Discussion Group - Or Performance Engine?
(Performance Is A Direct Function Of Corporate Decisiveness)
As part of our work, we commonly measure more than 100 corporate attributes that cause, affect, underlie and predict the performance of companies. We call them Leading Performance Drivers (LPD) and Early Warning Signs.
Of these, one Leading Performance Driver stands out as having the greatest effect on success and profitability. And this LPD is a key component of most of the others. It directly influences traits such as Assertiveness, Entrepreneurship, Innovation, Morale, Psychological Age. Indirectly it affects factors like Quality, Recruitment, Training, Vision, Zeal. In fact, it is at the root and origin of an entire alphabet of performance drivers.
It is Corporate Decisiveness.
This attribute has itself a number of components. Four obvious ones are:
Where speed, refers to the time it takes to make a decision. Importance, to the nature of that decided upon. Commitment, to the emotional commitment made to carry out decisions to completion. Rightness, to the correctness of the decisions.
Of these, it is the first three that are truly significant; rightness is almost never a problem.
When we measure Corporate Decisiveness we find that there is a direct, positive relationship between speed, importance, commitment and the performance and profitability of companies. Faster decisions are related to increased performance. The more important the decisions made, the more profitable the company. The greater the commitment to implementation, the greater the overall success.
World class companies consistently score high in Corporate Decisiveness. Troubled companies score consistently low. When we find profitable companies with low decisiveness scores, we know that trouble, in one form or another, is brewing. When we enable low performing companies to increase their corporate decisiveness, increased performance follows. Often immediately.
However, Corporate Decisiveness does not refer to the decisiveness of the CEO as an individual, though such individual decisiveness does have positive effects. Nor does it refer to the decisiveness of individual managers, though that has positive effects too.
Corporate Decisiveness refers to the decisiveness of the organization, expressed by and through its management team. It means that the management team, as a team, acting as the company, on behalf of the company, makes rapid decisions on the important issues and commits viscerally to their achievement.
When a company is small, the decisiveness of the CEO can be that of the company. But as it grows, that is no longer enough. Beyond a certain size, no matter how decisive the CEO is, unless the management team, as a team, is making these decisions (and making these commitments) a strong positive relationships with performance does not show.
To use a sports analogy: Individual decisiveness is akin to the ability of an individual player.
Corporate Decisiveness is akin to the competence of the team. And a powerfully functioning team of average players will often beat a poorly functioning team, even if it has great athletes.
Increasing Corporate Decisiveness is the surest way to higher profits and improved performance. Of all the improvement programs, it is the fastest and most reliable, it has the lowest cost and it delivers the greatest results. A first year return of 10:1 is the least you can expect.
So how do we increase Corporate Decisiveness?
The answer lies with the CEO. It is the CEO who must create the team and the climate of decision-making. And act as its leader and its coach.
If you are a CEO or Managing Officer and would like information on improving Corporate Decisiveness send e-mail.