The definition of success for all types of organizations (profit-seeking, non-profit, and government) is continuously changing and increasingly complex. From the mid-1940s to the 1970s the limited global competition allowed business leaders to focus mainly on financial results. The “party” ended sometime around 1980 when Xerox woke up to a situation where the Japanese were selling copiers in the US for what it cost Xerox to make them (Kotter and Heskett, 1992).
During the 1980s product quality became a key success factor and was directly linked to market and ultimately financial success. In the beginning, many proposed that high quality was simply too expensive. However, we eventually discovered that high quality = reduced cost and increased market share or as Phillip Crosby wrote in a book by the same title – Quality is Free! As the service and knowledge worker industries increased in size and importance, they discovered that talented, passionate people are also a key to high quality, customer satisfaction, and financial performance. During the 1990s, successful organizations became quite good at “connecting these dots.”
Raising the “Bar”
The “bar” has been raised once again to include sustainable results in three key areas – financial, environmental, and societal – or as some call it, the “triple bottom line.” There have been many programs, tools, and techniques proposed and implemented over the years aimed at improving organizational performance. In the end, we have discovered that there are no quick and easy answers. What is needed to achieve sustainable excellence is for leaders to become architects of their organizations and reimagine and reinvent them to create value for multiple stakeholders.
There are six stakeholder groups common to most organizations.
Workforce – Depending on the type of organization the workforce stakeholders could be employees, volunteers, or contractors.
Customers – Depending on the type of organization the customers might be paying recipients of products and services, primary beneficiaries of non-profit or government services, patients, or students.
Investors – For-profit investors provide capital and expect a monetary return on their investment. Non-profit investors (a.k.a. donors) provide capital and expect the most benefit to the primary beneficiaries of the non-profit services. Government investors (a.k.a. taxpayers) provide capital and expect the best government services for the least amount of tax burden.
Suppliers and Partners – Inputs to the organization are provided from a variety of external organizations from component product suppliers to partners that share both risk and reward.
Community – The public and local communities in which the organization operates are stakeholders of many aspects of organization operations.
Natural Environment – Finally, the environment and future generations find a “voice” in the other five stakeholders and public policy and regulation.
The future belongs to organizations that can figure out how to create value in ways that are consistent with a sustainable planet, society, and economy. The good news is organizations are not found in nature; they are human created entities. Consequently, they can and must be reimagined and recreated to address the many complex challenges we face today. To succeed, new organization designs will have to figure out how to create value for the multiple stakeholders including investors, customers, people, supplier partners, society, and the natural environment. This site focuses on leveraging two award-winning, peer-reviewed frameworks – Leadership and Design – to design and build organizations that create sustainable value for the multiple stakeholders.
Enjoy the journey,
Kotter, J. P., & Heskett, J. L. (1992). Corporate Culture and Performance. New York: The Free Press