Development of a Process for Organizational Strategy and Structure as Part of a Change Process
Case study
Sophia Rehn
Thesis for a Master’s degree in Business Administration The Degree Program of Leadership and Service Design Turku 2021
MASTER’S THESIS
Author: Sophia Rehn
Degree Programme: Master of Business Administration, Leadership and Service Design Supervisor: Elina Vartama
Title: Development of a Process for Organizational Strategy and Structure as Part of a Change Process
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Date 17.05.2021 Number of pages 92 Appendices 12
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Abstract
The thesis is a case study, where a development project was conducted for a middle-sized organization. The research was about the organization’s structure of development and strategy content as part of a process of change. The idea was to develop a base for strategy content and model structure so the organization can be a reliable and skilled operator in the future for their customers, employees and other stakeholders.
The aim was to identify possible organizational structures and to develop a sustainable model for the organization, including a base for strategy work and the change process part of it. The objective was also to arouse interest internally for the topic. The thesis includes theory of strategy content, leadership, organization structures and change process. The research was conducted with a service design approach to the internal development by using benchmarking, an interview, surveys and workshop as methods. Eight service design tools have been made and used to visualize the insights from the research and to develop solutions for the organization.
In conclusion, the methods and tools proved to be successful for the research outcomes and proposals for the commissioner. Concluding the thesis is the results of the strategy, structure and change process map, process timeline and the new organization model.
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Language: English Key words: organization, strategy, structure, leadership, change, service design
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Table of contents
1 Introduction ... 1
1.1 Problem area, aim and objective of the thesis ... 2
1.2 Research questions... 2
1.3 Frame of reference ... 3
2 Research design ... 3
3 Introduction to the case ... 5
3.1 Commissioner ... 6
3.2 Commissioner organization background ... 6
3.3 Early childhood care services ... 8
3.4 Social services ... 9
4 Theoretical background ... 10
4.1 Future of working life in the field ... 10
4.2 Strategy work ... 12
4.3 Strategy models and tools ... 14
4.4 Strategy content... 16
4.5 Strategy development ... 24
4.6 Leadership and strategy work ... 24
4.7 Leadership models ... 25
4.8 Leading by the strategy ... 27
4.9 Organization structures ... 28
4.10 Change process ... 31
4.11 Change leadership... 35
4.12 Summary mirrored with third sector organizations ... 37
5 Research methods ... 40
5.1 Benchmarking ... 41
5.2 Interview ... 47
5.3 Survey for managers ... 52
5.4 Survey for employees ... 60
5.5 Workshop ... 63
6 Service design tools ... 68
6.1 Business model canvas ... 68
6.2 Stakeholder map... 71
6.3 Value proposition canvas ... 73
6.4 Personas ... 75
6.5 SWOT-analysis ... 77
6.6 Organization model ... 79
6.7 Organization, strategy and change process map ... 81
6.8 Strategy and change process timeline ... 84
7 Results and conclusions ... 86
7.1 Proposals ... 89
7.2 Discussion ... 91
Reference list... 93
List of tables... 97
List of figures ... 97
Appendices
Appendix 1 Interview questions Appendix 2 Survey for managers Appendix 3 Survey for employees Appendix 4 Workshop results
Appendix 5 Result categories of workshop Appendix 6 Present Business Model Canvas Appendix 7 Developed Business Model Canvas Appendix 8 Present Stakeholder map
Appendix 9 Developed Stakeholder map
Appendix 10 Developed roles and responsibility form
Appendix 11 Organization, strategy and change process map Appendix 12 Strategy and change process timeline
1 Introduction
This thesis is a case study where a development project was conducted for a middle-sized organization that works in the field of early childhood care and social care services. This research is about the whole organization’s structure and strategy for a more functional future and the start of its change process. The idea was to develop a base for strategy content and organization model structure so the organization can be a reliable, safe and skilled operator in the future for their customers, employees and other stakeholders. The background to the development project was that the organization is going to inevitably face change because of the leading person, executive leader and founding member will retire in the near future. This change will lead to that the organization’s structure, strategy and operating model must be developed further so the organization can continue to be a skilled service operator in the field.
Service design approach is a modern, systematic and human-centric process of developing services. It helps organizations to identify possibilities and challenges in their business, to innovate and further develop their services in an active way. Usually, the approach is comprehensive to the developing of the service and the contributing factors are key throughout the process. The key goal for service design is to involve all parts of the service stakeholders into the process in the planning phase and to commit them to working together.
An organization’s primitive task is to create value and the organization owners defines that according to the importance of different things. Also, a strategy can be to create added value, which also is a competitor factor. (Tuulaniemi, 2011.)
In this thesis the organization’s primitive task goal was to create value for their employees with the development of the structure, strategy content plan and essential roles through involving the boards, the executive leader and the management as well as the employees in different ways. The employees were involved by having a survey about the future and what value they see in the organization. The employees will also be able to join the developing work further for their site after first exploring options for the future for the whole organization. Creating added value for the executive team and the management was also important in this developing project. It is possible to realize the added value given by involving and developing essential roles, tasks, responsibilities, structure and strategy steps.
The thesis author’s own research interest was to develop the organization because of the change ahead and to make option plans for the future. Finding ways to keep being an agile
organization but with certain action steps and structure towards the set vision. The author’s own role in the organization is to examine and analyze the operations as a whole within strategy content, finance and development for further possibilities.
The thesis research consists of different methods for getting extensive insights. The service design approach was aiming for having a variety of insights and the service design tools to display the results of the work as well as to showcase them visually.
1.1 Problem area, aim and objective of the thesis
The aim of this research was to identify possible organizational structures and to develop a sustainable model for the whole organization. The work also including a base for strategy and beginning the change process with the boards, executive team and management to help for the future. Change process thinking needs to be involved in the development work because of the factor that the leading person and founding member will leave a gap in the structure and key roles. The objective was also to wake interest internally to the topic. This was vital in all the different decision-making positions in the organization as the boards, executive team and management, to be able to prepare the change process together with the development of the structure and strategy.
It was important to identify essential roles in the new structure of the organization because of the changes that will inevitably happen. In this thesis the main emphasis was on organizational strategy, structure, leadership roles and development work. The main objective of the thesis was to examine, analyze and develop the organizational structure and strategy base for the future work as a skilled service operator creating value to the boards, executive team and management so they can create and provide their operation sites with value.
1.2 Research questions
The thesis work concentrated on three main research questions.
1. How to develop and build the organization’s structure and base for strategy for the future?
2. What are the requirements needed for the new organization’s structure and strategy?
3. How to implement the development into the whole organization in a change process?
The research also used supportive research questions for answering the main research questions. What kind of leadership will be needed in the future change process? What will be the new essential roles in the organization? What kind of model of culture, leadership and operation is needed for the new strategy base and structure?
1.3 Frame of reference
In this thesis the frame of reference for the work is seen in the Figure 1. The theoretical project of thesis work concentrated on organization structure and strategy models and approaches. The work includes information of the field, services and actors. The change process thinking factors, and leadership are reviewed. The service design approach in business development is part of the whole work.
Figure 1. Frame of reference.
2 Research design
This thesis work used the double diamond process model for improving the organizational structure, strategy and change process. The model helps to understand, identify challenges, opportunities and defining the problem as well as emphasizing and delivering solutions (Design Council, 2020). The double diamond process for the thesis is presented in the Figure 2. It visualizes the different tools and methods used in the phases of the design process as well as the timeline.
Figure 2. Service design process of the thesis.
The whole framework model shows it is a process. It is possible to learn, go back and repeat the phases to get to a solution in the end. The phases discover and develop are diverging, meaning it is essential to take in all kinds of possibilities, ideas and suggestions. The phases define and deliver are converging, which means it is time to diminish and cut down the intakes to a clear process with decisions. (Design Council, 2020.)
The discover phase is the research stage to define the research areas and methods, which includes both primary and secondary research of the work (Design Council, 2020). In this thesis research process the discover phase included benchmarking similar organizations in the same field. The benchmarking provided information about the field, organization structure, strategy and leadership perspective. With the help of desk research, the sector and the field as well as the future of the working life were outlined. For getting insights to the research there was a survey for the employees about the organization, the future prospect alongside the organizational values and their input in their daily work. The survey also made room for new ideas and suggestions to consider. There was a separate survey for the managers about what are their needs, desires, suggestions and ideas about the future of the organization’s structure, strategy and leadership as well as the change process. The interview was held with the leading person and face of the organization. It focused on the entire field, the prospects of the future and what the structural and strategy needs are for the organization when facing many changes going forward.
The define phase was the combining stage of the research, which meant forming theme clusters, findings and insights by analyzing the results from the discover phase. To diminish the research results for a clearer vision for the thesis work. (Design Council, 2020.) From the first stage in the process, the insights from the research were analysed into a specific form for further work in the process. The idea was to have a workshop with the boards to get to defining the subject and problem after the research insights. After this the stakeholder maps and the business model canvas for the entire organization was defined to present and developed canvases.
The develop phase is after gathering the insights and findings for ideating and creating. To set ideas and the design’s first drafts alongside the entire project's strategy for the work.
(Design Council, 2020.) In this phase of the process the thesis focused on creating a possible persona and the value proposition canvas for the organization. The persona describes the future persona of an executive leader based on the insights from the surveys and interview.
It combines the needs, traits and competence for the future. The value proposition canvas outlines the values, gains and pains for the segment of managers. Based on the insights a role and responsibility form were created to be used for defining the essential roles better.
The deliver phase is the last one in the process model with implementation. It is about testing, prototyping and analyzing to get to the stage of building, learning and repeating to get to the results, answers and outputs as solutions to the problem. (Design Council, 2020.) The last phase of the process consisted of a process map and a timeline of the possible change steps of the development work for the board to implement. The two maps consist of action steps towards strategy content, leadership models, organizational structure and change thinking.
A visualization of a model of the organization structure was created and a SWOT-analysis of the organization. The solutions in this thesis were the research findings, the gathered insights, tool canvases and the end results for the entire development work.
3 Introduction to the case
The thesis is a case study where a development project is conducted for a middle-sized organization Commissioner X that has been providing services in Southwest Finland for about twenty years. The organization’s structure, services and operations are described in the chapter. The organization’s background, the growth of the organization has impacted the structure and roles within the organization, which gives perspectives to the thesis. The
organization is now at a crossroad, where the leading positions as well as the structure and strategy have to be re-structured and re-defined.
3.1 Commissioner
Commissioner X was founded in 1998 and is an association with general interest as a non- profit-making organization. The Commissioner X association owns a hundred percent of a limited company, which provides early childhood education and home care for families with children. In addition, the association’s activities include sites that support integration work and rehabilitative work activities, especially for immigrant women. The association also has developing projects that support families, sustainable development, circular economy and integration into the community. The association also owns a joint-stock property company for its own building.
The mission of Commissioner X is strengthening the community of families with children, supporting parents in their educational duties and promoting sustainable development in all their activities. Additionally, strengthening the wellbeing and integration of multicultural and immigrant families into Finnish culture and the environment. Also, supporting volunteers through introduction, training and guidance.
The vision is that Commissioner X is an important partner and actor in the Southwest Finland region by providing reliable, safe and competent preventive family services, early childhood education and multicultural skills. Additionally, Commissioner X is an interesting and stable employer that offers its employees the opportunity to develop their own work and further develop new services to meet the needs of customers. The vision also aims to have good organization structure, build good steps of open leadership and communication inside the organization.
3.2 Commissioner organization background
The organization will face major changes in the future as one of the founding members, at the same time the face of the organization both internally and externally will retire in the near future. This will have an impact on the structure and as well as roles in the organization.
This will lead to that the organization needs to develop further to function after that and make strategic goals for the future as well as planning the process. The challenges are that positions in the organization is now handled by the same person having different roles.
Figure 3 shows the organization’s formal structure, positions and services. The joint-stock property company does not have a role in the thesis because of no employees. The mapped- out positions are correct, but the challenge is in the resources and definition of the roles, and not having enough key persons for the scale of the organization. For example, the executive leader, leading person and the limited company board’s chairman is the same person. Having decision-making positions and also functioning in the operative management can be challenging when developing the structure model.
Figure 3. Structural model of the organization of the commissioner.
The commissioner must also be aware of other changes in the future as legislations and regulations in the field. Also, the possibility of recruiting qualified employees is getting harder in the field and the increase of competition of customers.
The association started the services in the past with early childhood education services but because of tax regulations had to split the organization into different kinds of business forms.
This was to function on a bigger scale and having possibilities to have developing funded projects within the association as a non-profit and general interest. The whole organization is the target in this thesis when developing new structure, strategy base and change process thinking for the future. The whole organization is built on equity expertise that is shared between the limited company and the association. Equity expertise consists of many things, such as knowledge and innovation. The aim is to develop the services for the customers, employees and stakeholders from their needs.
The organization overall has had a fast growth during the years by new sites, customers and employees. The entire organization had in year 2020 approximately 140 permanent employees and 10 operation sites. There is a need to implement further strategy for the future and re-structure the whole organization because of the past growth and change happening ahead. There is a need at the same time to visualize the strategy and structure model for stakeholders. It is important to rethink leadership and management within the organization and what are the change process’ pain points for the boards, executive team and management. The thesis concentrates on the organization’s primitive task, which is to create value for their employees. With developing the structure and strategy by involving all it will give thorough development findings to create added value. Also, by involving all and together do the development work of the essential roles, work tasks and responsibilities will create more motivation and commit the key persons to the further develop.
3.3 Early childhood care services
In Finland Ministry of Education and Culture is the authority in charge of the policy and preparation of the Early Childhood Education and Care Act. The implementation of early childhood education is the National Core Curriculum for Early Childhood Education and Care as well as the municipalities’ local curricula based on it. Early childhood education is education, teaching and care that have been pedagogically planned, with carefully considered goals. Trained and qualified early education teachers and child nurses work in early education. (Ministry of Education and Culture, 2021.)
The municipalities use a service voucher for the fees or as a purchased service for the private daycare providers. As a customer choosing private daycare centers, the fees are depending on the private service provider’s fee. The total fee consists of the municipality’s service voucher amount or purchased service amount given as well as the customers deductible fee.
(Kuntaliitto, 2019.)
Early childhood education is intended for children under school age. In Finland, municipalities offer municipal early childhood education at, for example daycare centers.
There are also private service providers offering daycare services. The commissioner organization works in the field as a private actor. This means selling the services to the municipalities, other stakeholders as well as directly to the customers. The commissioner has seven daycares in Southwest Finland.
3.4 Social services
In Finland the Ministry of Social Affairs and Health is the authority in charge of the social policy and preparation of the legislation on social services. The social services must be organized by the municipalities. Inhabitants receive the social services from where they are stated as residence. The need for services starts by having an individual service assessment.
In Finland general social services is under the Social Welfare Act. The services include, for example, social work and social guidance, family work, home services and home care, services supporting mobility and mental health and substance abuse services. Under special legislation of social services are, for example, social services for persons with disabilities, special care services for people with intellectual disabilities, child protection and rehabilitative work activities. The municipal services are often complemented by businesses and organizations providing different social services. Municipalities can purchase services from private service providers. (Ministry of Social Affairs and Health, 2021.) Social services offered by the commissioner organization are home care for families with children and rehabilitative work activities.
Home care services for families with children is preventive and are meant to support the family in different life situations. The home service is always planned in partnership with the family. The service helps preventing short-term everyday risks by supporting the family in everyday life and parenting at home. The service can consist of help with childcare, child educational needs, performing and assisting with everyday activities. (Turku, 2021a.) Rehabilitative work activities are for inhabitants with long-term unemployment to enhance their opportunities for employment and to handle life management. The service is under special legislation, The Act on Rehabilitative Work, which outlines the rehabilitative work activities. (Ministry of Social Affairs and Health, 2021.) The goal with rehabilitative work activities is to prevent negative effects of the unemployment, strengthen the customer’s day- to-day and life management. Additionally, the work activities help the ability to function and work as well as general prevention of exclusion by providing employment and other services for the customers. (Turku, 2021b.)
The commissioner organization provides home services for families with children in Turku and Raisio. The provided services for families with children are offered by the municipalities through service vouchers, purchased services or payment commitments. The customers of the services can be private companies, families or as a self-paying customer. The
organization also provides rehabilitative work activities especially for women with immigrant backgrounds in Turku and Kaarina. The provided service for the customers is offered by the municipalities through service vouchers and purchased services.
4 Theoretical background
In this chapter the thesis research presents the future of the field, strategy and structure aspects and models. The chapter discusses organization’s key elements to develop in the subject as well as the importance of preparing change. At last, also change process and leadership are opened up from a customer-centric perspective. The theoretical background aim is to provide the research with essential knowledge on strategy content work and structure in a changing process via service design thinking. These main elements give the research key points on what to focus on and what to develop as well as to adopt into the development work. In addition, the change process and leadership can be reflected on the research results for the organization.
4.1 Future of working life in the field
The Social Services and Healthcare sector in Finland is large and total expenses accounts for about 40 percent of the government’s expenses. The future challenge is the cost increase when the population service need is growing, and other innovations evolve. At the same time, many municipalities' economy is showing a negative trend. In 2017 the publicly produced social services expenses were about 8,2 billion euros. The Social Services and Healthcare sector businesses is a notable employer in Finland. Because of that, the changes happening with the businesses’ employees and entrepreneurs could have both social and economic effects. In the sector there are in comparison more older entrepreneurs than in all wage earners or all entrepreneurs. The Social Services and Healthcare sector services will in the future also be an important part of the business life even when undergoing changes with the possible reforms of the sector. The need to focus on preventive care services and wellbeing a long side sufficient aftercare is apparent themes and also pointed out in the Finnish government program. (Tevameri, 2020, 18-26.)
In the sector the main functioning businesses are micro companies, which have under ten employees. The percentage of micro companies are about 95 in the sector. Small companies in the sector, which have 10-49 employees, counts to a total of 777. Middle-sized companies, which have 50-249 employees, counts to a total of 124 in 2018. Large
companies, which have 250 employees, or more were in the same year in total 46. They count for about 0,25 percentage of all the sector’s businesses. (Tevameri, 2020, 30.)
If looking at the employees that worked in the businesses in the sector in 2018 the number is 79 875 man-years. The biggest employer in the sector is health care service businesses and almost as big is the social welfare institution services. The third immense employer is non-institutional care services. Noticeable is that a large quantity of the wage earners in the sector is in the near future in retirement age and working aged population is decreasing in the future. It is important to acknowledge the age structure so the future work force, education needs and employee deduction in the sector can be foreseen. A vital part of the future will be how the businesses and entrepreneurs will arrange their businesses when retiring. (Tevameri, 2020, 55-60.)
It is foreseen that in the future factors that involves promoting employee’s wellbeing and reducing workload will be of importance to take into account. Also, after acknowledging the age structure and retirement age of the employees it will be vital to try to reduce the amount of disability retirement in the sector. (Tevameri, 2020, 64.)
The government's program policies will grow the demand of employees in the social services and healthcare sector as well as in the early childhood education field. For example, the Act on Early Childhood Education and Care (540/2018) in the near future demands qualified employees in a different way than today. Simultaneously the employee's reduction in the sector will threat the availability of qualified employees. It is already today noticed in the services of the sector that there are recruitment problems to gain qualified employees.
(Tevameri, 2020, 55-60.)
Therefore, it is important to engage employees. The conditions that are important for the sector employees to feel engagement are organization culture, work environment, rewards, education possibilities, human resource policies, reputation, values of the business, communication and the physical environment. (Suomi, Saraniemi, Vähätalo, Kallio &
Tevameri, 2019.)
Finnish National Agency for Education foresee that the most important needs of knowledge in year 2035 in social services are related to areas of customer-oriented service development expertise, broad expertise and management of wellness technology, digital communication skills, creativity and multi-skills (Tevameri, 2020, 66).
Other issues to consider in the sector in the future are the service voucher process and policies. The service voucher system model has offered businesses in the social services and healthcare sector as well as in the early childhood education field possibilities to grow. There are also recognized challenges in the model, even its many advantages. From the private service producers' point of view the challenges are related to definition of the vouchers’
value, availability of qualified employees, the political uncertainty, the municipalities’
economy and competition with large producers. (Tevameri, 2020, 72-73.)
In the future the sector needs to pay attention to different aspects as political, economic, social, technological, environmental and legal to be able to serve as service producers. The political aspect has given the sector a waiting atmosphere because a reform of the sector has been waiting for over twenty years. Economic aspects to consider are the population structure and the focus on the possibilities of preventive care services and wellbeing promotion among the employees. The social aspect can be seen in inequality increase of care services availability, it needs improvement as well as the changes and challenges in the field and line of work in general. Technological aspects will be that the development will be fast and artificial intelligence will generate opportunities besides the qualified employees. More importantly is how to complement technology with the values and service models in the field. Environmental factors are many depending on the service in the field. For example, one will be to reduce travel because of the technology providing service opportunities in new ways but also climate change and the changes in living standards. The legal aspect for the sector will continue to face changes and rearrangements. (Tevameri, 2020, 82-84.)
All new legislations and policies give directions for the future development of the sector.
The aspects to consider in addition are integration of immigrants to the services, urbanization’s impact on services, changes in the meaning of fulltime work and a more diverse understanding of the family life. (Jokinen & Nieminen, 2019, 20-31.)
4.2 Strategy work
The definitions of strategy work are many. It can be considered as the aim of positioning in the market, value creation and the competitive advantage of the organization that other actors do not have. It can be described as a plan for the organization’s future, including consistent operation activities, market positioning and the future vision and mission. Strategy work can be divided into classical and capability strategies. The classical strategy is more about traditional strategy models, meaning the organization’s chosen position in the market, the
offerings, the target groups and the channels. Capability strategies focus on the organization’s continuous development and enhancing the competitiveness on the market according to the changing needs of the market and customers. Strategy work also includes indicators to follow and maps to visualize the content. A strategy model can take into account the financial, customer, internal processes and learning as well as growth aspects. A postmodern strategy is seen as creating value and meaning for the customer. Its perspective is to have an emotional story as advantage, positive images that appeal to the employees and from them to the customers. At the same time, a way of producing an experience interface between the organization and the customer that enrich the customer’s lives with value.
(Kehusmaa, 2010, 13-18.)
The content of strategy work can be seen from many perspectives, but it is important to realize that the strategy is the whole roof of the work of the organization. Implementation of strategy is the whole organization’s common work, which includes every employee participating through their own work in the implementation. The strategy work’s phases need strategic management and the responsibility of it is at the organization's management. The key is that all parties and persons of the organization is implementing the strategy work. The various phases of strategy work can still be different for the roles, departments or sites. A strategy for an organization is at its best when adopted to the sector of work and it is a continuous process or operating model. Recognizing the steps of the strategy work are the ground for a great strategy process, see Figure 4 and the steps below.
1. Finding the best fit of strategy model planning for the organization.
2. Develop and draft the strategy.
3. Execute the strategy in practice.
4. Monitoring and evaluation of the strategy.
5. Update the strategy.
Figure 4. Strategy work as a continuous process.
The development of strategy work is continuous and a part of everyone's daily work in different ways. Views how to implement change with the help of the management of the organization, expressing the strategy into operational activities and aligning the whole organization with the strategy are also important parts of the work. (Kehusmaa, 2010, 13- 18.)
4.3 Strategy models and tools
The basic model for strategy is simple and consists of the elements of vision, goals, approach and actions. It focuses on making the vision and goals strong as well as what approaches and actions will serve it. Between the elements the model purpose is to oversee the actions and to develop further along the process of the elements. The model suits organizations that do not have the resources or time for a complex process plan. (Lucidchart, 2021.)
The Balanced Scorecard (BSC) is a strategy model for organizations to use for aligning daily work and long-term strategies at the same time communicating the process, prioritizing set goals, following up the process and evaluation of it. Also, to have different indicators to measure the operation process Mostly the BSC is a strategy map for the organization to include themes and perspectives, goals connected by action steps and performance indicators
in line with the goals. The map shows how the action steps and goals will be executed and the strategy implemented across the organization. (Stroh, 2014, 146-147.)
The EFQM model is a framework for operational development. In the model there are self- assessment and external evaluations. The evaluations contribute to finding the strengths of the organization and to identify the development factors, which then gives scores to the organization from the model. The EFQM model is maintained and developed by the European Foundation for Quality Management. The model has been developed through the years and the last one is the EFQM2020. The model consists of three parts: direction, execution and results. Inside the different parts are the assessment areas. The aim of the model is to define the strong parts, figure out the right purpose, innovate leadership, having a culture that are committed to the vision and goals and staying agile for the future changes.
See Figure 5 for more of a detailed version of the three parts and the assessments areas. The model helps organizations with change leadership and development for the future. The model is focusing on the customer perspective, dedication and stakeholder focus as well as on understanding the relationships between why and what an organization does and what it achieves through its operations. (EFQM, 2021.)
Figure 5. EFQM-model (EFQM, 2021).
SWOT-analysis can help the organization to realize external factors of change and at the same time align them with the ability the organization have to develop occurring needs.
SWOT consists of strengths, weaknesses, opportunities and threats. Strengths and weaknesses describe the internal characteristics. The opportunities and threats describe the external factors that is happening in the environment around the organization. The organization can match the strengths and opportunities or focus on converting the threats and weaknesses into strengths and opportunities. (Pardey, 2006, 222.)
PESTEL-analysis can help to make sense of change that is happening and affecting the organization from the outside. PESTEL consists of the categories political, economic, social, technological, environmental and legal aspects. Identifying these six categories can be essential for organizations, it helps to see what interacts with which category and what the likely effect is on change. The analysis is to find trends that can impact the organization, discuss the possible implication of them and then make relevant notes and findings to the analysis. (Pardey, 2006, 219-221.)
4.4 Strategy content
Organizational operations are based on the vision, mission, values and culture, what then leads to the creation of strategy. See Figure 6 for visualization.
Figure 6. Organization’s operation base.
All the parts need to be addressed understandably together with the entire organization’s employees. This is the base for the organization’s operations all in all. The employees are the most valuable investment of the organization and success key. It is important to involve the employees in the strategic choices to get them committed and engaged to fulfil the strategy. The strategy is made to express how in practice implement the mission and vision alongside how to achieve the goals of them together with the values of the organization.
(Kaijala & Tolvanen, 2020, 14-19.)
As part of the strategy, it is also vital to have the customer perspective and the employee strategy in line or included in the organization strategy. In today's fast changing surrounding it is essential to have a strategy process that is ongoing and agile for updates along the way in the operating environment. The work should be continuous and to be able to adapt new changes. Today’s working environment needs leadership and leaders that can reply to changes in the market, at the same time build an agile organization and shared development vision into the future. (Kaijala & Tolvanen, 2020, 20-26.)
Vision
The vision should reflect the goal mode within the set timeframe for the organization (Kaijala & Tolvanen, 2020, 14-19). The vision should give answer to where the organization is heading for the future, and everyone should be onboard believing in the vision. With the help of the vision, the employees will know how to operate their own work towards the common set vision. Together with the other basic elements of the strategy foundation, the vision will be implemented, planned and measured. The vision contains elements that combines the internal organization and the customers to a meaningful companionship. It is a short story that is easy to remember and brings the organization, customers and other stakeholders closer to a unique future. (Tuomi & Sumkin, 2009, 48.)
Mission
The mission of the organization defines the existence, the purpose and the operational or business idea. The questions that define the mission are, why is this organization founded and what is the goal with its activities. (Kaijala & Tolvanen, 2020, 14-19.) In practice it is to think about why the organization is doing its work and it can be a cornerstone, especially in fast changing environments to rethink regularly. The mission guides the operation of the organization. The mission is giving the executives guidelines for the direction of the operations, to handle resources and to build structure when making the strategy into actions.
The mission for an organization considers the customers’ perspective and is a short and flexible text for the future. (Tuomi & Sumkin, 2009, 50-53.)
Values
An organization’s values are a way to function and operate. The values should be seen or involved in all the employees' daily work in all departments or levels. Values are usually defined with an average of four short terms, which also make them easy to remember. In many organizations the values are words, but there needs to be some sort of story behind the values to explain their meaning in daily work for the employees. It is vital to determine what the values mean according to the leadership perspective. Values should be discussed openly in the departments, teams, boards and what they mean exactly for them and their part of the operations. The values will be the organization’s advantage if the employees have been involved in defining them and can have impact on the work. The essential part of values is that they are part of the daily working life of the employees and in all the activities and operations. This mean part of the strategy, the goals, leadership, teams, introduction, indicators of the operation and employee development. (Kaijala & Tolvanen, 2020, 14-19.) Culture
An organization’s culture consists of many elements and have a layered model of the organization's histories, values and beliefs, rituals and ceremonies, stories and heroic figures and symbols and artifacts. It is important for leaders in cultural change to make it possible and prepare for discussion of inconsistency. (Boonstra, 2013, 13-27.)
The culture of an organization can be many things and sometimes it is very intangible and abstract. It describes the ways to work, ways to speak, ways to lead and manage, different practices and policies, figures, symbols and stories. Organization culture is strongly connected to the employer image as well as the internal and external brand image in general.
The culture of an organization either appears consciously or unconsciously. It is possible that the culture varies in different department or location sites depending on the work tasks, history or various practices. It is important to understand the value and power of the culture when developing strategy and to having committed employees to implement it. (Kaijala &
Tolvanen, 2020, 14-19.) Organizations that have excelled in organization culture have three areas in common, which are the leader’s choice to have a good workplace, having a culture strategy as a management approach and that work is the base for a good working life. This is all connected to leadership culture in the organization. A business can be led by the
organization culture in the long run. There are factors that can build the culture strategy into the organization strategy. These are the leadership and management of leading the culture, culture-based leadership of the operations, implementation of the strategy with the culture, performance-based leadership in the culture and that the culture aims to form relationships with stakeholders, customers and societies. (Rossi, 2015.)
Competitive advantages
An organization’s products and services are the base for the business as well as important key factors as competitive advantages in the market (Kaijala & Tolvanen, 2020, 21-22).
Competitive advantages, success factors or differentiation factors are all something that organizations do in a different way than competitors. The advantage is when the factors are essential to the organization’s business, that makes the differentiation more attractive for success and from the customer perspective more desirable in comparison with the competitors. Usually, the competitive advantages are quite few and should not be mixed up with the organization's strengths. In the strategy the advantages’ perspective is to identify the advantages at the moment but mostly the future advantages that are desired to be accomplished. Today when market, environment and the customers need changes fast it is also possible to lose the competitive advantages if not evaluated regularly. To identify and evaluate the advantages the organization can use competitor and market analysis. To get to developing the identified advantages and the desirable advantages it takes systematic planning and time. By having action plans that include concrete practices that will describe the advantages, confirm the advantages, action steps and evaluations will make it easier to develop. It is also possible to measure advantages by including questions in surveys for customers and employees, as well as in a continuous process recognizing silent signals both internally and externally. (Kehusmaa, 2010, 82-83.)
Core competencies
It is important to understand the core competencies of the organization and focus on them that the organization has knowledge capital of. The core competencies are also based on the organization’s values. (Kaijala & Tolvanen, 2020, 58-59.) By identifying the core competencies, the executives can develop the employee's strategic skills and find the key persons. During this the function of the organization’s structure will also reveal itself.
Competence or knowledge is the combination of knowledge, experience and skills of the employee. The core is also perceived as the organization’s most strategical knowledge to
build on. It can be seen as the organization’s unique knowledge, added value for the customers and elements that creates potential for the future. It is essential to identify also individual competences and how to get them into being the organization’s common competencies. By looking at all key parts to building the core competencies it can innovate to develop, create potential for the future unique ideas and competitive advantages. From a leadership perspective, the defining of the core competencies is a way to measure organizational structures functionality and what needs strengthening from other stakeholders, projects and networks. (Tuomi & Sumkin, 2009, 54-55.)
Leadership and management
An organization’s leadership aspect and management’s role play a vital part in the strategy content. How the organization is built will also impact on this part and what kind of leadership models have been chosen. The managers have many roles, for example, being part of the executive team, responsible for results of own department, being the organization’s coach and supporter towards the employees. Additionally, developing at the same time and being a current member in the networks. It is important inside the organization to define what kind of leadership knowledge is needed to execute all this according to the values and strategical goals. This is not only considering the managers but all the roles under leadership from team managers to the executive leaders. (Kaijala & Tolvanen, 2020, 60.) Customer strategy
At first from a strategic perspective, it is essential to define the customer, for example, it is the person using the service or the person’s family as end customer. Today the customer is of importance in many organizations for developing new services or products together. A customer can also be a partner in ideation, development work and expansion of new features.
(Tuomi & Sumkin, 2009, 58-59.)
Having a clear customer selection and prioritization will help to have resources in the right place to work towards the common goals. Making strategic customer choices requires knowledge of the customer sales, profitability, potential and evaluation of the current and future expectations of the customers. In the same way assessing new customer potential according to the strategy. This can also result in possible change requirements in the customer base. Segmentation of customers can help the organization to better control the customers by having clusters and specific operating models. When having segmentation of the different customers it contributes to having clarity when making strategic decisions. It is
vital to have clusters that separates the customers by, for example, processes, needs, expectations or operating models. The clusters should be reflected in the strategy and what serves the organization. This will make the base for how to handle the customer clusters and operations offering strategy. By segmentation it is possible also to find specific competitive advantages for the different clusters. (Kehusmaa, 2010, 91-97.)
One of the first steps in segmentation is to get to know your customers. There are different tools to get to know the customers, for example, service design canvases, personas, research and data. After that analyzing how they make decisions and what information they need and want. (Leibtag, 2013, 157-158.) There is a difference between consumer customers and business-to-business customers, this is important to consider when dividing the market into segmentations and targeted markets. The business-to-business structure characteristics may be too mass level if not specified into smaller categories. (Heinonen & Strandvik, 2018.) In today’s competitive society and environment, market segmentation and target market selection are essential for businesses to also gain advantages. Effectively positioning the products and services are important. The phase of dividing your market into smaller homogeneous markets with the same or similar characteristics is key. From these smaller submarkets or segments the organization can choose to focus on serving them more effectively by their requirements, needs, wants and demands. The more closely the needs match, the smaller the segment is and that gain into possible more loyal customers when their needs are met more exactly. There are four bases that have developed from segment studies.
1. Geographic segmentation, for example, the market divided by geographic area, density of inhabitants or climate.
2. Demographic segmentation, for example, the markets divided by age, gender, family type or nationality.
3. Psychographic segmentation, for example, the markets divided by life-style variables such as interests or values.
4. Behavioral segmentation, for example, the markets divided by purchase occasion, benefits sought, user status or brand loyalty.
The segmentation base chosen to divide a market can depend on many factors as the product, logistics, media channels and buyer motivation. (Goyat, 2011, 45-51.)
Offering strategy
In this section of the strategy content the offering is already to an extent decided because of the customer strategy choices. The offerings are identified by the ones now and potential ones, then compared to the potential customer and market situation. When looking at the offering strategy it is essential to also think about the organization’s strength in the offering and the segment. It is possible also to have new offering areas when focusing on this content part. When making the strategy of offerings it is vital to have an operational plan on what are the goals, what to prioritize and what to develop in the market. (Kehusmaa, 2010, 97- 99.)
Partner strategy
The network partner strategy is vital to the organization in many ways and is one of the key elements to carry out the organization’s strategy. The key here is to identify the critical partners that are necessary for carrying out the strategy work in the organization. Also, when looking into the core competencies, the partner competence should be considered if they have new potential to offer for added value. The partnership should be useful to both parties but can also be outside the same field of work, which can be fruitful to create unique services for the organization's customers. (Tuomi & Sumkin, 2009, 59.)
Organization model
Depending on the organization model the board is responsible for the business’s administration in the end. Usually, the boards’ most essential task is to ensure the financial and strategical choices as well as the executive leader’s recruitment and follow-up. The executive leader and the chairman of the board's role is often differentiated from each other, which give a good prospect for the work. If the roles are the same person, it can be difficult to evaluate the work, but it usually reasoned for making faster and agile decisions. It is justified if a business is growing fast by the vision and the original founder of the business have the role of chairman of the board and executive leader role. It is important to recognize that when a business is growing, the move from founder and the innovator role to executive leader can be demanding. For this reason, it is good to renew strategies and the leadership structures of the business at certain times.
In Finland most of limited companies have one main owner. Mainly they are sole entrepreneurs and still have the same regulations to report as companies with many
employees. This extends the administrational workload and can affect also the productivity of the smaller businesses when having less time to focus on the core competencies. In businesses that have many owners the power is often with the board and then the executive leader. Here again is the fact that the owners are taking risks if the same person have the role of the chairman of the board and executive leader. In businesses usually risk and profit go side by side so the role structure is of importance. The board member of businesses should have the same traits and interests of impacting the business’s future. It is seemed good if the board is consisting of manifold members, for example, age structure, backgrounds, cultures and knowledge areas. It is worth considering if there is a need to gain knowledge outside the board if the focus is only on specified areas. Also, how the members fulfil each other's knowledge base are vital to think through and adjust if needed. Mostly, the board’s main task should be questioned if taking stands in the business’s matters and future strategy.
(Kaijala & Tolvanen, 2020, 73-76.) Strategic development projects
This part of the content can be projects that are both internal and external. Strategy, development and innovation are all parts that can bring added value to the organization it can concern processes, services, marketing, leadership or other concepts. The essential here is that the organization has a culture that enhances innovation and development projects as well as being part of everyone's work. (Kehusmaa, 2010, 105-109.)
Strategic goals
For many organizations there are three kinds of strategies: business acquisitions, innovation ideas and changing the operating rules and policies (Kaijala & Tolvanen, 2020, 72-74). The strategic goals are often broken down from the vision to annual budgets and goals, which are more specific. Business and profit targets are ways to concretize the strategy goals economically but also as important are customers, employees, processes and training perspectives for the strategy goals. It is vital to have quantitative and qualitative objectives and outlined how to measure them. Depending on what are the goals both quantitative and qualitative objectives measurements can give answers on how develop further. Essentials are also that all parties are aware of the objectives and measurements as well as the entire process having transparency of leadership. (Kehusmaa, 2010, 110-113.)
Risk analysis
Analysis of risks are a vital part of the strategy; it helps to foresee and prepare for possible risks of the organization. The risks can be analyzed both by internal and external factors. To consider depending on the field of work can be to use areas as political, economy, social, technology, environment and legislation. There are always risks in an organization it can be the customers, employees, technology or change processes but it can be helpful to identify especially, if a chosen risk and needing control. Risks also change in the fast environment that today is surrounding the organizations or even eliminated completely. Risk analysis is good for making scenarios of the future and how different risks and factors affects the organization. (Kehusmaa, 2010, 114-115.)
4.5 Strategy development
In the social and healthcare sector the differences between public and private actors are usually their ownership structure, for example, how the finances are built and what are the sources for the financing. Organizations can be seeking profit or be non-profit as private or third sector actors. In all the sectors there are similarities to create strategy for operating models, human resources and employer image.
There are changes made in all forms of the actors as fusions, business acquisitions or incorporations, which all have impacts on the employees. To succeed many of these changes need engaging change leadership to find the common operation models and policies. Today employee engagement and satisfaction are key factors to function, which needs skills of management and developmental aspects of leadership. Another focus is the customers and the operations performance of the actors, including customer experience as a factor to enhance and develop in the organizations. (Kaijala & Tolvanen, 2020, 9-12.)
4.6 Leadership and strategy work
Many businesses' leadership structures consist of many members and their separate roles in specific areas as strategy, development, economy, human resources and customers. This can lead to trouble if all are seeking their own agenda and are not working together to support the executive leader in making decisions for the organization. Having long-lasting strategy success demands agile leadership models. For instance, the importance of functioning communication tools and policies will impact on future work. The meaning of open strategy
is open discussions together about the organization’s matters regarding key elements and challenging issues, which needs skills and openness to get people activated. (Kaijala &
Tolvanen, 2020, 87-89.)
To build and maintain a skillful organization has also become a key goal of leadership today.
The challenge usually lays in the lack of a clear vision for the future, what is happening on the market and what kind of skills are needed for the future. If an organization has a strategy for the future and leadership aspects thought-out, the next step is the change process and to get all the employees committed to the work. This step involves all the departments and levels in the organization from the board members and management to everyone else. The leaders’ and managements’ task are to create the opportunities for the future and enhancing the vision and mission to the work. To get everyone committed and engaged in the future vision of the organization the leader should express clarity in communication, creating a culture of open discussion and innovation so all are onboard. (Kaijala & Tolvanen, 2020, 87-89.)
After a strategy is developed it is important to recognize the competence needed to go forward. To develop competence and knowledge is key when an organization is based on knowledge capital. When the future knowledge needs are found, then it is time to focus on the existing competence and what are the holes that need to be filled. The organization can categorize the competence into different areas: leadership competence, strategy competence, core knowledge, supporting knowledge, work community skills or other relevant area specifically to the operating activities. It can also be considered to deepen the expertise with teams or specific roles of the board, executives, managers or experts. (Kaijala & Tolvanen, 2020, 175-177.)
4.7 Leadership models
Agile leadership
Agile leadership is more of a coach approach, to make a clear strategy and from that show the way of the work. Also, concern helping with issues and tasks the employees face in their work and hinders them from going forward. Agile leadership is to encourage the employees to develop their knowledge and share their competence with the co-workers. The teams’
tasks are to find ways to work to achieve the set strategy goals. The perspective is that employees in the teams know their own work the best and are the best at developing it
according to the goals. In an agile leadership model, the employees are encouraged to find new operating models for their work by having a culture that accepts testing and failing if the work is developing from that and new ways are learned. (Kaijala & Tolvanen, 2020, 96- 99.)
The agile model demands a lot from the teams and employees as they must face responsibility for their work and leading themselves through the phases of testing and reflecting on the learnings. The teams are set up to do the work tasks and share them between their knowledge and competence. The model is based on having clear strategy and customer- centric goals to focus on, open communication and transparency in the work, a culture accepting testing and failure. Teams are in constant interaction and learning, the employees in the teams are shown trust and appreciation of their work, most of all the employees in this model needs to open to change and the process of it. Agile model is not for everyone and have certain risks. The formation of a small agile team can be challenging and still have the competence needed. Another part is the team's interaction and open communication with each other, especially the flow of information if the teams are working on distance. At the same time, in the entire organization there is the risk that different teams will create silos between each other. (Kaijala & Tolvanen, 2020, 96-99.)
Servant leadership
Servant leadership is defined to be more about understanding others and working with all to achieve the common goals. The idea is that the vision is coming from within the group and not the leader demanding it one way. The common goals and motivations are coming from inside the group forming the work and the leadership role. A servant leader shares the power with the group and aims for growth and wellbeing of the work community to all being able to perform to their best. (Pardey, 2006, 17.)
Innovation leadership
Innovation leadership is letting the work community use creativity and innovation to put the ideas into actions in processes for the goals. To give the opportunities to all to be creative and innovate is the leadership perspective to fulfil the set goals. To give encouragement to the employees using skills as a leader to let brainstorming and lateral thinking occur into the work. When having a problem creativity is finding the solution possibilities and innovation to make them into action processes. The leader channels the work of the community into the process while aligning it with the goals and mission. Effectiveness leadership is a key
element of innovation leadership to aim towards the goals and giving the ability to change.
(Pardey, 2006, 201-209.)
4.8 Leading by the strategy
Operating models of an organization sets the direction for change and the implementation of change in strategy. The importance of understanding the current situation and the parts that need improvements is vital to recognize so it will support the process to the new strategy goals. (Boonstra, 2013, 13-27.)
Transforming the strategy into day-to-day working operations requires leading the strategy process through the change and all levels of the organization. The start of the process needs leadership and making a draft of the timeline and participants. The ideal idea is to have the entire organization involved from the start for building the future scenarios, from there the board and executives can form the main key factors for future strategy. After that the departments and sites develop their own work from that. After the process it is good to gather all together for working on the final organizational level strategy, which then the board can confirm. The following step is to lead the departments to making own operating models according to the confirmed strategy in their own work site. (Tuomi & Sumkin, 2009, 30-33.) The change is constant in today’s world and change leadership to be successful need knowledge and management skills. A change process is a specific area of knowledge as also employee wellbeing, economic or strategy leadership. Depending on the characteristics of the change the sort of change leadership can be defined. Changes can be different and be led by case management or human management. Usually, both styles are required for success because change concerns all departments in some way even if it is about building new internal technology systems. The change leaderships’ task is to go from the starting point to the set goals. The change leadership guides the change process and the actions towards the goals in an estimated timeframe and by resources given. Change leadership and project leadership differ because projects are built for a specific target with the group and exists for a certain time. The change in organizations need a different approach because the organization and working community usually have history but also a future together. A change process is something that is happening during the daily work when the core of the business is ongoing even if the change is done by the employees in the organization. It is essential to get the employees and management motivated and committed to the goals of the change. (Kallankari, 2019.)
4.9 Organization structures
Today employees need some structure of an organization to support their work, but traditional hierarchical models are seen outdated and not meeting today's needs. The organizational structure in today’s businesses change constantly because of changes and renewal of operating environments and strategies. Here the organization’s purpose is to focus on leadership and the structure to being able to fulfil the strategy goals. The operating models and the management need to have the base to operate properly. When having a diverse business, the more complex the activities of operating become. It implicates that it can be hard to pursue the same organization model in the entire organization within the different areas of activities. It is a strategic choice, how to implement the strategic goals into the different activities and possible areas. The organization leadership model again reinforces the support to achieving the common goals. There are many different organization structure models that support the strategy work and the operating model. The models can also be used simultaneously in organizations to give a more supporting role to the operating activities.
(Kaijala & Tolvanen, 2020, 124-126.)
One of the main structures is a line organization, which is seemed as traditional, and the employee has one manager of the department. Authority goes from bottom to top and flows conveniently with administrative work. The risk can be that departments and the line in the organization can makes silos, which again affects the collaboration between them. (Kaijala
& Tolvanen, 2020, 124-126.)
The structure model of a matrix organization is based on that the employee has one or several managers. There is one main manager for the department and one manager of the specific activity as well as top management or executive leader in the highest position. One risk with this structure is if the goals are not set as common between all departments and managers.
(Kaijala & Tolvanen, 2020, 124-126.) See Figure 7 to see the matrix structure layout in an organization.
