What Do Top Performing Organizations Get Right?
Issue 105, April 27, 2023
For anyone that insists on predictability and familiar expectations, today’s disruptive marketplace can throw a wrench into a rigid planner’s world. Will there be a recession? Is inflation going to abate? Are current economic conditions the new normal? Will customers continue to pull back on their spending? There are so many moving parts to evaluate and consider for aligning organizational purpose, direction and focus.
Since we are hardwired to feel more comfortable with what we know and are anxious about change and what we don’t know we don’t know, operating in a digital marketplace in constant flux can be disorienting.
As a refresh of how to successfully achieve digital transformation and pivots in any business plan, we want to dive into what’s in the DNA of top-performing organizations. PWC’s study, Accelerating Performance in a Winner Takes Most World, brings forward that organizations that make mutually reinforcing investments in their business, operating, and technology models, in turn drive performance factors such as innovation, speed-to-market, and flexibility and are therefore, high performers. At the same time, the study reveals that lowering friction of the time and resources needed to do business inside the organization and as companies engage and interact with external parties is a significant contributing factor.
We’ll borrow another page from PWC’s book, Fit for Growth, and identify three things that set high-performance organizations apart:
- They focus on a few differentiating capabilities — what they do better than any other organization.
- They align their cost structure to these capabilities.
- They organize for growth.
Ok, we know that sounds like business management 101. The term “organize” isn’t as simple as it sounds. Organizing an organization represents the system, which includes the processes (how work gets accomplished) as well as the individuals and teams across a workforce which come together to comprise the organization’s culture. What that matrix misses or assumes, therefore, is that organizations must understand how to motivate, lead, and mobilize their individuals and teams. The most important part of the equation for success to us and our discussions in The Truth About Transformation is the human factor: the workforce. As Fadzai Danha from Industrial Psychology Consultants describes, “Ultimately, the best places to work are those where employees feel valued, work with good people, and enjoy their work. Building an organizational culture that works around the needs of every single employee is a challenge, but where organizations get it right, employees stay.” And that is workforce management 101 in 2023.
Performance Is a Team Sport
A recurring theme in our writings is based on our real-life experience helping organizations of all sizes manage a transformative process: Leaders cannot expect their management and teams to be in lockstep with the CEO’s vision. If the vision, alignment to the vision and the role individuals play exist only in the CEO’s mind, success is at risk. Without shared purpose communicated in ways that help the workforce understand their transitioned roles and new contributions, change and transformation will indeed fail.
At 2040, we are a constant reminder that a multigenerational workforce, led by next gen demands, is a force to be reckoned with. The multigenerational mix compels leaders to understand and respect different viewpoints, values, and insights that come from each cohort.
Fierce states there are five key characteristics of high-performing teams:
- Clarity of Shared Vision. High-performing teams are built on the foundation of clarity.
- Defined Roles and Responsibilities.
- Clear and Respectful Communication.
- Trust and respect.
- Continuous learning and improvement.
For a deeper look at how Gen Z is influencing change in the workplace, check out our recent newsletter, Why You Need to Listen to Gen Z.
Let’s look at what high-performing organizations get right. They have clarity of purpose. They know what their mission is and what they are trying to accomplish (not necessarily with a rigid journey to get there). Shared purpose aligned with relevant market orientation get organizations out of the gate in the right direction. A purpose-driven and value-based operating model also ensures an organization walks their talk – a necessity in today’s woke marketplace. And that’s not a simple vocabulary exercise; it needs to be authentic. They also build a workforce that is balanced with a range of backgrounds, workstyles, and problem-solving approaches. What the workforce has in common is shared purpose and the will to work in a team. And most important to high performance is leadership’s ability to quickly admit when it’s wrong (consider checking out Leading with Courage on admitting faults and mistakes), moving the wrong direction or has misjudged its customers. It’s a test of organizational character to fail fast, learn, and evolve to success.
A New Mental State
High-performing organizations are also mindful of a new workplace psychology that addresses burnout, crisis fatigue and mental health issues affecting employees of all ages. What doesn’t work is an environment with internal corporate politics, or a maniacal focus on efficiency that constricts learning, innovation, creativity, and experimental risk-taking. Such environments are generally characterized by internal competition and gamesmanship, hierarchy, ego, fear, fiefdoms, and mindsets like go along to get along, the boss knows best, and don’t challenge the status quo, according to Edward D. Hess and Kazimierz Gozdz for Architecture & Governance. The authors describe the new psychological environment as a community with “A work environment of psychological safety that enables an idea meritocracy evidenced by candor, challenging the status quo, data-driven decision making, permission to speak freely, rapid experimentation, hyper-learning, and allowance to make learning mistakes within financial parameters. The goal is to pursue the highest levels of human cognitive and emotional performance. That requires the right mindsets, behaviors, and processes. How people talk to each other, how people listen, how people emotionally connect, how people manage their thinking and emotions, and how people collaborate are all examples of the granular nature of daily behavioral focus that will be required in the coming age of smart technology and the digital revolution.”
Leading High Performance
As we wrote in our book, The Truth About Transformation, business leaders will be measured, even judged by their leadership performance; how they recruit and hire, construct teams, manage the board, and how they satisfy stakeholders whether they be internal or external. The potential trap here for any leader is bias, both unconscious and conscious, based on the values, experience from past actions, and institutional knowledge she or he brings to the organization. Here’s just a taste of the potential problem: Seeing is believing—but the opposite is truer, what you believe you see.
There’s a lot of pressure on today’s CEOs. The Edelman Trust Barometer reveals that organizations are under pressure to “save society.” This affects your customers, subscribers, the industry sector, and professions your organization serves, interacts with, and supports. Edelman adds “Most people (77%) say their employer has become their most trusted institution, putting more pressure on CEOs to prioritize societal and political issues in addition to shareholder value.” Furthermore, “People now expect organizations and CEOs to keep focusing on big social and political issues, even after the pandemic.”
Top executives should also take a hard look at their own leadership approach. PWC states that high-performing organizations have leaders “who recognize and act on the threats and opportunities that emerge from business ecosystems, service partnerships, and new technology. Upping your leadership game may require greater tech literacy and a willingness to make tough investment decisions in service of spurring transformation. Top-to-bottom, end-to-end transformation is not just about your business model, but the operating and technology models that enable it— and extending across the back, middle, and front offices of your organization. Organizations that transform—and keep transforming — put their resources against opportunities and threats. These leaders are most likely to capture the spoils in a winner-takes-most world.
Achieving High Performance
At 2040, we work with clients to understand the first step in achieving high performance is effective leadership that steps back and uses critical thinking to understand people, processes, and cultures. All cultures have similarities, but each culture is unique. The collection of individuals who comprise a culture is intrinsically tied to the focus of the success of the organization; what worked in the past and similar situations may fail miserably in the current structure. The true litmus test is for leaders to examine their own biases to see how these embedded beliefs inform and influence their performance and decision-making.
Get “The Truth about Transformation”
The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.