High Performance Organizations
Lee Thayer, PH.D.
THE PROBLEM
There has been a lot of talk in recent years about “excellence,” “quality,” “empowerment,” and “reengineering.” Unfortunately, that’s all most of it has been — talk. The fact is, 70% of all U.S. companies have tried some sort of quality program. But of those, only 10% have had any real success.
This is hardly startling news. The cost-effectiveness of buying an off-the-shelf “fix” for the problems that plague American businesses has always been dismal and will continue to be so for two reasons:
- The recipe is unlikely to be any belier than the cooks. In other words, any program is only as good as the managers who try to implement it. Because of this, no program for transforming mediocrity into excellence is going to succeed much beyond chance. And, in spite of the apparent belief that it can be easily done, nobody has yet found a way to make gold out of lead.
- There is no one sure way to change the culture of an organization in fundamental ways except by changing the person(s) in power. If the same people remain in power, and if they do not change in very significant ways, nothing much else is going to happen. In too many companies, those in power believe, “I’m okay, so there must be something wrong with everybody else.” So they grab at the latest off-the-shelf program in an effort to fix all those “broken” people who work for them. That approach can never work because it misses the real issue.
The place to begin is to recognize that even the best medicine won’t make excellence out of mediocrity. The final outcome depends far more upon the cook(s) than it does on the recipe. In most cases, transforming your organization requires transforming yourself.
HIGH PERFORMANCE ORGANIZATIONS
A high performance organization has certain fundamental differences that set it apart from other organizations. A high performance organization:
- Is better than its competitors at everything it does and is diligently and incessantly working at improving everything it does at a rate that significantly outpaces its competitors.
- Has a purpose which is used to focus the energies and consciences of all its members. Typically, that purpose is to be the best there is or ever was.
- Simultaneously and continuously maximizes the best self-interests of all its stakeholders.
- Outperforms all others (by any measure) not because of what propels it, but in spite of any and all obstacles that impede its path.
- Makes it possible — and necessary — for ordinary people to perform in extraordinary fashion.
- Transforms its people into “owners” of the life and the destiny of the organization.
- Is a healthy organization that is irrevocably committed to being great, whatever it takes to do that.
In a high performance organization, all (or most of) the people in it own all the problems having to do with the life and destiny of the organization. Ownership isn’t about having stock or equity in the organization; that doesn’t make people perform any better. People must be involved in the life and destiny of the organization.
The key is to structure the organization so that ordinary people can and will regularly accomplish extraordinary results. If you keep waiting for extraordinary people to come along and make it happen, you’re going to wait a long time. Instead, your goal should be to transform your organization in such a way that your people are capable of and enthusiastic about delivering high performance every minute, every hour, and every day.
High performance is about empowerment which involves a great deal more than waving a magic wand and telling employees, “You’re now empowered; go out and get it done.” That approach guarantees failure. To effectively empower employees, the person at the top, the one with all the power, must change their attitudes, beliefs, and behaviors so that they embody the essence of a high performance organization.
TWO BASIC BUSINESS ISSUES
There are two basic business and organizational issues that companies must face today and into the next century. These have a direct relationship to the need for high performance organizations.
- Today and in the future you will have to do more with less. This doesn’t refer to downsizing; this refers to doing more with less across the board. You don’t improve the health of an organization just by reducing the head count. That’s not the issue. The issue is how you design the paradigms and processes involved so you can do more with less.
- In the future, you will be required to make organizations that are good for people. Twentieth century business is moving toward concerns about the environment, ecology,
and protecting people. Much of this is required by government and much of it is onerous and wrong-handed. In effect, the government is trying to legislate organizations that make people better rather than destroying them. The intent may be honorable, but the approach is wrong.
People want to be masterful at something that makes them relevant to others and to life. In high performance organizations, all people are equally relevant to the life and destiny of the organization. Most people are willing to contribute their hearts and minds to such a cause.
THE MACRO VIEW
Many theories abound about the feasibility of high performance organizations. Most of those theories propose that anybody can create one. That may be the case, but anyone who attempts such a Herculean task must have the following:
- A fanatical commitment to the cause: Anything less will produce organizational pablum at best. The irresistible commitment must be performed by every manager at every level. You can predict the shortfall by how much less than total commitment is exhibited by the managerial cadre of the organization.
- A deep understanding that high performance is not a goal or an achievement but a way of life: The high performance organization is, and always will be, in the process of becoming a virtuoso performer. This is not perfectionism. Rather, it is a zeal to continuously get better — forever.
When making a high performance organization, you never fully achieve that goal. You will always be in the process of becoming a high performance organization because there is no “place” to get to. Instead, high performance is a set of beliefs, attitudes, orientations, and performances that contribute to an everyday, continuous process of becoming a high performance organization. High performance isn’t a goal; it’s a way of life — a continuous striving without ever getting there.
- An unbounded willingness to pay the price: Everything great has a price. No matter the level of talent, intention, or desire, those who can’t or won’t pay the price will never be contenders in this arena.
- A full and complete realization that necessity drives performance: Desire counts for very little in performance. Whenever people get better at what they do, it is because they have “instrumented’ themselves to improve, which is usually a painstaking process. Most people will make that effort only when it is necessary (the necessity can be internal or external). Ordinary people are capable of doing extraordinary things, not because they want to but because they have to. The key is to recognize that you can’t make people want to do things. They absolutely “have to” do them. When they “have to,” they will, and when that becomes the pattern of their lives, you can make other things “have to” and people will do them.
The most potent, powerful necessity of all is habit. It is high performance habits that make high performance organizations so powerful. No amount of talent, effort, or desire can begin to measure up to the habits that equip an organization to be the best there is.
- A realistic appreciation of the fact that high performance requires a totally different paradigm: A high performance organization functions completely differently than a conventional one. Getting people to think, see, and perform differently requires a major transformation. Managers deal in change; leaders deal in transformation. Transforming yourself from being a manager into becoming a leader is part of what it takes to lead the way. High performance organizations learn to see problems as challenges. Instead of dreading them as unbearable annoyances, they welcome and look forward to challenges. They like to be put to the test because it offers opportunity for growth. Just as virtuoso musicians relish performing the most challenging pieces, and great ballplayers go one-on-one with other great players, so too, must high performing organizations rise to the occasion.
Virtuosity doesn’t refer to recognition, rewards, and accolades. Instead, it refers to the attitudes, orientation, and discipline that takes place “off-stage.” Vladimir Horowitz, the greatest concert pianist of our age, practiced the piano every day until he died at age 94. Even after decades of performing at the highest level possible, he was still practicing to improve his art and craft. In a high performance organization, people at the top must practice their craft with that same kind of diligence and intensity.
- A total willingness to become “de-addicted” to the managerial payoffs of conventional organizations: In conventional organizations, managers get addicted to a lot of payoffs: money, power, prestige, privilege, etc. When a few people benefit at the expense of others, there can never be a high performance organization. You can’t manage your way into a high performance organization. Only when people manage themselves and their own work and have some control over the systems in which they perform can high-performance even become possible.
Too often today, the CEO of an organization takes away the relevance of everyone else in order to feed their own ego. They feel like they are indispensable and everyone else is just there to keep things going. In a high performance organization, it’s the opposite. Everyone is indispensable except the CEO.
- Being okay with the fact that there is no “answer.” You are the answer: Any answer to the question “How?” can never be independent of the person who asks it. Any off-the-shelf answers have no value apart from the person(s) who do it.
- Being able to imagine and foresee the implications of the fact that nobody has ever overestimated the difficulty of carrying through the task of changing the order of things in such a profound way.
THE ROLE OF THE CEO
The first obligation of the leader is to define reality. In a high performance organization, the facts of life aren’t different but the interpretations are. The leader has to make sure everybody is working under the same interpretation of reality.
Leaders must lead. They can’t allow themselves to be sucked into conventional scenarios or get stuck in the conventional way people think. Leaders have to fracture the way people think in order to make them what they have to be to create a high performance organization.
The CEO of a high performance organization must perform certain key roles. These are:
- You must have a great and worthy purpose: You must have a great and worthy purpose — not to you, but to the people in the organization. It must be something that captures their imaginations and tugs at their heartstrings, something they see as being a great and worthy purpose. If the organization is all about you, about surviving and making a profit, they won’t consider it a great purpose.
You have to learn a very difficult role: that of being a leader who can embody the great and worthy purpose. You have to be that purpose, not just say it. If people constantly see you “being” that great and worthy purpose, it will be contagious. It will provide certain kinds of necessity for other people that allow you to create a high performance organization.
- You must be a great and worthy leader: You must also be perceived as having a strategy adequate to the purpose. People need to believe that you have what it takes, regardless of the obstacles, to lead the way to that purpose. A great leader is one who is capable of seducing followers to their cause. They then surround themselves with disciples who are as committed to the cause and the organization as they are.
Leadership is probably the most sophisticated and demanding art there is. If you started today being a student of leadership, and you studied and practiced diligently for the rest of your life, you might be adequate. To be a great and worthy leader doesn’t mean
getting there; it means getting better at it every day because you study, read, look, ask, practice, and learn from your failures.
- You must be a great story teller: The story that you tell is not the way things are but the way they will be in the future. You must tell a great story because all new things are subject to attenuation. No matter how blissful or ecstatic something may be initially, people will accommodate it. The initial excitement, interest, and enthusiasm always dissipates.
The plot of your story has to bring about the story itselL And every role is a key role to be performed by those who are ready, willing, and able to make the story happen. Each player must own the performance of his or her role and, therefore, the outcome of the whole.
- You must re-launch the mission — every day, if necessary: It’s your job to dislodge the inertial forces of the old culture. What isn’t making a positive net contribution to the mission will make a negative one. You have to discern which is which and forever be working to increase the positive and decrease the negative.
People may get excited in the beginning but soon everything will be back to business as usual. You must be relentless in your pursuit of the cause. If you keep at it day after day after day, people will eventually believe you mean business and decide to join up with you.
THE MICRO VIEW
It helps greatly for the CEO to have a guide in this process — someone who has been there and can help them avoid some of the dangers and pitfalls and lead them in new directions. The guide also functions as a mentor, coach, and conscience of the organization to be.
The conscience is perhaps the most important role of the guide because it is almost impossible for the CEO to have a conscience for the new organization. Their conscience is clearly tied to the old organization. The guide can help move the CEO in the right direction so they can think, feel, and have the attitudes and orientations of the person who is going to be the chief steward of the high performance organization.
When that movement is clearly signaled to people, a vacuum gets created. That vacuum allows you to communicate. When the CEO begins to move in the new direction, others can no longer play the same game. They have to make some observations and ask some questions which allow the CEO to begin to communicate the process.
This is a very critical step in the process. Unless others can see you becoming somebody else, they won’t have any imperative to redo themselves and everything will go back to being the same.
You transform an organization one piece at a time beginning with the top piece. As you change your relationship with your direct reports, that piece of the organization will turn upside-down. It gets turned upside-down not because you want an upside-down organization, but because you want an organization that can work at any angle. Not until you get upside-down can you work at any angle.
Your direct reports will then go off and do the same process with their people. Piece by piece, those pieces get turned upside-down and that’s how you do the whole organization. It isn’t possible to do the whole organization at once.
To do this, you must accomplish four things with your key people:
- Make it necessary for them to be always becoming a virtuoso at what they do: A virtuoso is not self-recognized; somebody else has to recognize the virtuosity because it is based on performance. People may think this is an unrealistic goal, but virtuosos are not perfectionists; they are people who constantly practice their trade.
If you can’t make people into virtuosos, it is your failure not theirs. But it is also an investment issue. You have to determine the payoff for the investment necessary to turn them into virtuosos. Deciding whether someone is a “keepe? or not can be a very difficult choice. One way to determine that is to ask yourself, “If we already had a high performance organization, would this person be in it?”
- Make it necessary for them to have the heart, mind, and spirit of a leader: Given your role in the organization, your key people will practice or perform somewhat less than you will. But they still need the mentality and spirit of the leader.
There are many differences between managers and leaders. Managers make decisions; leaders create community. Managers use their power to aggrandize themselves; leaders use their power to do good. Managers are number-makers; leaders are people-makers. To have the heart, mind, and spirit of a leader, your direct reports must enact a very different role than they are used to.
- Make it necessary for them to be the chief steward of the mission: As you begin to take this process down through the organization, everybody necessarily becomes “the” chief steward of the mission. It doesn’t matter whether others help or hinder them; they are in charge of the mission.
For example, you don’t want a sales manager who says, “We could sell this stuff only if the manufacturing people knew how to build it.” In such cases, most CEOs would
step in and solve the problem. In a high performance organization, you don’t do that. Instead, you get the sales manager together with the production manager and let them decide how to resolve the situation. As chief stewards of the mission, it is their job to do so.
- Make it necessary for them (individually or collectively) to be able to take over your job and do it better than you do it: Process improvement is part of the subject of succession. If the successor isn’t significantly better than the one being succeeded, there hasn’t been any improvement. In essence, your job is to eliminate your job. This process needs to be taken all the way down to the front-line supervisors. Their job is also to make it necessary for their people to be able to take over their jobs and do them better.
Necessity is not about rewards and punishments; it isn’t about incentives or fear. Instead, necessity lies in one’s certainty about the consequences. Necessity occurs when a person knows what the consequences of their performance will be even though those consequences have never been seen.
The “triangle” of necessity has three sides:
- The nature of the relationship with the leader
- The role description/performance goals/learning plan
- The culture and/or the operating system within which a person, group, or unit performs When all three of these are joined, you have real necessity.
RECOMPOSING THE ORGANIZATION
How an organization is composed in large part determines how it performs. The guiding criterion for a high performance organization is to put every person into a unit which is in business for itself. Each unit becomes a “mini-business,” totally responsible for its own performance.
If there are good reasons to keep some functions centralized (such as accounting), the mini-business teams buy their accounting services from the accounting department. If the mini-business could purchase those accounting services outside the company at a better price and with better quality, they should do so. So even the centralized departments have customers and competition, just as the mini-businesses do. When people have immediate interests that have nearly the same life-or-death dynamics of the organization as a whole, then they begin to identify with the life and destiny of the organization. The tools of composing and recomposing organizations are:
- A scorecard that measures real performance against real goals and real competitors.
- The systems and processes that directly and indirectly generate the measures on that scorecard.
- The roles of the people who perform those processes and functions in those systems along with the casting and development work that makes them virtuoso performers in those roles.
Whenever any of these drives high performance, the organization is on the right path.
BARRIERS TO HIGH PERFORMANCE
There are five basic categories of obstacles and barriers to creating high performance organizations:
- The conventional mindset: Conventional wisdoms always and inevitably lead to conventional outcomes. If you want to have unconventional consequences, you must start with unconventional wisdoms. You can’t make high performance organizations out of conventional wisdoms. You have to find a way to get people to internalize the unconventional premises behind high performance, so that the next time something happens, the different premise drives behavior.
Most of the key ingredients of the “successful” manager’s mindset actually work against the making of high performance organizations. This doesn’t mean that managers don’t need a foundation in knowing how to run organizations. But if their knowledge can’t be made part of what people know and do, the organization will get stuck in a top-down posture.
Believing in panaceas that will solve all your problems is a conventional mindset. People are always looking for easy answers, but there is no such thing as a panacea for organizations. The answer is never “it,” the answer is always y~_ii. The answer is never easy and it can’t be bought. It must always be earned.
- Habits: There are habits of mind, heart, spirit, and action. In organizations, habits are always equivalent to routines. If these routines can’t be broken, the organization will be fixed at some stage of underdevelopment and, therefore, underperformance.
Routines are destructive to high performance because they disengage people from what they are doing. The old belief was that if we could regularize and proceduralize work processes, they would become predictable and dependable. That was true, but there was a price to be paid because routines always disengage people from what they are doing.
It isn’t possible to do away with routine entirely. But in a high performance organization, routines are not sacrosanct. The accomplishment always takes precedence over the rule. In a bureaucratic organization, the rule always takes precedence over the accomplishment.
- Underempowerment: Underempowerment is failing to make of the raw material all that could be made of it. If you don’t fully assume the obligation of making all that you can of yourself, you can’t do it for your organization.
By nature, hierarchies underempower those below. This doesn’t get corrected by giving people the prerogative to run the place. Empowerment is a slow process of making people responsible for their performance and the performance of the organization. Unless people are equipped to lead themselves, there is no real empowerment.
- Dumb systems: Dumb systems accommodate inferior performance: quality problems, mediocre productivity, poor customer service, marginal profits, etc. They focus on rules and activities rather than results and accomplishments. Dumb systems are generally predicated on the vested interests of those who run them rather than the larger good of the organization.
Dumb systems usually reward one outcome while those in charge are hoping for another. They are always cost and/or revenue-ineffective.
- The larger, popular culture: Our popular culture is not a partner in making high performance organizations. In fact, popular culture is moving rapidly in the opposite direction. It constantly bombards people with messages about being victims and about not being responsible for their behavior and performance. It tells people that “life begins after work,” and that they have certain rights and entitlements regardless of how they perform on the job.
That mindset is a real enemy to the kind of culture you need in a high performing organization. Tell the people who work for you to “park that garbage at the door!” Otherwise you will never develop the culture necessary for a high performance organization.
CORE STRATEGIES
The specific tactics are always a function of the leader, the existing organization, and the prevailing circumstances. But there are six core strategies that can be put to work in any situation:
- The strategic distribution of the ownership of problems: The ownership of the right problems by the right person (or team or units) at just the right time in the right way will elevate the performance of any organization. Ownership means that each and every person involved owns the consequences of their performance. This strategy drives the recomposition of the organization.
- Making possible what is necessary, and making necessary what is possible:
Sometimes, it isn’t possible for people to produce the required performance; they may not have the capacity to do so. Still, at the least, you have to make possible what needs to be accomplished. For real gains, you have to make necessary whatever is possible. And no one knows what that is until it is achieved.
- Accomplishments, not activities: A rule or procedure is not an accomplishment. Until all the people at the top are accomplishment-minded~ the rest of the organization won’t be. Recompose your organization and make it a requirement to be accomplishment-minded.
- Choice: Becoming a virtuoso organization requires a whole infrastructure of choices and an unshakable belief that what happens, especially the outcome, is by choice. You and your management team must model this belief and allow no other belief about how the world works to get in the way.
- The learning mode: The more people you have who are enthusiastically and diligently in the learning mode, the greater your competitive advantage from both continuous and discontinuous improvement. Every role description in your organization should have a learning plan.
- Bringing life back into work: The more seamless people’s work and non-work lives are, they more likely people are to be happy at work and very good at what they do. They will also be healthier than those who do what they do in order to get a paycheck to buy what they think they deserve.
A great cause, a great leader, and the unrelenting necessity to perform against real world competitors give people back a life at work. It is your job, indeed, your moral obligation, to make this happen.
HIGH PERFORMANCE WORDS OF WISDOM
- Conventional wisdoms always lead to conventional outcomes.
- You can’t “fix” organizations.
- You don’t help people by doing for them what they can and should do for themselves.
- People spend more of their waking hours at work than at any other activity. If they can’t have a humanizing life there, they can’t have it anywhere else.
- Experiences aren’t what happens to people; it’s what they make of what happens to them.
- Reality is what people say it is.
- Purpose is greater than happiness.
- People ask questions in direct proportion to their capacity for growth and development.
- It is better to know some of the questions than all of the answers.
- Reach people’s hearts. Their minds and bodies will follow.