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Beyond Performance: An overview of our approach to sustainable transformational change

Edited transcript and slides from a webcast on December 13, 2011

This webcast explored some of the research and client work from the past decade that went into the presenters 2011 book, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. During the session, authors Scott Keller and Colin Price discussed why most organizations are wired for mediocrity, which organizational capabilities are tied to measurable performance improvements, how to find the unique recipe of capabilities that will most benefit your organization, and how to implement change so you can thrive in the long term.

Beyond Performance: An overview of our approach to sustainable transformational change

The big idea

COLIN PRICE: The starting point was analytical data: essentially, we looked at 500 organizations over a tenyear period and got data from 600,000 people in those organizations. And we found that the organizations that distanced themselves from their competitors focused on both performance and health. Now the most important word in that phrase performance and health is the middle word, and. Were not suggesting, and the data do not suggest, that winning organizations focus on health instead of performance. But winning organizations focus on health as well as performance. Now, I guess were all familiar with what performance is. Health is not the profit today but, as we define it, the capacity of the organization to produce superior returns tomorrow through the ability to align, execute, and renew faster than competitors.

Exhibit 1 The big idea: Companies need to manage performance and health with equal rigor
Performance Health

What an enterprise delivers to stakeholders in financial and operational terms (e.g., net operating profit, total return to shareholders, net operating costs, stock turn)

The ability of an organization to align, execute, and renew itself to sustain exceptional performance over time

The narrow pursuit of shareholder value was the dumbest idea in the world Jack Welch Former chairman and CEO of GE Financial Times, August 2009

We have not achieved our tremendous increase in shareholder value by making shareholder value the only purpose of our business John Mackey Founder and CEO of Whole Foods Reason Magazine, October 2005

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Let me unpack that a little bit. We took 500 organizations and we measured their health over ten years. Some of them were low health; some of them were high health. We then correlated health to a whole bunch of different performance metrics.

Beyond Performance: An overview of our approach to sustainable transformational change

Exhibit 2 Organizational health and company performance are mutually reinforcing drivers
Likelihood that companies with specified level of health have above-median financial performance % EBITDA margin
31 68

48

x2.2 2.2x

Growth in enterprise value/ book value

31

52

62

x2.0 2.0x

Managing health is not something you can wait to do in the future: it is about the actions you take today to perform tomorrow

Growth in net income/sales

38

53

58

x1.5 1.5x

Weak1

Medium2 Health

Strong

1 Also referred to bottom, mid, and top quartiles in the health assessment. 2 Comprises 2nd and 3rd quartiles. Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

You see the EBITDA margin, growth in the value of the enterprise, and growth in the top line. And what you find is that the answer is basically two. That is, we found that healthy organizations had roughly double the chance of outcompeting and winning in terms of performance over the competitive-advantage period.

Exhibit 3 The business benefits of a balanced approach to performance and health during transformations are proven and profound
Bank 1 Profit per business banker
8% 19%
Performance-heavy approaches Balanced performance and health approaches

Coal mine Increase in tonnage

15% 25%

Bank 2 Retail banker cross-sell ratio

19% 43%

Retailer Sales-to-labor ratio

34% 51%

Telco Churn reduction

35% 65%

Source: Company data in longitudinal studies (2 years) of control groups vs. experimental groups controlling for all possible distortions of trial

Beyond Performance: An overview of our approach to sustainable transformational change

Organizations that focused on performance alone benefited, but organizations that managed to add the elixir of health on top of performancenot instead of it, but on top of itmanaged to roughly double the degree of impact. Let me just define health in a little more detail and introduce the nine dimensions of health we use.
Exhibit 4 Organizational health has nine critical dimensions that need to be proactively managed for organizations to transform successfully
Alignment Stakeholders are clear on vision, strategy, and expected behaviors

Direction

Accountability Execution Activities enable the company to execute strategy and deliver results

Coordination and control

External orientation

Leadership

Innovation and learning

Capabilities Renewal A steady stream of exploitable opportunities is created to ensure the company can evolve with the market

Motivation

Culture and climate

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Now, as nine things are hard to remember, if you read them verticallydirection, leadership, and culture and climatethats alignment. If you read it around the middle, thats execution. If you read it horizontally, thats renewal. So, these three concepts of alignment, execution, and renewal are what we focus on in terms of thinking about health. We havent found any organization that is distinctive or elite on all nine of these dimensions. The recipe for success seems to be: to be able on all of these dimensions and to choose two or three or four to be truly elite on. Let me talk you through one of them, just so you get the feel for it.

Beyond Performance: An overview of our approach to sustainable transformational change

Exhibit 5 Where is your organization healthy?

QUICK ASSESSMENT

Ailing
Direction Creates a strategy that fails to resolve the tough issues Provides excessively detailed instructions and monitoring (high control) Lacks a coherent sense of shared values Creates excessive complexity and ambiguous roles Establishes conflicting and unclear control systems and processes Fails to manage talent pipeline or deal with poor performers Accepts low engagement as the norm

Able
Crafts and communicates a compelling strategy, reinforced by systems and processes Shows care to subordinates and sensitivity to their needs (high support) Creates a baseline of trust within and across organizational units Creates clear roles and responsibilities; links performance and consequences Aligns goals, targets, and metrics managed through efficient and effective processes Builds institutional skills required to execute strategy Provides motivation using incentives, opportunities, and values Makes creating value for customers the primary objective Able to capture ideas and convert them into value incrementally and through special initiatives

Elite
and provides purpose, engaging people around the vision and sets stretch goals and inspires employees to work at their full potential (high challenge) and creates a strong, adaptable organization-wide performance culture and encourages an ownership mindset at all levels and measures and captures the value from working collaboratively across organizational boundaries and builds distinctive capabilities that create long-term competitive advantage and taps into employees sense of meaning and identity to harness extraordinary effort and focuses on creating value for all stakeholders and able to leverage internal and external networks to maintain a leadership position

Leadership

Culture and climate Accountability Coordination and control Capabilities Motivation

External orientation Innovation and learning

Directs the energy of the organization inward Lacks structured approaches to harness employees ideas

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Ill start at the top, with direction. An ailing company doesnt have a strategy, or it has a strategy that isnt worth the name. It doesnt resolve the tough issues. An able company has a strategy thats reinforced by its performance-management processes and systems. And an elite company has what an able company has but builds on top of that the ability to create meaning or purpose and a deep degree of engagement around the vision. The elite is not an alternative to the able; it builds on it. So how do you get to a high degree of health? Im going to turn to my colleague Scott.

The five frames

SCOTT KELLER: When we ask leaders where they want more help, more tools, and more insight, on performance or health, by and large, leaders say, We want more on health. We dont feel as equipped on the health side as we do on the performance side. And so in the rest of this presentation well focus heavily on the health side of the equation. Now, why do leaders want more on health? One way to explain it is, well, its harderits the soft stuff that we dont learn a lot about in our management training. Thats true. In addition, there is one aspect of health that relates to each of the steps of the change process that makes it particularly hard: there are a number of ways that we, as human beings, are what is called predictably irrational. That is, there are ways that a really smart, rational person, when thinking about human behavior, will get it wrong every time, because people dont react the way you would think they would. This idea of predictable irrationality transformed the field of economics with behavioral economics, and we feel that the field of change management and organizational behavior can in the same way be transformed.

Beyond Performance: An overview of our approach to sustainable transformational change

Aspire: Where do we want to go?

The first step involves setting as explicit an aspiration on organizational health as you would on performance.

Exhibit 6 On the health side, it is important to set the right organizational aspirations

Measure organizational health

Set the right health aspirations

A runner, a boxer, and a swimmer are all healthy, but in very different ways. What kind of health aspirations are right for your organization?

Involve a broad leadership coalition

We see three key things that will help leaders set an aspiration on health. First is measuring organizational health, that is understanding the nine elements of organizational health, and knowing how you do on those things. The second part is knowing what to do about it. Its one thing to know if you have high blood pressure, for example, and its another thing to know what caused it.
Exhibit 7 Health aspirations can be set by breaking down the nine outcomes into 37 management practices
Underlying practices that drive health Outcomes
Direction 1. Shared vision 2. Strategic clarity 3. Employee involvement Leadership 4. Authoritative leadership 5. Consultative leadership 6. Supportive leadership 7. Challenging leadership Culture and climate 8. Open and trusting 9. Internally competitive 10. Operationally disciplined 11. Creative and entrepreneurial Accountability 12. Role clarity 13. Performance contracts 14. Consequence management 15. Personal ownership Coordination and control 16. People performance review 17. Operational management 18. Financial management 19. Professional standards 20. Risk management Capabilities 21. Talent acquisition 22. Talent development 23. Process-based capabilities 24. Outsourced expertise Motivation 25. Meaningful values 26. Inspirational leaders 27. Career opportunities 28. Financial incentives 29. Rewards and recognition External orientation 30. Customer focus 31. Competitive insights 32. Business partnerships 33. Government and community relations Innovation and learning 34. Top-down innovation 35. Bottom-up innovation 36. Knowledge sharing 37. Capturing external ideas

Direction Accountability Coordination and control Innovation and learning

External orientation

Leadership

Capabilities

Motivation

Culture and climate

Results achieved, i.e., How effective is the organization?

Practices that are followed, i.e., What does the organization do?

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Beyond Performance: An overview of our approach to sustainable transformational change

Exhibit 7 shows the practices that underlie the dimensions of health. So you can understand what youre doing a lot of, what youre doing a little of, and how that relates to your overall health. Understanding this is fundamental to being able to think about setting the right aspiration for organizational health. The next point is that some of these practices work in combination.

Exhibit 8 Practices work in combination

MOTIVATION EXAMPLE

% likelihood that a company will be top quartile in motivation if it is top quartile in this individual practice Being top quartile in the following individual motivation practices1 results in the following % likelihood of being top quartile in overall motivation Meaningful values Inspirational leaders Career opportunities Incentives The stand-alone practice from the left plus a competitive environment results in the following % likelihood of being top quartile in overall motivation

55

+
55 54 48

61 61 58 95

Competitive environment

Success in individual practices is important to the overall motivation outcome

1 Analysis conducted on 4 out of 5 motivation practices.

Being top quartile in both incentives and competitive environment is a potent combination

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

If you look at the left side of Exhibit 8, you can see what most management literature has already shown. It says that if you look at the different ways you can motivate people, there are a lot of ways to do it that are about equally powerful. But theres one way thats a little less powerful, and thats incentives. We were able to go beyond that type of analysis and ask, Wait a second, what if we analyze motivation and its practices in the context of all the other management practices? Are there any interdependencies? Are there any complementarities that we can understand? And it turns out there are a number of ways all these practices interact, as you can see in Exhibit 7. So we started looking for any magic formulas, trying to find out if there are recipes that taste better, so to speak. What we ended up with is something that is unique in terms of being able to answer the question of how you get healthy. We found that theres not one recipe thats the winning recipe for health. There are actually four recipes that companies can choose from. And 80 percent of healthy companies are very clearly one of these archetypes, as we call them.

Beyond Performance: An overview of our approach to sustainable transformational change

Exhibit 9 Four sets of management-practice combinationsor archetypesquantitatively deliver higher impact than other combinations
Top 6 practices for each archetype Leadership driven Market focus Execution edge Knowledge core

1 2 3 4 5 6

Career opportunities Open and trusting Performance contracts Inspirational leaders Strategic clarity People performance review

Business partnerships Customer focus Competitive insights Government and community relations Financial management Capturing external ideas

Knowledge sharing Creative and entrepreneurial Employee involvement Talent development Internally competitive Personal ownership

Talent acquisition Role clarity Consequence management Rewards and incentives Personal ownership People performance review

Leaders act as a performance catalyst; they set high expectations and help the organization achieve them

Shaping market trends and building a portfolio of solid, innovative brands keeps us ahead of the competition

Discipline, sound execution, and continuous improvement are the foundations of great performance

Our collective talent and knowledge is our most important assetour success depends on us developing it effectively

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Theres not necessarily one perfect archetype for an industry, or even for a strategy. But there are a bunch of wrong ways to go by focusing on a number of practices that dont combine well. Focusing instead on a set of practices that do combine wellany one of these recipes helps companies succeed and endure. So, setting an aspiration requires (1) knowing your health both in terms of the outcomes and practices and (2) choosing which archetype makes the most sense for your company. The last point on how to set an aspiration is to involve a broad leadership coalition. And this relates to the predictable irrationality I mentioned earlier. Most leaders understand that they should involve people, but they tend to underplay the importance of that. In fact, research has shown that if you involve people in the right way, you get five times the commitment that you would otherwise have. And thats a pretty good return on investment by any standard.

Assess: How ready are we to get there?

When it comes to assessing the change readiness of an organization, on the performance side, its all about the capabilities people have; on the health side, its all about understanding the mindset shifts needed within the organization. Theres a tool kit we call the discovery process, which basically involves asking why a lot.

Beyond Performance: An overview of our approach to sustainable transformational change

Exhibit 10 The discovery process dives deeply into an organizations inner workings
Current state Where are we, and what do we want to achieve? Outcomes Outcomes (e.g., blame) (e.g., blame) Desired state Outcomes Outcomes (e.g., accountability) (e.g., accountability)

What changes to practices do we need to make to achieve the desired outcomes?

Practices Practices (e.g., no clear (e.g., no clear performance performance contracts) contracts)

Practices Practices (e.g., clear (e.g., clear performance performance contracts) contracts)

What changes in behavior do we need to make to breathe life into desired practices?

Behaviors Behaviors (e.g., minimal (e.g., minimal performance performance dialogue) dialogue)

Behaviors Behaviors (e.g., ongoing (e.g., ongoing performance performance dialogue) dialogue)

What changes in mindsets do we need to make to achieve sustainable changes in behaviors?

Mindsets Mindsets (e.g., Keep my (e.g., Keep my head down, head down, watch my back) watch my back)

Mindsets Mindsets (e.g., If it is to be, (e.g., If it is to be, it is up to me) it is up to me)

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Instead of going through the process Ill just give you an example. Salespeople who are on the frontline who are asked to do more selling often have a mindset that says, Ill give the customer what they want. Thats a good mindset, and those salespeople do a good job, but the great salespeople have a very different mindset. They have a mindset of, My job is to help the customer understand their unarticulated needs. That mindset means salespeople will ask a number of profiling questions that you often want salespeople to use but they dont. And just by shifting the mindset, a number of very positive sales behaviors kick into gear. This discovery process is tailor-made so that whatever performance goals youre going for, you can uncover the mindsets that help or hinder getting there. The next idea is to focus on just a few mindset shifts that are most critical to meeting your performance and health aspirations. Often, we find, its one or more of these three.

Beyond Performance: An overview of our approach to sustainable transformational change

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Exhibit 11 Ultimately, organizations should focus on a vital few mindset shifts

From transactional I am responsible for quickly and efficiently meeting the needs my clients express Probing my clients about their financial situation would be prying into their private affairs to relational I am responsible for bringing the best of my company to clients and addressing their needs, whether they are articulated or not I need to understand my clients full situation before I can give them the best advice

From silos

to collaboration

I know whats right for my area, and no one else can achieve what I can

I can learn from others, and there is great value in mining the seams together

From blame

to accountability I seek to clarify my and others accountabilities if they are unclear I trust others to do what they are supposed to do in a fair manner

There is a lack of clarity regarding accountabilities around here I show up at each meeting so I can watch my back

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

The last idea is assessing both whats working and what isnt. And again, this is one of those predictably irrational truths: we are much more likely to be motivated to improve when our strengths are being pointed out at the same time as our weaknesses. We wouldnt say just focus on strength, but we would say focus equally on strengths and weaknesses.

Architect: What do we need to do to get there?

How do you create a plan that will shift those critical few mindsets? What can you as a leader practically do?

Exhibit 12 On the health side, implementation should be architected using the key levers that drive people to change

Create the right context

Use performance initiatives to influence changes in mindset and behavior

!
Understanding how to make change happen at an individual level

Expect and leverage irrationality

Beyond Performance: An overview of our approach to sustainable transformational change

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Here again we have three big ideas. First is to get the context right, second is to use performance initiatives to influence the shift, and third is to expect and leverage irrationality. This is what we call the influence model.
Exhibit 13 Leaders can use four levers to influence mindsets
Influence model
CLIENT EXAMPLE

Role modeling

A compelling story

Top-team participation in
customer-metric reviews

Quantitative customer-loyalty
analyses shared broadly, proving value/link

Top-team members co-lead

cross-business customercentric initiatives

Transformation story Coordinated, memorable

communications campaigns

Skills required for change

Reinforcing mechanisms

Top 300 leaders enterprise

assets

Multiple cross-business
councils

New leadership behavioral

standard

Compensation and

consequences linked measurements built into all key business processes

360-degree feedback and field

and forum training on creating value across silos

Customer metrics and

This model can be used to take any performance initiativeaimed at things like sales-force effectiveness or supply-chain managementand think about building into that initiative a compelling story, the right reinforcing mechanisms, the skills required for change, and role modeling, so that the performance initiative includes moves toward the culture shift we want.

Act: How do we manage the journey?

COLIN PRICE: The next frame is how you actually make these changes happen. We all intuitively know that most organizations just have too much stuff going on: too many initiatives, too many counterproductive, redundant, overlapping, well-intentioned attempts to do the same thing. Because theres so many, things dont get done. To be more effective, the first step is to take a structured approach. The second is to get lots of people focused on the same things, and the third is to measure as you go along. The structured approach looks really complicated, but its actually dead simple.

Beyond Performance: An overview of our approach to sustainable transformational change

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Exhibit 14 Adopting a three-level structure brings coherence to the journey

Level 1: Transformation headline Level 2: Performance and health themes Health themes Cross-business councils Level 3: Specific initiatives

CLIENT EXAMPLE

Health themes Story cascade Talent-review overhaul

To become a highly competitive integrated company, recognized as one of the top 5 energy producers worldwide and as the employer of choice in our industry Performance themes

Customer focus

Collaboration

Accountability

Alignment

Performance themes

Expanding production Integrating the value chain Maximizing downstream Improving efficiency and safety

Pricing Learning
Vendor consolidation

Lean

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Think about your own organization. You should be ready to answer three questions at three different levels. At level one, the top level, what are we trying to do in this organization? Whats the mission or the aspiration or the direction or the vision, whatever you want to call it? Jumping to level three, what are all the things you need to do: all the tasks and finished actions to drive both performance and health? What we found in the winners, the organizations that were higher on both performance and health sustainability, is that they could also answer question number two, which is what are the relatively few themes, five to eight themes, which capture all of the level-three actions, and which make meaning for people? If youve answered all these questions, the next question is how do we get this done? Health is almost a social movement.
Exhibit 15 Build ownership for change by combining military and marketing tactics
Manage the transformation like a military campaign as well as a marketing campaign

Role clarity

Role descriptions, accountabilities, performance contracts, and decisionmaking authorities

Viral tactics unleash change that is largely selfdirected, mobilized by a cause beyond individual gains

Activists
Governance rigor Direction setting, decision-making and sign-off processes, funding, risk mitigation, and performance management

Core team plus voluntary connectors Simple rules, opportunistic, go with the energy Big aim, open approach Celebrations, change campaigns Empowered Based on wisdom

Project discipline

Problem-solving approach, project management, cross-initiative integration, and best-practice sharing, tracking, and adjusting

Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Data sharing

Beyond Performance: An overview of our approach to sustainable transformational change

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Its a way of getting people to behave differently in relation to the environment that theyre in. And you cant just rely on telling people to behave differently. You have to spot their enthusiasms. You need to light forest fires. You need to connect people who are committed and engaged. Many change programs weve seen are strong on the left side of Exhibit 15, but a little bit weak on the right side. Finally, measurement sounds intrinsically boring, I know, and its the kind of thing that people like us who write books say you just need to do. But theres more to it than that. You measure in order to adjust.

Exhibit 16 Implement effective evaluation mechanisms by measuring impact on four levels

Monitor enterprise value or shareholder value as the ultimate outcome1

Enterprise value

Measure performance to ensure improvement is taking place (e.g., revenue, cost, cash flow, and risk)

Performance

Monitor key health indicators to ensure initiatives have the desired impact (e.g., surveys and customer forums)

Measuring at all four levels enables organizations to link causes with effects and to act on early warning indicators

Health

Track progress of initiatives to ensure delivery on time, on budget, and to required quality

Initiatives

1 Or impact on key stakeholders for not-for-profit and public-sector organizations. Source: Scott Keller and Colin Price, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, John Wiley & Sons, 2011

Health is an adaptive process. What weve observed in winning organizations is they measure at four levels. Are you implementing the level-three initiatives on time and to quality and cost goals? Youre doing those things to drive health. So is health improving? You can measure it with surveys, focus groups, questionnaires. Then, youre improving health to improve performance, so you need a way to measure performance. And finally, youre doing all of those things to drive enterprise value, which you can measure too.

Advance: How do we keep moving forward?

The fifth of the five things were talking you through is in a way the most difficult. Essentially what were finding is that if the way your organization changes is slower than the rate at which your industry changes, youre in deep trouble. And in all of this work what weve identified, we hope, are a bunch of really helpful tools and tips and techniques to enable organizations to increase their corporate metabolic rate.

Beyond Performance: An overview of our approach to sustainable transformational change

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Central to all this is leaders. Everything weve been talking about calls for leaders to inspire people, to shift their behavior in pursuit of competitive edge. Now, the world is full of leadership theories. What we looked at is not theory but the behaviors that leaders in healthy organizations actually engage in.

Exhibit 17 The centered-leadership model includes five arenas

Finding an inspiring purpose that is built on strengths and using it to generate hope and action

Meaning Happiness Core strengths Purpose

Framing Self-awareness Learned optimism Moving on Adaptability

Looking at problems in new ways to find better solutions

Actively managing experiences to achieve maximum flow in the work day

Energizing Sources and uses Recovery Flow

Personal and professional context

Connecting Inclusiveness Reciprocity Network design Sponsorship

Actively shaping networks to heighten ones sense of belonging, ability to influence change, and personal growth

Engaging Voice, taking action Ownership Risks and fears

Taking personal accountability for ones life experience and setting aside fears to step up to opportunities
Source: Joanna Barsh and Susie Cranston, How Remarkable Women Lead, Crown Publishing, 2009

There are five arenas in Exhibit 17, and each one of them has got some sub-arenas. Think about yourself in each of these arenas and you can come up with a little scorecard. Central to leading organizations, the left column of Exhibit 18, is leaders working on themselves.
Exhibit 18 Centered leadership starts with self-mastery and expands to create specific skills enabling individuals to lead others and the organization

Leading self

Leading others

Leading the organization

Use personal vision to motivate yourself Take accountability to regulate your mindsets and behaviors to Manage energy and attention Develop a strong support
to maintain productivity network Leave your comfort zone and commit to opportunities create desired change

Motivate others to action Turn difficult conversations into learning opportunities Build relationships based on trust and emotional mastery Engage system support for teams Sustain and renew via coaching and sponsorship

Communicate inspiring vision Recognize and shift system Engage multiple stakeholders
dynamics for greater accountability and change stories

through appreciative inquiry

Source: Joanna Barsh and Susie Cranston, How Remarkable Women Lead, Crown Publishing, 2009

Beyond Performance: An overview of our approach to sustainable transformational change

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Theres a kind of authentic intent behind all of this. Healthy organizations are not ones that just pretend to engage their people and pretend to make a difference for their stakeholders. They mean it authentically.

Its the role of leadership to not only drive performance in this quarter but also to have the foresight to understand how the organization needs to evolve and develop over multiple quarters. So where at all possible, work on health for your organization. Work on it sooner rather than later.
Scott Keller is a director in McKinseys Southern California office. Colin Price is a director in the London office. Their book, Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage, was published by John Wiley & Sons in 2011. For more information, see www.mckinsey.com/beyondperformance.