core sector communique

Based On The Most Extensive Research Project Of Its Kind, New Book Shows Why Focusing  on Organizational ‘’Health’’ Is Just As Important As Concentrating On Performance

McKinsey’s Scott Keller and Colin Price Present Five-Stage Process For Building Exemplary Organizations in BEYOND PERFORMANCE

Only a third of great companies stay great over the long term, while an even smaller percentage of companies are able to implement effective change programs, assert Scott Keller and Colin Price of Mckinsey & Company in their new book, BEYOND PERFORMANCE: How Great Organizations Build Ultimate Competitive Advantage. Determined to understand why this happens and what to do about it, the authors undertook the most extensive research project of its kind. They found that companies often fall from grace, because of an excessive focus on managing performance without giving equal consideration to managing an organization’s ‘’health’’.

‘’More than a decade of research and even more of experience have led us to believe strongly that at least fifty percent of any organization’s long-term success is driven by its health,’’ explain Keller and price, defining organizational health as a company’s ability to align, execute, and renew itself faster than its competitors.

Although tending to health may sound soft, the strategic concepts found in BEYOND PERFORMANCE are all based on hard science. Keller and Price’s research encompassed survey results from more than 600,000 respondents at over 500 organizations around the world ; plus one-on-one interviews with thirty CEOs and other senior executives; as well as learning from more than 100 clients served by McKinsey. Their book is filled with in-depth examples of companies and leaders who have succeeded at implementing effective change programs and built exemplary organizations.

Aspire: Where do we want to go? Begin by establishing targets. Keller and Price emphasize that setting aspirations for organizational health that are as explicit as those for performance will vastly increase the chance of success. They then turn conventional wisdom on its head –revealing why copying management best practices from other organizations may be more dangerous than helpful, and explaining the often surprising combinations of practices that organizations can use to create health. BEYOND PERFORMANCE gives leaders the tools they need to understand how health to focus on.

Assess: How ready are we to go there? Organizations that succeed take time to assess their readiness for change. This means determining which capabilities matter, and assessing their presence in the organization. When it comes to health, the crucial place to look is at underlying mindsets. ‘’A mindset is a fixed mental outlook that predetermines how people interpret and respond to situations, ‘’the authors explain. Uncovering and shifting these mindsets is at the heart of making change happen. The authors provide practical tools that enable leaders to asses the area of mindsets with the same rigor as capabilities.

Architect: what do we need to do to get there?  After showing how to develop a portfolio of performance initiatives, the authors get to the meat of how to shift mindsets and behaviors- the area that leaders consistently describe as the hardest part of any transformation. They dive deep into the four levers that can after employee mindsets, such as creating a compelling change story and then ‘’cascading’’ it through the organization. Further, they introduce new techniques to manage those aspects of human behavior that are seemingly irrational- and therefore confound even the smartest leaders- yet are entirely predictable.

Act: How do we manage the journey? Keller and Price advise conducting pilot programs in two stages- the first aimed at proving that the concept is sound, and the second designed to ensure that the change is replicable. Beyond rolling out the pilot programs, lasting change demands energy. How to keep employees motivated and focused during a transformation has long been a ‘holy grail’ question in the field of change management BEYOND PERFORMANCE directly addresses how leaders can continuously unleash energy throughout the organization through such techniques as creating a sense of broad ownership and using tactics from the field of viral marketing to stir excitement and derail cynicism.

Advance: How do we keep moving forward? Longer-term success demands an effective transition from the intensive work and constant upheaval of transformation to a period of continuous improvement.’’You do this by focusing on two things: ensuring core of self-mastery and ongoing learning,’’ the authors write. The right kind of communicating meaning; the ability to view problems through a positive frame; and the developed in the crucible of a transformation program, ensuring they are fully embedded when the inevitable question of ‘what next’? arises.

In a world where most of the tangible aspects of an orgaqnization’s competitive advantage can be fairly easily understood and replicated by competitors, what can’t be easily replicated is the ability to grow and perform through better organizational health. This is why the authors call it the ‘’ultimate competitive advantage.’’

ABOUT THE AUTHORS

SCOTT KELLER is a director in McKinsey’s Southern California office, and leads its transformational change practice in the Americas. His work focuses on helping senior leaders to conceive and manage large-scale transformation programs. He is co-author of a book for colleagues and clients on organizational behavior as well as numerous articles on the topic . In addition, Keller is co-founder of Digital Divide Data, an award-winning, social enterprise that utilizes a sustainable IT service modal to benefit some of the world’s most disadvantaged people. He holds an MBA and a BS in mechanical engineering from the University of Note dame, Indiana. He lives in Seal Beach, California.

COLIN PRICE leads McKinsey’s organization practice worldwide. He is based in London. He has advised many of the world’s largest corporations, several national governments and heads of state, and many charitable institutes. The author or co-author of six other books, including Mergers: Leadership, Performance and Corporate Health, Price is also an associate fellow at Said Business School, University, in his home town. He holds degrees in economics, industrial relations and psychology, and organizational behavior.