilities. The center represents the more stable and long term related parts of the system while the borders represents those that might suffer adjustments according to changes in the context and operationalize the things that are in the essentials. Our interventions focus on both levels the center and the borders as well and we would at three levels organization as a system, teams and individuals at the same time that it has layers. This model has four main parts and these parts represent the organizational system itself. They are the value strategy structure and capability, culture and value delivering. All of them are articulated by the leadership system that ensure strategic consistency and execution effectiveness. We found that it is essential to look for balance and consistency in the dynamic of the system functioning because any disconnection between its parts implies loss of efficiency and value destruction. You can find perhaps if you have a connection between the center and the periphery you have a vision without an operational plan this is only just a dream. On the other hand, if you have a strategy without a requisite organizational design it can never be implemented and if you have a strategy and an organizational design without cultural alignment and people engagement it will never work as a system because it's basically a human system. So you need to ensure the alignment of the behaviors and cultural issues as well. Any question about this? It's clear enough to reinforce it has different dimensions different dimensions from the center to the border and then it has four main parts one related to vision and value strategy one with organizational design, culture and value proposition value delivery any question?

Speaker C The culture piece when someone calls me in and says I'd like you to come in because we need an accountability culture I'm starting to walk out the.

Speaker A Door because I start to come in.

Speaker C My question do you want accountability culture or do you want accountability? And here's the question how do you get for example an accountability culture except by having accountability.

Speaker A It is not except you need both. You need to have the accountability in place and the correct accountability assignments. And at the same time, because this works on the rational part of the people, you say, I would like you to perform like this, like this, like this, and I understand you rationally, yes. But what happened with the feelings and the emotional process that occur in that person when there is riding things that perhaps he don't feel is capable to do or that feel that are not attractive or whatever? So I say yes, but I never walk my talk because what determines the behavior is are your beliefs, not your rational understanding. So if you capture that part, you can never make a difference in a system because it's a human system.

Speaker C What do you do? You may be talking about this later.

Speaker A No, that is the conversation.

Speaker C Yeah, okay. Because from Elliot we got how do you do the accountability, the rational part, but how do you do the other part?

Speaker A Okay, first of all, we do that sorry, I'm just looking at this table. First of all, we do that at the very first moment, just in the starting moment of the process, because we are talking with the CEO or with the board or with the executive team, and we are capturing their intentions, their concerns, and at the same time, the meaning that all of these things have for each of them. So we work always impacting both sides, rational and emotional side alone, all the process, because we are dealing with people.

Speaker B Conversation about how they're feeling about yeah.

Speaker A But we have a different situation. When you have already defined your strategy or your value strategy and it implies radical change in the way the organization is doing the work. So there you have to install, I don't know how to say, to apply a systematic process and a methodology to help people to do the transition between the past forms and ways to behave and to manage their work and the new one. This is a transition process that this is essentially emotionally, it's not rational, like I said before. So we did specific things in that moment. Perhaps we can go through the last slide or another slide and it could be more clear to you. This is the way we implement the process. We were very reluctant with diagnosis for a long time because we thought that to diagnose the situation, give a lot of information for the consultant, but add poor value for the customer. But now we change our mind. We do that, but in a very special way. We do that including and making the executive team participate in the process of identifying the big problem and doing that, we create the conditions and the awareness to get the readiness that they need in order to say, my silo, sorry, I'm going to go back. During the diagnosis process we involved the management team in the findings and the defining of the problem and the solution approach. And the best part of this moment is not how well you diagnose the situation because you need to identify very accurately the problem and the root causes. But the more important thing is that the executive team gained readiness to do something about the problem and this is the payoff of this stage of this moment. You have a well defined problem and at the same time a solution approach in consensus with a team and at the same time an executive team with aligned about how to manage the gaps. The other step is related. We call this the strategic definitions because we are dealing here with two things. First of all, the definition of the sense of direction. And we are actively involved in define two things here the vision, mission and values of the company. And we try to do this with the board and executive team. And it is a relevant conversation. It's the most important conversation that we have because at this moment, we challenge the top management if they really will and desire to go to reach that vision. And we promote a deep discussion about the organizational purpose and the philosophy of the business and values. So if we don't have this piece in place, all the rest of the project go running a high risk because people don't expect from the leaders that they know everything, they would like to trust her leaders, their leaders and they expect consistency, moral consistency in order to sustain the effort to reach their vision. The other important piece in this moment is the value strategy definition. I think that Ron, you call it position and strategic positioning. I don't know if it's actually the same but the value strategy is related to what is the value, the unique value that the company is going to bring to the market. And here we have a very rigorous process to understand the market, understand the actual and future expectation of the customers and to identify the blue ocean or that things that can make this company unique. And taking this into account we made them reflection about the implications of create and deliver that value. What the implications that it has in the organizational design, in the capabilities, in the culture and in the cross functional processes, in the internal value chain and the extended value chain? And once doing that, we can go back to the architecture, we design the solution, we design and adjust it in order to identify the pillars or the drivers of the transformation. And it's always when, always when we have an intervention that implies a big change. It's needed to revise and to review the organizational design and the capabilities and to realign the system that is the condition to the strategy execution. If we don't have this in place, it's very difficult to execute the strategy. So we go on on this part that you know very well and you do perhaps better than we, we do that at a very high level and again we involve the management team in the process. Firstly training them in the main concepts, then shaving the criteria, the designing criteria and building different scenarios. And then we discuss with the CEO the requisite organization and it is validated with the management team and the board. And as we were working in the emotional process at the same time we are gaining acceptance for the next stage. That is the implementation phase. We are working till now with the main group leaders. The key leaders of the organization normally is SEO, his reports and the third level. And we try to ensure that this group, that is the relevant group in the company are clear enough to go to the implementation step. So in the next step we go deeper to create the conditions, to change behaviors and to gain the support and the buy in of a larger group to move to the new situation. And it has different stages of parts. You ask me how we do that. The first condition is to communicate a clear sense of direction and we are assigning putting the word the leadership practices in place. We help them to do this and doing that. We are doing the first step to their leadership practice practices to perceive the real value because they are doing something that they need to do and the organization is expecting them to do. And at the same time they are reinforcing their accountability and their power as leaders. So we call sorry, we call this the alignment process. And during the alignment process the management team communicate clear sense of direction. Yet the same time they clarify the nature of the change the from to situation and set clear expectations about the behaviors and the cultural conditions and behaviors that are aligned with the new situation. And at the same time they provide confidence and compromise. They are support to help people to do the transition process.

Speaker C Among other things. You want accountability and you want that to be part of the culture. Canada is a very polite country. Coming in as an American, sometimes it feels a pathologically polite. And so the notion of my saying to my subordinate you didn't do a good job and here are the consequences in a lot of our clients, they don't like doing that. Or the notion that to say I've given you a service getting relationship, if you don't get the quality of service you need, come back to me because I'm accountable to give you the resources you need. And they feel like oh, I can't tell my boss that Fred over here isn't helping me.

Speaker A This is a very important part of our intervention because the second piece here is to discuss about contribution and it is relevant for two things. Firstly, because when people feel afraid because of a changing situation. They need to recover the sense of security and identify the uncontribution makes you feel sure about the value you can add to the company. So we have a discussion firstly with the areas identifying the value chain and the customers and the stakeholders in the value chain and to understand the expectations along the chain and identifying the contribution of the area and then it goes down to the individuals. Besides of that, we developed a clear or strong capability of empathy and teach them how to have tough conversations because we need to have tough conversation at this moment because we teach coaching.

Speaker B Teaching coaching and feedback is an element.

Speaker A Yes, it's a kind of I don't know if it's exactly a coaching, but we teach them how to have dialogues that allow them to redefine the meaning of things because we are changing the way they are thinking their jobs and we are changing the core business itself. So you need to resignificant to build a new common meaning and understanding about what is it about. And it is related with the relationship between people and that is a dialogue that the manager have with his team and people have with the people that are stakeholders or partners in projects or in the value chain. But we apply this because it just is an ability. We applied it in different forms included in the discussions about the accountabilities alone, the cross functional processes and the agreements about the service agreements or the contribution agreements between areas. And at that moment it's very interesting because areas that were fading traditionally, like, I don't know, industrial people against commercial ones as they pass through of all the process, when that moment arrives, they have immediately an agreement, all the faults and consider the recriminations and everything disappear. They just only are a group of people trying together to get something great and this makes them flexible. They desire so much to reach that vision and to add value and to enrich the value strategy and to serve the customer in a unique way that they are flexible to accept another role, to accept the change of their accountabilities or to redefine the way we were relating each other when we were together in the past. And at the first moment you feel the organization very resistant. In my country we say it's like Raman. That when you go in the boat in the Dulce de Leche, that is a very solid mermaid and that is how the CEO feels. He feels like he can move the organization and he said I need speed, I need action, I need execution. And people are resistant. And when we went through the process there are a magic moment but it's magical that all the energy released and is applied. In doing that, the things happen really. And we have a lot of very interesting cases, but just one I remember one that was an airline that was in a startup in argentina and they inherited 800 people from other companies that were under bankrupt, it's clear and that 800 people didn't want that company to success. They want governmental company and the union support them in this demand. So there were 900 people and 800 didn't want to that business to be successful. So it was very difficult and they have six months to demonstrate the corporation that they were be able as a business. So it was terrible because at the very beginning people destroy everything, they put an advertisement and only one man stopped a flight because he didn't do his work. There are procedures in the islands that establish that kind of things and well there were a huge thomas, I know the word, when the people doesn't work, strike, a strike, a big strike that was terrible at that time. And the management team say well, we cannot succeed, it's impossible to move and we become to work with the people. At the moment. The management team put the company in his shoulders and go to every people in the organization, inviting them to be part of the project and asking them to give them the opportunity to show them that they could be a best world. And the trust or the confiance the trust that they were depositing in them will never be that they will sustain the promise. And after that and we work with small teams and well it's large to the story. Before of that they have voluntary meetings and to share the business results and the strategic plans and everything and nobody comes. It was only the CEO and eight people in the angar, the very big angar. After that process everybody wants to contribute, they call us and say take me into account, I would like to be a facilitator, I would like to be part of the security team, I would like to because all the energy flows in order to make things happen. So that is very magic moment. You have to stand in front of your organization and be capable to transmit to inspire this sense of direction. They be a threat and we support a lot of them and it always is a terrific experience to them because they buy in doing things, not just talking about things and it helps a lot to the buy in too. So I'm finishing the consolidation phase is we are putting in the leadership practices in each moment of the process. So in the last stage we transfer the whole process in order to cascade to other levels and that's it. Basically what we do. We have more or less information, but this is basically what we would like to share and that's that and what matters. We believe that our principles should be present in all the transformation steps. Value strategy, organization design, culture and value delivery. Because it's a philosophy that support and principles that supports all the time. The process transformation starts always at the top. The board and executive in conversation is relevant. It's relevant and there is no change unless there is a cohesive management team with a clear vision and purpose. Value proposition or value strategy and a value centered culture are key for business sustainability. When a company learns how to create and deliver value they have the key to sustain the business. A long time culture is the only lasting condition that can maintain and reinforce a requisite organization because it's the people that incorporate in their beliefs and behavior and leadership practices have to be teach and apply along the road. That is what we have learned in our practice. So thank you very much. Thank you.