The sustainable enterprise strives to achieve performance excellence – doing the right things, and doing them well. Values and guiding principles establish the basis for decision making; guiding principles set standards for behavior and provide directives for what is expected.
The sustainable enterprise has to be aware, willing, able, and ready to enact and to respond to change in the markets that it currently serves, or intends to. This means being able to exceed both the requirements and expectations of customers by offering better value propositions than competitors, either through differentiated product and/or services or price. Value includes convenience and quality.
Maintaining a competitive position means that it is difficult for others to replicate an enterprise’s people, process, and product and/or service capabilities because of the tight fit between them. Achieving a tight fit requires alignment between the enterprise and its constituencies externally, and between organizational units internally. Alignment is achieved through guiding principles that determine the expectations for behavior between the enterprise and its constituencies, and between and within organizational units internally. With both external and internal alignment, the enterprise is more likely to be able to meet the wants and needs of its constituencies.
The guiding principles for achieving performance excellence as an enterprise include:
Has shared values and vision…
Values set expectations for behavior, establish positions and priorities, and provide a framework for decision making. Guiding principles aid the process. To ensure alignment with constituencies, values must be set within context of the societal cultures of the markets within which the enterprise has a presence.
A vision statement is an inspirational description of a reasonably achievable future state of what both a community and the enterprise can become as a consequence of its activities.
The individuals within the organizational units must share the values and vision of the enterprise, and must be aligned with each other in order to achieve a tight fit. Sharing values and vision promotes the notion of stewardship. Stewardship is the responsibility for the performance of an enterprise and the delivery of value to its constituencies. It involves the administration of affairs and the protection of assets. Employees cannot be stewards unless they share values and vision. If they cannot be stewards, they belong elsewhere.
Has an energized productive workforce dedicated to both individual and enterprise learning…
Being sustainable means being able to continue over time either by developing, enhancing, or maintaining the current state, or by changing it. Competitive conditions can change from mild to intense, and demand can change from strong to weak without notice. Paradigm shifts result from changes in assumptions, concepts, practices, and values. New technologies can cause paradigm shifts that change products and/or services, and how they are delivered.
The workforce must be motivated to perform under the pressure of changing and uncertain conditions. Leaders must be self-motivated, and must establish an environment that enables others to motivate themselves.
As change occurs, higher-order effects kick-in – events or situations that could not have been envisioned or anticipated in the past. Consequently mistakes may be made with the benefit of “twenty-twenty” hindsight, but provide learning experiences for the future. Continued learning is an intangible benefit that can lead to tangible results. When the workforce believes that it is sharing in benefits, it is more likely to have a positive attitude and be productive. Learning how to be successful results from the experience of failure.
Because employees come and go, it is important that “tribal knowledge” is preserved within the policies, processes, procedures, and systems of the enterprise. However, knowledge is power. In an environment where trust and integrity are lacking, both vertical and lateral communications channels close for fear of retribution, or loss of power and position. In such situations, the chief executive officer is often the last one to find out what those on the front line take for granted. Cross-functional sharing of experience and learning should be encouraged to break down barriers and to recognize differing points of view.
Makes fact-based decisions through open discussions, and with the risk/return assumptions of opportunities and threats in mind…
Facts are data about events and conditions, and provide information about situations that are assumed to be true, and can evaluated objectively. Facts describe the past and the present. Whether facts can predict the future is a matter of experience and judgment. It may not be possible to obtain full knowledge of the facts due to time or cost considerations – an enterprise that gets tied up with “analysis paralysis” may miss opportunities that are staring it in the face. Sometimes it is necessary to move ahead with little information and break from tradition.
Decisions should be framed with an understanding of opportunities and threats, and the expected risks and returns from being active or passive, and offensive or defensive. Decisions should be made with anticipation and deliberation. However, the process by which a problem is solved is just as important as the decision itself:
- With the knowledge of the facts that are available under the circumstances
- Based upon an assessment of strengths and weaknesses of the enterprise and its constituencies
- Justified on the basis of rational criteria
- With open discussions, both vertically and laterally, that encourage obtaining differing viewpoints and building consensus
Discussions can only occur in an environment of mutual trust and respect. If differing viewpoints are not heard and responded to, then it is difficult to achieve agreement and alignment. However, crises break down barriers and can cause decisions to be made in an emotional state.
Once decisions are made, they should be executed with confidence, commitment, and competence, but supported by contingency plans.
Applies core competencies to competitive advantage…
Core competencies are activities done well that can give an enterprise a competitive advantage – it should hone and promote them.
Balances innovation with continuous improvement…
To be sustainable, an enterprise should strive continually for innovation, quality, and continuous improvement. However, sometimes it is necessary to consider putting innovation ahead of continuous improvement, or vice versa. Innovative ideas, and the associated new business development activities, provide opportunities to take positions in existing markets with new products and/or services, or in new markets with both existing or new products and/or services. Innovation is about new paradigms, whereas continuous improvement is about the effectiveness and efficiency of existing ones. Continuous improvement is about repositioning the enterprise in existing markets, restructuring its product lines, business lines, and business units, and reengineering its processes. Innovation is usually riskier. However, the cost of continuous improvement programs eventually outweighs the benefits. Therefore, management should foster an environment of intrapreneurship to ensure that innovative ideas are available because continuous improvement opportunities will become exhausted.
Focuses on results…
An enterprise gets what is measures. It is important to determine what needs to be measured in planning and policy development activities, instead of as an afterthought. Performance measures must be set holistically and exhaustively, addressing both financial and non-financial indicators.
Financial indicators include: revenue, costs and expenses, profits, cash flows, and gains and losses (returns on investment); non-financial indicators include: market share and penetration, product usage, satisfaction, quality, time-to-market, cycle time, productivity, and asset capacity and utilization.
Standards for measures determine requirements; achieving performance excellence means exceeding them.
Achieving performance excellence is an enterpriship (entrepreneurship, leadership, and management) competency.
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