You are on page 1of 21

Long Range Planning 38 (2005) 445e465

www.lrpjournal.com

Strategic Management as
Organizational Learning:
Developing Fit and Alignment through
a Disciplined Process
Michael Beer, Sven C. Voelpel, Marius Leibold
and Eden B. Tekie

To operate effectively, organizations need to fit or align themselves with their


environment, strategies, capabilities and leadership skills. To compete successfully in
a highly competitive and constantly changing business environment, however, organizations also need to attain fitness e the capacity to learn and change to fit new
circumstances. The concepts of fit and alignment are not new in business literature, yet the
record of change e the many failed initiatives most organizations embark on in an attempt
to improve their performance e suggests that many managers do not know how to lead
systemic and fundamental change. By employing quick, superficial change programs
leaders skillfully avoid learning the truth about poor coordination across vital activities in
the value chain and the fundamental organization design, cultural and leadership issues
that are blocking organizational effectiveness. The result is cynicism, low commitment to
change and ultimate failure to align the organization with strategy. In response to these
problems, the Strategic Fitness Process (SFP) was developed as an integrated, disciplined,
leadership platform that a senior management team can utilize to create an open
conversation about their organizations fit with the strategy and environment as well as
their own leadership. SFP enables truth to speak to power, making it possible for the senior
teams to conduct a systemic diagnosis of the organizations problems based on valid data,
and to identify organizational and leadership barriers that prevent change. Research in 23
organizations has shown that, when fully embraced by senior teams, SFP facilitates
dramatic and rapid changes in strategic understanding, organizational design, leadership
and the capacity for ongoing learning. This article discusses the theory and premises
underlying SFP, describes the step-by-step process and illustrates its effects on the design,
0024-6301/$ - see front matter 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.lrp.2005.04.008

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.

Organizational fit and fitness


The concept of fit or alignment has been extensively discussed in the business literature, and an
array of prominent authors has contributed significantly to developing the concept of fit in
organizational structure, environment, strategy, technology, culture and leadership. They show that
if organizations are to be effective and competitive they will need to achieve alignment in all these
elements.3 In the 21st century, continuous and turbulent change in the business environment has
added a powerful aspect to this mix. Terms such as discontinuous change, disruptive
technologies and age of revolution describe the uncertainty and complexity that pervade the
competitive environment.4 But how do organizations keep their companies fit to stay competitive
in a constantly changing business environment? How do corporations organize themselves to
446

Strategic Management as Organizational Learning

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.

success in dealing with changing environments is [both] about aligning


strategy with environment, and design, culture and leadership with its
strategy (fit), but also about ability to learn and adapt (fitness).
The environment is abundant with changes: changing customer demands and preferences,
technological advances, global competitors, innovative strategies. This leads us to consider that
organizations modify and adapt (and thus evolve) their designs in response to environmental
and organizational changes. In a rapidly changing environment, such as that faced by contemporary
organizations, organizational fitness e the capacity to learn and adapt e becomes especially
important. This entails fusing existing organizational capabilities with new capabilities to fit new
circumstances.5
The terms fit and fitness indicate, then, that success in dealing with rapidly changing
environments is not solely about an organization aiming to align its strategy with its environment,
and its design, culture and leadership with its strategy (fit), but also about its ability to learn and
adapt to changing circumstances (fitness). It is about having a dynamic organizational design.
Dynamic organizational design
To examine if organizations are fit to compete, managers require an analytic framework to diagnose
and take action. One such - the 7-S Framework of interdependent hard and soft features for
successful organizing - is provided by Peters and Waterman. They point out that for decades, while
managers rightly paid due attention to the hard aspects of organizing e strategy, structure and
systems (work system), the soft ones of shared values (principles and values), style of management
(leadership team), skills (capabilities and culture), and staff (human resource system) were largely
neglected. What this framework indicates is that soft features (emotional, behavioral and cultural
factors) that used to be considered as inflexible and informal need to be engaged and modified as
much as the hard ones.6 The Strategic Fitness Process, adapted from this framework by Beer and
Eisenstat, places organizational capabilities at the centre of the analytic framework and redefine a set
of organizational levers needed to develop and shape capabilities. This process was designed to help
a senior team engage both the soft and hard aspects of organizing (as described below).7
Peters and Watermans seven levers of organizing mentioned above describe the notion of fit or
rigidity. Organizations attempt to fit their business environment and their adopted strategy within
that environment. To achieve this alignment, organizations develop business practices that assist
them in competing successfully and in responding to the challenges they face. Normally, these
successful practices become built up over the years as the culture/capabilities that become
entrenched within the organization and, more often than not, extensive effort is used to maintain
Long Range Planning, vol 38

2005

447

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.

emotional commitments to the past can often block change.


Hence, for organizations to adapt to changing environmental conditions and design themselves
to fit that environment, they must learn to review and redesign their organizational levers
continuously to create the necessary organizational capabilities. However this requires much more
than an analytic framework, as emotional commitments to the past can often block change. If
people are to let go of the past to embrace the future, the process of change must engage them
emotionally; the Strategic Fitness Process was also designed to address this second order change
problem.

Approaches to achieving organizational fit and fitness


There are many organizations that fail to fit their strategy to their environment. Others, lacking the
appropriate culture, capabilities and behavior for implementation, can have the right strategy, but
still fail to fit their competitive environment. Research among several renowned American
companies, characterized by decades of success and profitability, provides evidence of decreasing
rates of survival and performance of companies faced with difficulties as a result of fast changing
and complex business landscapes and global and foreign competition. A handful actually continued
to perform over time, while a few survived but underperformed - many disappeared entirely.9
Coping in an ever-faster shifting competitive environment means continual strategic change, and
senior managements response is quite often to adopt the latest management fad. Such initiatives
usually offer new insights and ideas, and thus quickly become widely popular. However, they tend
only to have a short lifecycle, leading to a sharp decline in interest and attention as each fad is
replaced by a successor.10 They produce uncoordinated change initiatives which lose their
momentum with negligible changes in the organizations fundamental arrangements and behavior.
When abandoned, these fads can result in considerable financial and human costs, including
a demoralized and cynical workforce, and a lack of commitment and incentive for future change
programs. For the most part they fail to deliver the required transformations in organizational
culture and effectiveness to mobilize company-wide change that are associated with transformational renewal journeys.11
Companies also make extensive use of external consultants to help them in formulating their
strategies and/or redesigning their organizations. The corporate use of consultants and the growth
of the management consulting industry have been considerable, and the fees involved have become
quite substantial. Yet when the anticipated outcome from a change program does not materialize,
consultants and their clients criticize each other. All too often, organizations accuse consultants of
simply profiting from selling a solution that is merely a pre-packaged management fad.
Consultants, in their turn, maintain that clients are reluctant to make difficult decisions and
simply seeking ways to get stamps of approval on decisions they have already made.12

delegating to outsiders prevents [leaders] from learning how to lead


change, and deprives employees from engaging in the process
When the focus is on simply bringing outside knowledge into the organization, leaders in effect
delegate the leading of change to outsiders. This prevents them from learning how to lead change,
448

Strategic Management as Organizational Learning

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.

Barriers to fit and fitness in organizations


Engaging an organization in an honest conversation that leads to a systemic analysis of the
organization and the formulation of an integrated plan and implementation for change is
potentially very challenging. Organizational theory in four different domains provides insights into
Long Range Planning, vol 38

2005

449

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

Figure 1. Barriers to Successful Strategy Implementation


450

Strategic Management as Organizational Learning

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.

The silent killers of organizational fitness


SFP involves a Task Force of high-potential managers appointed by the senior team to interview, for
example, one hundred key people working in functional departments and activities all along the
Long Range Planning, vol 38

2005

451

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

Figure 2. The Dynamics of an Unfit Organization (Beer, 2002)


452

Strategic Management as Organizational Learning

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.

Lack of honest upward communication from below makes it


impossible for the senior team to learn about the limitations of their
mental models
In summary, we can say that the silent killers impede learning from taking place in such unfit
organizations. While senior teams are generally aware of the problems of the lack of fit between
their strategy, the organization they have designed and the manner in which they are leading it,
these barriers serve to prevent the teams from engaging with them emotionally. There are many
organizational interventions designed to deal with these barriers individually. For example, team
building consultants help top teams become more effective interpersonally, but they do not
necessarily focus the conversation that emerges on strategy or organization design. Management
coaching and 360 degree feedback are intended to change the leaders behavior, but the data and
discussion about leadership behavior occur outside the context of strategy and organization.
Organizational interventions that split these problems do not help the organization to develop
a systemic solution, one that engages head (analysis) and heart (emotions), thereby increasing the
likelihood that new arrangements will actually be implemented and sustained over time.
An integrated approach is required to provide a systemic and integrated framework to allow
managers to conduct an organizational analysis. It would have to guide managers in leading a process
of organizational change and learning from which they and others could also learn. The Strategic
Fitness Process developed by Beer and Eisenstat is an attempt to social-engineer a process that
integrates systemic analysis with a leadership process for leading learning and learning how to lead.26

An integrated analytic framework of organizational fit and fitness


As discussed above, managers can have remarkably incomplete, non-systemic mental models.
Reasons for this can range from the defensive routines they maintain to time pressures that prevent
in-depth diagnosis. The Organizational Fitness Model (shown as Figure 3) is a framework SFP that
Long Range Planning, vol 38

2005

453

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).
454

Strategic Management as Organizational Learning

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.

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

2005

455

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
456

Strategic Management as Organizational Learning

non-defensive dialogue. The fishbowl process involved a meeting-room structure, based on


trial and error, which was carefully designed to encourage the Task Force to report the
unvarnished truth safely. The Task Force sat facing each other around a table in the middle of
the room (fishbowl), while the Top Team sat around tables formed in an inverted-U round
the top of the fishbowl. After a discussion of each theme the Top Team asked questions for
clarification (ground rules prevent them from defending or denying that the information is
valid). Task Force members felt so strongly about the need for change that at the end of their
report they requested an opportunity to express their own views.
After the Task Force left the meeting, the consultants then fed back the Top Teams own
views of the organizations effectiveness and their own effectiveness as a team. The Top
Teams perceptions were practically identical to the feedback they had received from the Task
Force, with the exception of greater details about the leadership teams effectiveness and
emotional intensity about the problems (Task Force feedback was more emotionally intense).
The last several hours of the first day were devoted to a conversation about the leadership
team and its effectiveness.
The feedback from both the Task Force and consultants made it clear that all six Silent
Killers were present in SRSD: a general manager who was conflict averse and preferred to
make decisions based on one-on-one meetings; competing strategies and conflicting
priorities between long- and short-term businesses which led to conflict over engineering
resources; senior management that focused on defending their functions decisions and
activities rather than taking a broader general management perspective of the whole
business; poor coordination rooted in an ineffective organization design and leadership
behavior that threatened the development of three key new systems products; poor vertical
communication that resulted in low trust, low morale and low commitment among
employees; and inadequate number of managers with leadership skills who could lead an
integrated business or product team.
Because the Top Team heard these problems from the companys best people they chose
and trusted, the meeting had a powerful impact and created a mandate for change within
the senior team and the key employees of the division.
Stage 4: developing an integrated plan for change
This consists of two parts:
(i) Top Teams analysis of the Task Forces feedback and development of plans for redesigning
organizational and management processes using the organizational fitness model as
a diagnostic framework (see Figure 3). Based on this diagnosis the Top Team developed a broad
vision of how the organization and their behavior as a Top Team would change.
The Top Team spent most of the second day performing a root cause examination of the
organizations fit with its strategy. Based on the data, this analysis began with pinpointing
which of the capabilities (7Cs based on the organizational fitness model) in the fitness model
were problems and therefore needed strengthening given the business objectives and the
feedback gathered. The Top Team focused on two problems. One of these was how to
design an organization that would allow better resource allocation. The second focus of
discussion was the role and effectiveness of the senior team as well as the general managers
role and style in leading it. They then identified organizational levers that needed to be
realigned to produce the necessary changes in the final day of the three-day Fitness Meeting.
Working through the analysis and agreeing on the changes in organizational design and
leadership team behavior was an intense process and took two twelve-hour days, but which
ultimately produced some fundamental changes.
Confronted by the consultants with three options for organizing the division the Top Team
chose to organize as a matrix. They defined the role of the senior team and the business and
functional sides in a matrix organization as well as a new meeting structure that would allow
Long Range Planning, vol 38

2005

457

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.

Results at HPs SRSD


How effective was SFP in realigning the HPs SRSD business unit? There are three ways this can be
judged. First, one can ask what changes occurred in the management processes and behavior of the
organization and its leaders; second, how did the business unit perform in the years following this
intervention and third, how did members of the organization see the process itself. Below we give
brief answers to these questions.
1. What changes occurred in management processes and organizational behavior?
Since this organization continued to utilize SFP as an integral part of its strategic planning process
over the next five years, there is considerable qualitative data about how behavior at all levels
changed. This data points to substantial change, though change continued to be a struggle.
All of the six silent barriers that blocked the organization from realignment and continuous
learning changed. The strategy and priorities became clearer and were managed more effectively
because the senior team became more effective and Scott Wright, the general manager, altered his
role and approach to decision making. This was aided by the joint experience the leadership team
had shared in receiving painful feedback and working together to redesign the organization.
Coordination and collaboration between the functions increased as a result of a better
organizational design e the matrix structure and the involvement in creating it. An unanticipated
by-product of SFP was management development both at the top and among Task Force members.
When Hewlett Packard spun off its test and measurement business, of which SRSD was a part, four
of the managers on the senior team were appointed general managers of new divisions that had
been formed (the spin off resulted in a reorganization that ended the life of SRSD as a division). At
the same time, morale in the division shot up and stayed high. Finally, there is little question that
vertical communication improved. The collective sense-making of the organization with regard to
458

Strategic Management as Organizational Learning

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.

Employees believed management wanted to be told the truth.. senior


managers became comfortable with truthful feedback as helpful in
solving problems.
2. How has the business performed since the SFP?
In the years following the implementation of the Strategic Fitness Process, HPs SRSDs
performance improved significantly. Table 1 shows SRSDs performance in 1993 e the year
preceding the adoption of SFP e and for five successive years thereafter, during which period the
company continued to implement the process annually. The only pause in continuous
improvement of performance occurred in 1998 when Asia, an important market for their business,
underwent a major financial crisis. Of course, a general turnaround in the economy helped the
initial performance improvements as well, but management also felt that they would not have been
able to take advantage of this upturn without the honest conversation and focus on achieving the
right goals achieved via SFP.
3. How did members of the organization see the process?
HPs SRSD management and organizational members saw SFP as instrumental in enabling a more
effective organization and contributing to their effectiveness as leaders. This is confirmed by two
decisions. First, they decided to continue to utilize SFP as a strategic organizational alignment and
learning process annually. Secondly, when four of the Top Team members were promoted to
general management positions they chose to employ SFP to help them organize effectively and
create a climate of partnership with employees, colleagues and customers in improving effectiveness
through a process of organizational learning.
The organizational effectiveness facilitated by SFP in Hewlett Packards Santa Rosa Systems
Division has been matched in many (approximately 80% according to a study under way) other
organizations that have employed SFP to have an honest conversation about their fit and fitness. In
the 20% that did not make dramatic long-term progress, changes in hard aspects of the

Table 1. HPs SRSD Financial Performance

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

Orders in millions; Revenue and Net Profit in $Million


Long Range Planning, vol 38

2005

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.

Organizational change processes


Contributions made to the organizational change literature are mostly practice-oriented, and the
evidence and examples generated are prescriptive models in guiding change and change processes.
Process studies are generally frowned upon in academia, as they are hard to conceptualize about
and do not lead to easy generalizations, and require well-conducted qualitative studies and rich
data. However, process studies carried out on strategic decision-making and change show the
promise of such studies.30
Most existing change processes have several ideas in common, such as the importance of top
management and lower levels recognizing the need for change, communicating the change
throughout the organization, motivating the change to be supported by all members of the
organization, encouraging open dialogue between and among levels, and emphasizing the need for
leadership in supporting and implementing the change.31
Most organizations, though, continue to face difficulty in successfully implementing strategic
change. All kinds of organizations embark on change processes in their efforts to improve their
performance during shifts in environments and situations. It is improbable that a change process
designed for a specific situation can be universally applied to all firms with strategy fit/fitness
problems without substantial modification. For this reason, a feasible process should have the
flexibility to readily incorporate an organizations type of business/industry, the problems,
challenges and environment it is facing, and the resources and capabilities available to it.32
The following section discusses SFPs contribution to strategic fit and implementation. The key
success factors of SFP have been found to be the presence of an urgent gap between business goals
and results and a CEO or general manager who shares the underlying values of the process, the
openness to feedback and learning, a belief in making key lower level employees partners in the
strategy formation and implementation process, and a readiness to learn from the process. These
factors define the boundary conditions for successful implementation of SFP. Our analysis for the
present study of 12 applications found that while the SFP process always put the unvarnished truth
on the table and senior teams always responded with a change plan that matched their diagnosis,
sustained change occurred only in those organizations that met the boundary conditions above. In
a few instances the process actually changed the boundary conditions.

Change processes encounter resistance during [both] introduction and


implementation. . top managers attention is diverted and they
neglect to follow up progress.
SFPs contribution to strategic change processes
Change processes generally encounter resistance not only during their introduction but also during
their implementation. Once a process is under way, top managers, their attention diverted to other
issues, may often neglect to follow up on its progress. This ultimately contributes to the failure of
the process. SFP ensures that top management is involved throughout the process and that top
managers provide and show continuous guidance and commitment. The starting point for
460

Strategic Management as Organizational Learning

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

2005

461

Data [about] gaps between strategic intent and actual implementation


is more powerful when it comes from the organizations own
employees.
the trust of all employees, including senior management. Thus senior management cannot deny
data the Task Force reveals, and it is more likely for top managers who become sufficiently
dissatisfied with the status quo to engage in thinking about needed changes.
Once top management is awakened to the need for change, and the task force and the employees
they interview have strong expectations for improvement, there is an eager motivation for strategic
change. Consultants introduce heuristics as part of the social technology at various points to help
the senior team clarify its strategy, consider alternative organization design solutions, and analyze
and improve its effectiveness as a senior team. The change plan generated by the Top Team is
subsequently considered and reviewed by the Task Force. If there is any issue that the Task Force
feels is not dealt with, both teams work together to come up with a better solution. By engaging the
task force in a critique of its plan for change, the senior team succeeds in making the Task Force
partners in the change process. A sustained partnership (the senior team meets with the Task Force
several times a year) ensures feedback about how the organization change is progressing, and makes
necessary adjustments along the way.
Strategic directions need to be continuously adapted and honed to meet changes in the
environment. This entails an ongoing process of evaluating and adapting the fit of strategy with
environment and the alignment of organizational capabilities and levers in achieving strategic goals.
Iterative yearly applications of SFP at Hewlett Packards SRSD (and other organizations) have
shown that relevant data is surfaced and continuous adaptation occurs. In effect, SFP enables senior
teams to adapt their understanding of their strategy and to continuously realign their organization
with the emerging strategy.

Potential limitations of SFP


The Strategic Fitness Process is not about strategy content, crafting new strategy or even strategymaking. It is predominantly about strategy implementation, and this process begins with the senior
team reaching a consensus about strategy as the first step in SFP. The process then guides senior
teams through honest organizational-wide conversations that lead to self-diagnosis and change
intended to align organizational design, commitment and behavior with strategy, thus increasing fit
and fitness. It is a generic process derived from application in a diversity of corporate environments,
and has given overwhelmingly positive results when appropriately implemented and, importantly,
when a number of conditions we specify below exist.
First, senior management must recognize a gap between aspirations (strategy content) and the
actual situation (results), and acknowledge there is a business problem.
Second, leaders must be willing to confront conflict and that exposes their vulnerabilities. This is
not easy to achieve: in our research we have found that new leaders are disposed to, and feel more
comfortable with, dialogue about barriers to organizational effectiveness, while leaders that have
been in their positions for some time (like Hewlett Packards Scott Wright), find uncovering issues
that touch on their and the organizations capabilities more challenging. However, many have done
so successfully. The implication is that leaders can succeed with SFP only if they are open to
learning and accepting conflict. Leaders must genuinely embrace and commit to the process and its
underlying values; superficial commitment will only lead to failure of the process and its outcomes.
Leader readiness is tested at the outset by clearly describing the process and barriers - like the silent
killers - that typically emerge.
462

Strategic Management as Organizational Learning

Leaders must genuinely commit to the process and its underlying


values; superficial commitment will only lead to failure of the process
and its outcomes.
Third, SFP is less challenging when the culture of the company is participative and values people
as partners. Participation, partnership, open communication, honesty and trust are some of the
descriptions that portray the kind of culture that supports processes like SFP. In the hands of
a willing leader, initiating the SFP process begins the change of culture in the organization.
Conversely, organizations that are more hierarchical and control-directive have found SFP more
challenging, since it violates their culture and values.
SFP is, therefore, most appropriate in situations where there are performance gaps or
organizational problems blocking performance. Experience with SFP has shown that under these
circumstances most managers are sufficiently motivated to engage in the honest and necessarily
painful conversations about the organizations fit, and to learn from the process as it evolves,
thereby enhancing the organizations fitness. We suggest the process is most applicable in optimally
aligning an organization with its strategy.

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.

References
1. M. Beer, R. A. Eisenstat and B. A. Spector, The Critical Path to Corporate Renewal, Harvard Business
School Press, Boston, MA (1990).
Long Range Planning, vol 38

2005

463

2. C. Baden-Fuller and J. M. Stopford, Rejuvenating the Mature Business, Harvard Business School Press,
Boston, MA (1994).
3. A. D. Chandler, Strategy and Structure: Chapters in the History of the Industrial Enterprises, MIT Press,
Cambridge, MA (1962); J. Woodward, Industrial Organization, Theory and Practice (2nd edition), Oxford
University Press, Oxford (1965); P. Lawrence and J. Lorsch, Organization and Environment, Harvard
Business School Press, Boston, MA (1967); R. E. Miles and C. C. Snow, Organizational Strategy, Structure
and Process, McGraw-Hill, New York (1978); H. Mintzberg, The Structuring of Organizations, PrenticeHall, Englewood Cliffs, NJ (1979); M. Beer, Organization Change and Development: A Systems View,
Goodyear, Santa Monica, CA (1980); D. A. Nadler and M. L. Tushman, Strategic Organization Design:
Concepts, Tools and Processes, Scott-Foresman, Glenview, IL (1988).
4. M. L. Tushman and P. Anderson, Technological discontinuities and organizational environments,
Administrative Science Quarterly 31, 439e465 (1986); G. Hamel and C. K. Prahalad, Competing for the
Future, Harvard Business School Press, Boston, MA (1994); C. Christensen, The Innovators Dilemma:
When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, MA (1997);
G. Hamel, Leading the Revolution, Harvard Business School Press, Boston, MA (2000).
5. M. Beer, Building organizational fitness, in S. Chowdhury (ed.), Organizations 21C, Financial Times
Prentice Hall, NJ, 311e330 (2002).
6. T. J. Peters and R. H. Waterman Jr., In Search of Excellence: Lessons from Americas Best-Run Companies,
Harper & Row, New York (1982).
7. M. Beer and R. Eisenstat, How to hold an honest conversation about your strategy, Harvard Business
Review 82(2), 82e89 (2004).
8. D. L. Sull, Why good companies go bad, Harvard Business Review 77(4), 42e52 (1999); P. Evans and T. S.
Wurster, Blown to Bits: How the New Economies of Information Transforms Strategy, Harvard Business
School Press, Boston, MA (2000).
9. R. Foster and S. Kaplan, Creative Destruction: Why Companies that Are Built to Last Underperform the
Market e and How to Successfully Transform Them, Currency, New York (2001).
10. D. Miller, J. Hartwick and I. Le Breton-Miller, How to detect a management fad e and distinguish it from
a classic, Business Horizons 47(4), 7e16 (2004); M. Beer, R. A. Eisenstat and B. Spector, Why change
programs do not produce change, Harvard Business Review 68(6), 158e166 (1990); Beer et al. (1990) op
cit at Ref 1.
11. H. W. Volberda, C. Baden-Fuller and F. A. J. Van den Bosch, Mastering strategic renewal: Mobilizing
renewal journeys in multi-unit firms, Long Range Planning 34(2), 159e178 (2001).
12. A. G. Perkins, Bemoaning the rotten client, Harvard Business Review 71(4), 11 (1993); E. C. Shapiro and
R. G. Eccles, Consulting: Has the solution become part of the problem?, Sloan Management Review 34(4),
89e95 (1997)
13. A. Skoller and M. Beer, Success of strategy consulting engagements: An independent research project, Harvard
Business School, Boston, MA (1996).
14. R. H. Schaffer, High-Impact Consulting: How Clients and Consultants Can Work Together to Achieve
Extraordinary Results, Jossey-Bass (1997); R. Schaffer and H. Thomson, Successful change programs begin
with results, Harvard Business Review 70(1), 80e86 (1992).
15. M. Freedman, The genius is in the implementation, Journal of Business Strategy 24(2), 26e31 (2003).
16. B. Finnie and M. Norris, On leading change: A conversation with John P. Kotter, Strategy & Leadership
25(1), 18e23 (1997).
17. H. Mintzberg, Crafting strategy, Harvard Business Review 65(4), 66e75 (1987).
18. A. Pettigrew, Politics of Organizational Decision-Making, Pitman, Tavistock, London (1981); J. Pfeffer,
Managing with Power: Politics and Influence in Organizations, Harvard Business School Press, Boston, MA
(1992).
19. J. L. Bower, Managing the Resource Allocation Process: A Study of Corporate Planning and Investment, HBS
Division of Research, Boston, MA (1970); see also T. Noda and J. L. Bower, Strategy making as iterated
processes of resource allocation, Strategic Management Journal 17(7), 159e192 (1996).
20. L. J. Bourgeois III and D. R. Brodwin, Strategic implementation: Five approaches to an illusive
phenomenon, Strategic Management Journal 5(3), 241e264 (1984); and R. S. Kaplan and D. P. Norton,
The Strategy Focused Organization: How Balanced Scorecard Companies Thrive in the New Business
Environment, Harvard Business School Press, Cambridge, MA (2000).
21. C. Argyris, Strategy, Change and Defensive Routines, Pitman, Boston (1985); D. Tourish, Critical upward
communication, decision making and strategy formulation: Ten commandments for success, Long Range
464

Strategic Management as Organizational Learning

22.
23.
24.
25.

26.
27.

28.

29.
30.

31.

32.
33.

34.

Planning 38(4) (2005); E. W. Morrison and F. J. Milliken, Organizational silence: A barrier to change and
development in a pluralistic world, Academy of Management Review 25(4), 706e725 (2000); C. Argyris,
Double loop learning in organizations, Harvard Business Review 55(5), 115e129 (1977).
P. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization, Century Business, London
(1992).
R. A. Eisenstat and M. Beer, The Organizational Fitness Profiling Manual, The Center for Organizational
Fitness, Waltham, MA (1998).
M. Beer and R. A. Eisenstat, The silent killers of strategy implementation and learning, Sloan Management
Review 41(4), 29e40 (2000).
R. L. Daft and K. E. Weick, Toward a model of organizations as interpretation systems, Academy of
Management Review 9, 284e295 (1984); D. C. Hambrick and P. A. Mason, The organization as
a reflection of its top managers, Academy of Management Review 9, 193e206 (1984).
M. Beer, Leading learning and learning to lead, in J. Conger, G. Spritzer and E. Lawler (eds.), The Leaders
Change Handbook, Jossey-Bass, San Francisco, CA (1999).
R. Sanchez, Strategic management at the point of inflection: Systems, complexity and competence theory,
Long Range Planning 30(6), 939e946 (1997); and M. Ruef, Assessing organizational fitness on a dynamic
landscape: An empirical test of the relative inertia thesis, Strategic Management Journal 18, 837e853 (1997).
M. Beer and A. D. Williamson, Becton Dickinson (A): Corporate Strategy, Harvard Business School case
(1991); M. Beer and A. D. Williamson, Becton Dickinson (D): Strategic Human Resource Management
Profiling, Harvard Business School case (1991).
M. Beer and G. Rogers, Hewlett e Packards Santa Rosa Systems Division: Cases A-A4 and B-B3, Harvard
Business School Case No. 9-498-011 to 9-498-019, Harvard Business School, Boston (1997).
For example, R. M. Cyert and J. G. March, A Behavioral Theory of the Firm, PrenticeHall, Englewood
Cliffs, NJ (1963); B. Chakravarthy and Y. Doz, Strategy process research: focusing on corporate selfrenewal, Strategic Management Journal 13(Special issue), 5e14 (1992).
S. Miller, D. Wilson and D. Hickson, Beyond planning: Strategies for successfully implementing strategic
decisions, Long Range Planning 37(3), 201e218 (2004); V. H. Hailey and J. Balogun, Devising context
sensitive approaches to change: The example of Glaxo Wellcome, Long Range Planning 35(2), 153e178
(2002); I. Grugulis and A. Wilkinson, Managing culture at British Airways: Hype, hope and reality, Long
Range Planning 35(2), 179e194 (2002).
J. Darragh and A. Campbell, Why corporate initiatives get stuck? Long Range Planning 34(1), 33e52
(2001).
C. Argyris and D. Schon, Organizational Learning: A Theory of Action Perspective, Addison-Wesley,
Reading MA (1978); J. Detert, To Speak or Not to Speak: The Multi-Level Leadership Influences on Voice and
Silence in Organizations, Harvard University Dissertation, Cambridge, MA (2003).
For more on how the defensive postures of senior managers inhibit strategy development, see D. Tourish,
Critical upward communication: Ten commandments for improving strategy and decision making, Long
Range Planning 38(5), doi:10.1016/j.lrp.2005.05.001

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
Long Range Planning, vol 38

2005

465