Organisational Effectiveness: establishing competitive difference
By Matthew Emerson is the Founder and Managing Director of Blackmore Four
Before we even knew what COVID-19 meant, we were already in a hyper-competitive business environment, with an ever-increasing pace of product development and service improvement feeding the ongoing consumer demand for more, quicker and better. Socio-technical change on a global scale has meant that the ways in which people interact with products and service continues to change, creating a set of competitive dynamics – particularly the need to deliver at pace – that transcend traditional geographical or industries boundaries. These ongoing changes also impact the internal functioning of a business and play a role in shaping how your organisation needs to function to be effective and competitive.
Enter COVID-19. We cannot ignore the significant impact that the current pandemic has had on consumer behaviour, but it appears to have done nothing to reduce expectations when it comes to product innovation and end-to-end service. At a time when resources are limited and our working environment is disrupted like never before, businesses are having to find new ways of being effective in meeting market demand and being equipped to adapt to a myriad of change in ever-accelerated cycle times.
The market challenge is not new but meeting this challenge is made infinitely harder when your organisational resources are likely to be depleted and whilst we are all facing similar constraints, businesses that are able to quickly re-evaluate and establish organisational effectiveness will be in pole position to offer continued value to their clients or customers.
What is Organisational Effectiveness?
The nature of Organisational Effectiveness originates back through the history of work to a time when a core focus for management was on the measurement of effort, task and output. The study of human behaviour at work and subsequent development of management and motivation theory has been played out in the business community across the country, largely as reward and recognition schemes, or more recently under the banner of employee engagement.
However, Organisational Effectiveness is about an organisation’s ability to meet intended outcomes in a deliberate way – what we refer to as Organisational Fitness – understanding and making best use of the component parts of the organisation as well as the interactions within it. In addition, Organisational Effectiveness is about being prepared and equipped to adapt to the demands of the future, sustaining levels of performance despite the changing landscape – what we refer to as Organisational Health.
People are without doubt the primary source of inimitable competitive difference and relevant leadership and organisation of people is what will ensure that difference is an advantage. So, how effective is your organisation?
Do you know how effective your organisation is?
If asked the question ‘How effective is your organisation?’, what would you say? Do you have an answer? If you have an answer, do you know it is accurate?
At a surface level, Organisational Effectiveness is the concern of how effective a group of people are in achieving their stated goals so you might just reflect on whether your goals are being met and derive your answer from that. However, if you do not have any stated and communicated goals then the question might be somewhat harder to answer! If you have articulated goals or objectives, how do you know that the outcomes are linked to the input? How do you know that the way in which your organisation works is contributing to these results and it is not just one or two superstars driving your business performance? And critically, how do you know that when you need to focus on a different set of goals, your organisation can adapt and remain effective?
I am not sure there is a business in the UK that was specifically prepared for the scale and intensity of disruption caused by COVID-19, but there is a clear difference between those that know what made their organisation effective in the first place, and can take deliberate action to sustain performance through renewed leadership and organisation, and those that don’t and can’t.
Why is Organisational Effectiveness a critical competitive differentiator?
I accept that funding and specifically cash flow is often cited as the most critical component of economic success; without financial viability we are not even in the game. But if we assume for a second that the competitive landscape is full of businesses who have bought their ticket then the differentiators really come back to the other two factors of production (land and labour), and since our economy is increasing virtual, land just doesn’t seem quite as important now!
If the running of your business and all of the key performance measures are significantly influenced by people then you have to accept that the uniqueness of people and the nature of human behaviour is at the core of your business. Unless your business is so well prescribed and mechanical that it really doesn’t matter who performs the work, the uniqueness of your employees is what sets you apart from others. This is amplified in an organisational setting where the psychological make-up of your business is built on the collective and interactive thoughts, feelings and behaviours of your people. This results in three distinct areas of difference and opportunities for advantage.
- Organisational Capability: recruiting, developing and organising specific expertise that aligns directly with your business ambition leads to a powerful sum of knowledge and cognitive skills that can be distinctly different to that of your competitors. Your collective ability to create, innovate, produce, serve or relate – depending on your business priorities – can be your differentiator rather than following traditional industry rules and norms that result in average rather than outstanding performance.
- Collective Behaviour: often referred to as culture, the ways in which people behave are influenced and guided by collective values and norms which, even when overtly communicated, are rarely so specific that they can be deliberately matched. If the drivers of collective behaviour are properly understood then these can be aligned and harnessed to complement capability and propel high performance teamwork.
- Organisational Enablement: the way in which you lead your organisation and the tangible structures and processes/systems that enable people to contribute are easier to replicate (and much less effective) if they are
a) static and b) detached from the people you employ. Designing your organisation to take account of capability and behaviour – making it easier for people to contribute naturally – and building in the flexibility to adapt to changing business demands will make you better equipped to improve, let alone sustain, performance through significant change.
If you can harness this unique, complex set of attributes then your difference and fundamental proposition to the market is likely to outlast any replication of your product or service. To use your uniqueness to your advantage, you first need to understand the ingredients of your uniqueness – the people and their specific capabilities and behaviours – but also provide leadership that is in context and relational, AND set your organisation up to empower those people to use what it is that you employ them for.
How to be an effective organisation
The uniqueness proposition comes with challenge. People are complex, they change (not always as you would like) and it takes time, effort and capability to lead many different people to achieve a specific set of goals – especially when the goal posts are forever moving. Every business success story requires a team to be clear, aligned and motivated to sustain outstanding performance through the challenge of change.
Your collective ability to preserve what has worked and adapt to something new, whilst maintaining alignment to your company’s vision and goals, is what makes the difference and gives you an advantage.
The four organisational attributes that provide the anchor for sustaining high performance are purpose, expertise, empowerment and belonging.
People seek purpose but the compulsion of sharing a purpose comes from our innate need to belong and be part of some social structure. Shared purpose that can be clearly stated and consistently understood is the anchor for team performance as it gives everyone reference from which to make sense of their role.
People want to take pride in their work. For teams to thrive, mastery needs to be relevant to your organisation’s goals and this is what is referred to as aligned expertise. Some businesses prefer to dictate skill development and implement processes to facilitate interaction, however, there is little value created from collaboration based on rules and prescribed behaviour. You are more likely to sustain performance by fostering relationships that respect aligned expertise.
With shared purpose and aligned expertise, your team are well placed to make great decisions for your business, but do they have the authority to make meaningful decisions? Mutual empowerment requires a level of trust within the team allowing people to speak honestly, ask open questions and learn how to create value for your business. This is about creating an environment where everyone can use their expertise to make good decisions for the business.
Shared, aligned and mutual are not words I use lightly. A key, human need is that to belong, to be part of something, to contribute and be acknowledged for our contribution. A significant part of our identity and self-respect is derived from social groups that we can claim to be part of.
Organisational Effectiveness is not just a big company worry, it should be central to the role of leaders of businesses of all sizes and those who seek to sustain business performance through periods of growth and significant change. It cannot be taken for granted; it needs attention.
Organisations come in all different shapes and sizes and it’s important to consider the realities of your own business and the people involved to get the right structure, systems and processes (if required) in place rather than simply adopting what appeared to work elsewhere.
It is also critical to accept that human behaviour at work is rarely prescribed and that the formalities of structure and process is only one component of what leads people to behave how they do. Developing a better understanding of your teams and how they really work will help you take full advantage of your difference.
“If you are always trying to be normal, you will never know how amazing you can be.”