The Number One Difference Between High and Average Organizational Performance

Erin is the principal of an elementary school that, in 7 years, went from failing to the holy grail of closing the achievement gap. When I asked her about her approach to leadership, she said:

Leadership? I don’t know anything about leadership

She then went on to describe to me an eloquent system of leadership that is simple, scalable, measurable, and replicable. If each principal were trained to its requirements, I believe each would enjoy the same success. The challenge is our entrenched cultural baggage that leadership is about personal influence rather than an organizational system, intentionally designed to deliver value to the customer, or in this case, the student.

In an earlier post, I defined a system of leadership. In this post, I will address how high performing organizations approach three key resources that every organization uses to create and deliver customer value:

1) People;
2) Money; and
3) Knowledge.

The greatest difference I found between average and high performing organizations is this: average organizations manage these resources as assets, (a nice way of saying controlled); high performing organizations understand these are resources to be developed. Developing these resources means greater value delivered to the customer.


High performing organizations understand their workforce as the primary source of innovation and value creation. Therefore, the more than can develop their workforce, the more value they can deliver to their customers. Case: Virginia Mason Hospital has been recognized as one of the safest hospitals in America for 12 consecutive years. A rare achievement. One of my takeaways from a half-day tour was their intentional methods of developing their people. One of these methods is an important rule – leaders are NOT to be problem solvers. If a subordinate asks a manager how to solve a problem, out of respect to the worker they don’t, the manager can help frame the problem, but they do NOT solve it. Solving a problem for a worker is disrespectful to the worker because of a fundamental belief that the worker closest to the problem is in the best position to solve it.
This develops its workforce in at least two ways:

1) It gives them confidence that they have the power to identify a problem and design solutions; and
2) It gives them opportunities to learn new technical skills in problem-solving such as the 5-whys.

Within this environment, emerging leaders blossom and grow. Unfortunately, traditional leaders who see problem solving as a source of power, have difficulty giving this up and frequently move on.


High performing organizations see money as a resource that can grow in value. So, when they extract waste, they create more options for how to deliver greater value that will pay dividends now and into the future. Case: Kaas Tailored is a manufacturing firm with 200 employees Within their system of servant leadership, they train, coach, and mentor every employee, leader, manager, supervisor, and production lead how to do daily kaizen. Each year, their employees identify and conduct 1,000 -1,250 kaizens, with each saving the company $1,000. While the actual cash savings may flow to the company or the employee’s retirement account, customers received greater value through faster delivery, greater satisfaction, and confidence. It is not a coincidence that many of their clients have been with them for decades, even though there are cheaper alternatives.


Average organizations believe innovation is an expensive idea. High performing organizations understand that the most significant source of new knowledge and innovation lies within the workforce and its free of charge. Case: During my interview with Erin, the elementary school principal, she spoke about two ways of understanding knowledge creation and innovation.

• Knowledge creation (innovation); and
• Knowledge delivery or the actual use of new knowledge (innovation) in the classroom.

Knowledge creation. It takes ten years for an innovative idea to get out of academic research laboratories and into the classroom. As Erin explained, “this is too long,” yet innovation is a challenge because when it fails, the lost classroom time can never be recovered. When she described this to me, she pulled back the sleeve of her blouse and showed me the word “grace” tattooed on her wrist. She said, “sometimes great ideas fail, and we must forgive ourselves, learn from it, and move on. The next innovative idea may change the trajectory of a student’s life.

Delivering new knowledge. Erin believes that collaboration as foundational to the educational process. So, she installed peer review to increase collaboration. In this routine, a 3rd-grade teacher may observe a 5th-grade teacher teaching math. This peer review creates opportunities for collaboration, coaching, and mentoring. In doing so, new skills, approaches, and ideas are created, disseminated, improved, and passed on again. This routine creates a culture of learning within a learning institution.


In every organization, I have researched that has been able to achieve and sustain high levels of employee engagement; their approach to these key resources has always been development vs. management. Furthermore, all the research says that millennials are not interested in management (control), but they are wild about development.

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