Monday, February 05, 2007

Hallmarks of Organizational Success

Companies that wish to compete successfully in a turbulent business environment characterized by global competition, exploding information technology, fast-paced change, and new employer-employee relationships will inevitably be forced to make significant adjustments in the way they operate. From interviews - conducted in late nineties - with more than 1,000 senior executives and academics, experts at the University of Pennsylvania's Wharton School have developed a set of twelve hallmarks that will characterize the leading corporations of the the twenty first century:
Vision directed - This means having a statement of principles that is not just some high-sounding works tacked up on the wall of the company cafeteria, but a rather clear set of values that actually influence a company's operations and give employees a strong sense of pride in their organizations.
Cross functional - Asea Brown Bovari is a giant corporation with tens of thousands of thousands employees doing business in hundreds of local companies located across the globe. ABB cannot afford to be organized along traditional functional lines (e.g., marketing, manufacturing, R&D) because business decisions involve continuous coordination among many functions. Instead, ABB has a matrix organizational structure, with its local companies grouped by products and services, and again by geographical location.
Flatter & empowered - Information technology, intense competition, and the rapid rate of change have made he old, rigid hierarchies obsolete. Decision making simply cannot move up and down the corporate silos fast enough, so organizations must be fattened and individuals at every level must be empowered to make decisions. But, as John Kotter argues in The leadership Factor, this requires more from managers than they were ever asked to do before. "Figuring out the right thing to do in an environment of uncertainty... and then getting others to accept a new way of doing things demand skills and approaches that most managers did not need in the past. It demands more than technical expertise, adminstrativeability, and traditional management. Operating in the new environment also requires leadership." So an effort at developing leaders throughout the organization must accompany efforts at empowerment and flattening the corporate hierarchy.
Global - Companies like Ford have recognized the advantages that globalization can mean, from buying materials and services in low-cost areas of the world to developing new markets that can help cushion the blow when your domestic sales take a downturn.
Networked - Instead of carrying out every function on their own, companies will often find it far more cost-effective to create partnering arrangements with other firms to perform certain functions. Outsourcing, for example, is currently occurring in almost every field of business, where organizations are recently hiring outside vendors for their legal, audit, and cafeteria operations, security, and janitorial.
Information-technology-based - Computers and communications systems will continue to alter the way companies operate internally while improving relationships with suppliers and cu stormers. At large law firms, for example, computer networks now enable corporate clients to regularly review the work the firm is currently performing on their cases as well as the number of hours being billed to each other.
Stakeholder-focused - As Dr. Jerry Wind of the Wharton School explains, "A company will not be able to operate as a closed entity cut off from society's needs and demands. Management will still give primary attention to its shareholders, ... [but] increasingly, governments, environmental organizations, ... will hold firms accountable for their actions."
Flexible/adaptive - One of the best predictors of a company's long-term performance is its ability to adapt to changes in the marketplace. This requires a culture that encourages experimentation and intelligent risk taking, that incorporates now ideas into the fabric of its operations, and that provides employees with abundant opportunities to develop new skills so that hey can keep pace with change. At Motorolla, for example, the emphasis is on lifelong learning, with employees attending more hours of training annually than at almost any other company in the US. Training programs have enabled the company to achieve an exceptional reputation for product quality and maintain positions of leadership in areas such as computer chips, cellular telephones, and paging equipment.
Customer-driven - While many companies talk about getting close to the customer, some are actually trying to achieve it. Some manufacturing companies, according to Fortune Magazine, recognized that the best way for manufacturing employees to understand customers' needs to regularly travel to their facilities and find out firsthand how they use these companies. The result : significant product improvements.
Total Quality-focused - If any single element can be called the foundation stone of the change process, it is the emphasis on quality. After World War II, W. Edwards Deming and Joseph Juran taught the Japanese the importance of quality and how to attain it. Eventually, American companies got the quality concept and began singing out its praises with the other world-wide believers. They did that, just in time to win back some of their customers from the Japanese. Some of these companies (e.g. Motorola and Federal Express) have even been recognized for their efforts by receiving the prestigious Malcolm Baldrige National Quality Award.
Time-based - Developing a new product rapidly and bringing it to the marketplace ahead of the competition can spell the difference between a company's success or failure. In his book what America Does Right, Robert Waterman describes Proctor & Gamble's plant in Lima, Ohio, which was given the job of manufacturing the company's improved Downy fabric softener. Lima succeeded in overhauling its production equipment so rapidly that new Downy was rolling off the assembly line and into supermarkets in the unbelievable time of only sixteen weeks. The key, according to Waterman, was the plant's empowered work teams that took ownership for the project and held a large stake in its success.
Innovative - Innovative and entrepreneurial are words most of us associate with small or medium-sized companies. yet some of the large corporations - the elephants - have also learned how to run with the gazelles. Through a variety of methods, companies like General electric, Motorola, Federal express, and P&G have proved that they can compete successfully. Unfortunately, too many other U.S. companies are still struggling to find a change process that will make them more competitive.
These are the twelve hallmarks of success that a congress of The American Management Association ( AMACOM) I had attended in the mid nineties in Las Vegas with more than 4,500 of executives from the five continents had discussed and agreed upon. I can see now that we were right in predicting the future traits of the twenty first century needs and demands.

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