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April 7, 2007

Performance Heretics

...or, How I Learned To Stop Worrying and Love the Chaos.

Normally things are a bit contrarian around here, so citing other sources is not the typical event in these articles. But everyone riffs on interesting things seen elsewhere, and here's a fresh bit that yet another speaker from McKinsey, Phil Rosenzweig, had released via McKinsey emails to readers, in a piece called "The halo effect, and other managerial delusions." Catchline: "Companies cannot achieve superior and lasting business performance simply by following a specific set of steps." Rosenweig says:

"The fact is that many everyday concepts in business—including leadership, corporate culture, core competencies, and customer orientation—are ambiguous and difficult to define. We often infer perceptions of them from something else, which appears to be more concrete and tangible: namely, financial performance. As a result, many of the things that we commonly believe are contributions to company performance are in fact attributions. In other words, outcomes can be mistaken for inputs."

This is my kind of guy. He likes the Archestra definition of mythology: mythology is when description becomes prescription." To see the article, you'll need to get to the McKinsey Quarterly 2007 Number 1 (if you're a subscriber, click on through)... More great (and copyrighted) points lay in wait, such as this one:

"Recognize the role of uncertainty: Rather than search in vain for success formulas, business executives would do better to adjust their thinking about the context of strategic decisions. As a first step, they should recognize the fundamental uncertainty of the business world."

No one has a legal lock on this piece of advice, so we won't worry about reprinting it here with due credits. But in the spirit of free advice being worth its price, let's riff:

When it comes to inputs and outputs, it's at least trendy, if not mythologically correct, to expect that Customer Orientation would drive the Leadership, which would drive the Corporate Culture, which would drive the Core Competencies, and voila the company is aligned by design. So why doesn't that formula work? For the same reason that oranges don't grow on apple trees. Just because we designate a point A and a point B doesn't mean that you can get there from here. Apple trees don't allow oranges to grow on them!

So, for example, does customer orientation allow leadership of the necessary kind? Why should it? And if so, how?

Customer Orientation -- the ability to understand demand from the customer's perspective. Problem: the customer is miscast as a "recipient", when the actual key to the dynamic is that the customer is a "requestor".

Leadership -- the assumption of responsibility for making decisions that others don't want to be held responsible for. Problem: leadership is not always tolerated, much less assigned, where it naturally happens.

Corporate Culture -- the set of expectations that become shared about what importance certain types of daily operational behaviors have. Problem: cultural behavior is fundamentally not "strategic"; only the negotiations between management and behavior are strategic.

Core Competencies -- the conditions under which the ability to appropriately produce is least hindered by the management in the culture. Problem: the attempted control of those conditions is often misdirected to internal capabilities when it should be attending to validating the external circumstances.

So what's the point?

It's this: the alignment imagined between these four factors might be pursued as a linear structure, but it is unlikely to be mechanical. Think more "chemical" -- which naturally suggests that they change each other in order to get some result. If the nature of requests cannot alter the attention to (i.e., awareness of) where leadership really is in the organization, and if those leaders can't emerge to help manage the negotiation of expectations and actions, and if that negotiation doesn't result in dynamically organizing resources, then there's a pretty good chance that something critical to winning is not going to happen. (Don't confuse hitting targets with winning. If that was all there was to it, we wouldn't have to worry about "competitors" -- namely, about what we don't know that they have done or are doing...)

Posted by Malcolm Ryder at April 7, 2007 8:05 AM

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