Written by Don McKenzie, Managing Director, Adizes Institute Australia
Not every owner wants to just sell their organization and walk away. And even if you do, organizations that can demonstrate sustained high performance without reliance on the owners, or any key individuals for that matter, generate higher equity value.
Many owners, however, get to a point where they just don’t want to be as involved any more. There are other interests that take priority: travel, more time with family and so on.
However, the transition of owners out of their organization, even in a small way, is a risky move. It often leads to organizational issues at one end, and owners feeling “stuck” in their organization at the other. “The founders trap” is a specific phase of the Adizes Organizational Lifecycle model for a reason.
Transitions between family businesses are often even more complex.
The Adizes Methodology, developed by Dr Ichak Adizes and Founder of the Adizes Institute Worldwide, helps you turn what can be a risky and challenging time into a period of sustained performance.
Once owners have made the decision to reduce their time commitment to their organizations, the common approach is to start hiring for new roles, or delegating the roles and responsibilities of the owner to others in the organization. In our experience in over 70 countries and for nearly 50 years, starting this process too quickly causes problems. I have previously shared ideas on the first time an owner appoints an external CEO, COO or GM.
Before looking to the person or people that will replace you, we look to the processes. Turning what you do instinctively, into something the organization can do systemically without you.
The Adizes Conceptual Map provides a “strategy on a page” so to speak, in the context of owners looking to transition partly or completely out of their organization. It provides the why, what, how and who. The question of when is answered by the Adizes Organizational Lifecycle model.
For nearly 50 years, Dr Adizes has been helping business owners and executives understand that change creates problems and opportunities that need to be managed. Owners of successful businesses are very good at responding to these problems and opportunities, but this needs to transition to the whole organization before they step back.
In responding to the problems and opportunities caused by change, owners are often a strong source of the creativity and innovation of the organization. If this is removed too quickly, before it is replaced in all other areas of the organization, the organization will not be able to respond to this change loop as effectively as required.
What is “managing”? Managing is just deciding what to do and implementing the decisions.
Adizes believes the highest performing cultures are the ones that master “Democraship” as the core of their management approach. Democracy in decision making, yet dictatorship in implementation.
However, when and how to use Democraship is in conflict. This conflict is joined by other conflicts such as different managerial styles of people, roles, interests, definitions, perceptions, and values. This conflict is inevitable, but whether the conflict is constructive or destructive will depend on the level of Mutual Trust and Respect.
Do nothing and drive straight ahead into the conflict, and it will be destructive. But slow down and look for the Mutual Trust and Respect “turn off”, and you’ll find success where this inevitable conflict becomes constructive.
What we often find is that owners of successful companies have been very good at building companies with high Mutual Trust and Respect, but they don’t realise they are the glue that makes it happen. They underestimate their ability and how rare it is. It was more instinctive than systemic.
If they reduce their involvement or leave, we find things start to fall apart. They disintegrate slowly at first, and then quickly.
Long term successful owners acknowledge this and implement a sequence of steps to transition this “glue”, so the organization can make it on its own year after year.
Mutual Trust and Respect can’t be bought or demanded. It is not a type of glue you can just buy off the shelf. It must be created, and it is the outcome of other ingredients in the right sequence and intensity to suit the current and future organizational lifecycle position. It is not an input; it is an output.
Most management theories and consultants start with people, whereas Adizes suggests that people should be last in the sequence. There is, of course, the nuance here, however. We still agree that people are your most important asset, but people are a product of their environment. Good people can turn bad when there are issues with the managerial process in place, the vision and mission they are asked to believe in, and the structure they are placed in to fulfil their part of the vision and mission.
Mutual Trust and Respect is an outcome of ingredients, in the right sequence and the right intensity for your phase of the Organizational Lifecycle. It should be noted that these are high-level ingredients. Below each headline ingredient are multiple sub-ingredients.
We first start by demonstrating and transferring the managerial processes required to transition from where you currently are, to where you want to be. If this includes stepping back from the organization partly or completely, this becomes part of the guiding vision and mission, which developed using these upgraded managerial processes.
This starts with our “Syndag™” workshop. Syndag™ stands for Synergistic Diagnosis, where a cross-section of the organization comes together to identify and address problems and opportunities using a new managerial process. The team diagnoses the organization themselves and creates a plan of action collaboratively with the owners.
By using the processes, it is the first step of the owners transitioning the ability of the organization to manage the change loop with less reliance on them, create an energising vision and mission from within, and update the organizational structure to achieve any changes in the mission.
When owners are looking to step back or leave their businesses, other methodologies start with vision and mission (strategy) and/or structure. It makes sense, but it doesn’t often work practically.
The owner’s ability to execute their vision and mission is a function of the organization’s capability and capacity to do so. Another way of looking at this is the level of Mutual Trust and Respect. This transition is going to require a significant level of Mutual Trust and Respect, so this is our first goal. Develop high performance and Mutual Trust and Respect starting with the small, and building up to the big.
This is again why Adizes starts with a 2-3 day workshop focusing on the collaborative managerial processes, showing how owners can upgrade the organization to have less reliance on them:
These are not your operational processes. This is not a manufacturing or sales process, as an example. It is the processes used in the organization to complete the five functions above.
Starting with upgrading the collaborative managerial processes to enhance the five factors listed above, also dovetails into another sequence Adizes helps organizations embed. The sequence of “is, want, should”.
Business owners and executives have no shortage of people telling them what to do, this article included. This often causes them to think about what they really want, but often what is, i.e. the real situation as of today, gets missed.
Adizes starts with the is. What is the situation today?
The 2-3 day workshop brings together the people in the organization who hold the authority (generally the owners), the power and the influence (from multiple levels and functions) so we can diagnose what IS in every corner possible. And by ‘we diagnose’, I mean show them how to diagnose themselves. Demonstrate a repeatable process, that year after year can be used to diagnose the company.
Owners are very good at seeing issues, deciding what to do and driving decisions. If the owner/s are to step back, we need to ensure the organization can do this without them. We show how this can be done. Not only that, many business owners and executives assume they already know what “is”. It’s their company, they know everything there is to know.
This is often not true.
“When you are in the painting, you can’t see the whole picture”.
When you are so close and embedded in the organization, it is hard to see everything in a holistic and systemic picture.
The workshop provides a clearer picture to the owners of their entire organization, although this is not the main goal. For this transition to be functional, owners must ensure the entire team is 100% aligned, sees the world the same way, and there is no wasted energy going into what Adizes calls “organizational disintegration”.
Disintegration drains organizational energy away from what owners, and even what the team, wants for themselves.
This is another reason why we start here. Irrelevant of what the owners want, the only way they will get it is through a high performing team that is free of disintegration. This is the main goal: rapid alignment of everyone in a fully integrated manner.
Now the owners and their team can start to look at what they want for the future, but with a firm grasp of what is. The should help bridge the gap. “In light of what I want tomorrow, and what is today, here is what I should do”.
The Adizes Conceptual Map provides a clear path of the should. Imbed the processes to develop the key ingredients to create high levels of mutual trust and respect, so that inevitable conflict is constructive, and you can build a culture of Democraship to manage the problems and opportunities that come from change year in year out, without outside intervention.
With this underway, the owner/s can spend less and less time in the organization, whilst ensuring it performs better and better each year.
You cannot make a submarine fly, by appointing a pilot to look through the periscope.
Visions and missions don’t implement themselves. They will only be achieved if the right structure is in place. Too often business owners and executives appoint external consultants to help them decide where to go. The consultant helps them outline the future vision, mission or strategy.
But often there is no connection with what the structure is today, and what it needs to be. And if there is, often structure is seen as a one-dimensional organizational chart.
Do you want to fly over new mountains ahead? You better be structured like a plane so you can fly and have crew to fly it. If you are looking to fly over maintains but are currently structured like a submarine, what’s going to happen?
It may well be the right strategy, but you don’t have the structure to achieve it. You therefore first need to update your structure. There is often an iterative dance between mission and structure. “What structure can we achieve today, and what mission will that support? If we achieve that mission, what changes to the structure can we make to achieve the next mission.” Climbing a ladder one rung at a time, so to speak.
As mentioned above, structure is often seen as a one-dimensional organizational chart. The Adizes approach takes a multi-dimensional view, defining an organization’s structure as:
If you have all the resources, roles and responsibilities, and people have the cascaded authority to deliver on their role and responsibility and are rewarded in a manner that drives the right behaviours to achieve the mission, plus they have the information flows required to do their job, and be managed effectively, you are highly likely to achieve success.
However, what if your mission (or strategy) requires resources, roles and responsibilities you don’t have/can’t afford? Or you have people in roles but they don’t have the authority required to do their jobs. Or the reward systems don’t support and drive the right behaviours? Or you don’t have the information systems to support people doing their jobs, and the managers managing them?
What is the chance of success in the latter example?
Too often this is the situation. An offsite strategic planning session occurs, a plan is agreed, but on Monday the team returns to structural problems that will conspire to stop the plan being achieved.
This is how good people get “burnt” on the job. They are good people, but they are in a structure that does not support the mission. And maybe they don’t even understand or agree with the mission.
Finally, if there aren’t any collaborative managerial processes in place to help identify and resolve these issues in the face of inevitable conflicts, what is the likelihood they will be resolved on their own?
When an owner is deciding to step back from or leave the organization completely (generally through sale or merger), it is one of the ways an organization enters the “adolescence” phase. The organization needs to grow up and become a “Prime” organization where it can live without founder/s driving it day in day out. As with the human lifecycle, it is a challenging time.
However, the steps to get to this point of Prime will be different based on where you are today.
The way you move to Prime will be different if you are an early Go-Go company compared to a company in the aging phases, such as Aristocracy or Recrimination.
Again, you need to know the is of today, to ensure you plot the correct path of what you should do in order to achieve what you want.
Implementing the ingredients that build Mutual Trust and Respect will create an organization that is able to identify problems and capitalise on opportunism faster than its competitors. If it can beat competitors day in and day out, it will be no.1. But most importantly, it starts doing more and more of this without you needing to be involved 100%. You can start to gain freedom without the risk of leaving gaps that go unfilled.
You get to have your cake and eat it too. A high performing successful organization, that you have to spend less time involved in to drive this success.
Choose someone qualified with a demonstrated history of helping business owners transition out of, or just step back from, their organizations. We’d love to assist you.
If you choose Adizes, we will help you start with the 2-3 day Syndag™ (Synergistic Diagnosis) workshop that encompasses the five parts of managerial processes discussed above (identify, align, prioritise, decide and implement).
The workshop will leave you with a full strategic plan of prioritised initiatives, focused on supporting your transition to your new role within, or away from the organization.
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