Creating the Vital Organization

Balancing Short-Term Profits with Long-Term Success

Scott M. Brooks, Jeffrey M. Saltzman

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN:
  9781137536921
• eBook ISBN:
  9781137536945
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Are the day-to-day pressures of your business preventing your organization from reaching its full potential? 

If you are spending the bulk of your time and energy streamlining your operations - squeezing more output from your resources, shaving costs, or pressing for speed – you are risking your organization's future. Today's top leaders must balance their daily operations with future-oriented explorations so that their organizations can respond and adapt to any challenges in today's increasingly competitive and fast-moving environment. Yet focusing on both Current Performance and Future Potential is a tricky balancing act; each is a distinct pursuit that requires different skills, resources, measurements of success, and even time horizons. This book tells stories of strategy, insight, and action, featuring the latest advancements in industrial and organizational science, that will help catapult your organization to success now and in the future.
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CHAPTER 1

Introduction

In your organization, do you focus on streamlining Current Performance—squeezing more output from your resources, shaving costs, or pressing for speed—or do you step back from the day-to-day and consider the future of your business, including what kinds of products and services your team or business need to provide in the future? Clearly, attention to both is necessary, but each is a distinct pursuit: They require different skills and resources, different ways to evaluate success, and even different time horizons to know if you are on the right track. It is a challenge to focus on both daily and future needs, and especially to have to constantly switch your attention between the two. Often, in the battle between daily needs and future concerns, it is the consideration of the future that suffers, as we dwell on unending firefighting in the present, but this puts an organization at risk of being unprepared when the environment or market changes and current products or services no longer suffice.

New advances in organizational science and the practice of leadership can provide the advice necessary to define and achieve the right balance for you, your function, and your organization. That is what this book is about: Creating vital organizations.

Each day, in every business, leaders make decisions about the short term versus the long term. Decisions get made around maximizing current cash flow and profits, or reinvesting and building for the long term. But if the decisions were as easy as moving money around from budget lines A to B, there would be a lot more successful businesses. A substantial portion of business failures—from the costly to the catastrophic—can be attributed to not paying attention to the right balance between maximizing Current Performance and building Future Potential. Organizations fail not only when they go out of existence; they also fail when they are not thriving, or when they are neglecting to develop the capability to innovate to meet future needs. They fail their owners, investors, customers, employees, suppliers, and the communities in which they are located.

Disruptive technologies, globalization, emerging and evolving markets, and process innovations change so fast as to keep many organizations teetering on thin profit margins that leave little room for comfort. Survivors learn how to build and lead teams or organizations that are agile and resilient, so that they can turn quickly to pursue new opportunities and can manage bumps in the road. But organizations can do more than merely survive: They can thrive.

Clarifying what organizations do to thrive begins by separating core business pursuits into two broad categories: Current Performance and Future Potential. Some organizations are great at maximizing Current Performance—streamlining costs of production, as well as delivering time-tested products and services to known segments of the marketplace. Other organizations are supremely competent at developing Future Potential—innovating new approaches and offerings, and taking risks to create or penetrate previously unknown markets. Very few organizations, functions, or even individuals are truly good at both. Those good at both are thriving, vital organizations. They are performing today and building for tomorrow.

Saying all this is easy; making it work is hard. But one fundamental truth is that effective leadership of thriving organizations is based on clear strategies, meaningful insights, and inspired action. This book tells stories of strategy, insight, and action that are backed up with rigorous research. Collectively, these stories will create a roadmap that leaders of varying levels within an organization can utilize to maximize the performance of their organizations, their functions, or their teams.

Yes, this book is based on data, metrics, and other kinds of evidence that really matters. However, the insights gained from that data will be presented in the concise format of organizational stories. Critically, these stories are grounded in science. Decision-making traps abound, since we as humans are prone to a murky soup of heuristics, stereotypes, predispositions, and cognitive biases that make true evidence-based leadership more an exception than the norm. Common wisdom is often flawed when the environment changes so fast. How can we know what’s what?

We are organizational psychologists by training, schooled in the measurement of human foibles. Importantly, our focus is not psychopathology (though it is certainly present in the workplace) or the therapy that is often imagined in a narrow definition of psychology. We are devoted to studying how people work, how teams perform, and how organizations function and thrive. Throughout this book, we will present a framework for thinking about and improving organizational effectiveness, and how to read the environment—seeing through and working around the biases we all naturally bring to the workplace—in order to both maximize Current Performance and build Future Potential. Within the private sector, organizations that are successful at achieving this balance, those that are vital, have been shown to have higher performance on a variety of metrics compared to their singularly focused counterparts. Non-profits and public sector organizations have shown similar patterns of success with their own respective measures of outcome performance.

The suggestions, advice, and anecdotes you will come across in this book are applicable not just to public or for-profit businesses, but more broadly to all types of organizations. While every organization is unique, there are clear principles that apply to a variety of organizational types because they affect the two things at the heart of these organizations: people and goals. Organizations exist when groups of people come together to accomplish things they could not accomplish on their own. The principles outlined in this book can be applied across all types of organizations and can give any of them an edge at achieving one of the most important goals out there: to be successful at whatever tasks the organization was originally formed to achieve.

Providing a point of view on organizational functioning is easy. Ensuring that any resulting guidance is grounded in science is not. There are of course many pundits who do not hesitate to offer advice. Later chapters will highlight how to critically evaluate strategy and performance, and resist the gravitational pull of the human biases and heuristics that may have their origins in useful shortcuts, but can often lead us astray. For instance, how many times have you heard the phrase “people join organizations but leave bosses”? But try this the next time you have a large group together. Ask for a show of hands as to how many people left their last job because of their boss. In a room of 30 or 40 people, only 10–20% may agree. In general, the relationship with one’s direct supervisor, the boss, is not the reason why most people leave organizations. In fact, bosses are almost invariably one of the most positive aspects cited about organizations in employee surveys. Are there horrible bosses out there? Yes. Are there people out there who left their last job because of their horrible boss? Yes. But the statement that “people join organizations but leave bosses” is an overgeneralization that simply does not hold true for the vast majority.

One key to figuring out what is real and what is based on faulty assumptions—and to helping people build or lead an organization—is knowing which questions to ask. Asking the right questions about the organization and its performance is critical not only to be successful, but also to maintain that position over the long term. For instance, one president of a company that was struggling with quality and performance issues posed this question to his senior management team: “What can we be good at?” By framing the question that way, he completely divorced his organization from a key constituency: His current customers. He was unintentionally focusing way off into the distance in a long-term view. A more important question for a struggling organization aimed at the here and now is: “What do we need to be good at?” Organizations don’t exist in a vacuum: They exist to serve others, whether those others are within another part of the organization or are external to the organization. “What can you be” is long-term potential (exploration), while “what do you need to be in order to get to the long term” is short-term performance (execution). For an organization to succeed, those questions must be asked and executed on in tandem.

We have spent decades studying and assessing organizations, using metrics, dashboards, large-scale employee or customer surveys, extensive research linking various cultural (or softer) indicators to revenue or profit, as well as interviews, focus groups, and qualitative color commentary to tie it all together. We have worked with about forty of the Fortune 100 and almost ninety of the Fortune 500. We have similarly worked intimately with numerous start-ups and other smaller organizations across a wide variety of industries, including non-profits, governmental agencies, non-governmental organizations, and educational institutions. We have drawn from our extensive experience across these various industries to form the conclusions and advice presented here.

Throughout the book, we mix into our story-telling:

• Analogies (e.g., why trying to lose weight is like acting on business metrics—standing on the scale is the easy part);
• Anecdotes from organizational life (e.g., how a few calls a day from a well-known CEO drove more business improvement than all the good intentions in the world);
• Historical comparisons (e.g., what nineteenth-century Russia can teach about labor relations);
• Fundamentals of business strategy (e.g., how employee engagement is not as strategic as people think);
• Case studies (e.g., stories of how listening carefully to the highest performers—such as President’s Club sales people—can be paradoxically tricky and yet easy, and hugely informative);
• Research (e.g., the psychology of and behavioral-economic findings on unjustified dependence on social norms when under stress); and
• Practice-tested tips and advice (e.g., how a small “nudge” of a few sentences can dramatically increase the usefulness of employee dialog).

Readers will learn on two levels. On an individual level, they will learn about how their decision-making is influenced or biased, unexpectedly and unknowingly, by natural human tendencies. For instance, people often think that balancing Current Performance and Future Potential is a trade-off in a zero-sum game. Yet, if instructed properly about these concepts, leaders can break out of this trap and create conditions allowing for both to occur simultaneously in an organization. And on an organizational level, they will learn how these tendencies can affect and damage decision-making. Importantly, they will learn how to overcome these influences to succeed as individuals and as leaders of teams, departments, or entire organizations.

Each chapter will introduce measures or questions that will allow you to evaluate your own organization and gauge how it stacks up on the issues covered by this book and, we hope, will provide some insights on how to address any shortcomings identified.

CHAPTER 2

What Is Vitality?

The Elephant in the Room

Cristián Samper has a big problem. His job as head of the Wildlife Conservation Society (WCS) is to preserve wildlife, not to bear witness to its extinction. But if you examine the history of humanity as it relates to protecting wildlife, you may rapidly come to the conclusion that the odds of his being successful are not in his favor. Yet, once you get to know him, and learn what the WCS is doing to prevent species extinction, you may just change your mind. The WCS mission—to preserve wildlife and wild places—will be a hard-fought battle over many years, and will be won only if the majority of us see the long-term benefit in doing so. The long-term success of WCS will be judged by how well it carries out this mission. WCS initially built its reputation by saving the American buffalo from extinction, which was a real success story, and it is now doing some extraordinary things around the globe to prevent the extinction of other species, such as elephants.

Here is what WCS is up against: In Africa today, there are approximately 35,000–40,000 elephants killed each year for their ivory, out of a total population of about 500,000. Research studies have determined that, at this rate of poaching, the population is not sustainable and that elephants will rapidly vanish from the earth.1 Financially, the numbers are a bit staggering. An elephant’s tusks are worth about $6,000 to a poacher, who typically must deliver them to shady marketplaces, full of risk, as they are dominated by crime syndicates and terrorist organizations such as Al-Shabaab in Somalia, Lord’s Resistance Army in Central Africa, and Boko Haram in Nigeria. These organizations can turn around and sell the ivory from a pair of tusks on the black market in places like China, where ivory has a long history as a luxury good and is highly prized, for over $300,000. It has been estimated that 40% of Al-Shabaab’s operating budget comes from trading in poached ivory. This is a very lucrative market and important source of income for these unsavory organizations.2 So how can WCS break the cycle?

Since 2003, in the Luangwa Valley, Zambia, and under the guidance and stewardship of WCS, the Community Markets for Conservation (COMACO),3 has been able to create a growing population of farmers (109,322 as of December 2014) who have committed to giving up the illegal poaching of elephants and other wildlife. In return, these farmers receive training on farming techniques and a ready market for any surplus produced, which includes peanut butter, honey, and produce. The efforts have proven ...

Table of contents

• Cover Page
• Title Page
• Copyright
• Dedication
• Acknowledgements
• Contents
• List of Figures
• List of Tables
• Chapter 1 Introduction
• Chapter 2 What Is Vitality?
• Chapter 3 Strategy
• Chapter 4 Leadership
• Chapter 5 Developing Vital Individuals
• Chapter 6 Protecting Innovation
• Chapter 7 Evaluating Vitality
• Chapter 8 Navigating Change
• Chapter 9 Making Change Stick
• Chapter 10 Agility and Resiliency
• Chapter 11 Decision-Making
• Chapter 12 Global Implementation
• Chapter 13 Storytelling
• Chapter 14 Step-by-Step Guide
• Chapter 15 The Path Forward
• Appendix A: Complete Vitality Self-Assessment
• Appendix B: Big Five Inventory
• Index