Top Consultant, a UK-based operation dealing with consultancies, has an interesting article describing a recent study by the Economist Intelligence Unit and sponsored by Celerant Consulting, an affiliate of Novell. Top-Consultant reports that
More than 4 in 10 senior executives surveyed in a major new cross-industry study said that performance improvement initiatives undertaken at their companies over the past three years failed to achieve their objectives.
The oil and gas industry had the best results, but that only got them to 50%.
Projects fail at a miserable rate. These numbers reflect similar numbers for IT (see IT Cortex’s list of the statistics for IT failure rates), probably because mos IT projects really endeavor to change the way business works at a fundamental level. At least our industry isn’t as bad off as we all think. Our 50% failure rate puts us at the top of this study.
Only one in three (34%) executives considers their current performance management systems and processes to be effective.” Yet they still use them. If they aren’t effective, why not go back to chaos? I think that the only reason we keep these damnable systems is to keep lawsuits at bay. “We have a system! It wasn’t personal!”
Celerant has a more in-depth press release on the EUI performance project failure rate at their website. Also, see the .
From the EIU press release, which is actually better, now that I’ve read it:
Companies’ primary strategic goals are identified in the survey as improving customer retention (picked by 61% of respondents as being among their companiesÃ¯Â¿Â½ top three objectives) and increasing shareholder value (49%). Both depend heavily on achieving operational efficiency.
I will allow any of my RO pals make comments about why it’s insane that these are strategic goals. Or you can read Mark Van Clieaf’s recent work in the Ivey Business Journal (Canada’s HBR) about CEO value.
I’m just shocked at how most of the US companies can still make money. Would someone like to stand up for Free Enterprise?
Image Credit: Bix sits in confusion (Detail), by Jimmy Thompson. From “Heaven’s to Betsy!”, Club “16” comics (1948).
It’s astounding how this article (EIU publication) reflecting an executive survey thus the interpretation of executive management which fails to distinguish the significance of the system that is either operating functionally or absent. To suggest that top performers have “more committed management” illustrates exactly what it is that is so dysfunctional about work organizations today. Proposing that individual management commitment is significant is distorted. Each manager who is employed is committed to the success of his or her organization. The dysfunctional structure, systems and managerial practices is what shadows their effectiveness to the point where this commitment is entirely lost and invisible.
The senior management link to the frontline employees is significant. In the RO world we call this context setting and it is absent in many organizations such that employees and their managers are left to fabricate their own interpretations regarding what it is that the executive management is attempting to achieve absent any attempt to share the strategy with them.
I would depart with the assertion that improving operational efficiency should not be a strategic goal. If efficiency, or capability, is seriously limiting the organization’s performance and this has been a persistent and chronic problem the strategy should be to repair this maladie before moving off to strategic growth, R&D etc. And, the remedy needs to consider hierarchical structure, management systems, and the application of requisite managerial practices as the solution. These organizations that cannot operate efficiently are a reflection of incapable management and management’s inability to implement an effective managerial structure and system.