I have never had the responsibility of writing a blog before. In fact, I’ve been able to protect what I think from a more general audience for some considerable time but the web offers a double-edged opportunity to offer perspective and receive feedback that can improve and refine those perspectives. That, in a nutshell is what I hope can be achieved through this blog. As my first post I would like to frame my approach to business performance excellence so lets get to the perspective piece.
It may be a little clichéd but nonetheless relevant, to observe that we are presently situated in the “fault-zone” of a number of social and economic tectonic plates which will, in turn, play out politically. We have the emergence of Brazil, Russia, India and China (BRIC) as significant economic forces; we want to transform to a low carbon economy in response to the issue of climate-change; the baby-boomers are retiring; economic competition is becoming more globalised; oh and lets not forget the global financial crisis which probably still has legs and the potential for a few more significant surprises. Still further, I haven’t even touched on the technology developments that make so much of this possible!
Few, if any, organisations have been designed to operate in the turbulent environment in which we find ourselves so how are we to adapt to these challenges? In this context, I have put forward the view that business performance excellence is important because if its relevance to customers, stakeholders and competitiveness. It is, if you like, the foundation on which you are “Built to Last” as James Collins and Jerry Porras put it.
It makes sense to your customers
Firstly, I am firmly of the view that your organisation exists to create and serve customers regardless of being for profit, government or not-for-profit. If you have heard that before its because Peter Drucker said it a long time ago and I don’t think it has lost any of its cogency. Performance excellence matters to customers because through it they gain the value for which they are prepared to pay. Performance Excellence forces you to take an an “outside-in” approach to understand who are your customers, what they value, how you realise that value and who is not going to be a customer. It is ultimately the customer that determines the success or otherwise of any business.
A company’s primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company’s continued existence.
– Peter F. Drucker , The Practice of Management (1954)
It makes sense to your stakeholders
Secondly, you need to be able to create and deliver that value consistently and reliably! However, the value created extends well beyond customers to include the stakeholders to whom I refer: the shareholders, the staff members, the public and government that go to make up the wider community of interest in your business operations. Performance excellence matters to them because it means you are focused on understanding the mechanics of the business and what you can do to continuously improve. It also means you are taking corporate social responsibility seriously to manage and mitigate risk. With this mindset your business is operating sustainably, delivering reliable returns and protecting its long-term interests.
Operational effectiveness and strategy are both essential to superior performance … but they work in very different ways
– Michael Porter, What is Strategy, HBR (1996)
It sustains your competitiveness
Thirdly, I don’t mean to suggest that everything stays the same and is sweetness and light: change is inevitable and pervasive. These changes influence the nature and flow of information, money, sentiment and prosperity in ways that can rarely be predicted with anything approaching accuracy let alone precision. Competition in this environment is increasingly intense and the ability to respond to these changes must become integral to the way our organisations operate. Don’t imagine that this does not apply to an organisation that is in the government or not-for-profit. Competition for the available resources and your reputation for stewardship are realities. It is this turbulence that Joseph Schumpeter described as creative destruction and the effects of these changes will be felt by all of us for a long time to come. We are in the midst of a massive transformation in the way our world, and particularly business world, works.
The opening up of new markets and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one … [The process] must be seen in its role in the perennial gale of creative destruction; it cannot be understood on the hypothesis that there is a perennial lull.
– Joseph Schumpeter, The Process of Creative Destruction, (1942)
Every organisation needs to be doing the right things and doing them the right way: in short, both efficient and effective in all aspects of its operation. Without this vigilance, a horde of hidden costs will creep in to reduce product and service quality, impact customers, damage staff productivity and eat into margins destroying profitability, brand and reputations. Realistically, it isn’t that we must be perfect in everything. What it does mean is that an organisation’s leaders are focused on the overall performance in all areas of operation, and are able to lead the staff of an organisation to contribute, adapt and improve performance.
I hope this blog will help to create a community of people interested in performance excellence and particularly how the ideas can be embedded in the businesses in which we work. The success of any blog is only as much as it engages its readers with material that is of interest. To that end, I invite you to comment, suggest subjects that need to be addressed and give examples of where you see performance excellence in the business landscape.
Welcome, lets get on.