What Determines Business Performance?
John Conway MBA Business Performance Coach
Email: firstname.lastname@example.org @johnconway855
Knowledge is the source of all competitive advantage in business. It is what a company knows that determines its success. These two statements, gleaned from recent academic research on the drivers of business performance, added fuel to a fire that was ignited many years ago. I sat with four of my siblings on our only couch in our family home watching the 400m hurdles final in the Mexico Olympics in 1968.
The race captured my heart, later it would capture my head as I embarked on a lifelong journey of discovery, enquiring what were the drivers of elite performance in sport and business. All knowledge is the result of learning and starts with a question. My questions were; if knowledge is the source of competitive advantage, how can you manage knowledge to drive business performance? Are there other drivers at play? The answer is yes, there are three core drivers of business performance.
Three Core Drivers of Business Performance
Any business achieves competitive advantage when it first creates and then executes its strategy, by adopting a unique sustainable market position and then exploiting that position by executing its strategy. A business will achieve this goal if it creates a business environment that consistently rewards valuable habits, where motivated and skilled staff know what to do and know why how and when to do it for a specific job role.
There are three core drivers of business performance, knowledge, behaviour and the business environment Behaviour drives performance, the situation drives the behaviour. More specifically our understanding of the goals and our roles in any situation drives the behaviour. The three core drivers improve business performance by the impact they have on valuable behaviour, through three value pathways.
Value Pathways manage knowledge and goal oriented behaviour in a business environment through generic, cause and effect, patterns of action. By asking the right questions, you can measure how business environment factors start enable and sustain valuable behaviour. All three Pathways are all required to drive performance. This is how each Value Pathway works.
Business Behaviour Pathway
The first driver is behaviour. Behaviour, what we say and do, drives performance. All goal oriented behaviour follows a predictable ABC cause-and-effect pattern of action. Antecedents (A) start and enable a desired Behaviour (B). Consequences (C) sustain the behaviour. Goals start enable and sustain behaviour.
In business behaviour drives performance though a Behaviour Pathway that adds value when it aligns core competences, with core lean processes and core activities that are directed towards a strategic goal to deliver its value proposition. This pathway is generic, is core. It does not matter what business or industry you are in, the Behaviour Pathway applies to you because it adds value by concentrating on the critical few competencies, processes and activities, not the trivial many that you must focus your energies upon to succeed.
The Behaviour Pathway must align with the organisations goals, not the other way around. The goal of managing behaviour is for staff to do the right thing at the right time in the right way to meet their job demands and for them to enjoy it. The context and content of the Behaviour Pathway is unique to each organisation. All behaviour change starts from within and becomes valuable in moments that matter.
The Behaviour Pathway connects all levels in the business, individual, operational and strategic. The Behaviour Pathway is a necessary but insufficient driver of business performance. It must be combined with both Knowledge Pathways and Business Environment Pathways for best effect. Stray from your Behaviour Pathway for long and fail.
Business Performance Cycles
Business performance occurs in two distinctive cycles trying to be better or be different consequently behaviour is managed in organisations in two distinct cycles.
- Maintaining the existing performance outputs by making small incremental changes to existing inputs and processes, trying to be better and
- Attaining new standards of performance by doing different things, changing inputs and processes to achieve new outputs.
The goal of each performance cycle is to either prove or improve performance. Confuse each performance cycle at your peril.