Readers of this blog will know that I define Organisational Excellence as “delivering sustained superior performance that meets and where possible exceeds the expectations of stakeholders”.  To achieve this organisations need to focus on the value that they are delivering to their stakeholders – their customers, shareholders, employees, partners and so on.

I have been surprised over the years to discover how few managers understand the concept of stakeholder value, let alone how to manage and measure it. Many models that supposedly focus on “excellence” fail them by hardly mentioning it at all.  Yet the value that we deliver to our stakeholders determines their expectations, their perceptions and ultimately their loyalty.

So what is “stakeholder value”?  There are many excellent articles generally available these days that help answer this question far better and more comprehensively than I could do in a short(ish) blog, but possibly the simplest definition is to represent it in the form of an equation:

Stakeholder Value  =  Benefits – Sacrifices / Costs.

Clearly it is often difficult to quantify each of the elements in this ‘equation’, and this is where the challenges associated with stakeholder value measurement and management often arise.  However a simple example might at any rate illustrate the concept. The computer on which I am typing this blog is an Apple MacBook Pro.  This product, for me as a computer customer, generates more value than a corresponding Windows based laptop, simply because the benefits of a fast, reliable, virus free, error message free, update message free computer outweigh the sacrifice of not having access to such a vast range of software, and the higher capital (but lower software) costs. But that value will reduce if, for example, Apple computers become more prone to virus attacks and Apple do not address this in a way that causes no or very little inconvenience to its customers.

Of course this examples illustrates another important concept, that of perceived stakeholder value, and the change that takes place in expectations over time.  At the end of the day, perception is all there is and these change as expectations change.  But despite this moving picture, one thing remains constant – stakeholder expectations, and their perceptions based on these expectations, are always based on the value generated for them by the organisation concerned. Of course it needs to be said that expectations are influenced by other factors as well, for example the perceived value generated by other organisations, such as competitors etc.

So…..when your organisation is considering the drivers of your stakeholders perceptions and behaviour, check whether the value delivered to those stakeholders is ever considered or even understood.

I was recently asked by a reader of my blog where he should start in terms of excellence in his organisation.  He’d bought into my suggested definition of excellence and liked the 3S Model of Performance Excellence© but was struggling a bit in terms of ‘getting going’.  Following discussion I drew up a list of twelve initial, closed (yes/no answer) questions that he and his colleagues could ask of their organisation.  He was kind enough to say they were really helpful, so on the basis that they might be useful to others I have reproduced them below.  The questions roughly follow an order, in other words if you answer ‘No” to question 1 it’s hardly worth asking the remainder, and so on. The more challenging questions come towards the end. Where you answer “No”  you may need some help in identifying what to do.  Contact me (markw@markwebsterconsulting.com) and I should be able to help you.  Where you answer “Yes” to a question then this leads to supplementary questions designed to focus down onto where your organisation is performing well and where more or better attention is required.  Again contact me if you need help.

Twelve initial questions to ask ourselves about our organisation:

1. Do we know who our existing stakeholders are?
2. Do we know what our existing stakeholders expectations are?
3. Do we have a strategy to deliver existing stakeholder expectations?
4. Do we measure our current performance in terms of our existing stakeholders expectations?
5. Do we measure our existing stakeholders perceptions of how well their expectations are being delivered?
6. Do we understand what causes the performance we are achieving and the perceptions of our stakeholders?
7. Do we know who our potential future (short, medium and long term where relevant) stakeholders are/will be?
8. Do we know what our potential future stakeholders expectations are likely to be?
9. Do we have a strategy to create and/or deliver potential future stakeholders expectations?
10. Do we have a strategy to measure our performance and the perceptions of our stakeholders in the future?
11. Do we compare our performance and the perceptions of our stakeholders with those of other organisations?
12. Do we understand what we need to do to sustain superior performance and stakeholders perceptions in the future?

I was recently talking with a man who had just completed some training on how to assess organisational excellence for one of the excellence awards.  He was worried about how he, a fairly inexperienced manager, could effectively assess what an organisation does when he was quite unfamiliar with it or the industry sector concerned.  Not once did he mention assessing what they achieved, even after a few friendly prompts!  It struck me as we continued our discussion that like many, he was more concerned with ‘means’ rather than ‘ends’, in other words with what the organisation does rather than what it achieves.

Organisational excellence is, I would argue, all about what an organisation achieves.  As discussed in earlier posts, the excellence of an organisation is determined by its stakeholders, (they are the main and final arbiters), and they make their decisions based on how well the organisation in which they have a ‘stake’ performs, based on their criteria. So is what an organisation does not important?  Of course it is, because understanding what is causing the results they are achieving helps the organisation to take the necessary actions to ensure that those results become, or remain, superior, sustained and sustainable, and above all focused on the expectations of their stakeholders – the three true characteristics of organisational excellence that I call the “3S’s of performance excellence”.

I think the new assessor I was speaking with finally got it, for he said, “Oh I think I’ve been viewing this whole assessment activity in a completely wrong way.  I need to start with the results, see to what extend they deliver the 3S’s, then look at the causes of them in terms of what the organisational does, and assess these actions based on how well they are delivering the 3S results.”  Regrettably not, it transpired, what he’d been taught but all I needed to say was “Exactly!”

I am typing this post in the beautiful city of Prague where I have had the privilege of addressing Czech business people about my thoughts and experiences of organisational excellence. It was stimulating to experience the interest of many leaders in driving their organisations forward on a path of excellence.  During our discussions I was reminded once again of the importance of developing a culture of excellence in our organisations and the key role of senior leaders in enabling, stimulating and sustaining this.  We often speak of the models, processes, tools and techniques that can help organisations in their pursuit of excellence, but much less about the behaviours that are vital if we are really to succeed. Maybe we need to focus much more on these more challenging aspects that stimulate and enable success, and rather less on the mechanisms that support the process?

I was recently asked whether the three Stakeholder focused, Superior and Sustained aspects of performance, (see blog of 25/08/11 about the definition of Organisational Excellence), follow one after the other in terms of management attention, or whether management should focus on all three together.  My answer was that it depends on the state of your organisational progress to date.  Once an organisation is performing well in all three aspects then clearly management need to focus on all three.  However when ‘starting out’, the key requirement is to ensure that your organisation is taking the actions needed to identify, anticipate, create, understand, meet and where possible exceed your stakeholders expectations.  Having done so, the challenges are then to exceed the performance of others, such as your competitors, and to sustain this superiority over time. Truly excellent organisations aim to deliver sustained world-class performance in those areas critical to their stakeholders and the long-term success of their organisation.

I use a model of performance management with my clients to help focus their attention on this whole area of performance.  I call it the 3S Model of Performance Excellence©,  and the graphic of it, which might illustrate my answer to my questioner, is shown below. Readers may find it helpful….but please respect the copyright and do not reproduce it.

I have experienced ‘one of those days’,  when a large proportion of my time which should have been spent on important things was instead spent on doing things arising from mistakes made by others, people not following their own policies or processes, people not listening, or sadly in a few cases I suspect because of a lack of motivation to do things properly and well.  I’m sure you are not interested in my woes but it did get me thinking and I hope the result of that thinking might provide food for thought for some of my readers. On reflection I realised that the incidence of these sort of experiences had increased over the last few years and that I was not alone; colleagues and friends had frequently mentioned similar experiences.  Indeed several had mentioned incidents when on drawing attention to silly mistakes made by others they had experienced a strong response on the lines of “how dare you say that” from those concerned.  My mind went back to when I was a young manager.  One of the first and important things that was impressed upon me and many of my generation was the importance of striving to ‘get things right first time every time’.  Mistakes due to lack of knowledge or skill were excused but we were expected to learn from these and not repeat the same mistake.  Mistakes which should not have been made were just not tolerated.  It makes me wonder whether in our focusing on the rather more grander aspects of organisational excellence we may be forgetting some of these basics.  After all, surely one basic expectation of stakeholders is that our organisations do indeed strive for and largely achieve getting things right first time every time and that a culture exists where mistakes that cannot be tolerated are not allowed, where people strive to always do better, to learn and to focus their energy on contributing to organisational excellence through their own personal excellence. Food for thought or just the grumpy ramblings of someone who has experienced a bad day?  You’ll be the judge of that!

I’m typing this blog in the departure lounge of the international airport in the Caribbean island of Trinidad, where I’ve experienced a stimulating week working with a client seeking to plot a course to become an excellent organisation.  As we discussed the challenges they face on the way I was reminded of many of my clients in other parts of the worlds – in Europe, the Fast East, the Gulf Region and elsewhere who are grappling with many similar issues.  It reminded me that whatever the geographical location, the industry, the culture, and so many other things that express the differences that exist in organisations across the world,  organisational excellence is truly global and achieving it necessitates traversing much the same route for all organisations.