When we use the word “Excellent” to describe a business or a team, we’re talking about a certain specific way of doing business. In our experience, there are three clear criteria that consistently define organizational excellence.
Trait Number One: Proactive Awareness. Excellent operations are so impeccably managed in every aspect of their operation, that no matter how closely you scrutinize their daily practices, you can’t find any area where they need major help. Or, if something isn’t exactly what it should be, the leader is already aware of it and is taking the necessary steps to correct it. We call this trait “Proactive Awareness” because leaders in these organizations are so closely attuned with what is happening on the front lines, that they’re both aware of what’s going on and proactively responding to it at all times. This is only possible because in excellent organizations, transparency is a shared cultural value. People at all levels don’t try to hide things from each other, and people at all levels take action to resolve problems when they arise. The leaders model these behaviors.
Trait Number Two: Always Growing. In addition, the excellent business is growing and expanding, moving appropriately beyond its comfort zone to adjust to changing market conditions and technologies. When there are surprises in the external environment, as there inevitably are, those surprises don’t threaten the existence of the business. This continuous growth is possible because in excellent organizations, personal and organizational development are major priorities that receive substantial time, attention, and resources. People and teams do not stand still, and neither does the organization.
Trait Number Three: Planning Never Stops. Last but certainly not least, continuous improvement is a way of life at these companies because there’s a circular, recurring planning process that pursues quality for its own sake. The top leaders at excellent companies go through the entire organization on a regular basis, department by department, looking at each objectively and identifying what’s working along with what’s not working. When they’re done with this company-wide reality check, they start all over again. By the way, their team leaders do the same thing, making sure that their specific area is constantly being improved. Professional management is therefore a daily reality, exemplified by a disciplined, sequential, continuous, and repeatable process that propels the business into the upper 5% of organizations. These companies are always improving their present situation—and always looking forward.
In considering this excellence question further, we’ve found it helpful to classify businesses into four general categories:
1. Excellent. For leaders, and everyone else at these organizations, excellence, as we’ve defined it above, is a way of life.
2. Well-Managed. Well-managed, respected in their industry, and likely in the top 25% of businesses measured in terms of professional management, these organizations are nevertheless vulnerable, because they have not yet created a management culture in which organizational excellence is second nature.
3. Average. These businesses are doing well enough to reasonably satisfy the owners and management, but they’re vulnerable to regressing back to the at-risk level (see below).
4. At-Risk. Business owners/leaders in this group have lost control of their companies and possibly their personal lives. Businesses that rely primarily on one person for all or most of the decisions have low growth potential—and are likely to enter and remain in the at-risk category.
It’s important to emphasize a challenge that arises consistently in the at-risk category. These businesses typically revolve around their leader.
If something were to happen to that leader, something that took him or her out of action for a quarter or more, the business would instantly be in crisis and might not survive at all. By the same token, if a group leader were to leave the company, the department might suffer greatly. One or two charismatic individuals end up carrying a disproportionate share of responsibility for the organization’s performance. The stories of organizations who consistently operate in this category generally don’t end well in the long term. They all have a downward trajectory: They don’t know about the obstacles they face, and they’re not interested in finding out. This dysfunctional way of working drains both leaders and organizations of energy, resilience, and potential.
As you look at your own organization, consider asking yourself:
Where are we on the spectrum? Are we Excellent, Well-Managed, Average, or At-Risk?
How many of the Excellence traits would the members of our team agree are already part of their working environment?
If we are At-Risk, how can we change that?