I’ve been mildly surprised that the book, Beyond Performance-How Great Organizations Build Competitive Advantage by Scott Keller and Colin Price, hasn’t commanded more attention in mainstream business circles. Perhaps we’ve grown numb to the almost endless number of books purporting to show us the way to sustained success. However, don’t let the existence of 25,000 or so books published on managing change during the past two decades, blind you to some of the important and data-backed conclusions of Beyond Performance.

The book is the outcome of a massive McKinsey research initiative that suggests that the ability of an organization to gain and sustain success is a function of a focus on traditional performance tools and measures AND something they describe as Organizational Health. 

Organizational Health is defined as, “the ability of your organization to align, execute and renew itself faster than your competitors.”  

The authors backed by research that encompasses 600,000 survey respondents from more than 500 organizations; surveys and interviews with 6,800 CEO’s and an exhaustive literature review, put forth a powerful claim “On the strength of our research and analysis, we assert that the link between (organizational) health is more than a correlation, and is in fact causal.”

We’ve moved beyond correlation to a place where most of the 25,000 aforementioned books never go. The authors are stepping out on the statistical limb (a fairly sturdy, data-supported limb) in suggesting a causal relationship between performance and Organizational Health.

They take their conclusion one step further: “We argue that the numbers show that at least 50 percent of your organization’s success in the long term is driven by its health.”

What’s Organizational Health?

The short form: Organizational Health is described by three key components:  internal alignment on direction, quality of execution and capacity for renewal.

These three break down into 9 elements:

  1. Direction
  2. Leadership
  3. Culture and Climate
  4. Accountability
  5. Coordination and Control
  6. Capabilities
  7. Motivation
  8. External Orientation
  9. Innovation and Learning

The 9 further subdivide into 37 distinct management practices that can be measured, monitored and evaluated.  The 37 practices comprise the Organizational Health Index (OHI) survey, “a tool for measuring the health in rigorous and comprehensive manner.”

My Quick Takes:

Invest the time and read the book.  The book, the data, the OHI and the inherent management practices merit our time and attention!

There are practical implications for you and your firm now. Often, big  research studies seem to come back and confirm the obvious. There’s a little of that here, but the data backing of the conclusions allows us to move from conjecture about these practices to confidence that we need to focus our energies around promoting organizational health.  Anyone reading this or any other leadership and management blog will intuitively get that the 9-elements (and 37 practices) are essential. The book offers few epiphanies from an intellectual perspective. From a practical perspective, it clubs us over the head and reminds us that we tend to ignore much of the softer stuff (beyond performance activities and measures). Translation, too many business and leaders suck at cultivating organizational health.

It’s broader than employee engagement.  The OHI is comprehensive enough to bypass my gag reflex on employee engagement surveys serving as proxies for organizational health. If I see one more question asking me whether I have friends at work or whether I have the tools to do my job, the gag reflex will fail!

See also the last decade. Ignoring organizational health has in large part contributed to the creation of the lost decade we’ve just lived through. This past decade guarantees heartburn many years into the future.

Reminds you of your priorities. The authors and their concept of Organizational Health speak to the pieces we all intuitively know are essential for survival in this world…alignment on direction, focus on getting great people supporting execution, and promoting a culture that learns and adapts. The encouragement to work on the practices that beget health is an important reminder for all of us.

The Bottom-Line for Now:

No magical answers, but strong support for what the best leaders and managers have long known…the soft stuff of culture, climate and environment and all the inherent management practices are critical. Organizational health begets performance. Is it time for a check-up?

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Art Petty is a Chicago-based management consultant focusing on strategy and leadership development. Art regularly speaks on innovation in management and leadership, and his work is reflected in two books, including the recent, Leadership Caffeine-Ideas to Energize Your Professional Development.  Art publishes regularly at The Management Excellence blog at https://artpetty.com

Prior to his solo career, Art spent 20+ years leading marketing sales and business units in systems and software organizations around the globe. You can follow Art on twitter: @artpetty and he can be reached via e-mail at [email protected]