What really affects the performance of organizations? This was a question that my colleague Hendry Raharjo and I asked ourselves in a research study. We had access to quantitative data from 165 businesses.
Businesses were assessed on how well they performed on a number of criteria.
The criteria were:
- Management
- Information and analysis
- Strategic planning
- Employee engagement
- Process management
We also had access to the activities' results.
After thorough statistical analysis, we found that the two criteria that had the greatest impact on performance were management (1) and commitment (4). Perhaps not a surprise to you? But do you know which criterion the businesses were worst at? It was the management (1) of the business. In other words, what is most important for the result, the organizations were worst at.
The results of our study came with another surprise. What businesses were best at was strategic planning (3), which also had a negative or no impact on performance! Especially for public organisations, the study showed that the better they were at strategic planning, the worse their performance.
What businesses were best at was strategic planning, which had a negative or no impact on performance!
Have you been to a fancy conference venue for two days to talk strategy, only to go home and do exactly what you've always done? At first I thought it might just happen to me, but now I realize that strategic work has a lot of room for improvement. We need to become less strategic and focus more on actual performance improvement. The research study is published in the International Journal of Operations and Production Management.
With kind regards,
Henrik Eriksson
Förbättringsakademin and Associate Professor at Chalmers, Technology Management and Organization, Service Management and Logistics.