HOW THE MRI FOR BUSINESSES DISRUPTIVE AND INNOVATIVE METHODOLOGY WAS DEVELOPED
The Very Beginning
In 1990, the fast growing management development coaching company, Mage Centers for Management Development, that my partner Dr. Max Garfinkle and I had created, was hit hard by the recession We scrambled as quickly as we could, selling off our Boston office and closing the one in Toronto, leaving us with our home Montreal facility. But we were at a loss to understand why our coaching services which were in demand one day, could be dropped so quickly. We understood the recession argument, but from our point of view, one of the ways to deal with any downturn was to have better managers/leaders. So we did the logical thing and went back to several of our previously most satisfied businesses and tried to qualify their rationale.
What we came to understand was that although our management coaching services were excellent, we were not seen as contributing to their company’s business issues. They never saw the link between our services and their business success, so that dropping us was simply based on cost savings.
The Research Phase
Max and I decided that it was important to understand what businesses were all about, in order to be able to link our management coaching to business success.
We started with the simple premise that all companies were different based on the fact that all the people in them were different, in addition to using different systems and processes to operate.
We tackled the literature on organizations as well as all the articles and papers which were rapidly emerging at that time from the business schools’ leading academia such as Harvard, Stanford, and a multitude of others in North America and several in Europe. In addition to the time spent on gathering the knowledge about organizations from those sources, Max interacted with many of the authors and with business contacts that we had within the business world.
Over a three-year period, our library of books alone numbered over a hundred and we filled up many filing cabinets with the notes, papers and articles. Over those and subsequent years, we spent tens of thousands of hours on this initiative, with Max working on it practically full time.
In a recent article published in Strategy and Business, PwC validated our research through a study of 540 public companies. Deals that they undertook that were based on knowing and leveraging their capabilities delivered a 14% higher return on shareholder value than business deals based on any other criteria.
The essence of our work was in identifying a basic insight on long-term successful businesses: They continuously focused on the fundamentals of running their businesses – its capabilities and its human resources. Although self-evident, the challenge was in discovering which fundamental capabilities were the important ones, and then how to quantify them.
Our research led us to understood the key Strategic Challenges that were common to any type and size of organization: To operate successfully they had to be operate effectively and satisfy their customers; whereas to grow they had to be innovative and agile; and to accomplish that they required developing a culture that was constantly learning and developing its human capital. And for each of the five, we identified three essential capabilities that operationalized each one.
[Note that the PwC study did not indicate which capabilities were important, our research did – an important differentiator]
Turning the Discovery into Action
We realized from discussions with major consulting firms and with some successful enterprises, that it requires an intrusive and labor intensive effort, to be able to both identify the capabilities within any organization and be able to understand how well they are being executed.
We could not identify any methodology in the market place that could do so in an unbiased, fact based, timely and objective manner.
Fortunately, I had been subject, while being employed at ITT Canada after I graduated, to a SWOT (strengths, weaknesses, opportunities and threats) study led by the consulting arm of the then accounting firm Arthur Anderson. As the team that they sent in were bright graduates from premium US business schools who spoke no French, and as one of the only English speaking employees in the Montreal based plant where I worked, I was tasked to be involved in all of the meetings that the team had with our staff and managers. So when the report was submitted three months later, I attended its presentation in New York. It took the full day to review only a portion of the findings in the executive summary; with me made responsible to read the rest, interact with the consultants and report back at some unspecified date on the actions that were suggested. Due to my many other responsibilities of greater urgency at that time, that date never came, nor was I able to ever look at the report (which stood at a stack of papers 15″ – 18” high!). But what I did learn, was that all the report did was pull together the knowledge and wisdom of our management team and staff. The report only articulated, to the benefit of the consultants, what the people in our company already knew.
That insight led us to create a quick, perception driven, fully autonomous and confidential innovative listening methodology completed by a company’s managers, employees, customers and suppliers.
Reference the book The HALO Effect by Jerry Tarasofsky, for a more in-depth understanding of the evolution of The MRI for Business diagnostic.