Bring your organisation up to speed

Written by
Alice Breeden, Becky Hogan and TA Mitchell, Heidrick & Struggles

Published
08 Nov 2019

08 Nov 2019 • by Alice Breeden, Becky Hogan and TA Mitchell, Heidrick & Struggles

What separates today’s high-performing organisations from those unable to keep pace with the new demands of leadership? Heidrick & Struggles’ research has identified 13 factors that enable organisations to outperform their competitors consistently.

Ranging from resilience to adaptability, these variables can impact profitability and growth by allowing companies to mobilise, execute, and transform with agility; what we call “META”

The high-accelerating teams we analysed in our research had, on average, a 22.8% higher economic impact than other senior teams, while the performance ratings of high-accelerating organisations were twice as high as those of their low-accelerating peers.

In particular, honing in on three of these (foresight, winning capabilities and simplicity) will help companies in their efforts to achieve breakthrough business outcomes faster and more effectively.

Given today’s competitive landscape, excelling in these 13 factors has never been more critical, nor more challenging. In our recent work with a range of organisations, we found that only 27% managed to pull ahead of the pack.

Even those that successfully accelerate their performance find it more difficult to create foresight, winning capabilities and simplicity than to carry out the other 10 drive factors. Getting these three dimensions right should increase competitive advantage significantly.

The power of foresight

Finding effective ways to think ahead, anticipate change, and scan the environment for untapped opportunities, enables organisations to gain a keen competitive advantage. High-accelerating organisations prioritise foresight to a larger extent: more than half of their employees (59%) feel that they spend enough time preparing for the future compared to only 24% of employees in low-accelerating organisations.

If most companies are getting foresight wrong, what are those few that are spending enough time on the future doing to get it right?

Scenario-based planning can help. An insurance company we know had been facing an uncertain regulatory environment, changing consumer dynamics, and competing products. Its market leadership teams worked to identify the factors most likely to shape the company’s future; for example, how trends in immigration might lower the average age of the population, altering demand for insurance policies in the country.

After interviewing leaders and identifying the most dominant market uncertainties over a five-year horizon, the company created four scenarios, ranging from consumer interest in new product lines to channel disruptors, followed by multiple strategies to address each scenario and pressure-tested them to determine the steps and investments required to stay ahead of market trends and consumer preferences.

But foresight shouldn’t stop at storyboarding the future. Executives must know what to do with the insights they gain and adjust strategies and processes accordingly.

The demand for winning capabilities

Our research indicates that 57% of employees in high-accelerating organisations felt they attracted the best talent in their market compared to just 26% of low-accelerating organisations’ employees. However, recruiting and retaining the right individuals is only getting harder; digital talent is scarce and expensive and new roles are also emerging.

Less than a third of companies are sure they have the talent they need to thrive through digital transformation, according to a recent survey we conducted, a problem compounded by organisations overlooking the contributions of teams to organisational performance, preferring to focus on the entire enterprise or the impact of individual leaders. Almost a third of individuals working for low-scoring leaders feel that poor performance in the team is not addressed.

High-performing organisations, however, have found ways to attract the right people and create teams that deliver on strategy and build winning capabilities.

The first step is to understand the capabilities you need, which of these you currently have, and whether the people who have them are organised effectively. The next is figuring out how to find employees with the right skills or build them internally. Skill grafting can work well: rather than searching for individuals with a particular skill set, organisations create teams of people with complementary skills to cover the gap. This approach fosters wider collaboration, boosts learning, and, in some cases, retains valuable employees.

Creating a culture that supports performance and agility is also crucial and can require changing mindsets to help people become more adaptive, strategic, and innovative. Building a culture that supports acceleration often starts with clarity of purpose and has a stronger impact on the company’s performance; our work shows that people at organisations that are better at setting a strong, clear purpose also say their organisations’ performance is 2.5 times better than their counterparts at organisations that lag at purpose. Purpose creates alignment throughout the entire organisation and enables informed decision making to accelerate performance.

Developing winning capabilities extends beyond matching the right talent to the right roles. Brand power also plays a part in attracting talent, especially among younger workers who value sustainability, diversity and inclusion, and purpose. A company’s ability to fashion itself into a talent magnet and appeal to people with new perspectives and skills depends not only on placing the right people in the right roles but also rewarding and recognising them, and making sure they succeed in their careers.

Simplifying the situation

Hierarchies, mixed product offerings, matrixed organisational structures and data deluge can overwhelm organisations, preventing them from pivoting quickly in times of disruption. Simplicity must be a core organisational feature for teams to accelerate performance and enhance their competitive advantage. Yet, our research shows that only 36% of the employees from low-accelerating organisations felt that their structure and metrics were simple, compared to 67% of the employees of high-accelerating organisations.

For example, faced with mounting competition, the insurance company mentioned above had two primary goals: create an omni-channel experience for customers at a low cost, and move to more sustained growth after a period of cost reduction. But several barriers (including structural complexity, a lack of agile processes, and stagnant innovation) stood in its way.

To overcome those, the company embarked on a multi-year transformation beginning with leadership development. First, senior leaders identified what set the company apart at that time, and what would sustain that differentiation as it moved toward its goals. Next, it determined the leadership behaviours required to drive success, shift mindsets, and bring about greater collaboration and more efficient workflows.

Finally, a focused leadership development programme for the company’s top 200 leaders assessed their strengths and offered targeted coaching support to embed those behaviours. The company reaped enormous benefits, including increased share price, cost savings, higher employee engagement, and significantly improved speed to value.

A smart approach to change

Foresight, winning capabilities, and simplicity are all built on change and play critical roles in ensuring change efforts succeed. The right approach to transformation can more easily move the needle.

To do so, leaders must establish an organisational purpose that aligns with the company’s vision, mission, and strategic intent before assessing where the organisation stands today and its preparedness for change.

Leaders can then create an architecture for change, which should start with small pilot initiatives and a commitment to scale up the ones most effective in shifting behaviour, mindsets, processes, or overall effectiveness. Finally, organisations must set targets and perform regular pulse checks.

A clear and compelling purpose and engaged leadership serve as catalysts to the change process. Ultimately, the success of any change initiative should be measured, among other concerns, against the question “has it served our organisational purpose?”

Our research shows that organisations that rate high on clarity of purpose are 2.1 times more likely to rate high on energising leadership: 54% of organisations with high acceleration scores in purpose also score high on energising leadership, compared with 26% of organisations with low acceleration scores in purpose.

This, in turn, has the biggest impact on performance. Organisations that score high on energising leadership have two times the performance ratings of organisations with low acceleration scores in energising leadership.

Strong leadership is vital to developing winning capabilities. In one European payments company we know, deep hierarchies and authoritative leadership were preventing teams from developing winning capabilities. It therefore launched a Great Teams development programme to accelerate the performance of the senior teams and shape the organisational culture.

As part of this the company set ambitious goals for all teams and developed detailed road maps to guide and support the process, including team workshops, designing and implementing team journeys, agreeing on action plans and success measures, plus putting in place a feedback and coaching programme for team leaders. The company created a team barometer to track progress, redesigned its values and leadership model, and restructured teams to allow more efficient use of resources.

The result: a more customer-focused and innovation-driven business, accelerating senior teams, and organic financial growth for the first time in half a decade.

Plan for the future, deliver results today

Some leaders may see risks in committing greater resources to achieving foresight, winning capabilities, and simplicity. Constantly observing the external environment for emerging trends can divert focus away from the core operations of an organisation; adding activities, such as leadership programmes and skills development, to managers’ agendas can lead to exhaustion and a lack of clarity about priorities; and today’s winning capabilities can quickly become tomorrow’s outdated expertise if not continuously assessed.

Yet leaders who find the right way to hone their foresight and winning capabilities will be uniquely positioned to achieve breakthrough business outcomes faster and more effectively than their competitors.