So Far

The founder of Strategy Management Technologies, Douglas Swallow has been researching the primary enablers and inhibitors of optimal human and organizational performance for the past 27 years. The research has concluded the primary enablers and inhibitors of organizational performance are in three areas: contextual reference, human performance, and performance management technology.

Contextual reference is reference point from which one views the environment. The contextual reference point is the primary filter through which all data is processed and on which all decisions are made, right or wrong, good or bad, etc. An individual’s contextual reference point is a combination of their childhood programming, education, environment, natural performance profile, experiences, goals, principles, and beliefs. To use a metaphor, one’s contextual reference are the glasses through which one sees their world.

Organizational contextual references are comprised of an organization’s collective understanding of the business landscape and the principles, strategies, processes, practices, and performance management technology. An organization’s contextual reference is directly proportionate to the quality of results it produces.

As evidenced by the performance of Fortune 500 companies over the past 25 years, there is clearly a difference in the quality of organization’s contextual references or the glasses through which business view their landscape. Since 1980, 70% of the companies on the list are no longer on the list and less than 5% consistently produce pre 1980 results.

Organizational performance is a function of many external and internal variables. One of these variables is human performance. Since 1980, no single variable in the organizational performance equation has increased more in importance than human performance. Executive and employee performance now ranks as one of the top five factors in organizational performance. Just 20 years ago, this variable consistently ranked outside of the top 15.

Human performance in today’s workplace is a function of 12 elements:

Cultural fit
Professional quality profile
Natural performance profile
Life management skills and emotional competencies
Integrity
Leadership
Clarity
Focus
Passion
Obsession
Intensity
Environment

Research on the performance capability of the Fortune 500 companies that performed in the top 5% were found to be largely comprised of individuals who had high ratings in the top five, operated in workplaces with elevated ratings in the next six, and operated in good to excellent environments. These companies all demonstrated the ability to get the right people into the company, the wrong people out, and put the right people in the right places.

Performance management technology are the bundle of reports, schedules, manuals, and statements that enable the company and its leadership to navigate the company, keep it on course, avoid disaster, and take advantage of opportunity. In 1980, the standard bundle of performance management technology was comprised of seven categories of navigational instruments, which included

Business plans
Financial schedules
Market studies
Employee policies and procedures handbook
Compensation studies
Job descriptions and organizational charts
Sales and production reports

Since 1980, 235 Fortune 500 companies have gone out of business, were sold, or merged with other companies. The average net profit percentage of a Fortune 500 company has dropped 35% from 8.1% in 1980 to 5.2% in 2004 and 43% or 215 of the Fortune 500 companies are unable to produce historical market average net profit percentages.

Why did 43% of the best companies in America over the last 25 years fail to meet or exceed their shareholder expectations? Not one of them, before their decline, was short on resources, market share, demand for their products or access to knowledge and best practices of the day. All of them, by the standards of the day, had quality workforces and experienced and respected leadership. So what happened?

The answer to the question lies in their navigational and performance management technology. They could not see, as well as others could, what was happening at the macro level across all industries, or what was going on inside their own organization that was inhibiting their ability to produce superior results. Had they had today’s leading performance management instruments, virtually every one of the 243 companies would be here today and would be more profitable than ever before, but they did not, and as a result they are now gone.

Today, the basic list of core navigational systems is up to 15 and includes the original seven plus the following:

Published business models
Strategy maps
Process maps and performance reports
Benchmark and key performance indices (KPI) reports
Workforce and vendor fit and performance capability charts
Local knowledge reports
Departmental playbooks or operating manuals
21st Century recruiting, selecting, orientation, and development programs

The simple truth is contextual reference, human performance, and performance management technology dictates the level and quality of results in today’s environment. If a company operates from the same contextual reference as the most successful companies in the world do, has a workforce largely comprised of individuals with high performance capability ratings, and employs the leading performance management technology, it will produce the highest level of results in the market.

So far, what we know is:

While less than 10% of Corporate America has embraced it and academia remains reluctant to acknowledge it, the events of the past 35 years strongly suggest that the industrialized nations have entered the Fifth economic era.

This is critical, because there have only been four economic eras in world history: Hunter-Gatherer, Military, Agrarian, and Industrial. The criteria for the end of an economic era is when the most advanced version of the current era’s operating (business) model fails to produce equal to or greater than historical market average results and/or when an alternative operating model renders the current one obsolete.

Core economic operating models only change about every 1,000 to 2,000 years and the industrial age operating model has only been around for approximately 400 to 500 years.

What rendered the most advanced version of the industrial age operating model in America obsolete was largely the result of four events in the 1970’s: the emergence of the highly competitive environment, the first change in leadership structure in over 3,000 years, the emergence of a new class of employee called Naturals, and the arrival of the first workforce programmed under the post-World War II child programming model.

Degree of Market Competitiveness

Prior to the 1980’s degree of market competitiveness was largely defined in terms of demand and supply. A second definition emerged in the 1970’s, which suggested that degree of market competitiveness could also be defined in terms of number of points of distribution relative to a market’s ability to support those points of distribution and produce equal to or greater than historical average financial results.

This definition led to a segmentation of degree of market competitiveness into four levels: non, low, moderate, and high. The definition of each is as follows.

The Non-Competitive Environment is one in which demand exceeds production capacity and the number of points of distribution are insufficient to meet demand. There are virtually no competitors, and entry by competitors is legislatively, financially, or otherwise restricted.

The Low Competitive Environment is one in which demand exceeds production capacity and the points of distribution are insufficient to meet demand. There are multiple competitors. Entry is difficult, but not restricted.

The Moderately Competitive Environment is characterized by multiple competitors. There are a balanced number of points of distribution relative to supply, and demand and market segments are well defined. Entry is not restricted.

The Highly Competitive Environment is defined as any environment in which there is insufficient demand for a product or service to capable of supporting the number of points of distribution for that product or service at sustainable financial levels. Entry is not restricted. Market segments are well defined. Customer Value Propositions are well defined, (lowest total cost solution, best total solution, or best in class). Customers are experientially sensitive.

Prior to the late 1970’s, virtually all industries could be classified as non- to low competitive. The companies delivering the highest levels of profitability, shareholder value and equity did so, using the most advanced version of the industrialized era operating model. This operating model was built on a foundation of strategies, processes, and technology that focused on production capacity, velocity, scale, market share, price, replication, exactitude, sustaining innovation, low cost structures, and minimal headcounts. This focus was optimized through the creation of a youthful, experienced, skilled, loyal workforce, with a finely tuned centralized management structure, supported by a doing oriented culture, while creating price, supply chain, and legislatively defensible market positions. Customer satisfaction, quality, and service were not contributors to optimizing results.

With the arrival of the moderate and highly competitive environments in the late 1970’s, came a bundle of new variables in the performance equation that included:

Deregulation and uninhibited market entrance
Unstable market quality
Rapidly evolving external environments
Product segmentation
Consumer segmentation by value proposition; lowest total cost solution, best total solution, and best in class
Knowledgeable customers who were time, value, and experientially sensitive
Customer satisfaction indexing
Shorter product life cycles
Disruptive innovation
Resource allocation sensitivity and accountability
Raw material availability and inconsistence
Diverse capital, accounting, audit, and tax strategies
Competitive capital market
Capital and insurance markets dictating strategy, policies, and practices
Vendor/subcontractor procurement practices
Vendor/subcontractor performance
Product and consumer liability
Candidate and employee liability
Workplace liability
Diverse political environments
Supply chain integration and disruption
Dramatic increase in the quantity, complexity, and timeliness of decisions
Key position unbundling
Independent Board of Directors
Organizational positioning statements
Expansion of employee performance capability spectrum
Transition from management development to leadership development
Employee development and internal Universities
Cultures of accountability
Employee accountability, real-time performance feedback, and performance intolerance
Sales practices and ethics
Production practices and methodologies
Inadequate navigational technology
Enhanced workplace technology
Workload assessment
Multiple cost structures
Incentive and participation oriented compensation
Increased operating costs
Process quality
Rework and waste cost analysis
Real time inventory management and strategy adjustment
Outsourcing and specialists
Internal and competitive benchmarking
Insufficient demand to support the number of points of distribution

No one variable rendered the most advanced versions of the industrial age operating model obsolete, however collectively they created a weight it could not support. As a result it became functionally obsolete.

Leadership Structure

Since dawn of the second economic era, the military era, over 3,000 years ago, organizations and their supporting institutions have largely operated on the single leadership model, i.e. President. In the early 1970’s, single leadership was abandoned in favor of the first economic era’s talent oriented, leadership trilogy of Chairman, CEO, and President. In the first economic era, the titles were better known as the Wiseman, Hunter, and Tribal Leader.

Under the single leadership model, one individual is responsible for establishing and executing the strategic, tactical, and operational strategies of the organization. Under the leadership trilogy, these three responsibilities are divided into three distinctly different positions.

Leadership studies found the required talents or natural endowments to produce superior strategic, tactical, and operational results are mutually exclusive in highly competitive environments. The talents required to develop and adjust strategies differ from those required to optimize the acquisition of key resources, i.e. capital, raw materials, and key relationships, as are the talents to build and lead a workforce that produces superior results.

Overlays of the single leadership model over degrees of market competitiveness concluded the single leadership model was superior in non- to low competitive environments. However, as environments become more competitive and, as strategy and operational results entered the performance equation, the effectiveness of the single leadership model was found to diminish proportionately with the degree of market competitiveness.

Naturals

The leadership trilogy introduced the elements of talent, workload, and cultural fit into the performance equation. Prior to the 1970’s talent was not part of the employee performance capability equation. Based on a Gallup survey of 400,000 companies worldwide, talent is now considered to be the single most important factor in the employee performance capability equation.

Talents are skills, but skills are not necessarily talents. Talents are something with which an individual is born. Human performance studies have revealed that all human beings are born with a natural performance profile which is comprised of an intellectual persuasion, i.e. I.Q., neuro-linguistic communication profile, auditor, visual or kinesthetic, personality type, seven natural endowments, purpose, dream, and a gift. These seven elements have consistently been found to be in alignment.

All positions in a company require a core set of skills to be performed proficiently. Experienced individuals whose natural endowments are in alignment with the core skills of their position perform on average 2.3 times that of equally experienced skilled employees. Experienced employees whose natural endowments and are in near alignment with the core skills of a given position have formed a new class of employees, called Naturals.

In the 1990’s neurological studies emerged that scientifically explained how Naturals process information differently than skilled practitioners. How talent is processed on a separate neurological pathway that bypasses the cerebral cortex and all manmade filters, thus allowing for higher levels of performance.

State management specialists found when an individual is using three or more of their talents their state changes in a very positive way. The level of five neurological chemicals increases, includes:

Norepinephrine - the joy or happiness chemical
Dopamine - the attraction chemical
Phenylethylamine also known as PEA - the physical stimulant chemical
Oxytocin - the passion or care chemical
Adrenaline - the intensity chemical

Individuals in this state consistently lose track of time and perform with high levels of clarity, focus, passion, obsession, and intensity. They display innate knowledge of the subject matter and cannot explain how or why they did what they did in production of superior results.

Following these discoveries, psychological questionnaires were developed that separated one’s talents from one’s skills. These profiling tools have enabled companies to filter candidates and reposition internal employees into the optimal positions and develop workgroups largely comprised of Naturals.

Studies of consumer trends in highly competitive environments revealed that consumers cluster along one of three value propositions; best total cost solution, best total solution, or best in class. Companies whose products and processes are aligned with a particular value proposition consistently produce better results than those whose products tried to appeal to multiple value disciplines.

Subsequent studies found that, as with consumers, all employees have a dominant value proposition. Employees whose dominant value proposition were in alignment with their company’s performed better than those whose value propositions were unaligned. Workgroups comprised of employees with aligned value propositions consistently had less inter-workgroup conflict and were more productive.

This discovery led to the development of candidate “Fit” profiles. These profiles enable companies to build workgroups whose collective value proposition is in alignment with the company’s and its core group of customers.

A characteristic of the industrial age operating model was the bundling of positions and positional workloads in excess of what highly skilled practitioners could effectively process in a standard 40 hour workweek. This business practice was largely based on the assumption that employees would work longer hours, thus enabling employers to maximize production capacity per employee and minimize overhead and related expenses thereby improving profitability.

With the emergence of the highly competitive environment came increased workloads, workloads that could not be processed in a few extra hours a week. Studies of employees with excessive workloads had five choices; (1) work extra hours at the expense of family and key relationships, (2) accelerate work pace and errors per execution, (3) omit process steps, or (4) produce less work product, (5) operate in a state of indifference. All five choices would adversely impact organizational performance in highly competitive environments.

As a result, companies began conducting positional workload assessment and developing workload monitoring systems. This led to the unbundling and restructuring of positions. Experienced Naturals and skilled employees whose workloads are aligned with a 40 hour workweek produced better results than those with excessive workloads.

In the 1970’s the macro employee performance evaluation spectrum consisted of three levels: unsatisfactory, satisfactory, and outstanding. In the 1980’s the spectrum was expanded to five levels: unacceptable, less than satisfactory, satisfactory, highly satisfactory, and outstanding. In the 1990’s the spectrum shifted in context and was expanded to seven levels: disciplinary action required, unsatisfactory, skilled, advanced, expert, and leader. In 21st century, with the emergence of talent as a key variable in the performance spectrum there is discussion about shifting and the titles of the two highest categories to talented, and natural.

The importance and emergence of talent in the employee performance equation has doubled the breadth and scope of the employee performance spectrum and allowed managers to build teams that consistently produce superior results in highly competitive environments. The development of cultural “fit” technology has allowed managers to create highly harmonious environments and environments that were void of performance inhibiting inter-employee conflict. And the emergence of workload assessment allowed managers to optimize the performance of the workplace and individual productivity. The combination of these three events rendered the industrial age human resources hiring, staffing, and workload practices obsolete.

The arrival of the first generation of post World War II employees programmed under the new child programming model.

The industrial age operating model assumes that less than 15% of the employees will have a performance inhibiting set of life management skills and emotional competencies. Today, over 40% of employees profile with performance inhibiting sets of life management skills and emotional competencies.

Life management skills are those skills required to manage one’s personal life. Emotional competencies are the bundle of skills that allow an individual to effectively interact with others. Inadequate sets of life management skills and emotional competencies manifest themselves in the workplace under the term “personal problems.” According to a Gallup-USA Today poll, 93.6% of the problems in the workplace are attributable to personal problems.

Life management skills and emotional competencies are developed in childhood and acquired through childhood programming. Inadequate life management skills and emotional competencies are the result of the absence of and/or inappropriate council by one or more of the primary programmers. The primary programmers are comprised of mother, father, grandparents, self, friends/significant others, and the community/education system.

In the development of a child from birth to 18 years of age, a child is awake and available for direct and indirect programming 91,615 hours. Under the traditional pre World War II child programming model, a child spent approximately 37,207 hours in the presence of their mother, 18,952 with their father, 4,062 with their grandparents, 17,805 with friends/community, and 13,590 in school. Today, in America, according to census data, less than 15% of children have opportunity to be reared under this model.

In America, in non-divorced, dual income households, with grandparents in nearby, the average reduction in childhood programming time is at least 19,487 hours or 21% of the total programming time. This reduction is exclusively in two parental programmer’s categories: mother and father. This decrease equates to a reduction in programming time of the mother of 32% and of father 40%. In divorced households, total mother, father, and grandparent programming is typically greater than 40% or 24,000 hours.

Child programming is a function of time, content, and environment. Incomplete childhood programming is the result of inadequate time or absence on the part of one or more of the primary programmers, programmers not knowing they are accountable for programming or having the content to provide, and/or marginalized environments.

Emotional competency studies show neither the most advanced version of the industrial age operating model or today’s highly competitive market operating models have proven to consistently produce superior results with workforces with greater than a 25% deficiency in core emotional competencies and life management skills. Workgroups that produce consistently superior results are comprised of individuals with emotional competencies and life management skills in excess of the tipping points.

Studies show a direct correlation between the quality of childhood programming and the levels of emotional competency and life management skills. The arrival of the first generation of children programmed with an average deficiency of 35% in core programmer time, i.e. mother and father, in the early 1970’s was a contributing variable in rendering the industrial age operating model obsolete. Today, in excess of 80% of America’s workforce was programmed under the post World War II childhood programming model.

Summary

As a result of four events: the emergence of the highly competitive environment, a new leadership structure, talent in the employee performance equation, and the arrival of the first workforce programmed under the post World War II child programming model, the most advanced version of the industrial age business model has been rendered functionally obsolete in highly competitive environments.

Companies that will survive and prosper in the Fifth economic era will operate on a highly competitive market oriented business model and performance management technology, employ the leadership trilogy, and build teams of Naturals with non-performance inhibiting levels of life management skills and emotional competencies.

By exploring the achievement of optimal performance in business, production homebuilding, master planned community development, urban development, and individual excellence through the lenses of the contextual reference of market leaders, Naturals, and performance management technology, we have identified the primary enablers and inhibitors to optimal individual, organizational, and urban performance. Along the way, we developed 57 performance management technologies and workshops that empower executives to produce superior results in today’s highly competitive environments. The following is a brief overview of the major findings in each of these four areas.

Research and technology validity: The three biggest questions about ground-breaking research and new performance management technology are: is it academically valid, has it been proven to work in the real world, and what Fortune 500 companies are currently using it? Next to each of the following discoveries is a validity scale: * - face validity / theory, ** academic validity, *** contextual validity / field tested, **** employed by a Fortune 500 Company. In some cases, the aforementioned scale is not applicable. In these cases, the term “NA” is used. The term “Blend” is used to denote a mix of types of validity.

The methodology in the development of the following performance management technologies and programs was based on identification of leaders in a field by results on workgroup specific key performance indices, collection of supporting strategies, and the application of contextual reference of optimal organizational and human performance in highly competitive environments.

The following is listing of the performance management technology and programs by consultancy.

Organizational Genetics / General Business Consultancy

The Spark – An instrument that enables executives to quantify the degree of market competitiveness. All business models are degree of market competitiveness sensitive. The greater the degree of non-alignment of a company’s business model with the degree of market competitiveness the lower it performs. Conversely, the opposite is true.

Organizational Performance Variable Assessment Instrument – a new market entry assessment, quantification of degree of market competitiveness, and alignment of internal practices with the external business environment technology.

Organizational Priorities Alignment Profile – a simple profile that allows executives to prioritizes key performance variables and align them with the external environment.

Organizational Genetics – leading edge strategy mapping and alignment technology based on the discovery that organizational strategic platforms are identical in structure, form, and function to the genetic structure of living organism.

The Short Cut to Success – business life cycle assessment technology for long-term strategic planning.

The Keystone to Optimal Performance in Highly Competitive Environments – value orientation strategy, product, and process alignment technology based on the principles of the customer value orientations of the “lowest total cost solution”, “best total solution”, and “best in class.”

“Fit” - candidate and employee cultural “Fit” assessment technology for resumes, candidates and workforce assessment. This breakthrough technology enables HR professionals and executives to get the right people into the company, the wrong people out, and right people in the right place.

The Leadership Trilogy and the Natural Leader – a leadership and workforce development program based on the principles of the leadership trilogy of the Chairman, CEO, President and concept of Naturals.

The #1 Business Navigational Instrument – a program for downloading a company’s business model into a publishable document.

The #2 Business Navigational Instrument – artificial intelligence report technology.

Winning the J.D. Power Game and Creating Bulletproof Litigation Profiles – a customer satisfaction index and litigation mitigation development program based on the five year study of the strategies employed by companies that produce superior customer satisfaction ratings.

Total Compensation – a principle shareholder oriented compensation development program for owners and compensation committees based on performance capability requirements, percentage of gross and net revenue contribution, benefits, environment, base salary and bonus compensation.

Recruiting, Interviewing, Selecting, Orientation, and Employee Performance Evaluation for the 21st Century – the title says it all.

How to Create High Performance Organizational Cultures – a program for the development of high performance oriented organizational culture based on the principles of value orientation, total compensation, high performance environments, cultural fit, naturals, and creating workgroups with high levels of clarity, focus, passion, obsession, self-discipline, and intensity .

The Natural’s Sales Process and Sales Departmental Operating Model – a program that stabilizes salesperson and sales department results at equal to or greater than 2.3 times the market average.

The #1 Salesperson Performance Development Instrument - post sales process execution analysis technology.

The Employee Performance Institute

The Natural Performance Profile – technology that reveals one’s innate performance profile and how to consistently produce superior results and be excessively happy most of the time.

Universal Integrity – a presentation of the ten values every culture (even the no so good ones) in the world share that make-up universal integrity.

The 24 Principles of Optimal Human Performance – a presentation of the 24 principles that make-up the foundation on which all truly great performers stood and stand today.

The Wiseman’s Toolkit – the ancient’s optimal human performance development program that produces better performing employees than any known system today.

Love Strategies – when all else fails read the directions – compatibility profiling and natural internal (subconscious) and external (conscious) mate profile realignment technology.

Creating Good Kids - a time based examination of traditional and contemporary childhood program models for parents who want to provide their children with opportunity to have a great life in 21st century and understand the quality of their childhood programming.

How to have the perfect relationship in 30 minutes or less per week – an advanced inter-personal communication system base on the “best friend” communication practices.

The Swallow Bite Diet – a consumption oriented diet based on the understanding the average bite of food has 25 calories. By monitoring the number of bites one consumes weight can be lost or gained as desired.

Homebuilders Performance Research

Sweet-Spot Technology – a collection of algorithms and practices that consistently produces projects that perform in the top 10% of the market, reveals the “sweet-spot” within each market and market segment, and can reduce direct cost by up to $1.50 per foot.

Benchmark Technology – workgroup performance development technology based on the understanding that workgroups produce better results when their performance is measured against the results of their peers on like indices than they are by performance indices set by management.

Integrated Workgroup Master Project Scheduling Technology – an inter-departmental new project key date scheduling program with artificial intelligence capability that produces more accurate schedules than traditional independent workgroup scheduling programs.

The Best Land Acquisition Package in the Business – a completely customizable land acquisition package based on the leading thinking and packages in the market today.

Top Dollar – a workshop that presents the leading landplanning and product pricing strategies for the attainment of optimal sales prices and absorption.

Achieving Superior J.D. Power and Customer Satisfaction Ratings – a five year study on the strategies employed by the companies that consistently achieve superior J.D. Power and customer satisfaction ratings.

The Natural’s New Home Sales Department Operating Model – a sales department operating model that produces equal to or greater than market average results at half the market average cost that is based on building sales teams largely comprised of Naturals.

How to Maximize Traffic – advertising budget development technology based on annual budgeting with actual costs for a complete program versus the widely accepted percentage approach and theory of dead weeks, swing weeks, and go weeks.

The Psychographics of Selling, Sales Offices and Model Complexes – a collection of the leading strategies and practices for the optimization of new home sales environment performance.

What to do at the onset of difficult times – a program that presents the best practices by department that results in the minimization of the impact on financials during recessions.

Passing the Baton - preparing family for company leadership – a collection of workshops and technology designed to prepare and empower one or more family members for ownership and leadership of the family business.

Master Planned Community and Urban Performance Specialists

The Edge – an MPC and urban land use modeling program that produces the highest levels of land revenue and absorption that based on the principles of village typing, value orientation, and market segmentation.

Maximum Revenue and Absorption – a program that presents the leading strategies and technology for maximization of land prices and absorption.

The Perfect Custom Lot Program – a program that presents the leading strategies for optimizing custom lot development and absorption.

The Swallow MPC Development Schedule Program – a fully customizable master planned community development schedule.

The Swallow MPC Business Plan and Development Budget Program – a fully customizable master planned community development budget program.