In order to achieve sustainable high performance an organisation must achieve three necessary conditions:
- Commercial Responsibility
- Consumer Value
- Constructive Culture
“Tell me how you measure me and I will tell you how I will behave. If you measure me in an illogical way … do not complain about illogical behaviour”.Eliyahu Goldratt
In his paper about the “Balanced Scorecard and Theory of Constraints: A synergistic framework” Dr Mahesh Gupta provides a summary of the traditional metrics used to drive organisational performance.
Traditionally, Commercial Responsibility has been the sole interest of shareholders. More specifically there is an attempt to answer “How do shareholders view the organisation?” To deliver on Commercial Responsibility leadership focuses on cost-based strategies. Key components of cost-based leadership strategies might include constructing efficient- scale facilities, emphasizing operating efficiency, and vigorously controlling and reducing costs and overhead. The most common financial measures may include net profit, return-on-investment, and cash flows.
When performance drops in a cost based environment the pressure to compete for money goes up, the conflict increases and the behaviour becomes more defensive. This becomes a vicious cycle.
Traditionally, Consumer Value has been the interest of operations management and consumers. More specifically there is an attempt to answer “How do consumers view the organisation?” This usually involves retention related measures such as quality, flexibility, work in progress and on-time performance. The increasing Agile, Six Sigma and TOC based initiatives in the past few decades demonstrates an increasing realisation of the importance of consumer focus and customer satisfaction. Poor performance from this perspective is seen as a leading indicator of future decline in profitability.
When performance drops in a consumer-focused environment the pressure to compete for time goes up, the conflict increases and the behaviour becomes more defensive. This becomes a vicious cycle.
The conflict is compounded when a consumer focus is attempted in a cost-based environment because now we have increasing competition for both time and money.
Traditionally, Culture was ignored. In the main, this was because it was perceived to be difficult to measure. Human Synergistics International are global leaders in culture assessment. Their Circumplex model describes “Flight” based behaviours as Passive Defensive (green on the circumplex) and “Fight” based behaviours as Aggressive Defensive (red on the circumplex).
Left unchecked the impact of competing for time and money causes a Passive/Aggressive culture and reinforces the cycle of poor performance.
This is not an environment where sustainable high performance can exist.
Now that we understand the current reality and challenge of achieving
To deliver sustainable high performance we need “a whole of organisation strategy that deliberately creates a Culture of collaboration, innovation, confidence and achievement in order to improve Consumer Value while being Commercially Responsible.“
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P.s. Here is a link to the next post: What to change to and how? (HPtE #12)
To read the whole series click here: HPtE Strategy® Framework