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Strategic Management as
Organizational Learning:
Developing Fit and Alignment through
a Disciplined Process
Michael Beer, Sven C. Voelpel, Marius Leibold
and Eden B. Tekie
culture, leadership and performance of a Hewlett Packard business unit that utilized SFP to
solve strategic and organizational problems that were undermining its performance. We
propose that honest conversations about the organization and its leadership produced by
SFP enable fit as well as fitness - the capacity for continuous learning organizations require
to maintain fit as the environment changes.
2005 Elsevier Ltd. All rights reserved
Introduction
What allows organizations to survive and thrive in a highly competitive environment? To compete
successfully an organizations strategy must be aligned with that of its environment and at the same
time the organization must have the capabilities that fit its strategy. This is to say that fit must be
achieved within the organization as well as with the business environment. To accomplish this
alignment, leaders have to be open to learning about how their decisions and behaviors fit the
environment, strategy and organization. This suggests that effective leaders enable their
organizations to confront the tensions that prevent alignment and, through a collaborative process,
reshape alignment at several levels: between environment and strategy, strategy and organization,
organization and the leadership team, and between key people.
Many organizations deploy the latest approaches to organizational efficiency in hopes of
achieving fit, but too often find that they are unable to reap the full benefits from such activities.1
One of the main reasons for this is the lack of an integrated approach that changes multiple
dimensions of the organizational system, particularly key organizational capabilities and leadership
behavior. Organizations that reflect the continuous change in the environment by being able to
adapt their design and behavior to changes in strategy, and do this rapidly and effectively, exhibit
a second order organizational capability that Beer and Eisenstat have called organizational fitness.
To adapt successfully demands senior management with the courage and skill to lead a systemic
organizational learning process that will rejuvenate the organization by fundamentally reshaping
its design, culture and political landscape.2
This article reviews the organizational research and theory underlying these ideas, describes an
integrated and systemic organizational learning process called the Strategic Fitness Process (SFP)
intended to overcome the difficulties inherent in a systemic change and learning process, and
reports on an illustrative application of this process in one organization. We propose that
a disciplined process like SFP is essential if organizations are to realign their design and behavior to
fit their strategy (and thus their environment), and thereby avoid long periods of underperformance. And since the competitive environment is continually evolving, achieving fit should
be seen as requiring constant monitoring and regular updating, rather than intermittent
interventions. We also propose, based on our preliminary findings, that linking SFP to the
strategic planning process can enable an organization to adapt and learn continuously.
accommodate continuous environmental and strategic changes in their efforts to achieve fit with
the external environment and fit between internal organizational levers such as structure, systems,
processes, policies, practices and leadership? The answer is that organizations have to attain both
organizational fit and fitness.
Organizational fit suggests that for an organization to perform effectively, its business strategy
must be aligned with its environment, its organizational capabilities with its strategy, its
organizational design and culture with its capabilities, and its leadership behavior with its
organization design. The alignment and synergy of these elements is crucial for organizational
success. An organization may have the right strategy (content) but without the appropriate
organizational structure and capabilities in place, will not be able to implement its strategy
successfully. With its strategy unrealized, it will go on dealing with its environment and competitors
in an incoherent and unsuitable manner, and thus continue to perform poorly.
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that culture.8 When the business environment undergoes disruptive (discontinuous) change,
requiring concurrent change within the organization, the deep-rooted way of doing business
(deeply held beliefs and values) of the organization can prove a constraint in adapting to
environmental demands.
and also deprives employees from engaging collaboratively with their leaders in the process of
change. Predictably, the results are solutions that do not take: the organization attempts the
presumed solution e a new structure or procedure e but underlying assumptions, motives and
skills remain unchanged. So the initiative fails, to be replaced by another program, and then in turn
by yet another. Thus in a survey of 125 Fortune 500 companies, half the VPs of Strategy reported
that management consulting engagements had led to little change in the company and were
considered failures: recommendations either failed to achieve the intended results or were not even
implemented.13
Consultants, however, can be critical facilitators in bringing about effective change in
organizations. They can bring valuable expertise, up-to-date knowledge and fresh insights into
organizational problems. To realize a fulfilling outcome, organizations and their mangers must be
able to acknowledge the need for change and have the willingness to commit to it. Through
collaboration and interaction, organizations and their consultants can together bring about the
necessary change.14 As Beer and Eisenstat note, a more effective role for consultants, that would
enable organizational leaders to build their own capabilities to lead learning and change while
increasing the commitment of organizational members, would be to help leaders engage lower
levels in an honest conversation about the alignment of the organization with strategy and about
the barriers that prevent such alignment.
But if not employed cautiously, the use of consultants and change programs, while easy and
quick, can avoid this kind of honest engagement between top management and lower levels about
problems within the organization. Achieving an integrated plan for strategic fit and fitness is not an
easy feat, especially considering that attaining fit is not a one-time, or even intermittent, procedure,
but rather a continual one, achieved through constant learning (i.e. fitness).
Fit as a continual process
It is obvious that having a distinctive strategy is the first step in the right direction to organizational
success. Managers spend time, energy and costs in elaborated forms of strategy formulation.
However, without denying or diminishing the importance of strategy content and its formulation,
an exceptional and pertinent strategy will amount to little if it is not implemented properly.15 John
Kotter claims that strategy formulation accounts for only 10 percent of success, while its
implementation accounts for the other 90 percent. It is during the implementation process that
strategy is adapted, molded, and changed to fit the firms specific circumstances.16
From an additional perspective, Mintzberg proposed the concept of crafting strategies, and
suggested that strategy cannot be cleanly separated into strategy formulation and strategy
implementation. The best strategies can simply emerge in response to changing circumstances, and
not necessarily from a rigorous strategy planning process. In these times of increasing changes in
the environment, it becomes more significant than ever to integrate organization-wide experiences
and knowledge into strategy. The skill lies in the ability to balance deliberate and emergent
strategies e i.e. not simply to preconceive specific strategies but also to identify emerging ones and
integrate them into the formal strategy.17
Plans on how to achieve strategic objectives regularly change to reflect progress and the shifts in
events that take place both internal and external to the organization. Thus the strategic process
becomes an ongoing one, continuously updated in response to changes in the environment. It is
therefore crucial to have an integrated process that engages, emotionally and intellectually, both top
management and all the other levels of the organization. Successfully realizing strategic change is
a challenge that most organizations face: we address this problem next.
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why most organizations consistently encounter barriers which obstruct their ability to implement
strategic change (see Figure 1).
The first challenge to strategic change implementation can be understood through the lens of
power and politics in organizations, a subject that has been extensively researched. We know that
most strategic management processes are influenced by politics, power and resistance. Every
organization has certain levels of political activity in which individuals and departments pursue
their own interests. This is a natural by-product of hierarchical structures in which managers are
implicitly and sometimes explicitly competing with each other for resources, decision rights or
power and career advancement. When the interests of a particular department (or a members or
managers personal career) overrides that of the organization as a whole e when managers exploit
their power to pursue their own and their departments goals - they are likely to use resources or
staff without regard to the implications for the organization as a whole. And this in turn leads to
unhealthy politics.18
The role of self-interest in resource allocation decisions has shown how managers tend to commit
resources too much or too quickly for schemes (projects, goals) they consider likely to improve
current business (and thereby their own personal performance and career interests), while
allocating inadequate resources to new opportunities and innovations that could ultimately benefit
the whole organizations performance. When this dynamic dominates the decision-making process
it becomes detrimental to the organizations long-term effectiveness and performance.19 Ineffective
resource allocation and unchecked politics in turn affect the general manager. He or she may be
reluctant to shift decision-making power from one part or one level of the organization to another
e shifts that are inherent in all fundamental changes in organizational design e for fear of the
conflict that this may create.
Second, ineffective strategic implementation can be understood through the lens of research on
organizational purpose and commitment. This research has shown that developing commitment to
a central organizational strategy is an essential quality for achieving coordination and integration.
Managers must therefore develop common purpose at the top and then create dialogue with all
organizational members about that purpose to instil the commitment that will translate purpose
into action.20 Even when top management has a well-articulated strategy, key functional employees
who perform the activities that will ultimately achieve the strategy are rarely informed about the
common purpose of the organization, let alone allowed to become involved in its formation. Often
top management fails to communicate downward a coherent story about how the adopted strategy
responds to changing environment. In addition, (and consistent with Bowers research on resource
Unhealthy,
power & politics
Overriding personal
interests
Ineffective resource
allocation
Preventing
organizational learning
Old mental models
Lack of honest feedback
& communication
Barriers to
Strategy
Implementation
Lack of organizational
purpose & commitment
Weak/inefficient
communication
Lack of involvement
Resistance to change
Defensive routines
Organizational silence
allocation), insufficient vertical communication makes it difficult for employees to understand how
the firms organizational strategy or direction relates to the daily decisions they have to make and
the priorities they should be addressing.
key functional employees who ultimately achieve the strategy are rarely
informed about the organizations common purpose
Third, barriers to strategic implementation can be understood through the lens of resistance to
change. Both managers and employees will often assume defensive routines that protect their
existing ways of doing things and that prevent them from considering changes. A lack of
managerial interpersonal competence exacerbates this problem, preventing such issues from being
raised and discussed out in the open. To protect their turf and avoid any unpleasant confrontations
with top management, employees decide to minimize voicing negative feelings in public and keep
their thoughts and feelings to themselves. An organizational silence descends, as concerns and
views about organizational difficulties are suppressed. This ultimately undermines organizational
decisions and change processes because it prevents top managers from learning the underlying
causes to the obstacles their organization is facing, i.e. blocking double-loop learning.21
Theories of organizational learning provide a fourth lens through which we can come to
understand why organizations often face difficulties over strategic change and adaptation.
Organizations in many industries face uncertain environments, and have to make decisions about
strategy and organizational alignment and design to which there is no clear answer. Where top
management lacks relevant experience, it will make decisions based on old mental models, and the
lack of honest feedback and discussion will prevent learning about such models inadequacy. Senge
has proposed five disciplines for organizations to become learning organizations: individuals
having a good understanding of themselves; challenging the deeply entrenched mental models that
members bring into their activities; building a shared vision for what the organization wants to
achieve; encouraging open dialogue and cooperation among groups to encourage team learning;
and finally, a systems thinking that encourages managers to step back and have an overall
perspective of the organization rather than focusing on one or some aspects of it. Activities that
block these learning disciplines will impede successful strategic change.22
Both business literature and real world organizational experiences reveal these barriers to be of
powerful influence in strategic change implementation. Successful strategic change requires leaders
to engage issues both analytically and emotionally in a way that overcomes leaders and employees
natural tendency to avoid difficult and threatening issues. It typically requires the help of a third
party consultant who him/herself has integrated the analytic/business and interpersonal/
organizational dimensions of the firm into a systemic perspective.
Beer and Eisenstat developed the Strategic Fitness Process (SFP) to enable managers to engage
their organization in a dynamic analysis of its fit with strategy and in developing a systemic
integrated solution. SFPs effectiveness has been researched extensively across 23 organizations.23
(Later in this article we describe this process and illustrate its application in one of these
organizations.) Because SFP enables truth to speak to power, its implementation in a cross-section
of organizations in different industries has enabled a deeper understanding of what employees
perceive to be the underlying organizational and managerial barriers to developing organizational
alignment with strategy. We discuss these barriers in the next section before going on to illustrate
how they can be overcome by SFP.
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value chain of the business. Members of the Task Force then integrate their findings into a set of
themes to be fed back to senior management. An analysis of these themes in a dozen organizations,
and subsequently validated in many other organizations, revealed the following six barriers:
Unclear strategy and/or conflicting priorities;
An ineffective top management team;
A leadership style that is too top-down or, conversely, too laissez-faire;
Poor coordination across functions, businesses, or geographic regions;
Inadequate leadership skills and development of down-the-line leaders;
Poor vertical communication.
Together these six barriers constitute a set of symptoms that prevent managers from solving the
ever-present problem of aligning their organizations with changes in strategy. Figure 2 illustrates
how these barriers interact in a way that makes them self-sealing. Though known to everyone in the
organization (analysis of Task Force findings across many SFP applications shows that management
and employees see similar sets of problems, albeit with different emotional intensity), they are
difficult to raise and subject to open discussion, organizational diagnosis and change plan. That is
why they have been called the Silent Killers.24
Unclear strategy and conflicting priorities, an ineffective senior team, and a leader who is too
controlling or too disengaged in management style, can all interact to prevent the senior team from
developing a high quality business and organizational direction. Usually the leaders style is not
sufficiently effective to overcome the natural differentiation of interests in a multifunctional senior
team that can cause them to frame strategic and organizational problems quite differently.25
Lacking a common view of strategy and a commitment to improve the performance of the whole
organization leads to poor downward vertical communication, with the Top Team unable to
communicate clearly and consistently with lower levels about the direction of change. This in turn
prevents the development of common purpose and commitment at lower levels.
Quality of Direction
Top Down or
Laissez-faire Senior
Management Style
Ineffective
Top Team
Unclear Strategy
& Priorities
Poor Vertical
Communication
Quality of
Poor Coordination
Across Functions
& Businesses
Learning
Inadequate
Down the Line
Leadership Skills
& Development
Quality of Implementation
Just as important, poor upward vertical communication prevents the senior team from being
confronted with two other barriers identified by the Task Force, poor coordination and inadequate
leadership skills among down-the-line leaders. Organizational coordination and effective lower level
leaders are essential for high quality implementation, i.e. to lead projects, integrate processes and
foster the required cooperation.
Without honest communication about all of the barriers, senior teams are unable to confront the
issues that cause poor alignment and their ineffectiveness as a team, while organizational design
issues are blocked from resolution by functional mental models as well as issues of power and
politics. Without redesigning the organization and its management processes the organization is
unable to plan and allocate resources effectively.
As described above, organizational learning is an essential factor in bringing about fundamental
changes in organizational behavior. Figure 2 operationalizes the problems of learning that exist in
organizations which lack fitness, and could benefit from processes such as SFP. The senior team is
unable to have the honest and fact-based dialogue needed to question mental models that have
developed over the years, to develop a coherent strategy, and to view the organization as a system of
which they are an integral part. Lack of honest upward communication from lower levels makes it
impossible for the senior team to learn about the limitations of their mental models and the
capabilities needed to accomplish strategic objectives. Thus top managers are prevented from
learning about themselves, the organization and the environment.
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ORGANIZATIONAL LEVERS
THE ORGANIZATION
Leadership Team
CAPABILITIES
GOALS
Work System
Management Processes
Human Resource System
Principles & Culture
Coordination
Competence
Commitment
Communication
Conflict Management
Objectives
Strategic Tasks
COMPETITIVE
ENVIRONMENT
Creativity
Capacity Management
Corporate Context
LEARNING LOOPS
COMPETITIVE
ENVIRONMENT
Figure 3. Organizational Fitness Model (Beer, 2002) The comprehensive fitness model links business
strategy and competitive environment with capabilities and enabling organizational levers.
provides managers with a diagnostic framework for analysis of their organization. The framework
shows that the organization exists within a competitive environment, and naturally, to survive and
thrive, its strategy must fit its environment. Once that alignment is acknowledged by the
organization, the next step is to successfully implement it. The focus of the process is to challenge
managers to consider what hinders the organization in its ability to implement its strategy and
achieve its business and value objectives (shown on the right of the figure as the Strategic Task). In
the centre, the model shows seven organizational capabilities that research and experience have
suggested are crucial to successful implementation of most strategies, and thus invites managers to
consider the strengths and weaknesses of their organization in these areas.
Dubbed the 7Cs, these capabilities are:
a. Coordination among teams, functions and departments ensures efficiency in working towards
a common goal;
b. Competence encompasses technical, functional, interpersonal and leadership skills that are
dynamic and flexible in adapting to changes;
c. Commitment and accountability from each and every member is crucial if the organization is to
achieve its strategic goal;
d. Communication (vertical, lateral and to stakeholders) enables clarity on what, why and how
things need to be done;
e. Conflict management helps to sustain healthy politics in the organization;
f. Encouraging Creativity at all levels of the organization enhances novel ways of solving problems;
g. Capacity management matches financial and human resources (skills, knowledge) with the
strategy.
The organizational levers needed to shape these capabilities are shown on the left side of the model.
Once fit is attained in all these elements of the model, the organization is able to compete
successfully. However, in an ever-changing environment, fitting the organization to its strategy is
a continuous learning process e i.e. achieving fitness. As the model indicates, learning can only lead
to change when feedback about performance and capability gaps lead to changes in the
organizational levers. Neither organizational fit nor fitness can be seen as being in a fixed state at
a particular point in time - rather they need to be continually revised and adapted to a changing
business environment.27 The model promotes a discussion and diagnosis that asks management to
consider all the levers, including their own leadership behavior (the single loop) as well the capacity
of the organization to learn (the double loop).
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An Integrated Process
The Strategic Fitness Process was developed by Beer and Eisenstat in response to the challenges
faced by Ray Gilmartin, CEO of Becton Dickinson, in 1990. Becton Dickinsons top management,
most of them with backgrounds in strategy consulting, felt that they had developed excellent
strategies but found that a number of organizational and management problems blocked their
successful implementation. SFP was designed to create an honest organizational conversation about
the fit of the organization and its leadership with objectives and strategy articulated by top
management.28
SFP has since been applied by senior teams in approximately 200 organizational units within 23
companies operating in several different national cultures (for example in Asia and Europe, as well
as North and South American companies) with different work values. Though the process has been
specified in some detail to enable substantive analysis of the alignment of the organization with
strategy and learning, it has to be facilitated by consultants who have a systemic perspective and
facilitation skills. Both external and internal human resource personnel as well as strategy or
organizational effectiveness professionals have learned to implement SFP successfully.
The SFP process involves the following steps:
(1) Develop a concise Statement of Strategic and Organizational Direction;
(2) Collect data about organizational barriers and strengths in implementing strategy (Task Force
interviews 100 key people in all parts of the organization);
a. The senior team appoints a cross-functional Fitness Task Force of their best people to collect
the data;
b. Similar data is collected by the consultants from the senior team itself (the only interviews
not conducted by the Task Force);
c. Task Force develops list of key barriers and strengths from an analysis of its interview data
(one day preceding a three day meeting of senior team);
(3) Task Force provides feedback to the Top Team utilizing a fishbowl method (described later in
the article) that enables truth to speak to power (first day of a three day meeting);
(4) Develop an integrated plan for change (last two days of a three day meeting)
a. Top Team conducts a systemic diagnosis of the organization utilizing the framework in
Figure 3;
b. The leaderships plan is then critiqued by the Task Force who first meet alone, and the two
groups work collaboratively to change the plan as needed;
(5) A meeting with the 100 key employees interviewed, at which the senior team presents what they
heard and their plans for change, begins the process of implementation;
(6) The process is ideally recycled annually and institutionalized as part of the strategic planning
process.
The Case Study in Exhibit 1 illustrates how SFP was employed at Hewlett Packards Santa Rosa
Systems Division (HPs SRSD - subsequently Agilent Technology) to overcome the silent killers
discussed above, as well as a number of serious strategic alignment problems facing this fledgling
division, charged with entering and growing the systems business market, a new market for HP.
Long Range Planning, vol 38
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Exhibit 1.
Developing fit and fitness through SFP: evidence from Hewlett-Packard
SRSD was founded in 1992 from 14 systems product lines that came from HPs different
divisions. It was set up by HPs top management to implement the companys emerging
strategy in delivering systems solutions to customers, a significant departure for the company
that is involved in general-purpose instruments. Embedding these emerging businesses into
HPs traditional functional organization created a number of problems.
By 1994 top management was experiencing difficulties implementing its strategy. SRSD did
not fit the demands of the systems market, growth and profits were below expectation and
morale among employees was extremely low. It was apparent that SRSD was suffering from
tensions that were blocking fit (alignment) and fitness (learning).
Overcoming difficulties at HPs SRSD through SFP29
SFP unfolded over a period of eight to ten weeks and was supported by two external
consultants who facilitated discussions, ensuring that the process was followed as specified,
and participating as resources in helping the Top Team shape organizational solutions.
Stage 1: developing a concise statement of strategic and organizational direction
The senior management team convened in a one-day meeting to prepare a statement of
business and organizational direction. While creating this statement, this Top Team came to
realize that they differed in their interpretations of the strategy and the roles of the business
teams. The meeting enabled a better understanding and agreement among all members of
the Top Team about the strategy and requisite organizational capabilities. A learning process
had begun that opened up trust and better communication within the Top Team.
A strategic statement was prepared that succinctly conveyed the divisions core strategy
and the strategic tasks and organizational capabilities needed to implement it. This strategic
statement was later employed by the Task Force in its inquiry into the alignment of the
organization with the strategy.
Stage 2: collecting data on barriers and strengths to implementing strategy
The Top Team selected an employee Task Force of eight middle managers from different
parts of the division to collect data about perceived strengths and barriers to implementing
the strategy. The general manager met with the Task Force personally to explain the strategy
statement and asked them to report back the unvarnished truth. This personal appeal for
help and the truth was seen by the Task Force as an opportunity to make a real difference in
the affairs of the organization.
The Task Force, and not management, selected a sample of 80 employees throughout the
division to be interviewed (including several HP organizational units who supported SRSDs
business). The Top Team was not involved in selecting the sample of interviewees so as to
avoid the possibility of them picking out preferential (favored) employees. What the division
needed was honest opinions and views from various parts of the organization. It was the first
time that lower level managers had been given the chance to speak up about problems they
had known about for some time. They responded with long and often emotional interviews
that painted a rich picture of the dynamics in the organization. Once the interviews were
completed, the Task Force, with the help of the consultants, organized its data into broad
themes to present to the Top Team. The consultants interviewed the general manager and his
senior staff asking about the SRSDs effectiveness and their own effectiveness as a senior team.
Stage 3: Task Forces feedback to the Top Team: the three-day fitness meeting
The first day of the off-site Fitness Meeting was devoted to feedback from the Task
Force and consultants. The meeting opened with the ground rules for fact-based and
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them to examine priorities and resource requirements of each business. Additionally, they
created a process for decision-making that specified how conflicts would be resolved. The
role of the general manager in all of this was defined.
(ii) The Task Force reviewed the plans for change developed by the Top Team a week later to
determine if they were consistent with the feedback given and if the proposed organizational
design could be achieved. This made the Task Force active participants in the change effort.
After the Top Team presented its proposed changes, the Task Force met separately to
discuss their reactions. They were concerned that the Top Teams plan for change
overemphasized strategy, structure, and systems and seriously discounted the soft skills of
the organization such as the people and existing senior team attitudes and behaviors.
Additionally, the Task Force disagreed with the allocation of product lines to the four business
organizations that would overlay the functional structure. Having spent hours on this
problem during the Fitness Meeting, the Top Team became discouraged. The general
manager, however, chose to engage the Task Force to re-evaluate alternatives. Within a week
a somewhat modified matrix structure was agreed to. The Task Force members realized how
complex the problem was and that there was not one best solution.
Stage 5: implementing the plan with commitment from key managers
In the month following the meeting with the Task Force, the Top Team spent considerable
time communicating to the rest of the organization what they had heard, what changes they
planned to introduce and why. This was an important step that enlisted organization-wide
support in the implementation process.
At HPs SRSD the senior team decided to recycle the process a year later. And they
continued to implement SFP once a year, positioning it in the calendar to coincide with the
corporations strategic planning process.
speaking up changed. Employees came to believe that management wanted to be told the truth, and
senior managers became more comfortable with truthful feedback, coming to see it as helpful to
them in engaging employees and solving problems. HPs SRSD experienced changes in
organizational effectiveness and behavior, but its members also realized that fundamental
realignment is not an overnight occurrence but a struggle that takes time.
FYr
FYr
FYr
FYr
FYr
FYr
FYr
1993
1994
1995
1996
1997
1998
1999
Orders
Revenue
Net Profit
266.7
255.3
339.9
357.9
340.2
332.1
361.5
240.3
235.0
293.4
365.1
392.2
365.7
376.9
3.7
4.2
25.6
37.9
25.6
14.8
33.7
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459
organization such as structure and systems were made but long-term changes in organizational and
leadership behavior were not. In most of these organizations the leaders felt threatened and
rejected the values of honest conversations and the partnership embedded in the SFP. They
consequently did not follow-up or recycle the process in the same way that the General Manager at
HPs SRSD did.
participation in the SFP is when top management prepares a statement about the direction of the
organization, the umbrella strategy. This serves both to determine if members of the organization
are appropriately familiar with the strategy, and to get their input regarding the suitability of the
strategy with the competitive environment facing the organization, as well as their views on what
prevents the organization in realizing its strategy.
Of course, the basis for any organization that hopes to achieve success in a change program is its
recognition that there is need for change. This entails both top management and lower levels
breaking free from the mental models and comfort zones that constrain them from acknowledging
barriers to strategy implementation. In order to make the best possible sense of the complex and
uncertain changes in the competitive environment, and to make informed decisions regarding
the direction of the organization, top managers should be able to embrace and integrate the
information and knowledge that flow continuously through the organization and environment. The
most creative ideas and novel approaches to solving problems may well originate from members of
the organizations lower levels, who are in touch with customers and the competitive environment,
and who can grasp subtle discontinuities as they take place.
SFP provides a disciplined process that enables key people to share their expertise and
knowledge that ultimately become valuable inputs for an informed decision on strategic change. As
noted above, managers and employees alike often work in a state of resistance to change, protecting
their turfs. Employees may also have difficulty in finding a safe and effective communication
medium to help them to convey their ideas to someone who can actually incorporate their input
into the change process. Because SFP engages key people in the organization in an honest
conversation, one that is rare in organizations, the process enhances trust, reduces cynicism and
creates commitment to change among key managers (the 8 members of the task force and the 100
who have been interviewed). Their hopes and their enthusiasm for change are raised when they
observe senior management accepting feedback and acting on it.
Top management, in turn, is wary of uncontrollable and divergent views that could develop into
anarchy if free rein is given to employees to express their views. Another top management concern
could be the feeling of exposure and vulnerability at their abilities and effectiveness in directing the
organization being questioned.33 To offset this resistance problem, SFP provides a disciplined
means whereby employees participate in giving input that is related to strategy, environment and
organizational capabilities without fear of personal retribution (e.g., the explicit plea from the top
to hear the whole truth from lower levels, the fishbowl setup, the ground rules for fact-based and
non-defensive dialogue). Top management comes to realize they are getting feedback that has to do
with improving the organization, its strategy and its implementation, and not personal attacks on
their positions. Such an honest upward communication process not only enables information to
flow upwards, it has had a profound affect on senior teams. Senior teams are put in touch with the
emotions that their key people have about the current state of organizational and leadership
effectiveness. The distance between the senior team and key managers below is reduced sharply,
releasing the possibility of change.34
In effect, leading an organizational learning process means holding an organization-wide
conversation about the strategy and the organizations alignment with it. The more the process
engages a critical mass of employees in the process of honest inquiry and action, the more likely it is
that lower levels will become committed. Such a conversation can lead not only to better fit; but
also to improved fitness since organizational members learn that speaking up has utility and
leaders learn a process and its underlying principles. An important by-product of SFP is the degree
of involvement it fosters and the belief it creates that senior management will respond to problems
previously buried by organizational silence.
Data collected regarding the causes of gaps between strategic intent and actual implementation
become more powerful when the data comes from the organizations own employees. One of SFPs
most potent thrusts is in its Task Force, whose members are highly regarded and trusted by both
top management and the rest of the organization. The team comprises individuals whose selection
is based on their excellent performance and potential, their objectivity, and the fact that they enjoy
Long Range Planning, vol 38
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461
Conclusion
An ever-challenging competitive environment demands that business organizations continually
adapt their organizations to new strategic circumstances. While we have known for years that fit
must exist between strategy, the environment, the organizations design, leadership behavior and
culture, there is considerable evidence that leaders and organizational members are slow to make
these adaptations. Realignment may involve considerable losses in power, relationships, identity,
sense of competence, status and rewards, security and ultimately self-esteem. This is what causes
many senior managers to avoid confronting difficult strategy alignment issues. And when they try
to engage these issues, change is likely to be piecemeal, halting and slow, resulting in failure of
fitness in its environment.
This article describes a method e the Strategic Fitness Process (SFP) - and its underlying theory
by which organizations can effectively realign to fit strategy and capabilities, in a way that also
builds their fitness, i.e. their capacity to learn, change and adapt quickly and in advance of a crisis.
The value of SFP is in the detailed step-by-step specification of a strategic learning process and
boundary conditions for effective implementation, all based on theory and research in various
corporate environments. A specified leadership platform for strategic learning can be useful to
managers and corporate leaders interested in institutionalizing a strategic management and
organizational learning process in their multi-unit enterprise.
Acknowledgements
We gratefully acknowledge Charles Baden-Fuller, the Editor-in-chief of Long Range Planning, and
two anonymous reviewers for their highly valuable comments and suggestions which significantly
improved the paper. We also wish to thank George Roth, Academy of Management Program Chair
from MIT, and three anonymous reviewers for their constructive thoughts on an earlier version of
this paper that was presented at the Academy of Management Conference in New Orleans, 2004.
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Biographies
Michael Beer is the Cahners-Rabb Professor of Business Administration, Emeritus at the Harvard Business School
and Chairman of the Center for Organizational Fitness. Harvard University. Harvard Business School Soldiers Field
Boston, MA 02163, USA Email: mbeer@hbs.edu
Sven C. Voelpel is the Director of WISE Business Research and Professor of Business Administration at the Jacobs
Center for Lifelong Learning and Institutional Development of the International University Bremen (IUB),
Germany. He is also, since 2001, a Visiting Fellow at Harvard Business School and the Graduate School of Arts and
Sciences at Harvard University. Harvard Business School, Soldiers Field, Boston, MA 02163, USA, Email:
svoelpel@post.harvard.edu
Marius Leibold is Professor in Strategic International Management at Stellenbosch University (SU), South Africa,
and also Professor of Strategy at Business School Netherlands International. He holds visiting professorships in
North America and Europe. University of Stellenbosch, Private Bag X1, 7601 Matieland, South Africa Email:
ml@leibold.cc
Eden B. Tekie is Research Associate in the Department of Business Management, Stellenbosch University, South
Africa. University of Stellenbosch, Private Bag X1, 7601 Matieland, South Africa Email: 13733095@sun.ac.za
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