In recent years, managers have been bombarded with hype about one or the other improvement method. But most of these improvements were initiated without any scientific proof that they truly work, so there was a lot of chaff under the wheat, so to speak. Organizations were regularly set on the wrong track and exerted a lot of effort in the area of improvement without a demonstrable, permanent result.
Our study of High Performance Organizations (HPOs) marks a dividing line. Because:
With this, managers can for the first time develop a targeted focus on things that are truly effective and eliminate other things that they might have devoted a lot of attention to in the past.
The five factors that influence an HPO the most are management quality, openness and action orientation, long-term orientation, continuous improvement and renewal and quality of employees. Many things that were traditionally considered as important appear not to be decisive for a high performing organization. These are matters that may be important but they do not necessarily ensure a continuously excellently performing organization. I describe a few examples of such matters in this article.
No particular organizational design or organizational structure appears to have a direct correlation with the results of an HPO. It therefore does not appear to matter whether an organization opts for a functional design, a process-oriented institution or a matrix organization: none of these organizational designs guarantees the transition to a high-performance organization. Reorganization, something for which many organizations appear to opt for time and again when difficulties arise, will not necessarily help sustainably improve the organization’s performance. A reorganization must be for the benefit of the five HPO factors; otherwise it will likely work in a counter-productive manner.
Even a large degree of employee independence does not “automatically” lead to better results. And this despite the enormous amount of attention devoted to “empowerment” in recent years. What’s more: An excessively high measure of autonomy has a negative relationship with the organization’s result. Too much freedom for employees can lead to bad internal organization and lack of clarity. Ultimately it can even lead to a lot of damage, certainly if a certain measure of central coordination and direction is lacking. Management must indicate the playing field on which the employees can operate autonomously and the boundaries they may not exceed, under penalty of being fired, for example.
An organization’s strategy plays a relatively unimportant role when it comes to high performance. It does not matter whether an organization opts for cost/price leadership, product differentiation, customer intimacy or a combination of these strategies: the distinguishing factor is the uniqueness of the selected strategy in the sector or market in which the market operates. The adoption of a “me too” strategy is always misplaced if the organization wants to be an HPO. Analysis of the HPO study shows that when strategy as a factor is compared to the management quality factor, the latter is more important to the success of the organization. In other words: a team of good people can achieve everything it wants, while an organization with a clear and well-defined strategy without the people to implement it will ultimately fail.
Technology, and in particular information and communication technology, is relatively unimportant. Many organizations spend a lot of time and energy implementing new ICT systems. However, these actions do not in turn “automatically” lead to achieving HPO status. For example, implementing an automated CRM system will not automatically lead to employees becoming more customer-friendly. Here too improvement of the ICT must be for the benefit of the five HPO factors. The HPO factor will not be able to make continuous improvement without good ICT systems.
Benchmarks are not an objective in and of themselves. Organizations often see benchmarks as an end goal, while the HPO sees a benchmark as a starting point. Or as a point of departure from which the HPO will try to move away as much as possible in order to differentiate itself from its competition.
These five examples show what many non-HPO organizations often spend their energy on. The golden HPO rule is that implementation of these things always has to support at least one of the five HPO factors in order to be effective.