The secret to thriving in disruptions: Prioritising organisational health

Q: What sets apart the organisations that thrive despite disruptions from those that struggle to stay afloat?

A: Organisational health

Lots of food for thought from these findings so thought I would share some highlights from McKinsey’s extensive research spanning over 2 decades.

Organisational health encompasses how effectively leaders steer the ship, make decisions, allocate resources and foster high performance across the board.

It comprises of 3 key elements:
1.     Alignment around a common vision
2.     Effective execution of strategy
3.     Continuous innovation and renewal

Healthy organisations consistently outperform peers, delivering 3X the total shareholder returns over the long term, irrespective of industry dynamics.

One of the standout revelations from McKinsey’s Organizational Health Index is the correlation between health and various aspects of business performance.
From mergers to large-scale transformations, and even resilience during crises like the COVID-19 pandemic, healthy organisations consistently demonstrate superior financial outcomes and operational resilience.

Decisive leadership emerges as a linchpin of organisational health, particularly in times of crisis. Leaders who swiftly make and commit to decisions, empowering their teams along the way, are more likely to foster a culture of adaptability and agility.

Data driven insights and everyday innovation emerge as critical drivers of success, with organisations leveraging frontline feedback and analytics to stay ahead of the curve.

Talent management also takes centre stage, with dynamic deployment of skills and roles emerging as a competitive advantage. Companies that prioritise employee mobility and upskilling not only foster a culture of continuous learning but also drive higher retention and productivity.

Despite the importance of organisational health, common obstacles hinder progress such as inconsistent prioritisation, lack of involvement in implementation, and the perception that organisational health is separate from performance.

Leaders must prioritise organisational health as a fundamental aspect of their leadership, fostering alignment, execution excellence, and innovation.

Organisational health isn’t just a metric – it’s the foundation for resilience and prosperity in today’s dynamic business landscape.

How does your organisation prioritise organisational health in the face of volatility and disruption?
What steps can you take to foster alignment, execution excellence, and innovation within your team?

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