High-performance organizations (HPO)
HPO is a concept that evolved in the 1950s in response to the failings of scientific management. The HPO approach is absolutely essential to small organizations and especially to technology companies and startups.
An HPO is an organization that achieves and sustains high performance, when compared against peers. HPOs are flexible and are able to quickly change their operating structure and practices to meet changing needs. They actively seek out gaps and risks and adapt to close those gaps and to control risk.
HPOs focus on long-term success while defining and achieving actionable short-term goals. They focus on customer needs and relationships, safety, reliability, sustainability, and quality. They use formalized, explicit management systems to manage objectives, quality, and risk, and to support both management and line functions.
Thus, HPOs tend to have flatter hierarchies with reduced bureaucracy and less-authoritarian management models. They rely on teamwork and leverage diversity. And they invest in the continuous improvement of their core capabilities and in workers – in order to increase performance, build human capital, reduce turnover, and grow.
HPOs also rely on individual accountability and transparency, providing incentives to promote:
- Self-identification and reporting of errors, exceptions, adverse events and near misses.
To enable this, HPOs treat human error and human-performance issues as inherent elements of human systems, rather than as issues of discipline or individual value.
HPOs rely less on direct supervision, and more on leadership, self-directed teamwork, and mission-based decision-making. The concept of “trust but verify” is important in HPOs and is integrated into their management systems to allow the delegation of responsibility without a loss of overall control.
Note: HPOs are sometimes called “high-commitment organizations”.
The HPO concept has a range of interpretations as organizations customize it to fit their missions, so one will see a lot of PowerPoints and explainers that don’t seem to align. Despite the fact it’s been around for decades, there is no formal ’standard’, and HPO is more a philosophy/methodology rather than a prescriptive solution.
High-reliability organizations (HRO)
A concept related to but not entirely consistent with HPOs is the high-reliability organization (HRO). HROs are organizations that successfully prevent catastrophes in operating contexts where normal accidents would be expected due to risk factors and complexity.
Adverse events that have led to a focus on HROs include nuclear accidents (for example, Windscale, Three Mile Island, Chernobyl, and Fukushima), aerospace accidents (for example, the Challenger and Columbia disasters, and the Tenerife airport collision), and industrial disasters (for example, the Bhopal chemical disaster, and the Deepwater Horizon accident).
HROs are of particular interest in the nuclear power sector, strategic military contexts, naval operations, aviation and air traffic control, and petroleum industries.
HROs tend to share many of the following characteristics:
- Extreme hierarchical differentiation – multiple levels, each with its own elaborate control and regulating mechanisms (in opposition to the typical model for HPOs)
- Strong coupling – that is, tight interdependence across functional areas
- Hyper-complexity – large range of components, structures, systems, and levels, and a high degree of interaction between them
- Large numbers of decision makers in complex communication networks – supported by redundant control and information systems
- Unique levels of accountability (substandard performance or deviations from standard procedures result in severe consequences for personnel, which also differs from how HPOs treat human performance)
- Frequent, immediate feedback regarding performance and decisions
- Many critical outcomes that must happen simultaneously
- Short timelines (with the duration of significant activities measured in minutes or seconds)
- Lack of reversibility (errors cannot be practically corrected, and/or there is no way to withdraw or change operational decisions)
- Focus on risk, treating anomalies as problems even in the absence of adverse effects, and reporting and resolving errors and anomalies promptly
- Reluctance to simplify, embracing the complexity of systems and problems in order to fully understand risks and system behaviours, and ignoring explicit system boundaries during analysis
- Valuing diversity with respect to experience and opinions
- Situational awareness regarding unanticipated and varying conditions that could affect operations, monitoring safety and security barriers and controls to ensure integrity
- Focus on resilience, including the detection, containment, and recovery from errors and adverse events
- Deference to expertise – in exceptional situations and during upsets, HROs delegate authority to individuals with the expertise needed to solve a problem, and during crises the decision making shifts to the “front line”, regardless of hierarchical rank.
HROs and HPOs in high-consequence contexts
HROs share some characteristics with HPOs:
- Highly sensitive to context, and adaptive to changing needs
- Major focus on risk.
However, if considering the adoption of the HPO model, organizations in high-consequence contexts have to balance the benefits of HPO against those of the HRO model. HROs are the more traditional approach to organizational performance in high-consequence contexts, but a pure HRO focus without HPO elements doesn’t work well for small, nimble, disruptive organizations such as tech innovators and startups. This can be a challenge for organizations taking a tech startup approach to innovation in high-consequence fields, such as nuclear power generation.
- 2020-04 BBC: Why we find it difficult to recognise a crisis.
- Sutcliffe and her colleagues have identified five characteristics of the best-prepared “high-reliability” organisations, which rarely experience disasters.
- First, such organisations are “preoccupied with failure”, says Sutcliffe. “What I mean by that is they understood what they wanted to achieve, but they also thought a lot about the ways in which they could get sidetracked and the ways in which things could go wrong.” This includes taking near misses seriously. “When you say ‘preoccupied with failure’, people jump to the conclusion that you’re not very positive and can’t celebrate successes. That’s not at all what we’re saying,” she emphasises.
- High-reliability organisations also encourage their employees to avoid simplification and embrace complexity, even if that means abandoning appealing positive narratives. They spend most of their time focusing on the here and now, rather than on big-picture strategy. They build resilience, mostly by ensuring that their staff have the time and encouragement to tackle problems rather than sweeping them under the carpet.
- And finally, they have flexible decision-making structures, meaning decisions can variously be made by low-ranking people on the ground and upper management, depending on the nature of the crisis.
- High Commitment High Performance: How to Build A Resilient Organization for Sustained Advantage, by Michael Beer. 2009.
- Lean Enterprise: How High Performance Organizations Innovate at Scale, by J. Humble, J. Molesky, and B. O’Reilly. 2015.
- What Makes a High Performance Organization: Five Validated Factors of Competitive Advantage that Apply Worldwide, by André de Waal. 2019.