We study the steps taken by high-performing organizations to understand what they do well and how we can make our organizations better. That may be our first mistake.

A provocative report by Deloitte claims that the best practices of “great companies” may be more instructive as fable than fact. In “A Random Search for Excellence,” available here, Michael E. Raynor, Mumtaz Ahmed, and Andrew D. Henderson argue that success studies such as Good to Great, Built to Last, and In Search of Excellence are just as likely to be studying lucky companies as good ones.

“It’s only too likely that whatever benefit practitioners have realized has been distressingly haphazard, the consequence of a form of placebo effect (you expect it to help, so you perceive that it does, quite independently of any true causal connection), a Hawthorne effect (the mere act of focusing on something you were neglecting improves performance regardless of what motivated the increased attention), or luck (even a broken clock is right twice a day).”

The report backs up this assertion with detailed analysis of more than 230,000 firm-year observations using a “regression algorithm to create an ROA value stripped of everything but firm-level, or management, effect.” You’ll have to read the report to understand what that means, and even then it’s a struggle.

In the end, the authors don’t suggest that you dismiss the advice offered by existing success studies but that you treat such advice more as fables than science. “Their value is not what you read in them, but what you read into them,” they conclude.

One big problem with most success stories is their total reliance on financial performance to separate great from good from average or worse. The Baldrige model recognizes that world-class performance requires stellar results in several critical areas: product and service performance, customer satisfaction and loyalty, workforce satisfaction and engagement, process effectiveness, leadership—and financial outcomes.

That may mean that the best practices of Baldrige Award recipients can be treated more as science than fable—or it may not. Until someone applies the methodology outlined by Deloitte to the organizations that have won the award, we will not know with any certainty just how effective their approaches are.

To read more about Baldrige Award recipients, click on an article:

• Baldrige Gets Results
• An Achievable Mission and Vision
• How to Deploy Your Strategic Plan
• Ground Zero for Customer Service
• World-Class Employee Orientation
• What Employees Want
• Identifying Key Work Processes

(4 votes, average: 4.50 out of 5)

 Loading ...