The story in the previous post
was about a new board member who was having difficulty with the way her organization managed performance. You may recall that Alice Peckham could feel that the kind of performance her fellow board members were asking Fairfield Athletic to deliver wasn’t quite right, but she couldn’t quite figure out how to help them look at performance differently than they always had.
As we consider the simple and practical ways that purposeful enterprises must perform, we encounter a very basic truth about the performance of companies, and in fact all human organizations: Businesses can only deliver what we ask them to deliver.
If a board or owner is disappointed with the performance of their organization, the first thing they must consider is what they really asked it to do.
Just a few weeks ago, I sat with a board that was in the process of realizing that the organization they governed had veered off the path they preferred for one simple reason; without meaning to, they had asked it to do so. It was not that they had asked it directly, but rather indirectly, through the CEO’s compensation agreement and employment contract, the criteria for bonus allocation, and other incentives and inferred management priorities, which simply didn’t match what they considered the purpose of the organization. These were not stupid or thoughtless people – quite the contrary, in fact. But it took an intense conversation about the real aims of the organization for them to realize that they were asking it to do the wrong thing. When it became quite apparent that they had intended one thing from the organization and received entirely another, the path to recovery was much clearer, and they could reset their expectations of management, who they realized were actually rather compliant to the things they had been asked to deliver (and being well rewarded for doing so) which it turned out were all wrong.
The purposeful organization is relentlessly clear in asking its people to do the things that will deliver on its purpose. In the very first blog of this series, I argued that the demise of Kodak was not the result of a management failure, but rather a failure of governance. Like its founder, George Eastman, the owners of the company committed corporate suicide by failing to ask the management to risk what were very certain short term earnings from a very profitable film business for a shot at much lower (but continuing) earnings from a digital business. The disease we call “short-termism” is a fatal disease for companies, though perhaps not for the fluid capital of shareholders, simply because it insists on such strong bias for today, usually at the expense of tomorrow. Just last week, the Investment Association in the UK, whose members own approximately one third of the FTSE 100, issued its, “Productivity Action Plan” entitled “Supporting UK Productivity with Long-Term Investment,
” and, “urged listed companies to cease quarterly reporting and refocus their reporting on a broader range of strategic issues as part of its productivity action plan.
” Hopefully, we are beginning to recover from this disease of short-termism!
The purposeful enterprise uses the authority of its purpose to make these sorts of tactical decisions about how much profit to harvest and how much to reinvest for the longer term. For that reason alone, the purposeful enterprise is far more resilient and better equipped for success than its profit-driven competitors.
As we examine how each of us can help create purposeful enterprises that will change business and society for the better, we can begin by examining what we, in our present roles, are being asked to do and being rewarded for. What kind of performance are you being asked to deliver (and asking others to deliver), and how does it contribute to the purpose of your organization? I propose that the most helpful way to consider performance is to use a 2×2 matrix of capability and desire.
If my premise holds – that organizations (and individuals) tend to do what we ask them to do – then the following is also true:
If both desire and capability to deliver on the purpose are weak, then inspired performance is only a dream. Conversely, if both desire and capability to deliver on the purpose are strong, then inspired performance is likely.
A CEO with whom I have recently been working is a good example. She embodies the cultural attributes the organization aspires to, and yet, far more opportunities to deliver on the purpose exist than are currently being realized. There is both ambition and capability around the core purpose of the organization, but it has not been fully captured. When the board stops asking for performance on dimensions which the CEO is neither personally inspired by nor particularly able to deliver and instead begins to ask for the right things that align with purpose, both board and management will uncover huge opportunity.
Elsewhere, a project manager struggles to secure adequate budget for a very exciting opportunity that expresses the core purpose of the multi-billion dollar service business where he works. And yet, the project is so well aligned to the strongest desires of many of the employees to make a difference in their community. So instead of asking for headcount, he is asking for volunteers, and not surprisingly, they are showing up. Strong desire and good ability yields inspired performance. Lacking desire, you can only “buy” a limited quantity of the abilities of people who are left selling their skills for pay, and transactional arrangements don’t usually spur creativity or maximize potential.
Some years ago, I learned the 3 P’s of performance: People Practice what they Prefer (and so they Perform). That simple rule lies at the heart of any purposeful enterprise – people doing what they care about, extremely well. Let’s seek “inspired performance” – it’s where magic happens.
One place to begin: as you think about how your own organization handles performance, ask what it does to spark desire and unleash the ability of its people? What could it do differently to unlock sustained levels of inspired performance?