This is the fourth in a series of blogs on Changing Workforce Expectations
When people write about how work will change in the future, they often focus only on the environment and neglect to discuss the actual output of work. At the end of the day we work for an outcome. That outcome is unique to each individual and organization, but it is always connected to a performance measure of some type.
If you’ve worked in any organization since the late ‘80s you’ve probably been inundated with the focus on improving organizational performance. Terms like “high performance,” “best practices,” and “goal- oriented” have permeated our careers. Putting aside the hyperbole, organizational performance simply refers to the actual outputs or results an organization is measured against in relation to its intended goals or objectives. The performance of an organization provides context for its market value, future prospects, and even its allure for talented employees. For corporate business, performance usually translates into:
- Financial performance (profits, return on investments)
- Product or service performance (sales, market share)
- Performance of shareholder returns
For government or non-profit organizations, you would add categories such as:
- Increased constituents served
- More missions accomplished
In all of these cases the focus is generally on getting “more” from each invested hour of work. Between 2000 and 2010, labor input grew on average by 1.4% and labor productivity grew by 2.9% in relation to our economic growth. Since the early ‘70’s there has been an estimated 80% growth in overall worker productivity. Whether the goals focused on increases in revenues, profits, shareholder returns, or services rendered, the answer seemed to always be higher levels of short-term performance, in many cases putting the long-term sustainability of an organization at risk.
Organizations won’t lose their focus on improving performance and productivity; that will always be a central tenant of solid business management. But today’s leaders are also facing the need to expand their perception of improved performance to encompass metrics that aim for sustainability and innovation. Today we are seeing annual reports from companies like Nike that share details on:
- Social responsibility and environmental performance
- Brand and messaging performance
- Employee bench strength and engagement performance
- Performance toward strategies for increasing innovation and experimentation
So why are organizations pushing in this direction? It would seem counterintuitive if the focus is on getting more out of every hour worked. These metrics seem less valuable in a world engineered to focus on “more.” The answer resides in a few very important themes for tomorrow’s businesses world:
- We are connected. We live in a world where communities of people share their perceptions, information, new ideas, and beliefs more widely.
- Consumers have power. Governments, businesses, and nations can be influenced by the desires of unique consumer expectations.
- People are mobile. More than ever, people are on the move and taking their work and lives with them.
- Business is global. North America comprises only 5% of the world’s population; Europe only another 11%. China and India alone make up 37% of the world’s population and Africa another 15%.
Competing in this new global environment where consumers share their perceptions, companies like Nike — with a long history of poor global and environmental practices — realized it was necessary to shift focus from financial performance to sustainability and innovation.
But while being good – or looking good in the media — may be beneficial to companies’ brands, it does not directly translate to improved financial outcomes. Harvard Business Review did an analysis of more than 3,000 organizations that had increased their environmental, social, and governance investment (ESG) metrics and found that without substantial “innovation,” those companies’ financial performance declined as ESG metrics went up. However, innovations in process, products, and business models created opportunities for increased metrics in both environmental and financial areas. For instance, organizations like Dow Jones created a $350 billion market opportunity from their innovations to address manufacturing waste.
If your organization has to shift its focus from simply improving performance, to innovation and sustainability, how does it happen and where does it start? Well there is a lot of work being done on “innovation. Some interesting new books and research in the space worth a quick look include:
- Bob Kelleher’s Creativeship
- Stephen Shapiro’s Best Practices are Stupid
- Ron Adner’s, The Wide Lens
- Eric Kandel’s, The Age of Insight
Although each of these books is written from very different perspectives and by authors with widely varying backgrounds, it is amazing how they share a few key themes that can provide a starting point for innovation.
- Innovation isn’t a program or department; it is a culture and environment.
- Innovation and art are inextricably connected, which means you need both artists and pragmatists for successful innovation.
- Mistakes need to be embraced, not feared (This means the company needs to incent people who make mistakes, versus punishing them)
- Innovation doesn’t have to be a big idea; little ideas and process improvements can be powerful and more valuable.
- Innovation happens within an ecosystem or environment, not a box; stop talking about the box and start looking at your relationships.
- If you don’t understand the environment that you work within, you’ll never be able to find where the innovation will have the greatest impact.
- Parameters don’t hinder innovation, but rules and regulations do. Giving people a scope to innovate within – but with no wrong answers — creates the best outcomes.
- You can’t pay for innovation, you have to inspire innovation.
So if your organization is focused only on traditional performance metrics today – without looking at innovation and sustainability — it might be time to ask a few questions. More importantly, if your organization was one of the 45% in Brandon Hall Group’s Business Focus ’13 survey that said improving innovation or delivering new products and services was one of your top business priorities, your leadership already realizes this is the pathway to success. You will need to figure out how your role as an HR, talent, or learning leader can support your organization. It isn’t a fad or the topic of the moment; it is a business strategy.
Next time: Changing relationships with employees