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On High-Performance Organizations features the best thinking from top experts on organizational effectiveness, sustaining growth, and strategy. Written in a concise style that is ideal for the busy executive with little spare time, the book presents a stellar roster of contributors. On High-Performance Organizations is one title in the Leader to Leader Guides, which draw from the most compelling articles that have appeared in Leader to Leader, the Drucker Foundation's award-winning journal.
The first step to "put one's house in order" is to employ Peter Drucker's concept of "planned abandonment" and to reject outmoded organizational policies, practices, and products. This involves reviewing the organization's mission, customers, what the customers value, results, and plans to attain organizational goals. A second step is to examine the organization's leadership strengths, needs, and approaches; its allocation and development of human resources; its communication of mission and values; and its diversity. The third step of proactive change is introspection and planning for personal development. By aligning the organization's plan for the future with its plan for leadership and our own personal plans, we become more integrated and innovative.
Jack Welch, former chairman and CEO of General Electric, once compared his organization to an old house. Over many years all organizations, especially established ones, accumulate outmoded practices, policies, and procedures; the leader's job, he said, is to clean out the attics and closets. We need to take stock, assess our organizational estate, and discard what no longer works. Clearing the cobwebs from this old house is an adventure in "planned abandonment," to use Peter Drucker's evocativephrase.
As this year fades, it is natural to look back to what we have accomplished and look ahead to what is possible. It is a time of profound assessment. We know that the future demands a new approach to planning, and to leading change. "Business as usual" is dead. Vision, mission, and courage will carry the day.
To move from vision to action, to lead vibrant organizations that can flourish in the 2000s, consider an exercise that for generations has helped people refresh and renew their lives: spring house cleaning. A passionate western Pennsylvania value (my roots are showing), this practice is invaluable in the life of an organization and its leaders.
Three Dimensions of Change
For today's organizations, cleaning the attic-"getting one's house in order"-means, first of all, revisiting one's mission: the short, powerful, compelling statement of why the organization does what it does, its reason for being. From a passionate, relevant mission flow the few powerful goals that reflect the organization's vision of the future. And from those goals flow the objectives, action steps, and organizational tactics that will carry the enterprise forward. We ask the five classic questions that Peter Drucker has charged organizations to answer for the past 60 years: What is our mission? Who is the customer? What does the customer value? What are our results? What is our plan?
But creating this organizational coherence is just the first imperative of change. The second dimension of good housekeeping is the plan for the leadership of the organization. Preparing our leadership house for the future requires as much time, energy, and rigor as the strategic plan for the enterprise itself.
To create a plan for the leadership corps we must ask ourselves several more questions. These include:
What are our leadership strengths? What are the areas to be strengthened?
Are we leading from the front? Do we anticipate change and articulate shared aspirations, or simply react to crises?
How do we deploy our leaders, our teams, our people to further the mission and achieve our goals?
Do we use job expansion, job rotation, and opportunities for development in innovative ways to release the energies of people and increase job satisfaction?
Do our leaders see themselves as the embodiment of the mission, values, and beliefs of the organization?
How can we sharpen communication skills and attitudes -knowing communication is not merely saying something, it is being heard?
Are we building today the richly diverse, inclusive, cohesive organization that our vision and mission demand?
The answers to these questions help us build effective teams, deploy appropriate resources, and develop energetic leaders in response to goals and objectives.
The third dimension of change-getting our personal house in order-is perhaps the most challenging, and most neglected. It requires reserving the time, building the psychic energy, for introspection. When society is transformed, the organization is transformed, and in the end, we ourselves are transformed. We play an active role in all three.
Just as leaders are responsible for understanding their organization's strengths and preparing for its future, we must assess our personal strengths and take responsibility for planning our own development. For each of us, this will require listening to the whispers of our lives. We look at the intensely personal challenges of our health, our well-being, our relationships with others, and the promptings of our spiritual life-however we define it.
Bringing the Search Home
From such reflection we can set the goals of our own work-for instance, work-life balance-and ensure that our lives are consistent with the values and mission of the organization we are building. In our personal plan-written, not rolling around in our head-we are responsible for our own development, with checkpoints along the way.
I once talked with a highly successful CEO who shared with me his plan for 2000-he called it his "learning journey." It included fewer "things to do," greater focus, and more time for writing and for family-and specified deadlines for action. This went far beyond the business plan for a successful organization; it was the personal plan for a successful life.
When we align the organization's plan for the future with the plan for its leadership and with our own personal plan, they become one: the powerful symbol of the integrated, innovative organization of the future and its leaders. We look to other leaders, past or present, whose personal vision and values were congruent with the credo, the values of their organization. For instance, James Burke, former CEO of Johnson & Johnson, continues to inspire and motivate through his example, his results, his legacy.
Effective leaders have learned that moving from vision to reality requires a road map, a business plan for the future. When we create a vision for the institution, its leadership, and ourselves, we create a new house. We have left behind business as usual in all we see and do. It is an exuberant journey. It is called managing the dream.
Karl Weick and Kathleen Sutcliffe, with David Obstfeld
The effectiveness of high-reliability organizations, such as air traffic control centers, stems from the ability to respond to fluctuating conditions. Collective mindfulness, which can be developed in any organization, consists of: (1) viewing any failure as a systemic problem to be examined and learned from; (2) reluctance to simplify interpretations; (3) integrated sensitivity to and communication about operations throughout the organization; (4) commitment to resilience; and (5) fluidity of decision-making structures.
A patient is wheeled into the emergency room in cardiac arrest. A team of doctors and nurses leaps into action. Within minutes the patient's heart rate is stabilized and the team disperses.
The crew of an aircraft carrier works nonstop, managing the steady stream of take-offs and landings. In a moment of crisis crew members with appropriate experience break ranks, quickly form a group to contain the crisis, then return to their positions.
In a quiet air traffic control center, several controllers leave their posts to assist a colleague managing an unusually high volume of traffic. Backup controllers step into the vacated positions. Gradually people fall back to their original stations.
Casual observers might think these were tightly scripted, well-rehearsed activities. Individual players knew their roles, had often encountered these situations, and had only to do what they had always done to work effectively and reliably. However, research on operations such as these-known as high-reliability organizations (HROs) because of the potential for catastrophic outcomes should they fail to execute-reveals that the opposite is true. Their reliability is not due solely to standardized routines, which would have the individuals enacting the same set of actions over and over. Rather, their reliability comes from an ability to ensure stable outcomes despite working conditions-and responses to those conditions-that can vary wildly.
What do HROs have to do with other organizations? After all, unlike a nuclear power plant, neonatal care unit, or warship, most enterprises operate in a relatively forgiving environment. However, with increased competition, high customer expectations, and reduced cycle time, today's business environment is in fact very harsh. Although lives may not be at stake, livelihoods may be. All high-performance organizations aim to deliver the consistency, quality, and responsiveness of the best HROs. Yet as they are driven to squeeze slack out of their operations through downsizing, mergers, resource reduction, or complex distributed computer technologies, these same organizations are at risk for a host of failures.
Furthermore, most enterprises look for ways to give individuals the opportunity to build expertise, discover and correct errors, and apply their learning to each new problem-what HROs do at their best. We call this organizational competence collective mindfulness. By that we mean the capacity of groups and individuals to be acutely aware of significant details, to notice errors in the making, and to have the shared expertise and freedom to act on what they notice. Like other organizational capabilities, mindfulness can be developed through effective organizational and leadership practices.
Five Keys to Mindfulness
In reviewing years of research on HROs, we looked for how these organizations sustain reliability in the face of persistent high risks and fluctuating conditions. What operational or organizational strategies allow them to respond effectively to sudden changes? We discovered that a state of collective mindfulness grows out of five qualities common to the best HROs:
Preoccupation with failure
Reluctance to simplify interpretations Sensitivity to operations
Commitment to resilience
Fluidity of decision-making structures Each of these qualities encompasses a distinctive set of organizational skills.
Preoccupation with Failure
It is through failure-trial and error-that much learning in organizations occurs. But because the cost of failure is so high, and the occurrence of any given type of failure so rare, HROs have fewer opportunities for such learning. Therefore, they must find ways to do more with less information, to maximize what they can learn from the failures that do occur.
Effective HROs encourage the reporting of errors and regard any failure, no matter how seemingly isolated, as a signal of possible weakness elsewhere. This is a very different approach from that of most organizations, which tend to localize failures and view them as specific rather than systemic problems. Many researchers have observed a by-product of this attentiveness to all failures. In contrast to their minor role in most organizations, maintenance departments in HROs become central locations for organizational learning. Maintenance workers tend to encounter the largest number of failures, at earlier stages of development, and have an ongoing sense of vulnerabilities in technology, sloppiness in operations, gaps in procedures, and sequences by which one error triggers another.
To further increase their knowledge base, the best HROs also encourage and reward the reporting of errors, even going so far as to reward those who have committed them. Researchers Martin Landau and Donald Chisholm, for example, describe a seaman on the nuclear carrier Carl Vinson who reported the loss of a tool on the deck. All aircraft aloft were redirected to land bases until the tool was found, and the seaman was commended for his action-recognizing a potential danger-the next day at a formal ceremony. Similarly, Harvard Business School professor Amy Edmondson found, contrary to her hypotheses, that the best-performing nursing units had higher detected rates for adverse drug events than did lower-performing units. She interprets these results to mean not that more errors were committed in the better units, but that a climate of openness made people more willing to report and discuss errors and to work toward correcting them.
What also sets effective HROs apart is the way they perceive failure in relation to success. The best HROs regard close calls-for example, a near collision in aviation-as a kind of failure that reveals potential danger. Less effective HROs see close calls as evidence of success and an ability to avoid disaster.
Reluctance to Simplify Interpretations
Humans handle complex tasks by simplifying their interpretation of events. These simplified worldviews, frameworks, or mind-sets allow people to ignore information that may hamper efficient decision making. Indeed, all organizations are defined by what they ignore. This means, of course, that they are also defined by what can surprise them. Effective HROs pay attention to what is overlooked in the effort to manage ambiguity; they generally know more about what they don't know. Some have characterized this as an attempt to match external complexity with internal complexity. This effort takes a variety of forms, such as checks and balances embedded in diverse committees and meetings, frequent adversarial reviews, recruitment of employees who bring new experience and expertise, frequent job rotation, and retraining.
HROs continuously assess their procedures, rejecting some and adjusting others, to fight complacency and rigidity. This ongoing process of renewal and reevaluation requires a diverse set of perspectives within the organization, as well as mechanisms that allow those perspectives to be applied. This is not a simple matter.
A group with many diverse perceptions has more information at its disposal; what it may not have is a way of tapping the full range of this information.
Excerpted from On High Performance Organizations by Frances Hesselbein Rob Johnston Excerpted by permission.
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About the Editors.
1. Putting One's House in Order (Frances Hesselbein).
2. High Reliability: The Power of Mindfulness (Karl Weick and Kathleen Sutcliffe, with David Obstfeld).
3. The Marketing of Leadership (Philip Kotler).
4. The View from a Cubicle (An Interview with Scott Adams).
5. Economically Correct Leadership (James O'Toole, Bruce Pasternack, and Jeffrey W. Bennett).
6. Laws of the Jungle and the New Laws of Business (Richard Tanner Pascale).
7. Better Than Plan: Managing Beyond the Budget (Douglas K. Smith).
8. An Alternative to Hierarchy (Gifford Pinchot).
9. A Passion for the Business (An Interview with Jacques Nasser).
10. Strategic Generosity (Leonard L. Berry).
11. Creating Your Next Business Model (Adrian Slywotzky).
12. Principles for Partnership (James E. Austin).
13. Leadership in a Virtual World (Deborah L. Duarte and Nancy Tennant Snyder).