A SELF ASSESSMENT PATHWAY TO ORGANISATIONAL
EXCELLENCE
Dr Graeme Cocks
Melbourne Business School, Australia
Extended Abstract/Paper
This presentation summarises the key findings of a four-year empirical study to identify
Australia’s long-term top performing organisations and to explore the common
elements that set these organisations apart. Many overseas studies have contributed
significantly to moulding management thought and practices in Australia over the last
25 years but only limited studies have been undertaken to identify the key success
factors and measures that might account for the performance of winning organisations.
The detailed findings have been published in 2002 and updated in 2007 in a book titled
The First X1: Winning Organisations in Australia. This practical research will provide
the basic content for this presentation.
The project commenced with a survey of 1000 senior executives in Australia who were
asked to nominate successful organisations against a set of criteria that included taking
a balanced scorecard perspective, internal efficiency and long term growth, financial
and market performance, innovation and productivity measures. Following detailed
analysis, the final number of organisations was narrowed to eleven and their
performance was studied in depth over a 25-year period from 1982 to 2006. Where
possible, data were used to compare their performance with other organisations in
similar industries to confirm their winning status. Over this period these winning
organisations outperformed the stock market index by almost three times, although
financial performance was only one of the criteria and several organisations were not
publicly listed for at least half the period.
Annual reports for the 25 year period and other published material were researched and
summarised according to key events and drivers of success. The study included
interviews with several executives from each organisation, selected for their extensive
knowledge and experience about their organisation's strategies and evolution, to gather
additional unique insights into the specific causes of success and their relationship with
appropriate performance management systems. The causes were analysed for each
organisation by the research team to determine common themes that were subsequently
classified into nine key elements for success. The findings identified many of the
performance measures that these organisations have used to manage the elements that
distinguish them as winning organisations in Australia.
The research dispels several current myths about the characteristics of winning
organisations. It shows that organisational excellence is not about precise vision or
mission statements, stretch goals, great breakthrough ideas, organisational structure,
marketing promotion or high remuneration levels. More significantly, nine key
elements for long-term success have been identified from the eleven organisations:
1.
2.
Effective Execution. Winning organisations do what they say. They announce
what they plan to do, they plan and budget for it and they meet the plans and
budgets. To do this, they have clear processes that are accepted within the
organisation. They have good control systems, use quality management
principles, people take personal responsibility for their work and they rigorously
measure performance - often using project management tools. They learn from
mistakes and do not cross subsidise under performing business units. Winning
starts with effective execution which forms the pivotal element in the framework.
Perfect Alignment. Practising a culture of continuous improvement, winning
organisations use measurement and systems as the critical foundations for
alignment. They seek to align culture, leadership, people and perceptions to
strategy. Alignment is to external needs as well as internal forces.
Adapt Rapidly. Times change so that even if perfect alignment is achieved, it will
have to be changed, and changed rapidly. Flexibility is a key but change comes
with control. Innovation is sought in process as well as in products and services.
Clear and Fuzzy Strategy. Winning organisations have a clear strategy, though it
can be expressed in many ways and does not necessarily exist through a vision or
mission statement. But there is fuzziness at the edges of the strategy. Winning
organisations are always seeking to take advantage of incremental opportunities,
even if they lie just outside their current clear strategy.
Leadership, Not Leaders. Leadership is about teams of leaders. Leaders set up an
emotional ‘cause’ for the organisation, a reason for existence. Leaders exhibit
‘captain-coach’ styles and are players on the field, showing captaincy skills and
sharing the work. They are available, egalitarian, supporting their people from
close by, not setting difficult challenges from afar. The vast majority of leaders
come from within winning organisations and have been with the organisation for
nearly twice the industry average.
Looking Out, Looking In. Winning organisations are externally focussed. They
are aware not just of customers, but also of their environment, community,
international industry and international trends.
Right People. Winning organisations hire people who believe in their ‘cause’,
whose values and attitudes fit, not the ‘best’ people who demand the highest pay.
People who do not fit are actively managed out of the organisation quickly by a
measurement system that balances performance with adherence to values.
Manage the Downside. Despite rapid growth, innovation and looking outwards,
winning organisations are conservative. They plan carefully beforehand,
considering the downside, not just the upside, of major decisions. They measure
risk and seek to share risks with other organisations, customers and their people.
Balance Everything. Rather than trying to choose between alternatives, winning
organisations choose both using appropriate performance measures. For instance,
while they are conservative, they are also entrepreneurial. While focussing on the
long term, they also focus on the short term. While focussing on financials, they
also focus on delivering value to customers, employees and the community.
3.
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9.
This presentation will discuss these elements and present them as a “Winning Wheel”
framework for achieving sustainable organisational excellence. All elements need to be
in place and linked together. The framework is applicable to organisations of all types
included listed, private, not-for-profit and government.
Since the original work the author has been part of a team that has developed a
sophisticated web-based diagnostic survey that now allows organisations to rapidly and
effectively assess organisational performance. The survey consists of 90 core questions
built around the 9 elements in the Winning Wheel framework. Outputs can be
compared to the practices that have been identified from the research into winning
organisations in Australia – those that lead to sustainable above- average performances.
The diagnostic surveys and reports are targeted at those people within an organisation,
who collectively, should know most about how their organisation is currently
performing and where they might need to focus for future success. Typically the
diagnostics are completed by the CEO, direct reports to the CEO and the next level of
management and optionally, but very importantly, members of the board of directors.
Collectively these executives are in the best position to provide objective input for the
organisational - wide performance analysis. The outcomes of the diagnostic surveys
identify “whole of organisation” strengths, weaknesses and sustainability factors. This,
in turn, highlights opportunities to improve organisational performance by focussing
resources and actions on the key areas of importance rather than simply adopting a
broadly based approach to improvement and change supported by a plethora of
management fads and acronyms. The analysis is supported by quantitative and
qualitative feedback from respondents to the diagnostic questions. Concepts for
structuring the assessment in medium to large organisations will be discussed and
examples of the initial trends from these diagnostics will be outlined as part of this
presentation. Over time, it is anticipated that a benchmarking data base will be
developed which should allow organisations to measure their performance against
competitors or to extrapolate into best practice benchmarking in which comparisons are
made irrespective of industry sector, location or business model. The principles and
success factors identified from the winning organisations and the diagnostic program
provide leadership teams and individual leaders with practical concepts and an over
arching model for the design and implementation of an effective organisational-wide
performance management system that supports delivery of the organisation’s strategic
plan.