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:
- Making money now and in the future,
- Provide satisfaction to the market now and in the future,
- 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
. Weannounced a record result this year, which was a great outcome for our shareholders. At the same timeI 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:
- 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),
- Consumer Value (the interests of the customer or market – continuous improvement of the service or product),
- 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)