Weekly Business Insights from Top Ten Business Magazines | Week 299 | Strategy & Business Model Section | 1

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 299 | June 2-8, 2023.

Capturing the value of ‘one firm’  

By Blair Epstein et al., | McKinsey & Company | Quarterly Spring 2023

Listen to the Extractive Summary of the Article

The value of working together is intuitive to most leaders. Capturing the full value of operating as one firm, however, is elusive for most.   Historically, leading professional-services firms are considered the gold standard for operating as one-firm firms. Whether Goldman Sachs, McKinsey, or Latham & Watkins, these firms are characterized by, in the words of former Harvard Business School professor David Maister, “a remarkable degree of institutional loyalty and group effort that is clearly an ingredient in their success.”  Maister continues, “One-firm firms place great emphasis on firmwide coordination of decision making, group identity, cooperative teamwork, and institutional commitment.” In practice, this means hearing “we, us, and our” language versus “me, mine, and theirs.” It means there is one brand identity and a “firm way” of doing things.  The data shows, unsurprisingly, that not every successful firm operates as one firm. It also shows, however, that those that do are far more likely to be successful. 

After what may be years of freedom and encouragement to operate in fiefdoms, how do you convince all employees that their individual interests are best served by one-firm mindsets and behaviors?  Most leaders are aware of the four change levers that decades of cognitive and behavioral psychology show can effectively reshape the work environment: 

1. Create a one-firm understanding and conviction:  No change effort can succeed if colleagues don’t understand what is being asked of them and feel it makes sense. In a one-firm transition this requires leaders to:  create a compelling one-firm strategic direction, and resource it to win; and explicitly redefine the organization’s social contract.
2. Reinforce the one-firm mindset with formal mechanisms:  Any major organizational change requires that all colleagues be able to see that the new structure, processes, systems, and incentives support the change. In a one-firm transition, this means leaders must:  put a purposefully interdependent organization structure in place; align one-firm targets and incentives; redefine the finance and HR role in the process; 
3. Strengthen one-firm confidence and skills:  For change to be successful, colleagues should be equipped with the skills needed to succeed, and low-risk opportunities should be created to help colleagues build the confidence and capabilities to think and behave in new ways. In a one-firm transition, this requires leaders to:  foster a culture of trust and connectivity and build change-management muscle
4. Role model one-firm mindsets and behaviors: If colleagues see their leaders, peers, and staff thinking and behaving differently, they may be inclined to do the same. In a one-firm transition, this requires leaders to: communicate with one voice internally and externally; and show leadership resolve.

3 key takeaways from the article

1. The value of working together is intuitive to most leaders. Capturing the full value of operating as one firm, however, is elusive for most.  The data shows, unsurprisingly, that not every successful firm operates as one firm. It also shows, however, that those that do are far more likely to be successful. 
2. After what may be years of freedom and encouragement to operate in fiefdoms, how do you convince all employees that their individual interests are best served by one-firm mindsets and behaviors?  
3. Most leaders are aware of the four change levers that decades of cognitive and behavioral psychology show can effectively reshape the work environment: create a one-firm understanding and conviction, reinforce the one-firm mindset with formal mechanisms, strengthen one-firm confidence and skills, and role model one-firm mindsets and behaviors.

Full Article

(Copyright)

Topics:  Strategy, Business Model, Organizational Structure