KNOM Element Two, where adapted direction and strategies are formed: Part 3
“You don’t plan strategy – you learn strategy.”
Element 2: Strategy, Formation and Planning is the insight that strategy is not something planned but a continual process of learning and adaption. It is an ongoing and pivotal methodology running throughout the entire KNOM structure explained in The Overview of KNOM.
In the previous article on Element One: Permanent Home, we outlined it as the beating heart of the organisation where fully autonomous Guilds work together to achieve one goal. Guilds that are fully interchangeable through Dynamic Reteaming and constantly upskilling for a changing environment.
Here is what we will cover in the third article of this series:
- Focus your strategy development
- Practicalities guiding Temporary Programs
- A practical example
- Element 2 is a concentration of the KNOM structure
In a nutshell, Element Two is the brain that directs – not controls – the entire KNOM structure to deliver products and services to its customers. It houses changing Guild Leaders found in Element 1: Permanent Home, and consistent upper management. Element two does not achieve its influence through diction but by determining the hard and soft skills required for the Programs in the organisation.
However, and crucially, the determining of said skills and capabilities with their programs is iterative and adaptive, aided by insights from Element 5: Outcome & Data.
In one sentence, Element Two is a constantly iterating feedback loop influencing the entire KNOM structure based on the product and service performance in the market.
But where do you start in Element Two when you adopt the KNOM structure?
Focus your strategy development
If an organisation is early in adopting the KNOM structure and has limited insights from Element 5: Outcome & Data, it is pivotal to base the strategy on preestablished frameworks. For example, Porter’s Generic Strategies aids the organisation to focus on a growth trajectory. This can be growing from minimising costs or through superior innovation and design targeting either a niche or broad market.
In essence, the two generic strategies based on cost are the organisation aiming to grow based on financial optimisation, also called zero-cost budgeting and bottom-line growth. Alternatively, an organisation can focus on being unique and differentiated in the market, taking an innovative and unique design approach. For example, Walmart is a Cost Leader, and Whole Foods uses Differentiation.
To arrive at this level of long-term planning, an assessment of the organisation’s strengths and weaknesses must be contrasted with its opportunities and threats.
If an organisation is further in its life cycle, it is helpful to utilise the guiding framework of the Product Portfolio lifecycle. A structure based on the four phases a product accedes to, (1) “Innovation Front End”, (2) “Product Planning”, (3) “Product Development”, and (4) “Product Lifecycle”. In this way, the Strategy Formation can revolve around developing Temporary Programs and Skills Matrixes that correspond to the phase of the product and service.
The Strategy Formation in Element Two needs to lead to Temporary Programs and their Skills Matrixes. These are then featured in Element 3: Temporary Home with a time horizon of two to three months for the people to reteam and develop these programs.
However, such Temporary Programs and Skills Matrixes can only be designed when practicalities are in order.
Practicalities guiding Temporary Programs
Until now, the strategy formation has been top-level and meant to guide the Temporary Programs and Skills Matrixes. So to make the Temporary Programs actionable, certain aspects must be defined withinfinancial, legal, technical, social and functional practicalities.
Temporary Programs and their Skills Matrixes must be within certain budgetary constraints. Similarly, profitability analysis, forecasting and cash flow analysis of each Program must be outlined to keep its activities in Elements 3 and 4 within expenditure and ensure ROI.
Legal and regulatory directions must be highlighted per Temporary Program. Then the development and execution of the programs don’t land in a legal or regulatory bind. If such occurs, it can slow the entire process and grind adjacent and linked programs to a halt, rippling throughout the entire organisation.
Technological requirements mean Temporary Teams can form around Programs in knowing which required skills and capabilities are needed to deliver a great result. This also highlights the ‘Continuous Learning’ aspect central to KNOM, in that the people throughout the organisation will share expertise and knowledge, never becoming stagnant.
Each Temporary Program must enter a rigorous social and ethical process based on economic, social, and governmental (ESG) impact. In essence, this ties into the organisation’s multi-stakeholder responsibility and purposeful positioning within the market.
Everything until now have been to generally guide the organisation in certain directions. So to set these directions into practise and realise them, functional operations must be established. This can be how long the Temporary Programs last, how skills and capabilities should be transfered throughout the organisation, and so on. To make things clearer a real-life example is needed.
A practical example
As the above is high-level information on what “Element Two: Strategy Formation & Planning” entail, the boots-on-the-ground scenario will look different from organisation to organisation.
In the strategy design for a client using the KNOM structure, we based their Strategy Formation on five risk factors (1) Technical, (2) Operational, (3) Legal, (4) Economical, and (5) Social.
From these risk factors, a plan was formed to mitigate them. Further, this laid the foundation for Programs and their Skill Matrixes to be developed and iterated in Temporary Home.
While they circulated in the KNOM framework’s cyclical phases, feeding back onto itself to optimise the strategy and future Programs and Skills Matrixes.
This can look different for your organisation, but what is paramount is that data and insights from Element Five: Outcome & Data must play a central role in your Strategy Formation, Program Development, and Skills Matrixes. Your specifics may vary, but the structure and process will be the same.
Element 2 is a concentration of the KNOM structure
Element Two: Strategy Formation and Program Planning is the concentration of every element in the KNOM structure.
- Element 1 Provides the backend operations of the organisation while continually upskilling the people based on the Skill Matrixes designed in Element 2.
- Element 3 designs the teams that will execute the Programs based on the Skill Matrixes required. Which then totals all market deliveries – products and services – the organisation produces.
- Element 4 will execute and market the Programs based on parameters set in Element 2.
- Element 5 will gather data, extract insights, and evaluate market results to feed back into Element 2.
In short, Element 2 is where the organisation is kept on its tracks, adhering to its vision.
In summary, Element Two: Strategy Formation & Program Development is the part of the KNOM structure where the organisation ensures that its products and services are received in a specific way within the market. Strategy Formation & Program Development is the invisible guiding hand throughout all of the elements within the KNOM structure.
And most importantly, Element 2 achieves this by not dictating a rigid strategy and vision statement, but continually and constantly adapting and shifting its strategies based on the performance received throughout KNOM, namely from Element 5: Outcome and Data.
As Henry Mintzberg said, you don’t plan strategy – you learn strategy.
Skills and capabilities are in constant flux.
One day one skill is crucial – the other day, a new capability overtakes it. The Knowledge Network Operating Model constantly evaluates and iterates upon the skills and capabilities needed for the organisation to overperform.
This and more I delve into in Element 1: Permanent Home of my new organisational operating model – give it a read and let me know what you think.
You will never have a “finished” organigram, hierarchical structure, or organisational design because circumstances change to force the organisation to change. The ecology shifts, so the organisation must adapt. The Knowledge Network Operating Model, or KNOM, is designed to continually be adaptive, always changing based on circumstances.
I see organisations as living organisms that can either shelter or adapt themselves based on four layers of interacting variables: Product/Service, People, Processes/Procedures, and Culture. Most companies pride themselves on adaption due to rapidly changing environments. Although, what I have experienced is that organisations do not follow such an adaptable mindset. The organisational structure is rigid and needs to reflect the opposite: dynamism and adaptability.