The Five Keys To Building A High-Performance Organization
Article Tools
Resource Center
Access white papers, product demos, and presentations from companies whose reputations have been built on helping BPM practitioners get the most from initiatives.
- BPM 101: Selecting a Business Performance Management Vendor" -- new white paper from BPM Partners
- "The Finance Challenge of Aligning the Business With Strategic Goals," a podcast featuring Palladium Group's Phillip Peck
- Ventana Research white paper "Decision-Making and Performance: Improving Essential Business Analytics and Technologies"
- “XBRL at a Glance,” white paper from XBRL US
advertisement
Some organizations do well at nearly every task. Almost all of their initiatives succeed, and even when something fails, it has only a temporary impact. These high-performance organizations (HPOs) seem to understand the market earlier and more thoroughly than other businesses, retain the best staff members, and have less trouble responding to external pressures. We recently undertook a study and identified case studies in an effort to understand what high-performance organizations do that is different from their competitors and to identify traits they have in common -- in particular, we focused on characteristics of HPOs from the perspective of corporate performance management (CPM).
What we found is that HPOs share five characteristics. They set ambitious targets and consistently and continuously achieve those objectives. They display a strong sense of purpose through shared values both inside (among employees) and outside the organization (among customers, suppliers, and other stakeholders). They have a strategic focus and alignment so that employees know how they are contributing to the results of the organization. They have the agility to adapt to changing circumstances quickly. And, finally, they have a common and shared business model throughout the organization. Exhibit 1, below, shows how these five characteristics interact to improve corporate performance.
The Mission: Set Ambitious Targets
Many organizations claim that the primary function of a strategy is to describe how to maximize shareholder value. We feel that this is not fundamental enough. Strategies come and go over time. In high-performance organizations, the fundamental performance drivers are described by the mission statement. Corporate strategy is what links the mission statement with the personal objectives followed by employees.
Unfortunately, many companies struggle to create a mission statement that helps them focus on what they are trying to achieve. In an analysis of the mission statements of about 50 companies, we found that many specifically address the company and its customers as deserving corporate attention but ignore other important stakeholder groups. The average number of stakeholders mentioned was three, but the number most frequently addressed was one. Bad mission statements state the obvious. Good mission statements identify an organization's stakeholders. Great mission statements go a step further still and identify the performance drivers of an organization and establish ambitious goals for the organization. (See exhibit 2 below.)
Of course, developing a great mission statement is not the end of the process. Most mission statements are not really implemented in the business. They should be embedded within CPM initiatives so that they provide clear guidance in determining performance drivers and targets. Likewise, the company's CPM program should bring the mission statement to life by putting in place solid measurement practices that help discover which objectives and strategies have succeeded in bringing the business closer to achieving its goals.
Pinpoint Shared Values
Every organization has values, whether they're spelled out or implicit. "Values" are not soft. New employees that join an organization and do not fit into its value system usually depart soon afterward. If the employees and management of an organization do not share the same values, every change proposed within the organization will be heavily debated and implementation will require significant effort. Even when values are agreed upon internally, if those values (i.e., what binds the organization together) do not align with customers' values (i.e., what attracts customers to the company), the organization will struggle to innovate successfully. In HPOs, managers and employees agree on the company's internal values, and those internal values match customers' values. Exhibit 3 below shows three auto manufacturers, as an example of values that are closely aligned.
Focusing on values provides clear guidance regarding which business initiatives will succeed. An orientation on values should be prominent throughout decision-making processes within the organization. For example, when completing a business case for a prospective project, managers should apply three questions:
Are the objectives of the initiative in line with the values of the organization? Implementing a new CRM system is bound to be less effective in a company that is passionate about product design than in a company whose values place high priority on getting to know customers.
