Strategic Consulting Group Organizational Capability Assessment Discussion Document HiTech Co. (Sample Company) © 2001 Quay Alliance, Inc. All rights reserved. This sample report was prepared by Mark Youngblood, the developer of the Organisational Agility Assessment instrument.

Strategic Consulting Group Organizational Capability Assessment Purpose and Methodology Summary of Findings Strengths and Enablers for Change Weaknesses and Barriers to Change Preliminary Recommendations Table of Contents © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Purpose & Objectives  HiTech’s Strategy Team is evaluating several strategic alternatives. The team wants to ensure that HiTech is ready, willing, and able to implement the selected strategies and sees this Organizational Agility Assessment as a key element in that determination  The Objectives for this study include the following  Assess the organization’s perceived need for change and readiness and ability to implement these changes  Identify organizational strengths that can be leveraged to help with successful roll-out of the new strategies  Surface the weaknesses and barriers to change that must be addressed in order for the new strategies to be successful  Begin identifying actions that can be taken to address the weaknesses and barriers to change Successful Roll-out of the New Strategies © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Methodology Overview Assesses An Organization’s Agility  The Organizational Agility Assessment (OAA) is designed to assess an organization’s overall Agility—its ability to innovate and to respond rapidly to marketplace changes  The OAA is designed based on the characteristics of leading edge companies such as Medtronic, Southwest Airlines, Charles Schwab, and Starbucks in conjunction with the processes of complex adaptive (natural) systems  The assessment was distributed to a random sampling of 940 HiTech Co. employees including all levels and BU/SUs  A total of 465 employee surveys were gathered for this study © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group  There were 28 questions in the survey that required a score on a scale of 1 to 7 and two additional freeform comment questions  We focus on the scores 1-2 (strongly disagree) and 6-7 (strongly agree) because this is where the emotional energy is highest HiTech Overall Scores 11% 56% 33% Methodology Overview © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group  The Agility Factor is the net of the Strongly Agree scores (6 and 7) less the Strongly Disagree scores (1 and 2). This is a simple but powerful indicator of the organization’s overall Agility. We find it to be a more accurate indicator of the organization’s current state than averages of the raw scores.  Scores above +10 and below -10 are seen as statistically significant as well as scores that significantly diverge from the overall trend HiTech Agility Factor Scores Methodology Overview © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group I. Bureaucratic Methodology Overview The overall score falls into four categories, each describing a general type of organization “Industrial-era” organization—compartmentalized, control oriented, hierarchical, rigid structures, centralized decision making, inward focus, risk averse II. Managerial III. Agile IV. Dynamic Kinder-gentler version of bureaucratic organization —more creative and adaptable but still lags the market, relies on heroic efforts to sustain performance Change-adaptive, creative, employees committed to inspiring vision, people are valued, inclusive and participative style, committed to innovation and renewal Risk-taking, experimentation and innovation are the norm, authority from know-how, flexible operating environment, energized and committed employees TYPEBRIEF DESCRIPTION © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Level 1 Bureaucratic Level 2 Managerial Level 3 Agile Level 4 Dynamic 1st Quartile 2nd Quartile3rd Quartile4th Quartile Average Agility Factor HiTech’s scores indicate an Agility rating of Agile. Relative Rankings Assessment Scores © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Alignment Capability Overview The questions in the assessment are grouped into five “Capabilities,” all of which are essential elements in creating overall Agility. Creates focus and momentum, and provides people with a common reference point for organizing behavior and making decisions Organizational commitment to shared vision, values and goals CapabilityDescriptionImportance Adaptability Enables employees to respond quickly and easily to the rapidly changing marketplace to serve customers and improve the business Employee’s freedom to anticipate and respond to customer needs Collaboration Makes it possible for people to quickly and easily work together with a high-level of effectiveness to achieve business goals Ability and willingness to cooperate to achieve win-win outcomes Innovation Provides a constant stream of breakthroughs in performance improvement and new ideas for new products and even new businesses Ability to generate and sustain a high-level of creativity & change Vitality Creates the conditions where employees want to contribute their discretionary commitment and energy and achieve at their highest level Energy and commitment that employees bring to their work © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Capability Summary Findings HiTech’s Agility Factor scores grouped by Capability are highly positive. Any average above +15 is considered a major strength. Two areas that are markedly lower than the others are Adaptability and Collaboration. This relates to issues that employees have with bureaucracy and lack of cooperation across business units. Capability Summary © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group  Overall, HiTech scores as a low-end “Agile” organization  This means that HiTech is above average in the overall marketplace across all industries in its ability to make the changes needed to remain competitive in today’s market  There’s a strong belief in the need for change across the company and that HiTech is ready and able to make changes (Q28-29)  Employees are generally happy in their job and feel very strongly that HiTech’s people are its greatest strength (Q1 + Q30 comments)  People are loyal to HiTech, committed to its vision*, see it as a company that lives its values and is committed to win-win relationships (Q19, Q21, Q25, Q16)  Employees believe that HiTech excels at addressing customer needs and leads in introducing innovations* in the marketplace (Q28) Summary Findings Overall, HiTech is fairly well-positioned to succeed in implementing new strategies Strengths * indicates that there are discrepancies on this point between the statistics and people’s individual comments. © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Strengths — Summary Findings Employee comments reflect strong feelings and a high level of consistency regarding these strengths Employee Comments Were Highly Consistent  People — commitment, expertise, experience, and character  HiTech market share and years in the industry  HiTech brand recognition and superior products  Willingness to change  Senior leadership  Innovation © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group  People believe strongly that bureaucracy is a problem in HiTech (Q17)  There is a perceived lack of cooperation across the organization (Q14)  Ineffective communication, including a lack of straight talk, is a top concern across the company (Q28 comments, Q8)  People think HiTech lacks urgency and that employees are afraid to take risks and show personal initiative (Q6, Q12)  Senior executives at times have dramatically higher scores than do all other employees  The business unit “strongly agree” scores were on average 30% higher than those for HiTech overall  Business unit #1 had consistently low scores, with “agree” scores averaging 60% lower than the other divisions Summary Findings In certain areas, the scores indicate that HiTech has barriers to change that need to be addressed in order for HiTech to compete at the highest level Barriers & Concerns © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group  Siloism and a lack of alignment around a common vision and shared goals are seen as significant issues for HiTech  Employees are strongly concerned about the uncertainty of their jobs  Employee comments reflect a concern about HiTech’s need to address customer expectations and the quality of products and services  Many employees believe that HiTech does not innovate enough and that the competition is ahead in certain areas  People wrote that they felt overwhelmed by too much change and lack the resources they need to do their jobs Summary Findings Employees written comments validated scores on the assessment and at other times seemed to conflict with them Barriers & Concerns © 2001 Quay Alliance, Inc. All rights reserved.

Strategic Consulting Group Conclusions & Next Steps © 2001 Quay Alliance, Inc. All rights reserved. Detailed Results for Organisation and Business Units Remaining Sections of the HiTech Report