PETER ROCHE Producing Discontinuous Results: Why is This So Hard to Do? CHRMS Breakfast Series October 19, 2001

1. PETER ROCHE Producing Discontinuous Results: Why is This So Hard to Do? CHRMS Breakfast Series October 19, 2001 1

2. Leaders and Managers say they want to raise the bar on their organization’s performance; They say they want to: • Foster growth and development, ofboththeir executives and their organization • Build a substantially enhanced capacity to produce results in the organization • Constantly drive discontinuous change – or transformational change – in the organization and create a strong leadership edge in the market-place 2

3. Some Paradoxes We don’t relate to our organizations like extraordinary performance is what we are interested in really • We are afraid to stretch people more than “business as usual” • We prefer stability to too much change • We buy into reasons and explanations why extraordinary performance is unrealistic • We are unwilling to slaughter “sacred cows” and put up with systems process and policies which we know thwart us • We restrict information flow as we talk about being an open learning organization • The current design of organization suppresses the very creativity and contribution that senior leaders say they want

4. Some More Paradoxes • Leaders and managers tolerate high volumes of activity with little or no correlated result • Most leaders and managers are reluctant to promise to produce specific desired results in a specific time frame - or are unreliable at keeping them if they do promise • We operate from a mind-set that it is foolhardy, career limiting even, to promise to produce results that look “infeasible”, “impossible” or “unrealistic” at the time we are required to promise • Yet, by definition extraordinary performance, or “breakthroughs” are out of the ordinary results. If we are to be reliable in producing them we need to learn how to make and keep “impossible” promises 4

5. Some Fundamental Assumptions About People in Organizations • People want the experience that they are contributing to the realization of their organization’s vision, values and purpose - that their work is more than just a means to earn a living • They want to be part of an organization that works and that is considered the best in class • They want a mechanism to share what they know and what they have just learned - they want to be part of “learning organizations”, and “communities of practice” • People want the personal satisfaction of accomplishment

6. Some Fundamental Assumptions About People in Organizations (continued) • They want the experience of being recognized acknowledged and appreciated • They want the opportunity to make a direct contribution and they want to be trusted to do that • They do not want to be micro-managed • People can be counted on to “rise to the challenge”

7. And Some Paradoxes About People • Although we are turned on by accomplishment we settle for routine activities that produce little or no result - and no satisfaction • We complain about what does not work - yet we make do, settle for, put up with - rather than make changes • We want the results of change yet resist the process of actually making changes • We say we want extraordinary performance yet avoid the risk of failing • We want to be respected as self determining responsible adults yet we frequently wait for permission, wait to be told what to do, and act like we have no mind of our own • We think “I don’t know” means “therefore it is impossible”

8. How Do We Intervene and Create an Environmentof Extraordinary Performance? The first and most important step is to create a“Master Game” • The organizational “master game” is a “future” or set of outcomes taken on by the organization because it is worth doing - not because it is easily done • It calls for breakthrough actions, and when played full out this “master game” brings out extraordinary performance, a wealth of new learning and personal development • Engaging in a “master game” naturally builds a richer and larger capacity for results for the organization and its leadership

9. How Do We Intervene and Create an Environmentof Extraordinary Performance? (Cont.) • The “master game” is created from compelling ideas and bold visions - not the logical mind • It is what “ignites” passion, spirit, engagement, collaboration and full participation • It means giving up “I know” in favor of inventing, generating and discovering • It is embracing the risk of failure for a compelling “future” • Without a “master game” there is nothing to call for extraordinary performance

10. Five Core Elements of the Designof Extraordinary Performance 1. The Core Context – “The Master Game” 2. The Core Focus (Outcome) – “Entrepreneurial” results and mindset 3. The Core “Engine” – Leadership “from the future” 4. The Core Structure – The “Architecture” 5. The Core Values, Mindsets and Behaviors – The Culture

11. Key Elements of The London Perret Roche Group’s Framework What we “listen for”: I. Is there a “Master Game?” If so, what is it? II. What is the Capacity for “Entrepreneurial” Results? III. Is there Sufficient Leadership? IV. Is the Culture Supportive of the Desired Results? V. Is the “Architecture” Supportive of the Desired Results? VI. Is there a sufficient correlation between Action and Result 11

12. I. Is there a “Master Game?” - What is it? The “master game” is a “future” or set of outcomes taken on by the organization because it is worth doing - not because it is easily done. It calls for breakthrough actions, and when played “full out” this master game brings extraordinary performance and a wealth of new learning, building a new platform for the organization Essential components of an organizational master game are a “core idea” (or vision) and a set of bold “market-altering” promises

13. 1. Is there a compelling “core idea”? • Organizations are at their most effective and powerful when they are working inside the context of a clearly defined and communicated “core idea” (or a purpose or vision), that is designed to satisfy specific market needs • Extraordinary performance starts with a “core idea” which provides a clear focal point, an organizational “challenge” that inspires, and engages the leadership and the organization, and “calls for” breakthrough thinking and actions

14. 2. Is the “core idea” “market-altering”? • The “core idea”, ( purpose or vision) needs to contain in its expression the intention of altering the market and the organization itself in the process of implementation • In this way, the organization ensures for itself a “future” that, beyond fixing its existing problems and concerns, creates for itself a unique and desirable competitive advantage in the market place

15. 3. Is there a clear and aligned-on set of bold “promises”? • The “core idea” is translated into an organizational “master game” when expressed in a simple set of bold, measurable and time-bound “promises” made to its various stakeholders. This “master game” calls for new ways of operating and breakthrough actions from leaders and from the whole organization • These organizational promises become the focal point around which values, strategies, structures, processes, practices, and behaviors are aligned

16. 4. A Corollary: • Organizations are significantly sub-optimized when any one of these elements is either insufficiently robust, misaligned, or missing • This also means that there is an insufficient focal point to produce substantial change in performance. There is no “engine” to drive collaborative action and no clear “future” around which to create alignment about values, priorities, performance measures, desired behaviors and outcomes

17. 5. “Background” Starting Questions In Creating a Culture of Extraordinary Performance: • What is the “engine” for your organization - that drives it and gives it power in your market? • Is it powerful enough as the catalyst for innovation, creativity, coordinated actions and desired results? • How focused and aligned is the organization around desired results? • What is the “core idea” for your organization - is it clear and compelling? • What could be a powerful set of bold “promises” that would require a high level of collaboration to deliver on - that you want to be able to make and keep?

18. II. What is the Capacity for “Entrepreneurial” Results A key element of success for anyorganization is its capacity for producing “entrepreneurial” results A question for Leaders: Is your organization mostly “Entrepreneurial” ? Or mostly“Institutional” ? 18

19. Entrepreneurship Defined Entrepreneurship is a human, creative act that builds something of value from practically nothing. It is the pursuit of opportunity regardless of the resources, or lack of resources, at hand. It requires a vision and the passion and commitment to lead others in the pursuit of that vision. It also requires a willingness to take calculated risks. Jeffrey Timmons

20. 1. Some Entrepreneurial Qualities As a way of life… • Fast - short cycle time idea>action>outcome>review • Creative solutions to problems and obstacles • Rises to challenges - and thrives on them • Does not take no for an answer • Marketplace focus rather than internal issues focus • Passion: making a difference, generating better products, services, processes and practices • Sets bold objectives and meets them (Makes bold promises and keeps them) • Does not make excuses

21. 1a. Some Entrepreneurial Qualities (continued) • Finds a way, and if that does not work, finds another way • A drive to innovate • Within the current paradigm - Incrementally - small step changes - Large substantive changes • Outside the current paradigm-transformational changes • Flexible rather than attached to turf or hierarchy • Outcome focused • Lives a vision • Has practices that support vision and values • Tenacity to succeed even when beset with failures • Learns new skills and changes direction as needed

22. 2. Some Institutional Qualities • Slow to action - biased to planning and reporting • Internally focused • Not much innovation • Emphasis on maintaining the status quo • Won’t do it if solutions are not clear or fairly risk free • Seeks to avoid failures • Satisfied with doing well • Respects hierarchy and process more than getting results • Values “tradition” - the way we have always done it

23. 3. “Background” Questions: • Where is your organization on the “Entrepreneurial to Institutional” continuum? • Where do the leaders want the organization to be on the continuum? • Where is “the leadership” and the organization demonstrating “entrepreneurial” characteristics? • Where does the organization need to be to produce the desired market altering results?

24. 3a. Where are You on the Continuum?Where do you need to be? • Institutional Vs. • Designed to maintain status quo • Internally focused • More concern for “looking good”than for impact • Risk averse • Financial goal driven • Rigid, bureaucratic • Slow moving • Conservative . . . • Entrepreneurial • Fast changing • Market-focused • Driven by passion for impacting the market • Making and keeping bold promises - a promise driven organization • Fluid • Fast moving • Bold & Risk taking. . . _________________ 1 5 10

25. 4. How Entrepreneurial Are We Really? • In the last two years, have you innovated in product areas? In areas other than products? And have these innovations impacted the marketplace? • Do you make bold promises to stakeholders and deliver on them? If yes, give examples. • Are you actively maintaining a “list of opportunities” regarding possible ways of altering the marketplace?

26. 4a. How Entrepreneurial Are We Really? • Do you frequently choose speed to seize a possible opportunity over taking time to ensure that you are doing the right thing? • Are you moreconcerned by cost of failure than the fact of having a failure? • Do you fail on a regular basis? Is failure OK? • Are you benchmarking for entrepreneurial characteristics? • Is “raising the bar” seen as a means of growing and strengthening your capacity to produce results?

27. 4b. How Entrepreneurial Are We Really? The entrepreneurial organization typically would be aresounding “YES”on all questions.

28. But What Drives Entrepreneurial Behavior? Leadership Perhaps?

29. III. Is There Sufficient Leadership? Significant change will not happen without a strong leadership process. Leadership is what translates vision into reality Warren Bennis Leadership and management are two different operating states. They produce different outcomes. At best, organizations have good management. Few have developed a “distributed” leadership strong enough to produce “market-altering” change reliably. 29

30. 1. Leadership versus Management • Management is about planning, executing on the plan, control, and efficiency, and replicable results • Leadershipis about making happen what would not happen in the ordinary course of events • Significant change will not happen without a strong set of leadership practices - starting with the practice of “declaring” this shall be!

31. 2. The Role of Leadership • Establish the direction: design the future • Design the strategies to reach that future • Communicate the direction to all constituencies • Ignite, enroll, engage the organization and external stakeholders • Align actions “from the future”that produce desired results • Ensure that the culture and “architecture” of the organization support the design for the future • Lead the process of “invention” to overcome barriers, and design new pathways • Establish the mood, pace, tone and values for the organization

32. 3. A Leadership Challenge: • Leading “from the future” • In the “entrepreneurial” model, the future is invented “in the future” rather than extrapolated from the past. • Leaders choose a future because they really want it, not because they know how to get there. This future creates substantial gaps in behaviors and performance that can only be closed by mastering breakthrough results. • This model goes “against the grain” of traditional planning and execution models, in which we create - and realize - a future by extrapolating from what we think we know how to do and can do. • The following three slides illustrate the two • different approaches

33. 4. Leading “from the future”: “Inventing” versus “Extrapolating” the Future

34. 4a. Leading “from the future” (continued): “Inventing” versus “Extrapolating” the Future

35. 4b. Leading “from the future” (continued): “Inventing” versus “Extrapolating” the Future

36. 5. Starting “Background” Questions: • As a leader, what is your intention for the future? • Are you interested in, committed to, playing a “master game”? • Do you have a “leadership process” – and how strong? • What leadership skills need to be developed for the organization to be reliable in making and keeping promises? • What breakthroughs do you want to accomplish – personally and organizationally? Question: “What results are sufficiently important to you to have you be willing to make significant changes in personal and organizational practices and behaviors so as to accomplish those results?”

37. IV. Is the Existing Culture Supportive of the Desired Results? • • What are the key characteristics of the culture? • • Do they support producing “entrepreneurial” results? • • Where are the leverage points to produce rapid improvements in performance? 37

38. 1. What are characteristics of the culture? • Which aspects of the culture support “entrepreneurial” results? • Which aspects constrain“entrepreneurial” results? • What characteristics are missing that if developed would substantially leverage the knowledge and ability resident in the organization to produce the desired change? • What are the values of the organization? • Do they fit the future you are committed to? • Are there aligned upon and clearly communicated practices and behaviors? • Are they being lived?

39. 2. Some cultural characteristics that enable “entrepreneurial results” • The ability to set “bold futures” for the organization and commit to their accomplishment without fully knowing the pathways. • The ability to “align”as an organization around key issues and ways to “tackle”them. • The ability to make decisions and act quickly and efficiently. • The ability to acknowledge successes. • The ability to deal with failure “head on”, without avoidance or loss of power. • The ability to confront and resolve “difficult issues”.

40. 2a. Some cultural characteristics that enable“entrepreneurial results” (continued) • Working from commitment rather than circumstances, opinions and past-based experiences and assessments • Making promises and delivering on them • Getting into action quickly • Open and straight communication • Teaming and collaborating • Being accountable and being willing to be held to account • A willingness to be contributed to – coached, mentored and trained • An organizational desire to learn - being willing to say “I don’t know” as the start point of invention, generation and discovery

41. V. Is the “Architecture” Supportiveof Extraordinary Performance? • • What processes, organizational structures and practices are supportive of extraordinary performance? • • What processes, organizational structures and practices need to be dismantled or re-aligned? • • What processes, organizational structures and practices are missing that need to be built? 41

42. VI. Recommendations For Actions to Build Extraordinary Performance Say (Discover) WhatYou Want Really Really Really Want Create Your Own “Master Game” Become a Player