The Top 5 Determinants of Organizational Success

Newsletter 68

This newsletter is dedicated to the memory of Stephen Haines. He was one of the foremost strategic planning experts in the world, my friend and mentor, and an extraordinary human being. We’ll miss you, Steve…

We live in a wonderful era—we have a plethora of great information on what drives organizational success. So much so that sometimes it can be a bit overwhelming, and we can lose sight of the forest for the trees. Perhaps that’s why I see so many leaders who don’t use this information to their advantage.

So, when all said and done (and, as we all know, more is said than done) what are the top determinants of organizational success? For our purposes, let’s define success as:

  • creating sustainable financial success, and
  • making a sustainable positive difference in the world

The top 5 determinants of organizational success are:

  1. A core driving force of creating happiness
  2. The right people in the right roles
  3. An effective strategic plan and implementation
  4. Continuous improvement of leadership and management capabilities
  5. Continuous improvement of business practices based on customer needs

A core driving force of creating happiness

Aristotle said, “Happiness is the meaning and the purpose of life, the whole aim and end of human existence.” Stephen Covey said, “Start with the end in mind.” These gentlemen were a strategic planner’s dream—they went right to 50,000 feet and set the number one priority right out of the gate.

The research from the field of Positive Psychology tells us that after you meet your basic needs for food and shelter with a little left over for recreation (which only requires about $75,000 a year), there are 3 main determinants of happiness:

  • Fulfilling relationships with others. We’re highly social beings. Among other benefits, at a very basic level this improves our chances of survival. Leaders, think “benefits of teamwork.”
  • A “flow” experience in which you lose track of time because you’re engaged in the pursuit of challenging and meaningful goals. Leaders, think “engagement.”
  • Making a difference in the world and in the lives of others. Leaders, think “empowerment and autonomy.”

My experience validates Peter Drucker’s observation that an organization and the people in it need more than a profit motivation alone to create sustained success.

Too often I encounter leaders who snigger at these facts and maintain that they are “touchy feely fluff.” They do so due to their own fears, insecurities, and insufficient emotional intelligence. If you’re not valuing enjoyment over achievement and people over money, then you’ll never enjoy sustained success as an individual or as the leader of an organization.

If you think managing people relationships is tough, try being a loner and a misanthrope for a while…

The right people in the right roles

Many leaders still don’t pay enough attention to this. If you have a team of “C Players” and you compete against a team of “A Players” we both know what’s going to happen. By the same token if you have your Center playing Wide Receiver we both know what’s going to happen. Jim Collins calls this “having the right people in the right seats on the bus.”

An effective strategic plan and implementation

You’d be surprised at how many leaders are still working from some form of “ad hoc” strategy that resides mostly in their heads. Others follow the once-a-year SPOTS (Strategic Plan On Top Shelf) approach. Getting senior leaders to commit to ongoing strategic planning and implementation can be challenging. Remember, leaders have two basic roles: a) running today’s business, and b) building tomorrow’s business.

Continuous improvement of leadership and management capabilities

Organizational success is all about leadership, and the bottom line is that an organization’s only real limitations are the limitations of its leader. This is the Trickle Down Law in action. Also, how can you have sustained success over time if you don’t have strong leadership and management bench strength?

Are your leaders competent in creating a proactive and ongoing strategic leadership system, or are they just moving from one crisis to another? For example, are they skilled in leadership and management competencies such as: strategic thinking and planning, project management, hiring the right people, emotional intelligence, communication skills, coaching and building talent, leadership and motivation, succession planning, innovation, change management, performance management, conflict resolution, financial management, sales and influencing skills, customer focus, presentation skills, meeting effectiveness, and facilitation skills?

Continuous improvement of business practices based on customer needs

There’s a name for organizations that aren’t customer focused—Chapter 13. Think Kodak. Peter Drucker said that any organization has two basic functions: a) marketing (creating and then serving customers), and b) innovation (continuous improvement).

Satisfying your customers’ needs is the lifeblood of your organization. As the world changes, your customers’ needs change, and so you need to be continuously improving your business practices to meet these new needs. As Jack Welch said, “If the rate of change outside of an organization is greater than the rate of change within it, the end is in sight.” Do you have a strategic leadership system in place to continuously improve your organization? Do your competitors?

TECHNIQUES

Technique #1: Make creating happiness the core driving force of your organization.

Technique #2: Get the right people in the right roles.

Technique #3: Create an effective strategic plan and implementation.

Technique #4: Continuously improve your organization’s leadership and management capabilities.

Technique #5: Continuously improve your business practices based on your customers’ needs.

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