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CHAPTER 1
Introduction
What do award-winning companies know that eludes many of todayās executives? How do they organize and innovate to achieve outstanding results in their fields of endeavor? What core and innovative processes and best practices do they have in common that they can leverage in challenging times to achieve success? How have they overcome what a recent CEO study calls the āchange gap,ā or the ability to innovate and change in a challenging market?
In good times, strengths and weaknesses of a business model are often overlooked. In bad times, as with the global recession, weaknesses often come to the forefront. Market forces and prolonged recession have caused organizations to rethink their business models and innovate through best practices. I was intrigued by how several companies have thrived and innovated, particularly in one of the worst recessions since the Great Depression. Leaders were kind enough to share their stories with me. Research in this book focuses on core best practices from my first book1 and on how award-winning organizations have developed dozens of new, innovative best practices not only to survive but also to lead their sectors.
That some should be rich shows that others may become rich, and, hence, is just encouragement to industry and enterprise.āAbraham Lincoln
What about the First Book?
My first book, Five Key Principles of Corporate Performance Management, was published in January 2007 and to my surprise was the number 1 release on the largest global Web channels, Amazon and Barnes & Noble. For three years it has continued to be the number 1 corporate performance management (CPM) title (from over 2,500 titles globally). All royalties are donated to www.honorflight93.org to honor the families of Flight 93 and www.saluteamerica.org to assist wounded soldiers to rebuild their lives. Since this book builds on the first, I will share some of the strategic backdrop and research highlights from the first book that motivated its publication.
In 2001, I was fortunate to be invited by the CEO of Crown Castle International (a telecommunications company) to be the senior vice president of global performance (CPM office) and to form and deploy a new CPM office. Crown shortly thereafter experienced what is now referred to as the telecom meltdown. The economic backdrop and research showed conditions were very challenging, as demonstrated by the following:
ā¢ Kaplan and Norton, co-inventors of the Strategy Focused Organization and Balanced Scorecard, and my former employers and mentors, discovered that ā9 out of 10 companies fail to implement their strategiesā and that four barriers (vision, people, management, and resources) were responsible for these shortcomings.2
ā¢ Fortune magazine reported, āIf making the Fortune 100 best lists is an enormous accomplishment, consider how tough it is to repeat the feat every single year. Just 22 companies have appeared on our list every year since its 1998 inception.ā Between 1998 and 2004, the turnover of Fortune 500 companies has been staggering.3
ā¢ Booz Allen Hamiltonās study, āWhy CEOs Fall: The Causes and Consequences of Turnover at the Top,ā showed turnover among chief executives soared 53 percent between 1995 and 2001. The number of CEOs who left their jobs under pressure more than doubled during that period, and average CEO tenure plunged more than 23 percent, according to the study of 2,500 publicly traded companies.4
ā¢ Drake Beam Mornās (DBM) study, āCEO Turnover and Job Security,ā revealed that two-thirds of the worldās companies have changed CEOs at least once in the last five years.5
In response, my team and I relentlessly searched for methods and best practices from award-winning companies to share with the Crown organization to assist in improving our performance.
We researched, visited, and collaborated with over 40 award-winning organizations that encompassed all types of business models including government, quasi-government, publicly traded, privately owned, and nonprofit; and that participated in numerous sectors including aerospace, financial services, telecommunications, consumer products, utility, pharmaceutical, entertainment, communications, and high technology hardware and software.
This research revealed a common DNA consisting of 30+ CPM best practices that were grouped by the Five Key Principles:
Principle 1: Establish and deploy a CPM office and officer.
Principle 2: Refresh and communicate strategy.
Principle 3: Cascade and manage strategy.
Principle 4: Improve performance.
Principle 5: Manage and leverage knowledge.
The companies of the executives who generously shared their methods with us have earned an impressive roster of awards and honors, including the following:
ā¢ U.S. Presidentās Malcolm Baldrige National Quality Award (MBNQA)
ā¢ Kaplan and Norton Global Balanced Scorecard Hall of Fame Award
ā¢ Deming Quality Award
ā¢ American Productivity & Quality Center Best Practice Partner Award
ā¢ State Quality Awards (based on MBNQA criteria)
ā¢ Fortuneās ā100 Best Companies to Work Forā
ā¢ Several other honors and awards in each case
In truth, I was thrilled to direct Crownās global improvement efforts with a very supportive and collegial executive team and employee base. The CPM best practices started to take hold, and Crown earned several notable, globally recognized awards and honors, including the following:
ā¢ The Wall Street Journal ranked Crown in the Top 20 Most Improved Companies in Shareholder Value (out of 4,000).
ā¢ The companyās share price appreciated from $1 to over $30 during my tenure.
ā¢ The company won the Balanced Scorecard Hall of Fame Award from Kaplan and Norton.
ā¢ The company won the American Productivity & Quality Center Best Practice Partner Award.
This was the beginning of the Five Key Principles model (shown in Exhibit 1.1) that has since been used by dozens of organizations to emulate the winners, with striking results. This model has been updated based on the results of new research.
Innovation and Accumulated Knowledge
Since the Crown experience and the publication of my first book, I was often asked if I would follow up on the initial book and continue the research. I became intrigued by how several companies led their sectors prior to and during one of the worst recessions since the Great Depression, and I decided to pursue further research on them for this sequel. The case companies have amassed over 175 distinguished awards and honors.
EXHIBIT 1.1 Five Key Principles of CPM
Ā© Copyright 2007 Bob Paladino & Associates, LLC.
Innovation has been at the heart of our existence and advancement for centuries. Alchemists would argue that innovation is really our natural state. Exhibit 1.2 chronicles some innovations spanning 5,000 years f...
