The same way you build a successful technology, product or service: passion, intelligence, focus, investment, and commitment.

The creation of that other thing called “the organization” is often the stepchild to that exciting product or service on which the company was founded. But you can’t launch a successful business with a flawed product strategy; poor market timing; an inefficient resource plan; management teams in conflict; difficulties with key stakeholder groups; unstable organization structure; or a poor work culture for employees. On second thought, maybe you can. But who wants to?

An ineffective, inefficient organization isn’t a fun place to work—which matters to more people than you think. And, it doesn’t tend to be, or remain, profitable. Unfortunately, that’s status quo for far too many businesses.

Building a high-performance corporation depends on: 1) leaders who can manage complex systems, 2) clear strategic direction in dynamic market conditions, 3) a roadmap that sequences resources, 4) an evolved leadership team that truly teams, 5) stakeholder management, 6) flexible, scalable organization design, and 7) an Employer of Choice culture. These seven elements are the secret sauce of building a high-performing corporation.

Leaders who can manage complex systems

Managing a corporation in the 21st century “is” rocket science. Speed, multiple cultures, time zones, competitive pressures, technology, products and services are all blended together into a behavioral soup—called the workforce. Leadership needs to be able to act effectively on all dimensions: strategic, cross-functionally, and functionally.

We have just witnessed a phenomenal business collapse due to lack of functional expertise. Solyndra needed material science/manufacturing expertise to fully understand the true cost of manufacturing and better competitive intelligence to determine that Polysilicon, the key material used in competitor products, would soon be mass-produced cheaply—making Solydra’s product overpriced. The needed functional expertise wasn’t on board to prevent this oversight—a common organizational problem.

Clear strategic direction

When a start-up isn’t able to articulate a clear strategy a Darwinian event occurs: the company dies quickly. Yet, it seems almost endemic that established companies struggle to articulate that next cycle of business growth. Are the right visionaries on board to define growth? Has the company settled for executive consensus as a substitute for visionary thinking? Are the assumptions on which the strategy is based challenged periodically? Strategic planning is a dynamic process and must be nurtured continuously to remain viable.

A roadmap that sequences resources

Many executive teams create a vision and move to execution too quickly. This promotes silo behavior. A vision is only a half-baked plan. It is critical that the executives work together to translate a vision into a blueprint that provides context for execution. Further, when the key objectives of the organization are sequenced resource deployment becomes laser focused—because the organization is growing in an efficient manner: foundation first, walls second and roof last. Many planning algorithms don’t utilize sequencing. The result, by design, is inefficient resource deployment and flavor of the month initiative work.

An evolved leadership team that truly teams

Are you leading your company with a team or a group? There is a profound difference between these two concepts. While Bocce Ball and Ropes courses socialize people, team building has specific outputs: rules of engagement, clear interdependencies, conflict resolution, and decision-making protocol. If these constructs aren’t in place then you’re managing with a group (not a team) and playing roulette with company success. Executives are like thoroughbred stallions. It’s the nature of the beast to run, kick, and bite. Company’s need thoroughbreds to compete—but not with each other. Leveraging these smart, driven people in the confines of an organization can only be accomplished through effective teaming. If left to chance divisive behavior will prevail.

Stakeholder management

Nothing can derail an executive’s agenda faster than misunderstood and mismanaged stakeholders. What’s a stakeholder? “A person, group or organization that has a direct or indirect stake in an organization because it can affect or be affected by the organization’s actions, objectives, and policies.” Stakeholders in a business include: customers, directors, employees, agencies, owners (shareholders), suppliers, unions, creditors, and the community from which the business draws it resources.

Stakeholders have a higher level of sophistication and influence than in the past. So, it is hypercritical to know your stakeholders, and their expectations. Proactively manage the stakeholder landscape as part of your planning algorithm or the stakeholder landscape will manage you.

Flexible, scalable organization design

Organization redesign may be the most frequently performed planning activity. It’s too bad because it seldom achieves the desire effect. Why? Organization design has less influence on company performance than you might think and tends to be conducted for the wrong reasons: solving people issues, cutting costs, or just shaking things up hoping for a better result. If workforce disruption is your goal reorganization will do it and expect productivity to dive below 43% as a result.

Tips for effective organization design: 1) Save people selection for later, 2) Start with a clear strategy, 3) Form a design team with the right skills, 4) Maintain line-of-sight structures, i.e., Put natural working groups in close proximity to promote communication, 5) Match talent to the new design at the end, and 6) Don’t stop with a new org chart. Roles and responsibilities, decision-making processes, procedures, and education are needed to rewire the new organization.

An Employer of Choice culture

Companies that model Employer of Choice characteristics generate the best shareholder value. What are these characteristics? 1) A compelling company vision, one that draws and keeps talent. 2) Great people managers. “People join companies but leave managers.”3) Career trajectory. Everyone wants a career opportunity. 4) Total Rewards matters. Base pay, bonus, long-term incentives, and benefits must be competitive. Serious business leaders need to be students of culture—how to built it and keep it in tune.

Summary

Peter Drucker said, “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” Building a high-performing organization is absolutely rocket science. It deserves that same level of passion, intelligence, focus, investment, and commitment as does developing that next great product or service. In doing so, you will create and sustain that sought after competitive edge your business.

It’s highly unlikely that your company is using its resources efficiently. Why? The logic on which traditional planning is based is flawed. And, it can introduce huge inefficiencies into the daily operations of a company. On the surface the operational plan might look great and make sense—but if it doesn’t use “sequencing” as the organizing principle, then behind the scenes that same plan is draining productivity by as much as 15% to 27%[i] or more. No kidding.

How much money does a 15% to 27% productivity loss equate to? You can do the math for your company. It could be a few million dollars in an early stage organization to hundreds of millions of dollars in lost productivity (and related market opportunity) in a large corporation.

The Problem with Traditional Planning

A traditional planning approach goes something like this: 1) The company defines its vision and purpose. This is why the organization was formed, where it’s going, and what it will look like when it gets there; 2) Leadership will also define its mission statement or “What they are striving to achieve”—looking out 18 to 24 months; 3) Next, a string of high-level objectives are typically identified (let’s call these imperatives). Then the functional leaders (Sales, Engineering, Marketing, R&D, Finance, etc…) identify the work needed to be done, meaning, list the key projects and programs in order to achieve these objectives (let’s call these initiatives); and 4) The Initiatives identified by the functional leaders are then aggregated into a plan. That’s when the fun begins. Bright, motivated leaders spend time debating priorities and make a case for resources. I call this activity “resource roulette” because at this juncture resource allocation might as well be gambling since the logic on which it is based is severely flawed.  Why?

When there is a high interdependency between imperatives and initiatives, which is the case in almost every modern-day corporation, then sequence or the order in which work is performed (like building a house) becomes extraordinarily important. When building a house a foundation must be built first. There is no debate about this. Next, walls must be erected before plumbing and wiring can be installed. No one would dream of putting on the roof before the walls were built—and in reality it couldn’t be done. When one builds a house there isn’t debate about priorities. The house is built on the basis of sequence or the logical order in which work needs to be accomplished. And here in-lies the root problem: organizations are very, very complex systems (even start-ups) with a high sequential relationship between imperatives (high level objectives) and initiatives (where the work gets done)—but this sequential relationship isn’t obvious. And, “the sequence” is further hidden when bright, energetic functional leaders act independently to create their respective plans of work to be performed. Without a sequenced based plan the organization is doomed to essentially work against itself as an army of motivated employees pursue goals and objectives that aren’t in unison.

The Power of Sequencing

Let’s review a powerful, numbers driven example, to illustrate the power of introducing sequencing into the planning process. (See Excel spreadsheet attachment: Sequencing Analysis)

A CTO Group in a large corporation was struggling with lack of headcount, funding and their ability to meet general company objectives. The group had 111 employees and an $83M annual budget (excluding R&D capital). Prior to beginning the planning refresh cycle the current plan documents showed: 8 imperatives and 126 initiatives that the 7 CTO Group executives had aggregated from their various departments into a plan.

After refreshing the Mission Statement we identified 10 imperatives that were needed in order to achieve the Mission. Next, we mapped the 126 existing initiatives to the new Imperative set. See column #1 “New Imperatives Identified in Plan” and column #2 “Existing Initiatives Mapped to Imperatives”. Examine the Initiative count by Imperative. (Note: At this stage you can’t read the actual Imperative description to know if, for example, 32 Initiatives is the correct loading for Imperative #1. We’ll save that discussion for a later time.) To this point Initiatives have been identified and put in motion based on executive debate over priorities. Remember, building a company is like building a house. There is always an inherent sequence that should be the organizing principle on which a plan is based. Now let’s demonstrate the impact of introducing sequencing as the organizing principle of the plan.

Next, the executive team performed a very simple sequencing activity (on the new ten Imperatives) called the Interrelationship Digraph. This is a common sequencing tool used for a variety of applications. After sequencing (see lower portion of Excel spreadsheet green and red areas) we learned that Imperatives 8, 5, 4, 3, and 9 (ordered high to low) were the drivers or, keeping with my sequencing metaphor, building the foundation and walls of the house. In other words, these Imperatives needed to be finished or at least significant progress made before the lower in sequence Imperatives could be efficiently completed. It turned out that Imperatives 1, 10, 6, 2, and 7 (in this order high to low in sequence) were the followers or the wiring, plumbing and roof of the house. Notice that at this stage there is no debate about priorities! So, for example, it’s very difficult to build a sales plan without a market analysis. This is a no-brainer. Unfortunately, with literally hundreds of initiatives in queue in most companies, it’s very difficult to determine where these might fall in sequence unless there is an explicit mechanism in place to identify it.

After completing the sequencing activity this is what we learned:
1)     63 of the 126 existing Initiatives were cancelled or suspended. These were deemed too low in sequence or simply unnecessary at this point in time.

2)     22 new Initiatives were added—not in anyone’s queue—and deemed mission critical; 14 of these addressed high in sequence Imperatives.

3)     32% of the allocated resources (headcount and dollars) were rebalanced from low in sequence Initiatives to high in sequence Initiatives.

4)     The executive team’s confidence level grew and the weekly staff meeting debate ended over headcount and dollars.

5)     The CTO Group executive team agreed that their confidence level in plan execution had significantly increased.

6)     The CTO also presented this plan to the CEO and Board of Directors (CTO had previously been challenged by the BOD on his resource requests). He received accolades for plan composition and transparency. Stakeholder confidence and sponsorship had exponentially increased.

Summary

Is the organizing principle behind your company’s plan sequence or prioritization? I’ll bet it’s the latter. This means that you’ve got hidden treasure in terms of significant productivity gains awaiting discovery. Now, go get it.

[i] Research performed on 87 companies between 1999 and 2009 pre and post planning process results. Planning process documented in Beyond Genius, Innovation & Luck: The “Rocket Science” of Building High-Performance Corporations, J. Allan McCarthy, November 2011, 4th Edition Publishing, available at Amazon.com.