Handbook of business strategy 2006-the high-performance organization

The high-performance organization: making good decisions and making them happen

If you have ever worked in an organization that is truly high performance or encountered one as a competitor, you do not soon forget. High-performance organizations push the limits of growth, the way Intel has done with its record of continuous innovation. They adapt better to change, as Vodafone has in itspursuit of global leadership in mobile phone services. They become talent magnets, like Nike, where ``athletic authenticity'' is a clear priority. Dell, BMW, Procter & Gamble, Toyota, and Enterprise Rent-A-Car all know how to mobilize their organizations to pull away from competitors. For companies such as these, organization is more than a means of translating objectives into action ± it has become asource of competitive advantage.
No wonder that eight out of ten business leaders surveyed by Bain & Company see organization as one of their top three priorities. Organization can make or break a company. Yet, paradoxically, while most business people acknowledge the importance of building an effective organization, very few succeed. Bain research indicates that only 15 percent of companieshave an organization that helps them outperform (Figure 1).

What sets apart the high performers is the quality of their decision-making. They make the most important decisions well, and then they make them happen, quickly and consistently. We found again and again that these achievers are decision-driven organizations, built for effective decision-making and execution.
Making good decisionsmeans being clear about which decisions really matter. It requires getting the right people focused on those decisions at the right time. That is true whether the decisions involve the largest issues that a company faces (what's our strategy? should we buy or sell this company? should we move manufacturing to China?) or more tactical, day-to-day concerns (should we buy more components now or nextmonth? should we accept this customer's return?). Decision-driven organizations are distinguished by the consistency and calibre of their decisionmaking and execution at every level.
The difference is striking.
More than 90 percent of high-performance organizations we surveyed believe that significant decisions get made well in their organizations, resulting in prompt, effective action. Bycontrast, nearly half of those who rated their organizations less effective believe that they often fail at making and executing decisions, and only about 10 percent of them think they truly succeed at decision-making (Figure 2).

Building a system
How do companies come to excel at decision-making and execution? The high performers recognize that the org chart ± who reports to whom ± is only asmall part of the equation. They put their energy into building an integrated system, one that supports a high-performance organization. They aim to outperform competitors on five vital dimensions:
1 Strong leadership that provides compelling vision and direction based on the sources of value in the business.
2. Clear accountability for the most important reinforced by the organization'sstructure. Decisions
3. Talented people, placed in the jobs where they can have the biggest impact, and focused on the measures that matter.
4. Outstanding frontline execution, enabled by the right tools and working practices.
5. A performance culture that motivates people at all levels to get things done and to strive for excellence.

The high performers we studied recognize how the attributes ofeffective organization reinforce one another: clear vision and cohesive leadership contribute to crisp decision-making and vice versa; and a performance culture keeps frontline employees intent on high-quality execution, which feeds the expectations and shared objectives that reinforce the culture (Figure 3).

Most organizations do not achieve this kind of performance. What holds them back?...