In the sixteenth century, Spanish conquistadors in South America heard stories about a king who was covered in gold dust as part of a religious ceremony.  During the ritual, the king supposedly made an offering of gold and precious stones to his god.  The Spaniards called the king El Dorado, and over time El Dorado came to mean the empire or the city of this golden king.  According to the legend, El Dorado contained gold and precious stones in fabulous abundance.  The legend was so powerful that for over two centuries, European explorers mounted expeditions to search for El Dorado.  So far as we know, the “city of gold” was never found.

It’s only human to long for simple and easy solutions to complex or difficult problems.  At least once in our lives, most of us have yearned for a diet pill that really works—one that would enable us to lose twenty pounds in four weeks without eating less or exercising more.  In most cases, we know this is just wishful thinking.  I suspect that most of us have occasionally fantasized about winning the lottery, but we really don’t expect that to happen.  In some cases, however, our desire for simple solutions rises above mere wishful thinking.  The number of self-help books sold in recent years attests to the fact that millions of us have been willing to believe that such solutions do, or at least might, exist.
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The desire for simple solutions can also be found in the business world.  Nowhere is this more evident than in the attempt to answer the most basic of all business questions:  What drives or leads to high performance?  Why do some companies achieve exceptional levels of growth and profitability while others—often in similar circumstances—languish in mediocrity or completely fail?  Over the past three decades, the effort to identify and describe the “secret” to achieving high performance has probably consumed more brainpower and produced more written words than any other single business topic.  It has been the modern-day business equivalent of the quest for the Holy Grail or the search for El Dorado.

Since the early 1980s, dozens of books have attempted to explain how companies achieve high performance.  Most have been written by talented and well-respected authors, including active and former business executives, management consultants, and business school professors.  These books tend to fall in one of two categories.  The first category includes books that describe the important attributes or characteristics that high-performing companies share.  The implicit (and sometimes explicit) promise of these books is that if you can create or develop these attributes in your business, you too will achieve high performance.  This category includes some of the best selling business books, such as In Search of Excellence by Tom Peters and Bob Waterman, Built to Last by Jim Collins and Jerry Porras, and Good to Great by Jim Collins.

The second category of performance-related books is both more diverse and more specific.  Rather than describe essential attributes of successful companies, the authors of these books focus on specific management tools or techniques.  In the 1980s, many of these books talked about total quality management or one of its many components (continuous improvement, statistical process control, etc.).  In the 1990s and this decade, popular topics have included business process reengineering, activity-based costing, the balanced scorecard, the “digitization” of business, and lean manufacturing.  Once again, the implicit promise is:  Use this tool or technique and high performance will inevitably follow.  A few of the more significant books in this category are Reengineering the Corporation by Michael Hammer and James Champy, The Balanced Scorecard by Robert Kaplan and David Norton, and Lean Thinking by James Womack and Daniel Jones.

Despite the best efforts of a lot of very smart people, the secret to high performance has remained elusive.  No one has been able to get it quite right.  For example, the research that produced In Search of Excellence focused on forty-three companies and ended in 1979.  Ten years later, thirty-one of those companies remained independent and publicly traded.  Over this ten-year period, only thirteen of these companies outperformed the S&P 500.  The other eighteen “excellent” companies underperformed the market.

Don’t misunderstand me.  Many books about improving business performance contain valuable insights.  I’ve read and studied all of the books mentioned in this column and many others, and I’ve found important and useful ideas in most of them.  Unfortunately, however, many of these books also contain serious flaws.  In some cases, the research methodology is flawed.  In others, the authors draw conclusions that aren’t really supported by the data.  But the most serious flaw in most of these books is that they claim too much.  They offer ready-made solutions that seem to guarantee success, but these solutions don’t work as well as the books usually promise.

The basic problem is that high performance is far more complex and unpredictable than most business best-sellers indicate.  The world of business is not ruled by the kinds of precise laws that govern much of the natural world.  For example, if I apply heat to water, the water will boil when the temperature reaches 212 degrees Fahrenheit.  I can repeat this “experiment” thousands of times and the result will always be the same.  The laws of physics enable me to accurately predict that my action (applying heat to water) will produce a specific outcome (boiling water).

This level of predictability simply does not exist when it comes to explaining business performance.  We cannot know in advance that a particular action or group of actions will lead to high performance because business performance is always determined by the interplay of numerous factors, many of which are beyond our control.  This inability to dictate future outcomes has important implications for managers.  First, it means that the use of any one management tool or technique—regardless of how sound that tool or technique may be—will not always lead to high performance.  Most importantly, however, our inability to dictate future outcomes means that there is no universal formula that guarantees high performance.  No one has been able to describe a true formula for high performance because, like El Dorado, it just doesn’t exist.

Does this mean, then, that we must leave business success entirely to chance or fate?  Absolutely not!  We may not be able to dictate future outcomes, but we can do many things to influence those outcomes.  The first step is to recognize that uncertainty will always be a part of business.  When we accept the inevitability of uncertainty, we can put the decisions we make on a sounder footing.  We are more likely to focus on identifying all the possible alternatives and on evaluating both the benefits and the risks of each alternative.  We can then make decisions with a clear-eyed view of both the potential upside and the possible downside.  This approach may not provide us with as much comfort as relying on a “fool-proof” recipe for success, but it’s better than searching for El Dorado.