We're at the end of an eight-year period, which was marked in the beginning by the demise of Enron and marked at the end by the demise of Lehman Brothers. During that near decade, the quasi-religious mantra of business was shareholder value: Focus on performance and on performance alone. That's what real managers did. They decomposed activity to work out the value creation potential and they focused on performance. Everything else was stuff that needed to be done to run the machine.
We now know what that philosophy of management produced: an apparent growth in global GDP followed by an even larger decline in global GDP. It produced a lack of sustainability of corporate earnings. The same is true in the public sector. Focusing exclusively on performance simply does not produce long-term shareholder value, sustainable competitive advantage, or an ability to achieve the mandates of the organization in the public sector.
So, how can we focus instead on longer term organizational health? For me, health is the capacity of the organization to compete not only today, but tomorrow. I think of it as having three elements: