Warren Bennis once said that a leader does the right things while a manager does things right. One could extend this to mean that you must have both efficiency and effectiveness in an organization. The real question is whether or not it is possible for an organization to be both efficient and effective. Before we can answer this question we must define just what an effective organization is. Some possibilities include:
- Meets or exceeds customer expectations
- Fulfills its mission statement
- Creates stakeholder value
- Rising stock prices
- Wins quality awards
- Has satisfied employees and managers
- Has been around for many years
Most executives would be more than happy to have an organization that satisfies even a few of these criteria, never mind all of them. With the exception of the last criteria, there are many organizations that can satisfy most of these criteria but they will probably not be around for fifty years (the average lifespan of a Fortune 500 company).
Managers can focus on achieving these outcomes and they will be focusing on the wrong things. Let’s take the example of the Titanic sinking. Review the above set of criteria. Would any of them have predicted its striking an iceberg and rapidly sinking? For another example, look at any number of corporate bankruptcies from the W.T. Grant Company in the mid-seventies to GM in 2009 and you will find that these criteria would not have predicted their failure and bankruptcy. Granted few bankrupt companies have met all of these criteria, but even if they had, they would be looking in the wrong direction and ultimately they would have failed. The same assertion can be made for those companies that are currently on the corporate “most successful” lists today. Most of them will succumb to the same problems that spelled the death of their predecessors.