What is Great?Mar 14, 2021
We often "throw around" vague words like "successful, effective, and great," but what do these words really mean? When it comes to organizations, what is "great"? Some have defined "great" as stock price over the years compared to other similar companies (e.g., Collins, 2001). While financial performance is an essential outcome to be great, by itself, it is not a complete definition of truly sustainable excellence or great.
The definition of success, or what I call sustainable excellence, is the ability to redesign and create value for multiple stakeholders, including investors, customers, workforce, suppliers and partners, and doing it in a way that’s good for the community and in a way that’s at least neutral and could be a positive for the natural environment.
In other words, my definition of a GREAT organization is one that creates ever-improving sustainable value for multiple stakeholders, including investors, customers, workforce, suppliers and partners, society, and the natural environment.
In short, success, or being great, is being able to create financial or economic results in a way that doesn’t require stealing from other stakeholders to do it. When you’re stealing from other stakeholders to do it, it’s not sustainable. So you may achieve it for a while, but it’s not sustainable.
How well is your organization doing at creating value for your stakeholders? How do you know? If the value for multiple stakeholders is the definition of great, we need measures of value for each key stakeholder group to understand how well we are doing today, how fast and how much we are improving, and how we compare to other similar organizations and world-class performance. The comprehensive scorecard includes both the outcome measures of stakeholder value and the process measures that predict stakeholder value. A comprehensive scorecard helps us understand the organizational system of inter-related processes and projects.
Unfortunately, assessment by itself doesn't create value. To become great requires that the definition of great and the scorecard measures that inform a strategy that drives the changes to the systems and culture that will move the organization toward greatness. But the most important change is one of mindset. To create value for multiple stakeholders, you first have to stop thinking about it as a zero-sum game of tradeoffs and resource allocation decisions. Creating value for multiple stakeholders requires you to think of the stakeholders as a system where a talented and turned on workforce creates innovative quality products, services, and customer experiences that attract new customers (initial purchase), has them coming back for more (repeat business), and bringing their friends with them (referral business), all of which help grow the top line. The increased revenue provides more cash to reinvest in improving supplier and partner performance and workforce performance to provide even better products. When all this is done in a way that is good for society and the environment, those benefits come back to the firm in reduced costs (less waste and energy usage) and increased workforce and customer loyalty.
Collins, J. (2001). Good to great: Why some companies make the leap...and others don't. New York: HarperCollins.