Does Capability Really Work? – Part 3
The last dataset in our three-year study enabled us to observe the impact on performance of NOT managing capability adequately. Here are the ‘not-so-surprising’ results.
The third part of our involvement with a large miner in Australia relates to a period past the peak of the mining boom, with the consequent drastic adjustment required of many teams. These changed circumstances enabled us to study the impact on capability and performance of a ‘distracted’ workforce.
For a complete picture, please refer to the two previous blogs. The first one ‘Does Capability Really Work? – Part 1’ described the pilot study that opened the door to our involvement in the three-year contract. The second blog, ‘Does Capability Really Work? – Part 2’ summarised the results we obtained in the first seven quarters of the contract, when the workforce was focused on achieving the best performance.
The results reported here complement – and are as important as – those obtained when capability was managed effectively. DRASTICALLY CHANGED CIRCUMSTANCES The mining boom reached its peak and, naturally, the miner’s focus and priorities changed. From one prioritising growth, it moved to one requiring cost control and a preparation, if not early implementation, of a downgrading of facilities. This impacted both the miner’s team working on the contract but also the supplier teams who had to adapt quickly to changed circumstances. Naturally, the driver for these changes was the miner and any doubt or lack of focus on the miner’s part had a major impact on the contractor.
The changes can be summarised as follows:
Changed KPIs representing the changed priorities, with a stronger emphasis on cost and health and safety.
Changes in the senior management team and among staff, mainly on the miner’s side.
Uncertainty about the future.
It seemed to us, from the outside, that the teams had moved from one of focus on deliverables and performance – how to create win-win outcomes – to one characterised by doubt and preservation. DRASTICALLY DIFFERENT RESULTS Whereas the results reported for the first data set were very positive, the ones for the second set show a gradual decline over the quarters for both capability and performance, as shown below.
The results for the first set are on the left and those for the second set on the right.
Several points are immediately apparent in relation to the second dataset.
The overall score for the KPIs dropped sharply between quarters 7 and 8. This can be explained by the new KPIs giving the teams some challenges.
The scores exhibit downwards trends, as shown by the green (for CCIs – Core Capability Indicators) and blue (for KPIs) lines of best fit.
The CCIs for quarters 12 and 13 were not collected due to internal difficulties in the teams concerned.
These results can be summarised on a single graph, as shown below. The results in blue pertain to the first dataset and in orange to the second dataset.
The continuous orange arrow, second dataset, shows a clear downward trend over time, with the data going from upper right (quarter 8) to the lower left. The trend includes the elongated diamond which corresponds to two quarters (quarters 12 and 13) for which the capability was not measured with a survey but estimated by management. If we disregard the diamond because of its potential lack of reliability and only consider the first four points, then the trend, shown by the dotted arrow, is less steep but still clearly down, meaning lower capability scores and lower performance scores over time.
WHAT WE LEARNED The second dataset pertains to a period of lack of focus in the teams involved. That is, capability was not managed and dropped over time, which was accompanied by a drop in the performance scores. The few points below summarise the outcome.
Decreasing capability correlates with decreasing performance.
Capability can be used as a predictor or performance success (or lack of).
To avoid low or decreasing performance, it is necessary to actively manage capability.
In addition, the overall experience demonstrates the importance of having well-functioning teams, with no issues distracting them from their primary corporate task. This condition was not fulfilled in the period of the second dataset and the results suffered consequently. THE CONCLUSIONS FROM THE TWO DATASETS REINFORCE EACH OTHER
“FOCUS ON CAPABILITY DETERMINES PERFORMANCE OUTCOMES”
The results for both datasets are compatible (refer to ‘Does Capability Really Work? – Part 2’ for the conclusion related to the first dataset).
When there is focus and capability is actively managed then performance increases. Conversely, when focus is lacking and capability management is neglected, performance suffers.
However the compatibility of the results is not simply a semantic statement, with one being the logical converse of the other. It is the result of two separate sets of measurement. Therefore, the conclusion derives added value from its experimental underpinning. FOCUS ON CAPABILITY DETERMINES PERFORMANCE OUTCOMES This short heading is a good summary of our three-year experience with the large Australian mining company. It means that simply focusing on producing outcomes is not sufficient, one must focus on creating and managing the enablers, that is, the conditions that are known to lead to success. These conditions comprise the dimensions of the capability model used (see ‘The Six Core Elements of Capability’) which describe the overall environment in which the activity takes place. These dimensions and the elements they contain reflect the best of contemporary management practice and theory and it is therefore not surprising that they play a major role on outcomes. THE CAPABILITY MODEL IN PRACTICE In the next blogs, we’ll be discussing how the capability model provides organisations with a unifying management model and methodology, a common language and flexible implementation. We’ll also discuss how the model can be applied to a wide variety of situations and problems. We’ll look at risk management, change, transformation, design thinking and the digital revolution to name a few. And we’ll consider different industries and describe how they can benefit in direct and practical ways from our capability-centred solutions. That’s an exciting program and I look forward to sharing it with you in 2017.
Paul For more information on our work with the mining company, pls check:
Capability – The Foundation of Business Performance and The Impact of Capability on Performance – Experimental Evidence.