Rewire Your Brain to Execute Strategy

I was intrigued while reading a new management book called “Management Rewired”, by Charles Jacobs. It is based on recent neuroscience discoveries through the use of functional magnetic resonance imaging, a new way to see how the brain actually works and responds to stimuli. The book offers some suggestions that have significant implications for conventional wisdom in the matter of getting an organisation, or group of people, to do what they need to do, especially in the context of executing strategy.

One of several discoveries the book outlines is that our conventional performance management and feedback processes do not improve performance. The author lays out a compelling story to suggest why this is true and outlines ways in which managers need to rethink their approach to working with people.

This phenomenon was actually discovered in a landmark study at General Electric (GE) more than 40 years ago (and published in the Harvard Business Review). As Jacobs recounts, the study found GE’s performance-appraisal system not only did not work, but also produced results that were virtually the opposite of what was intended. This study has been largely ignored until now, because it challenged the prevailing view of the fundamental role of managers.

What we have readily accepted for the past 40 years is that receiving information from our manager on how we are doing is the best way to improve our performance. This is the basis of most of today’s performance management systems. GE found a manager’s praise had no effect on performance one way or the other, while areas a manager criticised showed the least improvement.

In the reality of today’s business world, when we look at what measure of individual performance is required for strategy execution to be effective, we see individual performance is closely connected to how well employees tie their individual efforts into the organisation’s bigger picture. Jacobs goes on to say employees need to understand the dynamics of their industry, how their company and its strategy actually creates value for the buyer or target customer and what kind of thinking and behaviour is required to implement it. They should know specifically how their task contributes to success or failure. And they need real-time information about how the business is doing and feedback on the success or failure of their efforts. It cannot simply come from their manager in a quarterly review meeting based on subjective data and analysis. (As a side note: the need for real-time information is one reason performance-management systems’ software applications have experienced major growth over the past decade).

One of the major challenges for measuring people’s performance when executing strategy is that new strategic initiatives and projects designed to create major improvements and/or entirely new businesses or processes have no baseline of process or task performance that can actually be measured or benchmarked. The question then becomes: “What do we need to measure in terms of performance to drive the results we want, and who decides?”

Getting answers about the vital few strategy-execution metrics that matter in any business requires discipline in the strategic planning stage, plus some organisational process analysis, to get it right. Since a specific task may have not been done before, asking the person who will fill this role to determine the performance objective may not be sufficient or even wise. Furthermore, strategy-execution performance objectives should never target just numerical objectives without a broader mission and purpose that engages people.

As an example, in the late 1990s, I worked with a very small over-the-counter printing company, PrintingforLess (PFL, www.printingforless.com), that wanted to compete over the Internet in a large commodity-driven market for commercial-printing business. They used their Internet-marketing savvy and small size quickly to revolutionalise how the Internet was used in the commercial-printing industry. Many larger printing competitors had to revamp all of their business systems to match the offering. The key to the success of PFL’s strategy was the challenging mission of reinventing the way commercial printing services were purchased and delivered over the Internet.

Execution performance at PFL was measured by a real-time “open book” of information about the hourly performance of the organisation and individuals that could by seen right on their computer screens. This enabled all PFL employees to serve their customers as they saw fit, because they understood the metrics of customer service that drove their differentiated value and their customer’s purchase decision preferences. These performance metrics naturally evolved over the first several years as PFL customers made their explicit needs known. This drove both the required “at the moment” behaviour and decision-making and had the largest impact on delivering the right results that mattered to the customer.

In other words, it was the customer who ultimately decided whether or not the employee had performed, not the manager. Today, PFL is one of the top-ranked online printing-service companies in North America, in a hyper-competitive market.The realm of strategic-performance management is a key example of where neuroscience discoveries are shifting the paradigms of how the mind works, and as a result they are challenging our beliefs about the very nature of the world we know. Organisational practices must be re-examined through a new lens of brain-based science. “Management Rewired” is worth reading if you want to consider new ways of improving performance and shaping behaviour.

By William Malek

Since 1991, Strategy2Reality LLC has helped both small and major companies around the world successfully convert their vision and strategic business plans into measurable results. Call us now at 1-650-387-3036 or e-mail info@strategy2reality.com
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