Moving from best to better and better Business practice redesign is an untapped opportunity
In a world of constant disruption, is consistent, sustained performance improvement even possible? We believe it is—and to get there, we suggest a path based on frontline workgroups adopting business practices—focused on new value creation—that aim to help both workers and companies get better, faster.
Overview: Beyond process
Under mounting performance pressure, many corporate leaders are looking to business process reengineering to improve performance, and in many ways that makes sense—after all, processes give shape to an organization and are often useful for coordinating routine flows across large organizations. The routine work of a company should be done as efficiently as possible, which increasingly means incorporating automation.
But organizations may be missing a much greater opportunity to improve performance.
Here’s the thing: Much of the work of many organizations today—at least the work that typically offers the potential for differentiation—is no longer routine or even predictable. When conditions and requirements shift constantly, processes fail. While process optimization can still certainly help reduce costs and streamline operations, leaders should consider a different kind of organizational rethinking for significant performance improvement.
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And in an environment of accelerating technological advances and rapid and unpredictable change, constant performance improvement is a must. Competition can come from anywhere—doing well relative to the competitors on your radar isn’t enough. Many barriers to competition are falling, and many boundaries, between industries and between markets, are blurring. Consumers have more access to information and alternatives than ever, along with a coincident increase in expectations. Workers have more access to information and alternatives—and increased expectations. At the same time, many employees, in all kinds of environments, face increasing pressure to reach higher levels of individual performance. The useful life of many skills is in decline, creating a constant pressure to learn fast and reskill.
Many companies have struggled to effectively respond to these pressures since long before the Internet of Things and cognitive technologies added new layers of complexity. The average return on assets for US companies has declined for the past several decades, and companies find themselves displaced from market leadership positions more often than they used to.1 While the price-performance improvement in the digital infrastructure has increased exponentially, most companies are still capturing only a small fraction of the value that ought to be available through the technologies built on this infrastructure. Existing approaches to performance improvement appear to be falling short.
It begs the question: In a world of digital transformation and constant change, what does performance improvement mean? Many companies suffer from at least one of three broad problems that can misdirect their focus:
- Thinking of performance improvement too modestly. Leaders often think of performance advances as discrete, one-time jumps from A to B, or even a series of jumps to C and D. The initiatives that typically generate these bumps are similarly construed as pre-defined, one-time changes rather than as unbounded efforts that have the potential to generate more and more improvement. As we discuss in more detail in Beyond process,2 not only do most companies need to continually improve their performance—those that don’t start accelerating may fall further and further behind and become increasingly marginalized. Accelerating improvement, then, should be a goal of operations, not just one-off initiatives.
- Thinking of performance improvement too narrowly, focused only on costs. Process optimization and cost reduction have dominated much of performance improvement efforts for the past several decades, focusing largely on the denominator of the financial ratio of revenues to costs. But costs can be cut only so far, and technology-based process efficiencies can be quickly competed away, especially at a time when the changing environment and shifting customer expectations are making many standardized processes quickly obsolete. Further reductions can become harder to achieve and have less impact.
The relevant performance might be more about an organization’s ability to create significant new value. Workers across an organization regularly encounter new needs, new tools for meeting needs, and opportunities to identify new ways of delivering more value and impact in multiple dimensions, including helping other parts of the organization generate more value. The potential for value creation isn’t confined to certain roles or functions, and is bounded primarily by an organization’s ability to create new knowledge and creatively address new problems. Focusing on new value creation may be the key to getting on a trajectory of accelerating performance improvement. Doing so would require an organization to move beyond efficiency and standardization and begin focusing on cultivating the behaviors—such as experimentation and reflection to make sense of what has been learned—associated with new value creation.
- Thinking of performance improvement at the wrong level. Most organizations manage performance where they measure it—which is to say where they have data: broadly, for the department and organization, and narrowly, for the individual. Both levels can miss where work, especially value-creating work, increasingly gets done: in groups. As a result, organizations can miss the opportunity to shape how work actually gets done. Focusing on performance where it matters most to the organization’s work might be a key to having a significant impact on the performance that matters.
The imperative to act seems simple: Today’s environment seems to offer no reprieve, no stabilization that gives us a chance to catch our breath and say, “OK, now we’ve got it figured out.” The methods and processes that led organizations to great success in the past seem to no longer be working. For sustained performance improvement, companies may need to change their focus and look in new directions.
Definition of a frontline workgroup
For our purposes, a frontline workgroup is characterized by size, sustained involvement, and integrated effort. A workgroup pulls together three to 15 people working interdependently to deliver a shared outcome that could not be achieved without all members working on it together. The members spend the significant majority of their time interacting with each other, formally and informally, on tasks that cannot be highly specified or sequenced in advance.
What a workgroup is not:
- an entire department
- a task force or committee in which decisions or recommendations are made but not executed by that task force or committee
- a set of people whose work is determined by highly specified, tightly integrated tasks
- a standing unit whose composition remains stable over a long period of time
- a team that meets on an infrequent basis to perform some tasks together
Where will organizations find performance improvement instead?
Fortunately, many companies have a largely unexplored opportunity to not just improve performance but to accelerate that improvement, breaking out of the trap of diminishing returns and moving onto a performance curve of increasing returns. And it isn’t an opportunity only for the organization but for the workers as well.
If an organization is to take advantage of this opportunity, it may need new business practices—focused on new value creation—that help it get better and better, faster. The opportunities to identify and create significant value will likely emerge on the front lines, where workers are encountering changing market needs and dynamic conditions almost every day. These unexpected demands, or “exceptions,” fall outside of the standard processes. As the demands and conditions become more complex and unfamiliar, frontline workers could have to work together in order to address them, since an individual alone will be less likely to effectively solve an issue or develop an opportunity.
An opportunity for companies, then, is to shift to cultivating the workgroup practices (see sidebar, “Definition of a frontline workgroup”) that can accelerate improvement in the operating metrics that seem most relevant to a company’s performance. These groups’ ability to accelerate their own learning and impact as they encounter exceptions can be key to improving their own operating metrics, which in turn could be critical to overall corporate performance.
Practices to accelerate performance improvement
We identified nine key practices that help frontline workgroups accelerate performance improvement.
First, what do we mean by practice? A practice is the way work actually gets done, the activity involved in accomplishing a particular job.3 We use it in contrast to formalized process, referring to the way work and information flow is organized and coordinated across stages. Process is how work can be done in a controlled and predictable environment where the solution is understood and predetermined.
Processes leave little room for variance. They can be documented. They are often handed down from above and manifest the command-and-control often thought necessary to drive performance efficiency in a predictable, scalable efficiency model. Practices, by contrast, are not typically codified. They are mostly tacit and emerge through action—for instance, there’s no learning to ride a bike except through the act of trying. Practices tend to be context-specific and are constantly evolving—much like today’s business opportunities.
Practices can be difficult to articulate; they don’t translate into a “practice manual.” Specific instances of practices will share some similarities that guide—rather than govern—our actions. That is part of what can make a practice so powerful. One can describe a practice and what seems to be most important about it at a high level, but the actual practice will develop in a way that is specific to the context. Studying Xerox field technicians in the 1990s, anthropologist and organizational consultant Julian Orr observed that even supposedly identical machines, once deployed in the field, develop peculiarities depending on age, usage, and the characteristics of the physical environment in which they sit. As a result, in all but the most straightforward cases, the issues technicians faced fell outside of the documented process for which they had been trained. Fixing any given machine on any given day depended upon a set of undocumented and evolving practices that helped field technicians learn faster what would work or not work in a specific context.4
Practices that may help accelerate performance improvement in the workgroup would:
- Emerge in the workgroup: We distinguish the practices of a group from management practices, which tend to require organizational leadership to implement, or individual practices, which rarely have the scope to affect an organization’s performance.5 By providing the space for experimentation and reflection, workgroups can be a uniquely effective environment for cultivating the tacit knowledge of practices. Practices may more readily be observed, tried out, refined, and informally shared within a group’s narrower confines and deep, trust-based relationships. In this way, groups can both learn new practices and use those practices to potentially learn faster how to improve performance.
- Drive learning embodied in action: The learning that is important here is not just sharing existing knowledge or data but creating new knowledge. That might mean coming up with more creative ways of acting on information or dealing with entirely new situations.
- Leverage technology: Practices should catch up with technology. As new technology platforms and tools emerge, practices should evolve to harness the potential in technology.
- Evolve as context evolves: Business practices may not sound revolutionary. In fact, the shift from focusing on business process optimization to cultivating workgroup practices, which could evolve and diverge, is subversive, empowering work and workers and undermining efforts to standardize and, ultimately, control them. Shifting to practice more than process can lead to a proliferation of ways to do things on the front line, defying documentation and standardization.
While practices themselves are usually context-dependent, the need for practices can transcend contexts, including “culture.” Some cultures may naturally lean toward certain practices over others, while some may seem unsuited for any of the practices. Regardless of the existing culture, however, organizations aiming to stay relevant will likely need to move toward a culture in which workgroups accelerate performance improvement. These practices can help create the conditions for groups and, perhaps ultimately, organizations to rapidly evolve.
This set of articles hardly constitutes an exhaustive blueprint of everything a workgroup should do—a well-functioning group will no doubt develop other useful practices and processes that help members accomplish their work. The practices we identify specifically focus on what may be needed to accelerate performance improvement. However, they are also not exhaustive in the sense of even detailing what a workgroup might need to do to accelerate performance, since the conundrum of writing about practices is that, by their nature, even the act of trying to capture a practice has a way of changing it. We have tried to describe what is most pertinent: the practices that seem to drive the type of continuous learning in action that is needed to accelerate performance. We also offer examples of more-specific sub-practices and tactics.
Note that we deliberately are not talking about the practices for high-performing teams. The distinction is more than semantics. Others have extensively discussed practices for high performance, and we don’t intend to challenge or recreate that research. Nor do we dismiss it. The organizations that learn how to get on an accelerating performance trajectory—where they continuously develop new and better ways to deliver new value rather than becoming more efficient at delivering the same value—could be the ones that thrive in an increasingly unpredictable world, one in which a strength can rapidly turn into a vulnerability. The practices that aim to generate high performance as typically defined within an organization—delivering the results that leaders expect—are unlikely to generate accelerating performance improvement and may actually hinder it.
The practice bundle
In this report, we identify nine practices (explore the interactive) that are key for accelerating performance improvement in operational workgroups. Taken individually, they can help provoke, propel, and pull together, building momentum around a challenge. Combined, they reinforce and counterbalance each other to help workgroups learn faster and have more impact.
Given the limitations of text and language, we write about each practice individually. Two points should be clear: First, the power of the practices is as a bundle—the more the better. They tend to amplify each other to accelerate performance and learning within a workgroup. While implementing any one practice can help a frontline group accelerate performance, the goal should be to bring together as many of the nine as possible.
Second, workgroup leaders should not think of these practices as sequential—and certainly not as siloed. Many of us in organizations are so oriented toward thinking in process steps that it can be almost impossible to look at nine practices and not immediately start thinking about them in a sequential way. Resist the urge. These are not stages or handoffs; they don’t have defined inputs or outputs. Rather, these are ways of working in which most, if not all, group members would be engaged much of the time. They reinforce each other.
For example, prioritizing performance trajectory can help amplify the shared outcome by establishing tangible objectives that the team can pursue. Additionally, having a bias toward action and a commitment to a shared outcome could direct a group forward but also might mean that workgroups stick to the way things have always been done. However, pairing it with cultivate friction and reflect more to learn faster might ensure that teams go beyond “good enough” and look beyond the old way of doing things.
The nine practices play three roles that can accelerate performance and learning:
- Those that can provoke the workgroup to think differently about a challenge and possible approaches and create better alternatives
- Those that can propel a group into action to gain additional insight into the next best move to make a greater impact
- Those that can help members pull together to harness diversity and come up with ever-higher impact and outcomes
How to use these practices
Practices may look different for every workgroup. We present the nine practices in a format intended to guide exploration and practical use.
Each write-up includes the following:
- An introduction, describing the potential value of the practice in terms of driving performance improvement over time for a workgroup
- What the practice is: definition and key distinctions
- What it isn’t: misunderstandings that can send you down the wrong path
- You know you need this practice when: You have to start somewhere; use this section to get a sense of which practices might have the biggest impact on your workgroup in the near term
- Putting the practice into play: discussion and examples of how a practice can become real, including a deeper look at techniques that could help bring theory into practice
- Antibodies at work: Why isn’t this easy? What are some of the key obstacles you might face in the organization when trying to put the practice into practice?
- Questions for reflection: practical questions designed to help you develop the practice within the context of your own workgroup
How to get started
Perhaps the best news: This doesn’t have to be a huge organizational transformation. Get started today, one workgroup at a time, starting with those that might have a disproportionate impact on the organization’s operating performance. Small moves, smartly made, can set big things in motion.
Anyone, whether an executive or a frontline worker, can use these practices to begin changing how her organization works. Leaders may have to resist the urge to make it a major initiative and instead be very targeted, focusing on one or two workgroups with the most potential for impact to generate proof points and build momentum. Staying small and focused could help avoid alerting the organizational immune system, affording more space to demonstrate impact. On the other hand, employees would have to take initiative to start developing these practices within their own groups, or honoring and cultivating the practices that already exist, without relying on a mandate or even permission from above.
Which practices you start with might depend on whether a particular workgroup has been in existence for a while or if it is just forming. It’s safe to say that many organizations could benefit from more productive friction, but some established groups may need to eliminate unproductive friction first, while new-forming groups might be encouraged to defy conventional wisdom by forgoing “fit” and seeking to maximize potential for friction. A workgroup should choose the practices that seem likely to have the most impact on the challenge it is facing. Whatever the practices, look to identify a few workgroup metrics that are especially relevant to understanding a workgroup’s performance and trajectory. Significant performance improvement, as reflected in a key operating metric, could drive interest in having a more systematic focus on practices to drive widespread performance acceleration.
It is worth repeating that, as momentum builds in one or two workgroups, the goal should not be to standardize these practices for scale across the organization. Measure and monitor performance at the workgroup level, for those groups. Use the selected workgroup-level operating metrics as tools for better understanding the success of certain practices rather than for reporting or compliance.
Business practice redesign is more than a key to unlocking the potential for accelerating business performance improvement. These nine practices can be a key to working in a world of constant change and digital transformation—for working in a world of flow. They have the potential to change the way we work with each other, today. And they might be just the beginning of a conversation about how we will work, tomorrow; they may put organizations on the path to redefining work to focus humans on what we can uniquely do, along with helping to amplify the potential of humans and machines working together. The practices are ready to be made yours and put into practice in your own workgroups—a living, and evolving, list that shouldn’t require approvals or change management. It requires only that you get started.
Over the course of developing this framework and identifying and describing these nine practices, we talked to 60-plus workgroups across 20 markets and three continents. We sought to focus in particular on groups that seemed to be improving their performance over time. For a representative list of these groups, see exhibit A in Beyond process.6
Full case studies for eight workgroups will be forthcoming in the Case study library, to be published in February 2018. Although our research suggests that few organizations collect any type of systemic data at the workgroup level, members of the groups we profile believe that they are indeed accelerating performance. Each have adopted at least one practice from each category (provoke, propel, pull together). The two most commonly used practices are commit to a shared outcome and maximize potential for friction, which seems to make sense: To get better over time, the groups we studied had to be committed to a specific outcome, and all of them had tried to bring in divergent ideas around achieving those outcomes. Where many workgroups fell short was around cultivating friction to harness the creative potential of that diversity. The case studies illustrate how real workgroups across an array of industries are using practices to accelerate their own performance improvement.