Building Capability
( The Fifth Element )
The Balanced Scorecard has gone from fad to practice. The four elements of financial,
internal, external and innovation systems are outlined in a matrix of performance used to
identify critical issues. Research is coming to bear on the fact that brand loyalty; growing
loyal customers and employee engagement are also leading rather than trailing
indicators of future performance potential. [Coffman & Harder, 1998] Over time,
investors have used trailing indicators as an effective method of determining future value-
some of those being profitability, revenues, return on capital, cash flow and economic
value added among many other strategies for determining the capacity to perform.
However, in the real time economies of the future, one thing and one thing only will
provide the key to future performance potential- capability. Companies who build
capability will survive and prosper in the coming years as turbulence and accelerating
change erode traditional business models in fast time.
"Five things can be used as key performance indicators in the "capable
organization."
A teaching culture
Innovation speed
Real time connectivity
Adaptive systems
Employee leverage
TEACHING CULTURE - coaching systems
Teaching and coaching in every layer-led by senior leadership is the first measure. "GE,
Allied Signal, Intel, PepsiCo and Coca-cola are all examples of teaching companies."
[Tichy & Cohen, 1998] The real performance indicator for this strategic objective is
unbiquitous information and the feeling that people can get what they need in real time
without hassling with a chain of command. Feelings can be measured, just ask people!
Facilitated sharing is a passive leadership activity that occurs in a teaching/coaching
culture.
INNOVATION SPEED - increasing #'s of iterations
Innovation speed is difficult to measure, yet the key is the nature of a company’s
revenues and profits in new products, services and relationships (3M mandates this ratio).
How much of what we do today is reflective of what we have done yesterday and how
much of tomorrow’s business is going to based on what we did today? Failing to
innovate fast enough can be a real problem in today’s marketspace. We can’t depend in
most cases on tomorrow looking like more of today in a lot of industries. Sure we have
those cash cows, but if you intend to attract capital, customers and relationships, you had
best build-in the capability to innovate-quickly and create permission to fail.
REAL TIME CONNECTIVITY - creating conversations
People are confused about what this means. Can you pick up the phone and talk to the
end user of your product or service-do you even know who they are? Does your web site
measure statistics on the 5 W’s? Are your teams connected? For example, is marketing
connected to manufacturing and I don’t mean at the hip, but at the thinking and feeling
levels-through a placenta? Do you know what the effects of your work are having on the
results of someone else? Can and do you build capability around response…to customers,
people who were your customers, people who aren’t your customers and people who
could be your customers-internally and externally? The edge of an organization is going
to be determined by its conversations-internal and external--their quantity and quality. If
we can speed up, increase the volume or improve the quality or our conversations,
capability will improve as a result. Connecting communities of interest, practice and
commitment into constellations of shared learning will precipitate real time
connectedness--ubiquitous conversation.
ADAPTIVE SYSTEMS - awareness + action
Capability here describes systems that become self-authoring and generative. Self-
authoring is a development term for an order of consciousness that exists "when people
have a view of their own systems and know the viewpoint of others about that same
system. It allows us to be self-correcting and generative. We create the ability to self-
generate a solution at the touchpoint rather than having a mandate to do so-mandates are
too slow! We also create learning from knowledge management at every level in the
organization and we enable people to act. Thus the age of generati.
EMPLOYEE LEVERAGE - employee satisfaction = customer
satisfaction
What is it? How do you get it? If your employees can answer the following twelve
questions in a manner that is satisfying to them-you got it! The following list of questions
is distilled from a meta-survey conducted by The Gallup Organization as a result of
studying and interviewing over 1 million employees. The following 12 questions have
been demonstrated by research to relate to Business Unit Productivity, Profitability and
Customer Loyalty. The essential components of the 12 areas have been reframed as
"audit questions" and are listed by Gallup as the following: [copyrighted by The Gallup
Organization]
1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for good work.
5. My supervisor or the person I report seems to care about me as a person.
6. There is someone at work who encourages my development.
7. In the last six months, someone at work has talked with me about my progress.
8. At work, my opinions seem to count.
9. The mission/purpose of my company makes me feel my job is important.
10. My associates (fellow employees) are committed to doing quality work.
11. I have a best friend at work.
12. The last year, I have had opportunities at work to learn and grow.
SUMMARY
In conclusion, the fifth element-capability--will become the defining element. It will
connect the other four elements of the balanced scorecard together in a matrix of
capability. So how do you do it? Here’s how!
The TOP 10 Ways to Build Capability [in no particular order, but
concurrently]
1. Create a coaching system that links HR, leadership and strategic outcomes.
2. Use the guiding principles of this program to hire, train and promote the right
people.
3. Create the feeling in your organization that people can fail to succeed.
4. Create the necessary infrastructure to connect people with metrics.
5. Become a teaching organization and teach at every level continuously.
6. Enable people through continuous development to higher levels of function.
7. Understand appreciative inquiry and how to build a culture around it.
8. Make it fun to work in your company.
9. Make perfectly clear what should be perfectly clear.
10. Get out of people’s way. (There is more than one way to skin a cat!)
Mike Jay is a practicing business coach who writes on business topics surrounding
leadership, business performance, organizational development and success. Comments to
[email protected]
