What is organizational excellence?

I suppose one of the foundational elements I need to establish for this blog is what I mean by organizational excellence. Often in our society organizational excellence is measured primarily, if not solely, by the bottom line. Quite often, at least for publicly traded companies, this myopic definition is shorted in time to a quarter’s performance at worst or a fiscal year at best.

There is no doubt, at least for organizations that are businesses, that profitability is one key measure of excellence. In my mind, however focusing only on that is insufficient. Is profitability being gained today at the expense of future performance? Is profitability gained through unethical treatment of employees, the greater community, the environment? The interaction of an organization with all of its stakeholders, not just shareholders, certainly needs to be considered in defining organizational excellence. Further, for many organizations, profit is not an objective, so using that as a measure of excellence is failed from the beginning. A broader meaning for the term is required.

One of my favorite theorists on the topic of organizational excellence and leadership is P.B. Vaill. If you are not familiar with his work, I would strongly recommend sampling some of his writing. In a journal article written on the broader topic of high performing systems (excellent organizations fitting in as a subset of that broader group), Vaill stated that a high performance system must meet one or more of the following criteria:
· They are performing excellently against a known external standard;
· They are performing excellently against what is assumed to be their potential level of performance;
· They are performing excellently in relationship to where they were at some earlier point in time;
· They are judged by informed observers to be doing substantially better qualitatively than other comparable systems;
· They are doing whatever they do with significantly less resources than is assumed are needed to do what they do;
· They are perceived as exemplars of the way to do whatever they do, and thus they become a source of ideals for the culture within which they exist; or
· They are the only organizations that have been able to do what they do at all.

(Vaill, P. B. (1982). The purposing of high performance systems. Organizational Dynamics. Autumn, 23 – 39.)

Two more of my favorite authors on this topic are J.R. Katzenbach and D. K. Smith. In their seminal work on high performing teams in excellent organizations (The wisdom of teams: Creating the high-performance organization), they identified six characteristics of excellent organizations:
· They have balanced performance results that benefit all of the primary constituencies of the team: customers, employees, and shareholders/owners;
· They maintain clear, challenging aspirations;
· They enjoy committed and focused leadership;
· They have a dedicated work force dedicated to productivity and learning;
· Skill-based performance is a source of competitive advantage; and
· Within the organization, open communication and knowledge management exist.

(Katzenbach, J.R., Smith, D.K. (1994). The wisdom of teams: Creating the high-performance organization. New York: HarperCollins.)

While it is possible to debate the definition of excellent organization and cite various authors to support different perspectives, in this blog when I use this term or refer to organizational excellence, the characteristics espoused by Vaill and Katzenbach and Smith are the foundation upon which I will be building.

What do you think? What makes an organization excellent in your opinion?