(High-)performing organizations can be recognized by the fact that they offer high-quality products and services at attractive prices on the market and thus represent real added value for their customers. If they are also innovative, perhaps even market-defining, treat their employees well, are environmentally aware, socially responsible, sustainable, etc. and grow profitably, then we are already close to a high-performance company. However, this is not really new.

The more interesting question is how such companies achieve this. Of course, this depends heavily on the industry and market environment in which the company operates. However, since the beginning of digitalization around 30 years ago, many framework conditions have changed fundamentally across industries and sectors. It's not just that digital champions with their innovative, sometimes disruptive business models are now stealing a march on many established companies. Technological development has also significantly increased the power position of end customers and market transparency, as well as causing a shift in value creation from products to services, from hardware to software. And the next technological leap through AI is already in full swing. The pace of innovation is increasing exponentially, while the predictability and predictability of developments is decreasing.

It is therefore somewhat surprising that many companies still work as if little has changed since the industrial age: Workforces are organized in small-cell, often rigid structures, decision-making processes are often tough and slow, the left hand knows little of what the right hand is doing. Employees carry out what managers decide, departmental and self-interests dominate, and the customer plays a prominent role at most in sales and service.

If skilled workers are scarce and the labor market is good, the first top performers will leave at some point, whether due to dissatisfaction or simply because other companies are more attractive. If other factors such as new competitors, technologies or supply problems are added, companies quickly find themselves at their breaking point. They slow down, product and service quality drops along with customer satisfaction and the downward spiral begins.

Today, speed, innovation and adaptability are more important than ever, as is the willingness to tackle change early and, above all, sustainably. There are only five areas that management can directly influence:

1. Vision and strategy
2. Processes and governance
3. Organization and structure
4. People and their roles
5. Technology and IT

These five “enablers” have significant interactions and also have a hierarchical ranking, from top (1st) to bottom (5th). Two small examples make this clear:

1. When problems arise, people like to reorganize quickly (3.) in the hope of finding quick solutions. Of course, this can work if you pay attention to the people and their roles (4.) and both work processes (2.) and IT (5.) fit the new target organization. Otherwise, the actual problem is usually only shifted. It then gets stuck elsewhere.
2. In many companies, IT has grown over the years, often consisting of isolated solutions that are somehow linked to corresponding tools. There are then workarounds, media disruptions, manual steps and much more to keep the whole thing running, because people usually know how to help themselves. If major IT changes are then pending, such as new releases or cloud relocations, you quickly realize that neither your own processes (2.) nor their mapping in IT (5.) are ideal and things become difficult...

High-performance organizations proceed differently: they start with the market, the customers and their own strategy (1.), optimize their process landscape top-down (2.) and only then adapt the organizational structure (3.). Once the new structure is in place and it is clear how it interacts, it becomes relatively easy to derive requirements for roles and responsibilities (4.) and to set the right priorities in the areas of technology and IT (5.).

All high-performance organizations have a clear vision and a high degree of customer centricity, because after all, that's where the money comes from. They know exactly what is needed to achieve a high level of customer satisfaction and thus business success. Some companies even create new customer requirements through innovation, thereby shaping entire markets. We are all familiar with these examples.

To achieve this, the five enablers must be designed in such a way that a high level of innovation, speed and adaptability are possible. In addition to a clear and well-communicated strategy (1.), these are above all lean and agile processes (2.), a flexible, often flat organizational structure (3.), as well as clear roles with end-to-end responsibilities (4.) and IT (5.) that optimally supports all of this.

Of central importance here are the organizational structure (3.) and the associated value-adding processes (2.), which must perform two things:

On the one hand, delivering results in a customer-centric, fast and effective (agile) manner (e.g. in development, sales, marketing), on the other hand ensuring highly efficient and process-oriented standardized workflows (e.g. in production, logistics and finance).

The central challenge here is to find a common framework that does justice to both agile, customer-centric and process- and efficiency-focused units. Such “hybrid” organizations usually consist of 4 building blocks:

1. Functional units: they ensure functional and operational excellence as well as the protection and further development of the company's most important skills and competencies > classic, functional line organization (e.g. system development)
2. Lean-agile units: work closely with customers and the market. You manage the operational business, especially in highly dynamic markets > Interdisciplinary teams (e.g. sales, marketing, application, service)
3. Shared services: they are the interface between lean-agile (b.) and functional (a.) units > internal or outsourced service providers (e.g. purchasing, production)
4. Spine: ensures overall strategy, leadership and synergies within the company 
   > Units with a sovereign function (e.g. strategy, controlling)

Many companies are struggling with this change. Not least because leadership and collaboration are changing fundamentally. Soft factors such as trust, letting go, transparency, commitment, accountability and consistency are suddenly becoming critical to success, and the human factor is gaining in importance.

Auch wenn derartige Transformationen anspruchsvoll sind und einen langen Atem brauchen, weisen Unternehmen, die konsequent und nachhaltig diesen Weg gehen, beeindruckende Erfolge auf. Wichtig dabei: der Wandel wird zum stetigen Prozess. Eine länger andauernde Stabilisierung in einem angestrebten Zielzustand – so wie früher – wird es zukünftig kaum noch geben. Dafür passiert einfach in Wirtschaft und Gesellschaft zu viel in zu kurzer Zeit.

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About the author

Rüdiger Schönbohm is a partner at TCI and an expert in (agile) organizational development. His work focuses on questions of strategy-led further development of organizations, mostly in a lean-agile context. He has 20+ years of management experience in global companies in the automotive and consumer industry and has worked for many years as a management consultant, project manager and agile coach.

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