When short term results fall short of expectations we tend to adjust short term efforts to fix the short term results. Subsequently we get stuck in short term cycles of chasing the wrong result.
You can see this behavior across all markets and in any business regardless of size. Whether in public or private companies, large or small businesses in pursuit of revenue growth and profit are constantly reacting to results. The reactions vary from the joy of achievement to frustration and disappointment in not knowing why the results are not what was expected. When the results aren’t what was expected everyone knows what to expect. A tribunal ritual of questions seeking answers to why the results aren’t as expected.
Subsequently when no one really has the answers everyone embarks on studies to insure their numbers are good and if they aren’t they seek ways to justify why they aren’t or people to blame for the failure. The pattern of behavior repeats itself like an organizational addiction to dysfunctional thinking.
Results Are Driven By What?
As we all know there are lots of variables that influence an organization’s results. Most organizations attempt to measure and monitor the critical variables such as income, expenses, customer retention, satisfaction, sales, employee turnover and a host of other operating processes that influence results. There are also changes in market conditions, competition and the fundamentals of economics which influence results. All of these variables can be categorized as human, strategic, structural and relationship variables which are all intangibles.
The very operating processes that management measures and monitors reflect the output of intangible capital. In other words customer retention and satisfaction is an output of relationship capital. Employee satisfaction and turnover is an output of human capital. The information and knowledge required to operate the related operating processes is structural capital and the purpose and identity of the organization in the marketplace is reflective of the strategic capital.
The intangibles come before the processes which come before the results. So until an organization measures its intangibles process improvement is limited and so are the opportunities to improve the results.
Unless you work on improving the intangibles (inputs) you’ll never really achieve the optimum results (outputs).
The 21st Century changes requires reverse engineering in our thinking if we truly want to improve anything.