High performance organizations - a study in the Indian context

Abstract

“Michael Schell knows a thing or two about measuring high performance. A baseball statistician par excellence, he’s put together a convincing argument for declaring the “all-time best sluggers” in the history of the game. To people outside baseball, it might seem curious that the task would be a hard one, much less that Schell’s argument would require 400-plus pages to defend (his book was published by Princeton University Press earlier this year). What could be so complicated about counting hits? But Schell knows different. What he’s claiming to have accomplished is so ambitious—the variables so legion, the data so asterisk laden—that he calls it the holy grail of baseball statistics. Plenty of people with other methods will try to show he’s wrong. And so it goes, too, with declaring the greatest players in business. Except that it’s even harder. Consider, first, that we business spectators don’t even have the benefit of an agreed-upon scoreboard. Are the winners the ones with the highest market caps, the ones with the greatest sales growth, or simply the ones that remain standing at the end of the game? (And when’s the end of the game?) Then, too, there’s the impossibility of holding anything constant in terms of context. Are you better if you boomed in bust years or if you really boomed in boom years? Hardest of all is the follow-on task most business stat masters set for themselves: discovering not only who’s the greatest but why”1 Twenty five years and numerous similar studies after Peter and Waterman’s bestseller In Search of Excellence, the verdict on high performance organizations is not yet out. Different approaches have been taken based on different characteristics of high performance organizations like strong financial results, satisfied customers and employees, high levels of individual initiative, productivity and innovation, aligned performance measurement and reward systems, and strong leadership. Since different researchers approach the topic from different backgrounds and angles and with different goals, a consistent definition of a HPO is not easily forthcoming. Most evidence is anecdotal consisting of surveys and case studies and most importantly, a major chunk of the organizations studied are in the American context. However, with the Indian story taking off in an unprecedented manner, we felt the need for a similar study in the Indian context as well. Even without using the term ‘High-performance organizations’, a general idea of star performers across industries exists in popular perception thanks to the media which repeatedly hails them as forerunners of India. Inc. Through this empirical study, we set out to uncover specific , objective measures to test whether these organizations actually deserve the position of eminence that has been bestowed to them and if they do, what are the parameters which are the basis for it. What we found made us pause and think. For surprisingly, most of the names uncovered are not those that make headlines every other day or those often perceived as the biggest value creators. Instead these were companies that were creating a unique niche for themselves usually by tapping small nascent opportunities away from public glare. Whether it is bio fuels or trading software for brokerage firms or embedded software solutions for the power sector, a large proportion of these firms rule unopposed in their unique kingdoms i.e. the focused area of business that they have chosen. But is that all? If focus the only thing- then what are companies like United Spirits or GTC Industries doing in the list? Is identifying opportunity more a function of a firm’s vigilance and strategic planning or is merely chance i.e. being at the right place at the right time? Was Praj Industries, one of the high performers for instance, plain lucky since its earlier business of fermentation technology put it in a unique vantage position to tap the bio-fuels opportunity? Is sustainable competitive advantage built through years of effort on building different parts of strategy and organization or is it just a one-time lead built by tapping such windows of opportunity? And most importantly, how relevant is such a study anyway? Even before the world fully accepted In search of excellence, many of the companies identified were already showing signs of faltering and some like Enron, completely went bust. How transient then is high performance and is it possible at all to draw learnings for future organizations from what has been uncovered in the past? The report is aimed at reaching a view some of these fundamental questions based on the results of our empirical study and further study of the high-performance organizations so identified. It is important to note that not all of them have been answered in full or the final verdict on any issues reached . However,where the value add of this study lies is in devising an objective measure which can be used as a first level filter before a detailed subjective assessment of high performance as well as building initial hypothesis on the different questions posed based on these first level results.