This is why your company is not Winning!
Despite our efforts, skills, experience and good intentions, we often find ourselves leading companies or departments which are not outright winners. When we look at the numbers, they are good, but not a run-away success. When we look at competition, we may be among the best, but we are not alone. And even in those rare cases, when we are part of a clear success model, which everybody envies, we know that we could do better. Our own personal definition of winning would require even better results.
So we try harder. We dig deeper to understand our customers. We find new technologies to disrupt the market. We build closer relationships with our customers online and in-person. We develop integrated product supply systems which are more agile, more reliable and lead to lower costs. We are doing all the right things.
Let’s take a look at the level of sophistication for each of your key activities (innovation, production, sales, marketing, finance, etc). How close are each of those to the global best-in-class? If your company is like most I know, all these activities are pretty close to the state-of-the-art. Sure, they are exceptions. But you are probably working on those, or at least you will when the gap becomes clear to you and to the other decision makers. And if you were to do this analysis for your competitors, you would find a similar pattern.
So you would think that the daily work in such an organisation is quite productive. But it is not, is it? Do the majority of your meetings lead to good decisions which are immediately executed and result in business growth? Do most people spend most of their time on the key priorities that are clearly spelled out? Are conflicts dealt with quickly and efficiently? Does everybody know who is responsible for what? Does someone immediately take responsibility for a new issue, which does not fit into the organisational charts? Do good ideas as well as bad news easily and quickly flow to the managers who can deal with them? Is the dysfunctional behaviour of Department head Smith called out and fixed before his people lose motivation or leave the company? Do all the best people stay in the company?
In other words, how close is your organisational health to the best-in-class? How would it impact your business results if your organisational health was closer to state-of-the-art? As close as you are in Finance, Innovation, Sales, Production, and so on.
McKinsey tried to answer this question based on a survey of 500 companies and 600 000 employees (“Organizational Health: The Ultimate Competitive Advantage”). They found that companies with strong organisational health were twice is likely to have well-above-average topline, bottomline and company value growth. They also found that organisational health influenced company results as much as all the “traditional” activities combined: Innovation, Production, Sales, Marketing, etc.
The bottomline is this: Technical skills in innovation, production, marketing and sales are critical to the success of a company, but any advantage is likely to be competed away relatively quickly. Organisational Health, on the other hand, is a far more sustainable source of competitive advantage. Most companies are relatively weak in this area, and the company which start improving will quickly be able to beat their less sophisticated competitors in the market place. And competition is minimal. Very few companies are on a path to organisational health. It is a blue ocean for the company that chooses to go there.
If want your company to win, you have to tackle misalignment, confusion, unproductive behaviours and the general lack of collaboration. You have to make your organisation healthy.
How do you do it? Check out “The How of Organisational Health”.