Sustainable high performance – It’s Not Luck (HPtE #1)

It’s Not Luck is a business novel written by Dr Eliyahu M. Goldratt.

Dr Goldratt was an educator, author, physicist, philosopher and business leader, but first and foremost, he was a thinker who provoked others to think.  He is best known as the father of the Theory of Constraints (TOC).  TOC is a process of ongoing improvement that continuously identifies and leverages a system’s constraints to achieve more if its goals. He introduced TOC’s underlying concepts in his business novel, The Goal: A Process of Ongoing Improvement,  which is recognised as one of the best-selling business books of all time. First published in 1984, The Goal has been updated three times and sold more than 7 million copies worldwide. It has been translated into 32 languages.

It’s Not Luck is Goldratt’s second novel and focuses on the resolution of conflict through the Theory of Constraints (TOC) Thinking Processes.  He introduces the necessary conditions for the strategy of any organisation that wants to achieve sustainable high performance.

In Chapter 30, Alex Rogo shares his insights on the goal of a company.

Alex highlights the perceived conflict between protecting the interests of shareholders and protecting the interests of employees.  The focus on ‘Making money now and in the future’ protects the interests of the shareholders.  To protect the interests of the employees, it is necessary to ‘Provide a secure and satisfying environment now as well as in the future’.  Alex also discusses a third necessary condition that relates to the interests of customers.  To ‘Provide satisfaction to the market now and in the future.’

Alex explains that these are the three necessary conditions for sustainable high performance in a commercial organisation:

  1. Making money now and in the future,
  2. Provide satisfaction to the market now and in the future,
  3. Provide a secure and satisfying environment for employees now as well as in the future.

In the real world, there are many examples of organisations across the globe that have recognised these as necessary conditions for sustainable high performance.

Air New Zealand is one example.  In an NZ Herald article published in September of 2017 Christopher Luxon, Air New Zealand’s CEO states:

“The thing for me is recognising that, as a business leader, you have a responsibility to lead a company for the future, leaving it in a better place in five, 10, 15, or 20 years’ time. My job is to make sure that commercials are strong, the customer experience is great, the culture of the organisation is constantly improving.

We announced a record result this year, which was a great outcome for our shareholders. At the same time I announced that we’re doing a performance bonus for our unionised staff. And I could have arguably had shareholders say, ‘Well Chris that was $12 million you didn’t need to spend’. But I haven’t had that at all. I’ve had the reverse – the shareholders have said that was a smart thing to do.

They understand it’s just not about maximising dollars and cents relentlessly.  It is constantly a balancing act and investors get that and understand we’re being strategic about it.”

We can visually depict this:

But what about a not-for-profit such as a government department, health organisation or a school?

Rather than “making money” the focus for a not-for-profit is to secure sufficient funding now and in the future.  Rather than “customer satisfaction”, the focus is on maximising consumer outcomes.  Consumers could be the direct recipient, like patients or students, the funder of the service such as the government on behalf of taxpayers or, the community.

It is worth noting that the necessary condition of a Culture that is safe, secure and satisfying is common for all organisations whether for profit or not.

We visually depict this:

In order to capture both profit and non-profit organisations we refer to these necessary conditions as:

  1. Commercial Responsibility (the interests of the Shareholder, Government or Board – a return on investment whether it be in dollars, quantity or quality of services or products),
  2. Consumer Value (the interests of the customer or market – continuous improvement of the service or product),
  3. Culture (the interests of employees – a safe, secure and satisfying work environment).

These are the foundations of our High Performance through Engagement Strategy.  We refer to them as “The 3C’s”.

Commercial Responsibility, Consumer Value and Culture are mutually dependent on each other.

Sustainable high performance is not luck, but, it is also not easy.  Finding the synergy between Commercial Responsibility, Consumer Value and Culture is a challenge.  It takes commitment, effort, time, and a robust strategy.

An HPtE Strategy® guides an organisation to find the synergy between the 3C’s by putting in place the structure, processes and leadership practices required to manage the tension between them.  It is a strategy to make sustainable high performance a reality in any organisation.

My name is Karl Perry.  I help organisations achieve sustainable high performance by helping them deliver their own HPtE Strategy®.

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Next up in the #HPtE series: Delivering Commercial Responsibility (HPtE #2)

It would seem to be so self‑evident that maximum prosperity for the employer, coupled with maximum prosperity for the employé, ought to be the two leading objects of management …

“It would seem to be so self‑evident that maximum prosperity for the employer, coupled with maximum prosperity for the employé, ought to be the two leading objects of management, that even to state this fact should be unnecessary. And yet there is no question that, throughout the industrial world, a large part of the organization of employers, as well as employés, is for war rather than peace, and that perhaps the majority on either side do not believe that it is possible so to arrange their mutual relations that their interests become identical.”

Taylor, F. W., (1911) The principles of scientific management, pg 1

I only recently discovered this quote from Frederick Taylor, considered the father of scientific management.

It seems that it is not so self-evident!

It is possible to meet the interests of employers, employees and consumers.

This is the very heart of our HPtE Strategy®.

Air New Zealand and the “3C’s”

Finding the synergy between Consumer Value, Commercial Responsibility and Culture has been the key to Air New Zeland success …

“Our customer centricity, commercial focus, and highly engaged culture have made Air New Zealand the most revered company in our part of the world as reflected in our corporate reputation rankings on both sides of the Tasman.”

Mr Luxon says he will miss heading to work every day to lead the aviation equivalent of 12,500 All Blacks. 

“It has been an awesome journey and what we have achieved by working together with a common goal of supercharging New Zealand’s success economically, environmentally and socially has been nothing short of remarkable.

“I have absolutely loved the responsibility and experience of leading this company over the last seven years. It has been intellectually challenging, people centred and an absolute privilege to do this job. However, I do feel it is the right time for a new leader to take over and preserve and enhance the good things from our past, but also to put their own stamp on the organisation bringing their own personality and emphasis to the role as I did.”

He says the culture at Air New Zealand is unlike any other company and it has only strengthened as the airline introduced performance management and leadership development programmes, pioneered High Performance Engagement (HPE) with its union partners, chose to pay a Company Performance Bonus, improved its safety record and lifted its commitment to diversity and inclusion. 

“All of this has seen Air New Zealand regularly voted as the best place to work in the country. I will miss the friendship and support of all those with whom I have worked with and served.

Air New Zealand Media Release
https://www.airnewzealand.co.nz/press-release-2019-air-new-zealand-chief-executive-officer-resigns

What to change to? (HPtE #12)

Wouldn’t it be great if we could get synergy between achieving financial outcomes, continuous improvement of value for consumers and a constructive culture?

An HPtE Strategy® assists people to seek out improvement opportunities, strengthen peoples ability to solve problems when a conflict occurs, all the while helping to build positive relationships between people. This saves time and money.

It is a path to sustainable high performance.

But, an HPtE Strategy® is a big commitment.

Many organisations have already recognised the need to find a synergy between the 3C’s and have developed their strategy around it.  This is certainly a great step in the right direction and those who have invested in it have reaped the rewards.  While the benefits are big, sustaining the effort and focus takes a great deal of effort.  The pressure to compete for time and money erodes the impact of the effort put in and the transformation will slow or stagnate.  Sometimes it will regress.

If you have ever seen an organisation whose leadership changes focus to just one or two of the C’s you will have witnessed the stagnation or regression.

An HPtE Strategy® takes engagement and culture to a new level that is less influenced by a change in any one leader.

This is achieved through a mix of focus, structural, process, system and leadership style changes.

It would not be judicial to enter into such an approach without first testing it within your organisation.  Before committing to an HPtE Strategy® a Proof of Concept Project is recommended.

But, before you even get to a proof of concept, organisational leadership must answer four important questions:

  1. Why Change? Is sustainable high performance really the goal or do we have a more short term focus?
  2. What to change? We have already described the endless cycle that erodes Commercial Responsibility, Consumer Value and Culture.
  3. What to change to? We have already described the reverse of the cycle.
  4. How to change? That is the focus of the #HPtE series from here on in.

Learning about the HPtE Strategy® is a starting point to explore your business system and begin addressing the competition and conflict inherent in most organisations.

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Up next in the #HPtE series: Interest-Based Problem-Solving is at the heart of High Performance through Engagement (HPtE #13)

Want to explore an HPtE Strategy®? Ask us about our Discover HPtE Strategy® Video Conference – a one-hour introduction to the HPtE Strategy® Framework. Contact Karl or Richard via direct message on LinkedIn.