12 Principles that Guide High-Performance Organizations

Unlocking the Secrets of High-Performance

They may seem, at first glance, to have nothing in common—different industries, challenges, experiences, leaders, competition, you name it. But there is something about this group of organizations that drew attention and merited study.

And that was their performance. These businesses outperformed their competition. Consistently.

Brian MacNeice and James Bowen recently spoke with me about their research into these companies and their new book, Powerhouse: Insider accounts into the world’s top high-performance organizations. Brian and James are founders of the international Kotinos Partners consultancy. They are experts in high performance.

They outlined 12 principles that guide the organizations that outlast and outperform the competition.

 


“Engagement on its own is only a stepping stone to sustained high-performance.”

 

12 Characteristics

How did you arrive at the common characteristics of organizations achieving excellence?

Effectively these emerged gradually through the research. We studied each institution with an open mind and on its merits. Then we shortlisted, at the conclusion of our research in each case, what we thought were the fundamental drivers of that institution’s enduring outperformance. When we compared the lists we had created across several of the institutions, the common characteristics became evident.

Secondly, because our research process was quite extended, we had the opportunity to use some of the later studies to test and validate hypotheses emerging from the earlier ones.

Finally we used some of our client work, which was progressing in parallel, to further refine our thinking.

 

I often ask leadership experts whether leaders are made or born. You take on that question with regard to high-performance organizations and say that they are made, not born. What leads you to this conclusion?

Simply put, the leaders who we spoke to in the organizations we researched were consistent in articulating and reinforcing that view. Without exception they talked about how they viewed the enduring sources of their advantage as being their people and their organizations, and they each described their roles as being about setting direction and ambition and then facilitating and enabling their organizations to achieve and extend those ambitions over time.

Even more particularly, given that many of the organizations we researched could be reasonably described as “values-driven,” their leaders saw a fundamental aspect of their roles as being about defining, representing, facilitating and rewarding those values in their organizations. The Mayo Clinic, Tata, Doctors Without Borders (Médicins sans Frontières) and the US Marine Corps were particularly strong examples in this regard.

 


“Overengineered engagement initiatives can become impersonal and feel false.”

 

4 Pillars of High-Performance

Let’s talk about the four-pillars to delivering high-performance.

Copyright Brian MacNeice and James Bowen, Used by permission Copyright Brian MacNeice and James Bowen, Used by permission

Every organization knows it needs a plan. Where do most go wrong?

There are lots of ways in which organizations go wrong when it comes to planning, but for this discussion we will highlight two that we observe again and again in our work.

First, we suggest that organizations go wrong by planning on a basis of “inside-out” rather than “outside-in.” That is to say, their leaders tend to look at last year’s model and last year’s performance and identify tweaks they can make with a view to delivering incremental performance improvements next year. This model of planning tends to be short-term and tactical in nature and anchored in a historic, likely outdated, view of the world.

 


High performance organizations plan from the outside-in, not inside-out.

 

High performance organizations come at planning from the outside-in, using a much more strategic, future-oriented approach. They start by looking outside their organizations to understand how the context within which they operate is changing. Sometimes they do this by looking at their organizations through a series of discrete “lenses” – for example industry, market, customer, competitor, technology, regulatory, people – to understand (a) what dynamics they observe, (b) what opportunities and/or challenges arise as a result of these dynamics, and (c) how these dynamics might play out over the course of their planning horizon. Armed with these insights – in particular a much deeper understanding of cause-and-effect – they are better positioned to create strategies that bridge from where they are now to where they want to be over time. Relative to the first approach we discussed, plans developed this way tend to be more ambitious, radical and lower risk all at the same time.

Second we would suggest that organizations go wrong because they view planning as a task rather than as a capability. They view it as a chore to be endured once a year to fill a template, and which brings with it a significant cost in terms of time away from the frontline. Their engagement and investment in planning reflects this attitude – for them it’s about getting to the end of the process as quickly and painlessly as possible.

The approaches we observe in high performance organizations, by contrast, are more consistent with Eisenhower’s famous mantra that, “Plans are nothing, planning is everything.” They understand that their organizations, and the worlds in which they are operating, are always changing, and as such they develop planning as a dynamic, enduring competence. They operate “with their heads up,” tracking changes in their context all the time, taking on board the lessons of their experience and factoring insights into their plans on an ongoing basis. Some of these organizations have moved away from a traditional, annual model of budget-based planning towards a more continuous, iterative model of strategy development and deployment.

 


“Plans are nothing, planning is everything.” -Dwight Einsenhower

With regard to priorities, many people in an organization may feel overwhelmed. Fewer people doing more work is often something that is common after years of low or no growth. How do individuals best prioritize their goals? How do leaders know whether work demand is matched with resource supply?

The answer to the first question depends on where individuals sit within their organizations. At the highest levels, senior leaders insist on clarity of priorities as a defined outcome of their strategy/planning processes – they are always clear about their strategies, and likewise always clear about the priorities for delivering the strategies.Powerhouse

Deeper within their organizations, prioritization is enabled by the clarity and consistency with which the key institutional priorities are communicated and cascaded down. Senior leaders in several of the organizations we studied – Gary Kelly at Southwest Airlines being a particular exemplar in this regard – recognize the importance of clarity of message and are absolutely relentless in reinforcing their organizations’ ambitions, strategies and priorities at every opportunity. This eliminates ambiguity for staff and, in particular, minimizes the extent to which they and their teams get caught between competing agendas. The same leaders also make sure that governance models – especially performance management and reward processes – are aligned with delivering their organizations’ identified priorities.

There aren’t really any shortcuts in the process of aligning demand for work with supply of resources, and it’s definitely not, nor should it be treated as, an exact science. It’s basically a top-down/bottom-up process of deconstructing priorities, projects, and initiatives into manageable pieces for which the resource requirements can be identified reasonably accurately, and then aggregating the pieces back up again to understand the total load on the organization. In addition to matching demand with supply at the institutional level, our high-performance organizations are proactive in aligning at the levels of key individuals and teams. They look to identify and mitigate in advance any potential bottlenecks or risks where multiple projects are dependent on the same critical individual or team resources.

 


High-performance organizations kill off initiatives not aligned with strategy.

 

We observed two critical “keys” to creating organizational capacity in our research. First, a constant focus on cleaning out day-to-day operations – in particular by pushing down decision-making accountabilities and eliminating unnecessary escalation of low-level issues, and second a rigor in killing off initiatives not directly aligned with the organization’s vision and strategy.

 

12 Principles that Guide High-Performance Organizations

  1. Ambition: a clear, unambiguous vision for what the institution is looking to achieve
  2. Purpose: absolute clarity of why it wants to win
  3. Measures: holistic scorecards of the right performance metrics that link to the vision
  4. Standards: high standards embedded and lived as an institutional value
  5. Gap: narrow performance distance between highest and lowest performing individuals and teams
  6. Decisions: established practice of taking decisions as close to the action as possible
  7. Code: behavioral standards for what it means to be a member of the institution
  8. Engagement: strong connection across institutions, their leaders, their staff and their stakeholders
  9. Resilience: institutional capacity to maintain performance despite negative shocks
  10. Feedback: organizational-wide interest in and focus on learning
  11. Teamwork: recognition that high performance is a collective endeavor
  12. Improvement: constant, institution-wide focus on pushing the boundaries of performance

 

People. You say it’s “what it means to be a member of the team.” Expand on that thought. What’s the best way to define a behavioral code?

The behavioral codes we observed in the organizations and teams we studied were in effect answers to two key questions:

What does it mean to be a member of this team? and

How does this translate into standards and expectations for how we work together?

The answer to the first question in many instances requires triangulating among the overarching values, standards and ambition of the organization, the team’s specific brief, and the preferences and values of the individuals in the group.  In answering the first question, teams take their institutional values and relate them to their own specific circumstances and membership.

The best way to define a behavioral code is to follow this exact approach. Start with the institutional values and ask the team to define what those values mean in the context of the specific situation they face. Then identify examples – either real or potential – of the standards they define being lived or broken in the work that the team would do. In this way, the institution’s values and standards move from being somewhat generic and abstract to being much more specific, tangible, and relevant for individual teams.

 


“Performance powerhouses demonstrate the capability to improve at an accelerated rate compared to their competitors.”

 

Process. You suggest that it’s critical to design the best processes and structures to reach the vision. How do leaders assess this? How do you know it’s working?

The starting point for effective, high-performance process design is for leaders to define the jobs of their teams in the specific context of their institutional visions and the measures of team success associated with delivering them. In many of the client organizations with which we work, both teams’ roles and their scorecards are defined simply and narrowly in the context of performance delivery – i.e. the job of a sales team is to deliver sales, and sales performance is the single, overarching measure of team success. However, in the high-performance organizations that we researched, we found individual team roles and performance measures being defined more holistically than this, specifically in the context of the institution’s vision for success. In Tata Group for example, we saw the job of a sales team, in addition to delivering sales performance, defined as being about developing a pipeline of sales talent, creating a best practice model for sales-force deployment and management, capturing consumer insights for communication back into the organization, and representing the organization and its values in the relevant market. Simply put, in addition to delivering performance, the expectation was that the team would contribute meaningfully to building the capability and capacity of the Tata company to extend its performance leadership over time.

 


High standards should be visible, transparent, and engrained in organizational DNA.

 

James Bowen James Bowen

The standard of “just enough process” that we observed across the institutions we studied is not the same as “no process at all.” As such, we observed that, having defined their jobs holistically and comprehensively in the context of the institutional vision, teams could then design their processes to ensure they had no gaps.

Leaders know their approach is working on the one hand by tracking performance against the key metrics identified and on the other hand by tracking the extent to which they feel comfortable in raising performance expectations over time. This is how they know they are being successful in building organizational performance “fitness.”

 

Of the 12 principles you outline in your book, was there a principle that made the list that you didn’t expect?

They were a few. Maybe the most unexpected was that relating to the “Performance Gap.” At the in Philadelphia at the Curtis Institute of Music, with the New Zealand All Blacks Rugby team, and in Finland with the state school system, we learned that maintaining a narrow performance gap – or distance between the highest and lowest performers in a population – was a key enabler of sustained positive performance across a group. Leaders in these institutions explained how, if they allowed a wide gap in performance levels to emerge, the performance levels of the whole group would suffer as a result. They showed how over time the performance of the best in their groups would be ‘brought down’ in subtle ways by the relative underperformance of those around them while the levels of the average or lower performers tended to stay substantially unchanged. Conversely, the effect of maintaining a narrow gap was to subtly challenge and create the conditions for the best performers to push their boundaries still further, while at the same time mobilizing those following behind to improve their performance as well. We saw at those institutions how maintaining a narrow performance “gap” created a really powerful force for enabling continuous commitment to better performance.

Brian MacNeice Brian MacNeice

 

Was there one particular story, of all of the interviews and features throughout the book, that you think about most often?

It is really hard to pick out one, as all of them had their own special moments. The process of visiting each of the institutions in person and spending time immersed in their worlds was a privilege and created lifelong memories for us. If forced to land on one, we might highlight our visit to the Grameen lenders meeting in the village of Mirzanagar – otherwise known as Branch Number 23760207 – as having been very special. It was amazing to witness the group of female villagers speaking with pride about how they were able to sustain incomes for their families on the backs of the loans they received from the Grameen Bank. It was a powerful reminder of how business (and we have to keep reminding people that the Grameen Bank is a profitable, corporate entity, not a charity) can make a real difference to the lives of so many people.

 


Powerhouses build an environment where the right thing to do is the easy thing to do.

 

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Powerhouse: Insider accounts into the world’s top high-performance organizations

 

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