Provided By: NeuEon – Originally Published by Forbes Technology Council
Connect with peers on this topic and others at the MIDMRKT CIO Forum.
There’s much ado these days about high-performing organizations — the Apples, Starbucks and Amazons of the world — and what enables them to shine. And while there’s no standard definition of “high-performing organizations,” most people I know agree they’re those companies that consistently outperform others in their peer groups over time.
There’s also general consensus on the characteristics these organizations tend to share. For example, high-performing organizations seem to excel at teamwork. I’ve found that companies like Amazon often establish and maintain cross-organizational alignment on a clear vision, common goals and shared values. Many are able to respond quickly to changes in the competitive landscape and evolving customer needs. And these companies typically understand how to effectively use the concept of “business value” to drive and measure success.
“Business value” in this context is about more than “value” as defined in Agile approaches like Scrum, although the value Agile teams use to prioritize work is obviously important. It’s also about understanding all aspects of the value your organization creates for stakeholders inside and outside the organization — including customers, employees, partners and society — and using that insight to optimize the people, processes and technologies across the end-to-end value chain to boost value creation.
Your organization may not be classified as high-performing, but whether your goal is to become one of those elite companies or simply improve performance in a few key areas, understanding how to leverage the concept of business value can provide useful insights and inspiration. Here are a few best practices I’ve uncovered through my experience as the founder and CEO of a company that helps businesses create value.
1. Consider business value through multiple lenses.
People define the term “business value” in many ways depending on the context. Organizations have just as many ways to measure it based on what is important to their business. Most organizations view it — at least partially — through an economic lens, using common metrics like revenue, profit and market share to quantify value. I believe successful organizations, however, see it more broadly and recognize that other forms of value have the potential to create even more value and drive long-term success. They can be less tangible and more difficult to measure, but are important to understand. For example:
• Value in the form of time or money saved from optimizing the efficiency of business processes and modernizing technology
• The value created as the company completes work — employees learn and grow, relationships among partners and teams strengthen, and intellectual property is created, for example
• The value that’s embodied in satisfied customers, engaged employees, productive partners and a supportive community
2. Ensure that vision, goals and objectives drive the definition of business value.
There’s not a simple formula for defining business value — every company is unique. In my experience, high-performing organizations create a clear vision with well-formed goals and objectives that are aligned with a strong set of core company values. They use this as their North Star to create a clear definition of business value, how they’ll create it and how they’ll measure it that’s tailored to their situation.
For example, one of my company’s manufacturing clients has a strategic goal to reduce the delivery time of products to customers. Meeting this goal represents business value to them and aligns with the company’s core values. They want to decrease the time it takes to receive, process and manage orders; source and manufacture products; and pick, pack and ship them. They understand how improving the efficiencies of each step in these processes creates value by helping the company achieve its goal.
3. Create cross-organizational alignment to optimize value creation.
The high-performers I’ve observed establish cross-organizational alignment on a clear, shared understanding of their vision, goals, objectives and definition of business value. They can trace the activities and deliverables of each team and individual in the value chain to these higher-level elements, so everyone knows how they contribute and what is most important to work on. And they establish an environment of transparency and communication to create alignment and trust.
My company’s manufacturing client understands how the people involved in the processes of order management, manufacturing and fulfillment drive business value by streamlining their work. They also know how the teams involved in building and optimizing underlying technology solutions create value by enabling improved efficiencies. Equally important is the fact that the people responsible for those efforts know how they are delivering business value individually and as a team. This keeps everyone in sync and creates a sense of shared purpose.
4. Move the needle forward in the most impactful areas.
I’ve noticed that when high-performing organizations feel they’re lagging or are trying to gain competitive advantage, they focus on moving the needle in areas with the most potential to help them meet their objectives. They know what matters and when to move the needle on which aspect. The steps they take are dependent on their objectives and circumstances, and the entire organization is in continuous alignment.
As an example, one of my company’s clients was facing a data quality issue, which led to mistakes in customer-facing content. The errors weren’t critical, but they were having a potentially negative impact on the company’s reputation and brand. Identifying the root cause and downstream consequences of this issue in terms of business value helped the client prioritize the data quality project against other efforts.
5. Address cultural barriers to value creation head-on.
Without a culture that supports your goals of becoming a higher-performing organization, making progress will likely be challenging. In general, high-performing organizations like Amazon, Google, and others often have cultures that embrace customer focus, adaptability, alignment, teamwork, collaboration, innovation and risk-taking. You may not seek to develop all these characteristics, but if your culture doesn’t support the behaviors you’re trying to drive, it’s important to seek ways to change it. This isn’t easy. But as Peter Drucker is credited with stating, and Mark Fields, former CEO of Ford, reportedly made famous, “Culture eats strategy for breakfast.” Any company that disconnects the two may put its success at risk.
This is the first in our 2019 series of articles on high-performing organizations through a real-world lens.