The Five Essentials of an Extraordinary Organization.

LEADERSHIP:

Say what you will it all begins with leadership. It also can end there if you aren’t careful. Leadership is like a giant magnet. Depending on how it is set it either attracts or repels top performers.

The first and primary task of any leader is to build a guiding coalition of other leaders. (See Leading Change by John Kotter) A leader must be intensely aware of his/her own strengths and weaknesses and assemble a team that complements each other. There must be shared values but diversity in strengths and experience.

Too many leaders and organizations stumble into what I call the fighter pilot’s paradox. A great fighter pilot must maintain a laser-like focus on his target while maintaining a floodlight like awareness of his surroundings. Otherwise he gets target fixation and literally drills his plane into the ground. As we have become fixated with survival and the bottom-line it has been easy to ignore the talent we have surrounded ourselves with or the other essentials of an extraordinary organization.

What are the critical traits of a leader we should consider for an extraordinary organization’s guiding coalition? Drawing on the work by Daniel Goleman (Primal Leadership and Emotional Intelligence) on EQ (Emotional quotient) as well as the Stanford research reported by Jim Collins (Good to Great) and work by Daniel Harrison we look for the following list of seemingly paradoxical qualities.

Extraordinary leaders are:

• Humble but willing to lead.
• Have a compelling ‘big’ vision but combine it with precise control.
• Helpful to others but can assert their own needs.
• Diplomatic and tactful but can be straightforward, frank, and truthful.
• Empathetic but capable of enforcing necessary rules.
• Cause motivated but able to discipline themselves and others.
• Certain and authoritative, but open and collaborative too.

At the Leadership Mentoring Institute we also go further and look for AQ (Adversity Quotient by Stolz) composed of a self-motivated, cause motivated, persistent but flexible individual and also people who have what we call wide adaptability /change bandwidth and communications bandwidth. All these characteristics can now be accurately assessed with newly available high tech talent tools.

Such leaders recognize their main role is to develop, manage, and communicate clear expectations. They need to function as a cohesive team that breaks down barriers, incinerates silos, tells the truth in love, attracts talented people and builds on their strengths, and constantly focuses on contribution. We must build and sustain a culture that drives performance and creates value for customers.

The leadership or guiding coalition of such an extraordinary organization has a four-fold challenge facing them.

1) They want to build a culture that has a compelling vision and consistently lived values (if you don’t live it you don’t believe it) that creates an environment where high performance people feel welcomed and customers are celebrated. Their goal is to create a commitment culture where top talent wants to stay and everyone knows what they need to contribute.

2) They desire to develop operational practices that encourage disciplined people to do disciplined things. They want to generate a relentless, systematic pursuit of reality and truth that keeps them ahead of customer expectations.

3) They strive to create a clear and concise strategy that provides them with a unique selling position and creates real value for customers. The goal is to make their organization a selling engine.

4) They want to attract, retain, motivate and mentor top talent, a “type A” team of top performers that stimulate each other and the leadership to further top performance. Their objective is to attract and develop top leaders at all levels of the organization.

These are the five essentials of an extraordinary organization. Leadership, culture, operational practices, strategy, and talent form the nucleus that drives the extraordinary organizations with dynamic energy. They become almost obsessed with striving for the highest levels of performance in these areas.

The challenge is with most organizations these tasks are in ‘silos’ within the organization. The “O” team (anyone whose title ends in O!) because they are seen as the ‘leaders’ get to set and maintain the culture, i.e. the values, vision and overall goals. The operations team controls operational practices. Strategy is really set by marketing and given a quick review by the CEO. The talent is the turf of the HRD department. There is some overlap between the silos, but too often not a lot of productive interaction.

In the extraordinary organization these four vital areas become the obsession of the leadership or guiding coalition. They know that loyal employees create loyal customers that create loyal shareholders (See The Loyalty Effect by Reichheld). They also know that according to a Watson Wyatt Worldwide study in 2000 that these companies with highly committed employees tend to post sharply higher shareholder returns. How do we create loyal employees? By having a culture that inspires and values them. By having operational practices that are simple, speedy, and produce results. By having successful strategies that stress the uniqueness of what they do and provide real value. By having other talented people mentoring, supporting and stimulating them in an environment where truth is valued and trust is created. These organizations have a high Authenticity Index and prove very adaptable to positive change.

These five functions are intangible assets of the organization (See Invisible Advantage by Low and Cohen-Kalafut) that when integrated into a seamless leadership model drive performance and create tremendous value. They help the good organizations become great. The Cap Gemini Ernst Young study reported by Low and Cohen-Kalafut found that over 60% of an organization’s real value ‘drivers’ were not represented on the balance sheet. At the leadership Mentoring Institute we have identified 10 key drivers that we measure in a tool called the Intangible Assets Inventory. We’ve already looked at leadership. Let’s look at four of the major drivers in more depth.

CULTURE: “What we believe and how we behave around here.”

According to Built to Last by Porras and Collins and The Soul of Service by Leonard Berry, long-term studies on the most successful companies found they have a very clear sense of their values and vision—and they acted consistently on them! We define values as being bone deep enduring beliefs that guide our actions. The extraordinary companies only had three to five values and everyone in the organization knew them. We define a vision as being simply a picture of what you want the organization to look like and/or be known for in three to five years. Your mission is a statement of your goals, actions, and strategies/strengths that will take you there.Almost every organization now has these. The extraordinary organizations live, breathe, walk, and talk these with an obsessive consistency. They use these as tools tobuild the organization. They treat it like a good horse. You ride the horse. When the horse starts riding you, you shoot the horse and get a new one!

An effective values statement must have three characteristics. It must be realistic, usable, and noteworthy (run). The first two characteristics should be self-explanatory. Your values should be so realistic and usable that they are used by your entire team for making every day decisions, for evaluating promotions, and perhaps most importantly for recruiting new talent. The idea of noteworthy is that when lived consistently these values will differentiate your organization from all others. These values should be things your team can run the organization with! In “Built from Scratch” the story of Home Depot’s rapid growth to an extraordinary organization, the founders stressed that their value system acted as an invisible fence. When they started to go out of the yard, making a bad decision or a questionable hire, the values system let them know they were going astray!

We also like to say the ideal vision has zip. This means it should have ‘zing’ or sound-bite value as it says where and what you want to be in three to five years. A long and windy, obtuse, clunky vision statement won’t be remembered by anybody. It should also act to inspire your team. Last of all it should fit the overall purpose of your organization. If your vision doesn’t fit or look good on a t-shirt forget it!

If we view the values as the vehicle for getting you to your vision then we can say the mission is the gas and the map to guide you to your vision. A good mission says how we will get there. It should be goal specific (and goals must be SMART --specific, measurable, attainable, relevant, timely), actionable and simple but spectacular playing to your strengths. Please pardon the acronyms, but they are a great teaching tool, and people do have a tendency to remember acronyms and that is the point of the whole exercise!

If these elements are communicated incessantly and lived consistently they provide an excellent set of behavioral boundaries for the organization. Like an electronic dog fence a jolt should hit people when they do something inconsistent with the values or vision of the organization! These values and our vision should also serve a ‘gatekeeper’ function for our organization, screening out people and procedures that will not enhance our organization or ability to serve our customers.

We must first walk the walk before we can talk the talk, and always our mouth must match our motions! The word hypocrite should bring us to attention to be sure we are living what we believe and be able to explain ourselves. If we have fallen short then we apologize and make it right. This all goes into building a powerful environment of trust. People know what we believe and that we will do all we can to deliver on our beliefs. This then allows a transfer of trust from our employees to our customers. We may promise much but we always deliver more!

OPERATING PRACTICES: “How we lead and motivate people around here.”

Extraordinary organizations are dedicated to a relentless and systematic pursuit of reality. (Execution by Larry Bossidy) They are made up of disciplined people doing disciplined things. (Good to Great by Jim Collins) They strive to have customer-centered processes that are simple and speedy. They know the big don’t eat the small, but the fast eat the slow. “Make dust or eat dust” is their motto.

They create a sense of ownership by linking individual performance to the vision and incentives. They provide an opportunity to grow as you perform. By doing these things in a planned way they create a sense of obligation.

The extraordinary organizations know that if everything is important then nothing is important. They know they have to focus on the ‘vital few’ things that really drive performance and create value. They use best practices such as the balanced scorecard to identify the vital few key performance indicators and then over-communicate them to the team. They use best practices like Six Sigma and/or Carnegie Mellon’s Software Engineering Institute’s CMM Capability Maturity Model to map out every key customer process in their value delivery system and continuously seek out where the disconnects and bottlenecks are that hamper performance. They drive themselves by continuously asking how can we deliver more quality in less time at a more economic cost and enhanced value to our customer? They decide what they do best and then do it better and then even better! Good enough is not good enough. They know that in the business world today you are either the hunter or the hunter, the predator or the prey. They would rather creatively disrupt their own products and processes than have a competitor do it to them. (See Christiansen The Innovators Solution)

They like to standardize processes so they can simplify training and costs while monitoring quality, but they also know that this can create rituals (ruts!) that then lose track of reality. By consistently reviewing performance against goals and customer expectations they develop rapid results feedback systems that keep them adaptable and in touch with reality. They thrive on fast, unfiltered customer feedback that drives performance improvement. They make excellence a habit.

The mark of an extraordinary organization is in the ease of execution. Like a professional baseball team when the ball is pitched already everyone on the team is moving into position. When it is hit everyone smoothly shifts again, one to field the ball, one to cover a base, others to backup positions. Everyone knows what to do in any situation and does it with seemingly flawless effort.

With most organizations it is more like watching my boy’s t-ball teams for six year olds. Everyone stands until the ball is hit and then everyone descends on the ball. Then an argument breaks out as to who gets the ball. Meanwhile the opposition is circling the bases, usually in the right direction. Much fun is had by all, but the mayhem is hardly productive or professional. Customers and top talent prefer the execution of a well-oiled machine that is continuously improving and exceeding expectations.

STRATEGY: “A plan of action for delivering the vision.”

Theodore Levitt in The Marketing Imagination and Kenichi Ohmae in The Mind of the Strategist both stress that the simplest strategy is usually the best. Ohmae says if you can’t say it in one sentence you don’t have an effective strategy. However, we should emphasize that the best strategies are deceptively simple. It takes much work and deep thought to come up with a successful strategy that literally describes you while it defines your competition out of existence. It should represent a unique selling position; what it is you do different and or better than anyone else. It should provide a clear customer value proposition. It should go a long ways to helping everyone in the organization know just why people buy from you and continue to buy from you.

In the classic book Good to Great they call this the hedgehog principle. “The fox knows many things but the hedgehog knows one big thing.” I Americanize this and call it the porcupine principle. The porcupine may not be as smart as the coyote, but it knows one big thing (think needles) and it does it exceedingly well. The extraordinary organizations do this also. No not needles, but developing a focus on one big thing. I believe it is actually an intersection of four factors. They have a passion for what it is they do. They have a sense of pride (we can be best in class at doing this). It is something that can be done profitably. It is something that they have or can find the people to do. Where these four factors intersect you have a tremendous opportunity to dominate your market. It was very noteworthy that of the great companies Jim Collins identified almost none of them were from dynamic markets. They took this principle and dominated where they were.

We can use the analogy of a white water rafting trip here. A few of my friends decided to go rafting down a local river known for it’s challenging rafting. They bought two fully equipped rafts, brought along food and drink, and figured what could be so tough about this. They dropped off one car at the lower end of the river and then took the rafts up to a location several miles upstream. The river looked pretty docile so they embarked. They were having such a great time they didn’t notice the river was picking up speed until they were well on there way into what the local people fondly call the devils armpit, a series of dangerous waterfalls even elite rafters take with extreme caution. Some fishermen finally dragged them from the water after bouncing off several rocks and sinking their raft. Too many organizations charge ahead without proper guides or equipment and end up dashed on the rocks by there own version of the devil’s armpit! Extraordinary organizations plan the strategy and then strategically work the plan. They always keep the voice of the customer in mind. Will this strategy differentiate us and drive performance and create real value for my customer?

The main goal of having such a clear strategy is to build the organization into a selling machine. It becomes a sales engine when everyone knows it is their responsibility to continuously seek, gain, develop, and keep quality customers. The extraordinary organization knows what it’s niche is and what their ideal customer looks like, and they pursue them like hounds after a fox with their noses glued to the ground.

Is your organization on its way to being a selling engine? Have you found your porcupine niche, your focus area that will help you dominate your market? Does everyone know what your unique selling position is and what the customer value proposition is?

TALENT: “The people and skills we have on hand to accomplish our vision.”

Have you assembled a smart, hungry, humble, and disciplined team to serve your customers? Have you customized your team by carefully selecting your talent? Do you know if you have “A” talent (Top 10 % available for the position), “B” talent (next 20%), “C” talent (middle 40% available), or worse? (See Top grading by Smart)

Do you have a talent template for each key position (not just a job description, but eligibility factors and suitability factors) so you place people in positions that fit their unique strengths, attitudes and abilities? (See Now Discover your Strengths by Buckingham) Does your organization know why EQ (Emotional Quotient) and AQ (Adversity Quotient) are more important than IQ? Extraordinary organizations do all this. They do a Talent Asset Inventory and give it a real number whether the CPA’s do or not. They know that to lose even a low level employee to turnover costs them the equivalent of a years salary when you calculate in lost wages, retraining, recruiting costs, and lost customer confidence. They know the hidden cost of placing a person in a job that does not utilize their full capacity or fit their personality. These things don’t show up as a direct item on the balance sheet, but they determine the real value of the organization.

Extraordinary organizations also don’t let the HR department do the hiring. Everyone gets involved with structured interviews, using behavioral based questions that seek out desired attributes and test how well the candidate fits the organization’s values. They recognize that top talent is interviewing them as much as they are being interviewed, so when they find someone they want they have a talent value proposition already composed that says why you should want to work here. It covers things like the values, vision, mission and the stimulating challenge of working with other top performers in an organization that emphasizes ownership and opportunity. By having everyone involved they also should feel invested in the new hire and really strive to set them up for success not failure!

Outstanding organizations are also ‘groomers’ as well as ‘pluckers’. They don’t just pluck the best talent from other organizations, though they are very happy to get them. They also groom their own talent, developing loyalty by showing a concern for growth and the opportunity to move up in a winning organization.

So how does your organization match up? You can run with the herd or lead the herd. The view and the air are much better from the front! The market place seems only to reward the frontrunner. The ‘me toos’ soon get relegated to unprofitable business and find themselves sandwiched in by low cost providers on the bottom and top performing value offerings from the top. The question is: What can you do?

So, what can you do? First you need to know where you are now before you can begin a journey to a better place! The Leadership Mentoring Institute can help you by providing a 10-question Authenticity Index that will show you what the current level of trust is in your organization. Trust is the foundation upon which successful change can be built. We can also provide you with the 50-question Intangible Assets Inventory that measures how your employees perceive your organization in ten categories of intangible assets including leadership, culture, operational practices, strategy, and talent. Also we can work with each of your executives as part of a Talent Assessment Profile to complete the Harrison Innerview, an in-depth leadership profile that examines over 130 different factors that drive performance. This is the first step to determine if you have or can attract, develop, and keep the “A” talent you need to be extraordinary.

Extraordinary organizations become extraordinary by deciding that’s what they want to do. They shatter their own complacency and look reality in the face. Where are they as far as trust among the troops, capability in leadership, and health in the intangible assets that really drive value? Are they willing to take rituals by the throat and replace them with a relentless, systematic pursuit of reality? Are they willing to do this while they are still healthy and able to experience a little shock and awe and survive to become stronger? It is then easier to transform something strong into something superb.

It is your choice. In today’s environment only the extraordinary organizations really thrive. The ordinary organizations only survive at best. Be extraordinary!

For more information about the Leadership Mentoring Institute please go to www.leadershipmentoring.com and learn more about the tools and processes described above.