Friday, August 12, 2011

Health vs. Performance

by Virgil R. Carter

What’s the steady-state condition of your organization? Is it an exemplary organization? What does exemplary mean? Scott Keller and Colin Price, examine this question in a recent article “Organizational health: The ultimate competitive advantage”, published in the McKinsey Quarterly.

The authors content that “focusing on organizational health—the ability of your organization to align, execute, and renew itself faster than your competition can—is just as important as focusing on the traditional drivers of business performance.” The authors go on to explain, “Organizational health is about adapting to the present and shaping the future faster and better than the competition”. Their view is that the ultimate competitive advantage lies in an organization’s ability to “create a capacity to learn and keep changing over time”.

Now, many non-profit organizations are noted more for their continuity and consistency, than for their “learning and changing over time”. Do you agree? Some non-profit organizations even boast that “we’ve always done it that way!” So where does that leave health vs. performance of non-profits?

First, and foremost, every non-profit is unique. That is, each organization has its own history, culture, traditions and values. So “competitive advantage” can’t successfully be copied from other organizations and simply imported into a “host” non-profit organization. The authors point to their research that leads them to believe that health (the ability of an organization to align, execute and renew itself faster than the competition) is the basis for performance (what an organization delivers to stakeholders in financial and operational terms). “At least 50 percent of any organization’s long-term success” is the result of organizational health.

According to these authors, to improve organizations, with lasting results, leaders must “focus on (organizational) long-term health even as leaders push for higher performance. How is the long-term health of your organization?

For the full article, click here.

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