Mediocrity instead of Excellence

Why do organisations strive for Mediocrity instead of Excellence?



Mediocrity: derived from Mediocre, meaning “of only ordinary or moderate quality; neither good nor bad; barely adequate” (Ref:Dictionary.com)


Excellence: derived from Excel, meaning “to surpass others or be superior in some respect or area; do extremely well” (Ref: Dictionary.com)



Based on definition alone, it is inconceivable why any business leader would settle for mediocrity over excellence…It just doesn’t make sense. Why would you be content with any part of your business to be “barely adequate”, when you have every opportunity to excel and for it to “do extremely well”.

I don’t believe a business plots a course to be mediocre, it just happens. 

How can this happen? 


Leadership: 

From my experience, mediocrity starts at the top and is fostered by middle management. If the head of a company does not lead by example, does not set expectations, does not push the boundaries, is not visionary, then how are his or her direct reports and their direct reports going to exercise excellence ?

Revenue and Profit:  

A revenue only or profit only focus, with no consideration of cost management. Are short term decisions taking priority in order for the minority within the business to receive their annual bonus? There is no balance; its all about revenue or profit. Very little if any focus on business development or innovation, resulting in excessive cost cutting activities in order to maintain or protect the revenue or profit line when the market changes.



Accountability:

Absence of a performance management system and no KPI’s for individuals or teams to focus on. Implementation management structure which fosters empire building, leading to micromanagement and subjective decision-making. 


Environmental: 

External circumstances may allow for significant growth resulting in a false belief of achieving excellence. During opportunistic and or market growth periods, failure of effective fiscal management and forward strategy can knock a business over when the tide changes. 
Process:  

No active or relevant business (or quality) management system to govern the business. Poor strategy development, communication and execution. There is a firm belief that process, checks and measures within the business are all too bureaucratic and don’t add value. 


What are some of the signs that your organisation is mediocre and not excelling?


No Collaboration: 

  • All of the decisions are made by the MD or the appointed proxy who never challenges the MD. 
  • A culture of micromanagement exists.
  • There is no communicated business strategy 
  • Lack of structure, lack of process and lack of objective decision making.



No Performance Management: 

    • No evidence of a performance management system
    • No objective means to assess individual performance and identify development needs.
    • No goals or targets to identify bad, good, better, best

    No Processes:

    • The term “Innovation” is used all the time, but in fact the product(s) only ever receive minor refreshes and colour changes.
    • The term “nimble” is used all the time, but projects are never delivered on time because the same mistakes are constantly repeated.
    • Projects just keep on going with no or little commercial consideration. 
    • No one knows what continuous improvement is? 
    • Most people within the organisation are long serving and as a result have not been exposed to other business models, industries and challenges. They are very resistant to change and knowledge is only used as leverage for self preservation and not the greater good and progression of the organisation.

    Sound familiar?

    What can happen when an organisation allows both its culture and its people to be mediocre?


    Accountability:  


    No one is held accountable for their actions, outcomes and performance. This results in an “all care but no responsibility “ attitude and does not add value within the business.

    Innovation: 

    At best, it is evolutionary and the only activity which may fall under the innovation umbrella is through cosmetic and incremental updates. As such, innovation in its true meaning does not exist within the business and creativity is stifled. 



    Capability Development: 

    No investment occurs within the business on developing the skills and capabilities of its people other than for mandatory or legal requirements. 
    Complacency: 

    Staff within the business become complacent with their role and approach towards the business. Those within the business begin to cut corners, data driven or fact based decision making is replaced with opinion and “hear-say”. Documentation and evidence of findings is non existent resulting in most decisions based on verbal confirmation rather than documented results and analysis.



    Change Resistance:  

    A mediocre culture does not nurture and encourage continuous improvement with the business. The same mistakes constantly re-occur and the staff within the business don’t see the need to implement any changes. Typically, there is strong resistance to considering a new way. Most are ignorant about the constant changes in the outside world and the impact this has on the internal business.  A constant theme or phrase is “ this is the way we always do it”. 

    Denial:

    Given the poor organisational culture, most re-live the “glory days” and do not have the ability to read what is actually happening within the business and within the market. In particular, those who are tasked with business development, product management, sales and the like who can’t read the play are merely fair weather sailors, and as such are of insignificant value to the business.



    Why is this allowed to happen? Is it because: 

      

    CASE Study 1: Construction Service Provider: From Mediocre to Excellence. 


    A good friend and former colleague of mine joined a top three residential building industry company as the Business Operations Manager. He discovered that despite the business being quite successful, it was chaotic, unstructured and if something didn’t change was most likely going to self implode within 3 years. He methodically looked at every part of the business and met with every employee to get an understanding of their background, skills and what their understanding of their role was within the company. 
    He reviewed the supply chain, stock management, customer/client relationships, commercial tendering & terms and quality systems of the business.  

    Although he could see the business was performing well at a revenue level, the trend at the cost level was moving in an unfavourable direction, hence impacting profit and long term sustainability. The challenge was in convincing the owners. Although they knew the business was getting too big for them and they way they ran it(hence them hiring him), they were happy, as they could see a strong revenue line and that was all that seemed to matter to them. Like many other business’s, the  adopted a mediocrity attitude; “if it isn’t broke, don’t fix it”. However the danger here is that you may not be able to identify it is broke until it is too late.  




    Progressively, he assessed all parts of the business, applying benchmark techniques and world class practices to a building services company which was apparently doing well in the eyes of the owners. He discovered the cost of quality/warranty return work was equivalent in value to the third largest client. The alarming point here is that 18 months prior to him commencing, the value of quality rework was equal to the forth or fifth largest client. So the trend was heading in the wrong direction and the owners could not see this.  


    Needless to say, he continued to apply best practices and with a continuous improvement mindset reduced the cost of quality to insignificant proportions. After two years, of methodically assessing every part of the business and applying an excellence approach he more than quadrupled the profit to revenue ratio, purely by reducing the operational costs. This is a great example the transformation of a business who thought it was going ok, in an industry which is not historically know for its world class practices.



    Can a business experience success while being mediocre?



    The short answer is “yes”, but... the success will not be sustainable long term. If a mediocre organisation is in a favourable economic environment, such as foreign exchange rates; as has been the case in Australia for several years, 2009-2014, it might be able to fly under the radar for a while and the following scenario might sound familiar…


    • Experiences favourable growth in both revenue and profit 
    • Depending on the positioning within the market, experiences significant growth (market penetration) 
    • Increased focus on marketing
    • Many become complacent as a result of the growth and a believe they have cracked the code to success
    • Runs on “auto-pilot”  as a result of the right time and right place and the inflating ego of key staff
    • Believes it is nimble and fast to react to the market needs, and actively propagates this message  
    • Fails to recognise changes in the market and when it finally does (if it does) is all a little too late
    • Denial kicks in about the actual state of affairs
    • The leadership team begin show signs of paralysis and fail to lead
    • Morale drops and parts of the business begin to implode

    The danger with allowing a mediocre culture to settle in, can be disastrous for a business, because failing to strive for excellence, to constantly improve, to operate using best practise, to keep the finger on the business pulse so that there is an understanding of the challenges ahead which may or may not be new to the business or market or industrial and be catastrophic.

    People within the business become comfortable with the mediocre work life.


    CASE Study 2:  Consumer Product Manufacturer. From Mediocre to Mediocre


    Another good friend and former colleague of mine worked for a consumer product manufacturer for a short period. He was brought into the business along with some others as part of the new MD’s  business transformation plan to achieve excellence and long term sustainability. 

    For about a decade prior to this, the business experience strong growth in Australia and it is fair to say the management team at the time, the MD and CEO believed they were invincible given the outstanding financial performance during this period.

    But not all was good. There was activity for the sake of activity. Many were busy being busy rather than being productive. A culture of fire fighting was the “norm” and solving a problem which one created due to a lack of due diligence was praised as an outstanding result.

    Despite all of this, the business was extremely successful, experiencing double digit growth year on year for about 8 years and delivered an EBIT to Sales ratio in the order of +15% per annum.

    The new MD and some of his new team realised that despite the recent financial success of the business over the previous decade, there were some real concerns about:
    • the age of the products on offer
    • the structure and method of operation within the business.

    Given the business had delivered song financial results and had the title of “market leader”, most of the staff believed they were invincible. They became complacent, cut corners and truly believed they could do no wrong. 

    Those new to the business…Those who have worked elsewhere and had experienced challenges elsewhere, could see the gaps in the organisation and its culture and concluded it was time for change.

    A detailed 3-5 year strategic plan was developed for the first time, that was designed to address these concerns and catch the business before it was too late.

    Like a big ocean liner, the business also took too long to stop and turn course. The poor organisational culture which had been allowed to develop meant there were no robust processes in place and no competent people to conduct sanity checks on the business performance, market landscape and strategic needs. The business had been conceding market share for a couple of years prior to this analysis. The concerning point here is that it was denied to be the case by those who were responsible for sales and marketing under the previous administration.
    It was underestimated just how low the organisational culture base was. Cracks began to appear when objectives along with expectations and accountabilities became part of daily work life. When opportunities were made for new products to be developed, the so called "experts" in the business struggled to be innovative and gravitated to towards solutions they new rather than explore new ideas. The newbies in the business 
    were undermined and along with their idea’s. The projects which did go ahead, were merely regurgitated existing products which was not entirely the fault of the project team, but more so as a result of poorly specified design briefs from Marketing and Product Management. 


    As mentioned above, organisational changes occur all the time and old MD was called back in to try and stabilise the business, with no success. The competition had grown stronger, developed better product, challenged the way the market worked and had taken about 30% market volume from the leader. Why?…because they excelled!!




    How did this happen?…The buck stops with the CEO… and the old MD… and his management team which allowed this to happen. They did not drive the business in the direction of excellence. They focused on revenue and profit only, and financial success was achieved through external forces.  

    That is, the business was in an economic environment which was favourable, the competition was weak, and the business had a strong brand loyalty in the market place and rode on the back of this loyalty well past its used by date during this period. While it experienced growth and success financially during this period of time, it did not grow and find success in the same manner within itself from a development, capability, risk management, continuous improvement, innovation, customer experience and organisational culture. It may be argued the business excelled in its financial performance, but this was in the short term. Was the MD asleep at the wheel?

    True excellence (the objective of the “newbies”) would have driven and challenged the business to look over the horizon and to formulate and rollout internal and external initiatives to deliver ongoing and sustainable success, by addressing the product offering, internal processes, customer relationships, end-user experience and staff development.

    In Summary:


    Organisational Mediocrity occurs due to poor leadership and an unbalanced business focus which is fuelled by poor accountability, insufficient business processes, lack of innovation, staff complacency and favourable environmental conditions which provides limited success and a false belief of excellence.

    If not identified early and address effectively, Mediocrity will foster an organisational culture which will be so entrenched and resistant to change that when the business is faced with unfavourable market conditions it will not have the competency to prevail and Excel. 


    What do you think?

    Andrew Baldacchino
    Director - ANBA Pty Ltd

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