Every organisation exists to deliver value (products, services or something less tangible) to ‘customers’ and other stakeholders. However strategic intent is defined, it is about delivering value both ‘outside’ (customers, suppliers, regulators, community etc.) and ‘inside’ (staff, shareholders, partners, franchisees etc.). We traditionally manage via the organisation chart, yet no entity shown on that chart can, by itself, deliver external value. In reality, we create, accumulate and deliver value by collaborating across the organisation. While resources are managed vertically with the organisation chart; value is created and delivered horizontally via the process architecture.
Organizational performance is ultimately measured in terms of delivery of the value promised to customers and other stakeholders. This demands proactive management of the cross-functional activity that creates, accumulates, and delivers value. The value pathway must be discovered, value delivery performance must be measured, and performance gaps must be closed where there is a business case for doing so.
It is no longer enough, if it ever was, to have a lean efficient organisation consistently producing a quality product. Henry Ford reduced the time it took to build a Model T chassis from 12½ hours to 1½ hours. That was a prodigious feat but would have been pointless if nobody wanted to buy a car.
Sustaining organisational performance must start with the value proposition – what are we promising to deliver and does anybody care? Then we need to understand how we are delivering that value and the extent to which we are living up to our promises.
