7 Dysfunctions of High-Potential Companies
The rate and depth of learning may be the only true competitive advantage.
Success is a moving target. Only those companies that continuously innovate — significantly increasing customer value — will continuously hit the target. The goal is successfully managing the creation, flow, and implementation of new ideas throughout the enterprise faster than the competition.
Challenging deeply held assumptions is at the heart of transformational learning and innovation.
- “Clearly, transformational learning requires something much more than profound individual learning. True transformational change is rare — where the organization gets to the point of eagerly challenging deeply held assumptions about its strategies and processes. Rather, most people do the same things in superficially tweaked ways." (Edgar Schein, The Corporate Culture Survival Guide)
Learning faster than the competition is about much more than new products. In fact, learning and innovation may have nothing to do with technology:
- Reinventing business processes
- Bringing new ideas to market in record time
- Rewiring the company for creativity and growth
- Realigning the enterprise with the new strategic direction
- Each employee enhancing how he or she conducts the company's business
Is your company learning faster than the competition?
Here's an excellent way to gauge the rate and depth of learning across your enterprise — are you learning faster than your competition?
- What percentage of your company's new ideas are coming from employees outside of R&D? The percentage is fifty percent or higher at the most innovative companies.
- How quickly do new ideas get reviewed and implemented? The rate of adoption has a lot to do with your organization's readiness and capacity for change — key qualities of highly innovative companies.
- What percentage of revenue is generated by practices, processes, products, and services that didn't exist two years ago? Highly innovative companies establish yearly enterprise, function, department, work group, and individual learning and innovation goals.
Is your company's learning-velocity fast enough to stay in business? (Without continuous learning and innovation) "...we are just two years away from failure." (Bill Gates, Microsoft Co-Founder in Innovation: The 5 Disciplines for Creating What Customers Want)
It's more about "flow" than what you know.
A company's intellectual capital — accumulated knowledge and experience — is a key determiner of its strategic success. But as the rate of change accelerates, its economic value quickly diminishes. To remain competitive now, companies and individuals must refresh what they know by engaging in relevant "flows" of new knowledge — continuously increasing the rate and depth of their learning.
The recently released study by Deloitte, The 2010 Shift Index, found:
- Economic value has shifted from "stocks" of knowledge to "flows" of new knowledge
- Knowledge flows — which occur in any social, fluid environment where learning and collaboration can take place — are quickly becoming one of the most crucial sources of value creation
- Facebook, Twitter, LinkedIn, and other social media foster them, as do virtual communities and online discussion forums
- The more the business environment changes the faster the value of what you know at any point in time diminishes
- Success hinges on the ability to participate in a growing array of knowledge flows in order to rapidly refresh your knowledge stocks
- Knowledge flows can help companies gain competitive advantage in an age of near-constant disruption
The key to learning faster than your competition is increasing your talent's level of creation and participation in flows of new knowledge.
This is the sixth of the seven dysfunctions. The first three dysfunctions severely weaken a company's foundation and strategic direction. The next three, including this dysfunction, destroy a company's ability to execute its strategic direction — the reason the organization exists.
All seven dysfunctions create an incredible drag on a company's performance, with the first six dysfunctions contributing to the seventh which is the most destructive. See 'It's Time For A Reality Check' for an introduction to the seven dysfunctions.
The issues addressed in this blog, as well as the supporting examples, are targeted to the leadership of public companies on the way to a $Billion in revenue. These issues, though, are also critical to the strategic success of all profit and non-profit organizations from early stage to mature.
David Seregow, Ed. D. is Founder and President of Attaine Performance Corporation, providing strategic guidance, collaboration, and coaching to high-potential companies. www.attaine.com Copyright 2010 David Seregow, Ed. D. All Rights Reserved. Permission granted to post, print, or email this entire posting if full attribution is included and the post is not edited.