Today's Challenge for Leaders
Guiding organizations through choppy waters is what leaders do. Some are more flourishing than others. You are expensed with maintaining and growing the viability of the enterprise regardless of events you seemingly have no operate over. The question is how you go about that.
Power Adapters
There has been a lot of talk about strategic thinking and planning. However, when faced with slumping sales and rising costs, administration tends to look within and focus on examining existing operations, to try to find ways to reverse the trend. It typically starts with a meeting with sales and marketing, to get a more exact feel for the store and to adjust sales projections. Armed with this new earnings number, an in depth auditing of each agency will supervene seeing for new efficiencies, new ways of doing business, or anything that can help the enterprise hit the new numbers, the new fixation of the business. When money is tight you cut back right? It seems only logical.
But if you stop and think about it for a moment, is that well the best way to analyze the situation? For example, when an auto maker experiences a downturn in sales the automatic response is to slow or stop production. This is not adapting to the store it's reacting to the market.
Couldn't the real qoute possibly be that the auto enterprise didn't fully understand what kind of car the store wanted, how many and at what price point? well they spent a great deal of time and resources conferrence brain on the competition, which is a good thing to do, and they should do it. But remember, the competition doesn't buy cars. Shouldn't the enterprise also understand the environment that their customers live in? Shouldn't they also know and appreciate what constraints that environment might place on their customers' buying decisions? The real qoute isn't that the enterprise didn't sell sufficient cars; that is just the end result. The real qoute is that they made more cars than the customers wanted to buy or could afford buy, or plainly made cars that the customers didn't need or didn't want.
It's the comprehension that the enterprise must have of the external driving forces, their inter-relationships, and the impact these have on the company, that should rule what it must deliver to be competitive or plainly remain relevant. And it is this comprehension of what it must deliver that then determines how the company's internal systems (and their inter-relationships) need to be designed and operated.
The Systems View
This idea of seeing outward, of seeing beyond the walls of the enterprise office construction is not new. What is relatively new to many executives, is the idea of seeing at the world as a range of systems that generate a whole and examining the relationships between those systems to rule how they affect the whole. Systems Theory, as applied to organizational management, puts forth the premise that all organizations are systems, and all systems are part of larger systems. How a subsystem fits the needs of the larger law finally determines if that subsystem prospers or is left to wither on the vine.
It's this understanding that the adept leader can use to get a more "holistic" view of his organization. comprehension how the enterprise relates to the larger law in which it exists and operates, and then how the company's internal systems lead or detract from that larger relationship can provide a more relevant analysis.
It well isn't as esoteric as it may sound. Once you grasp the understanding it will be easy to see how it applies to your organization. Let's spend a moment on a definition and then we can address application.
In Systems Theory, a law is defined in two ways:
Externally, by its purpose. Each law has a role that it plays in the higher-level law in which it exists. Using the auto enterprise example we can say that the auto enterprise is a law whose role is to provide cars to the next higher-level system, the auto market. The auto store in turn has its multiple roles that it plays in the next higher-level systems of transportation and national economy and so on.
Internally, by its subsystems and internal functions. Each law is made up of components and sub-systems that interrelate and lead to the comprehensive purpose of the parent system. In the auto enterprise those components might consist of engineering, production, marketing, finance, human resources and sales all of which should be supporting the system's purpose of providing cars to the higher system, the auto market.
Systems law in Managing Organizations
Defining the Higher-Level law and the Organization's Role in It
So for a leader, the first step in developing a holistic view of the organization is to define the higher-level law in which it exists/operates, and its role/purpose in that higher-level system. Where does it fit? What kind of role does it play and what value does it bring to the purpose of the higher-level system? If a enterprise does not have a role to play in the higher-level system, then it does not belong in that system; and if it cannot find a role in any higher-level system, it is in supervene redundant and will finally die. Additionally, and sadly more common, if a enterprise cannot accurately define what its role is in the higher-level system, even if it has something relevant to offer, it will be treated as if it had no role at all.
If a higher-level law cannot comprehend value by together with a singular sub-system, it will ignore that sub-system. This typically means the end of that sub-level system's participation in the higher-level system. That's the reason nobody makes buggy whips or vinyl music records anymore.
Designing the Internal Functions and Subsystems of the Organization
Once you have defined the higher-level law in which your enterprise operates, and established your company's purpose within it, then it's time to look at the components or subsystems of your organization. These subsystems and components, knowingly or unknowingly, all interact and play a part in achieving or detracting from the company's purpose. Ideally of course, these subsystems and their interrelationships should be designed and organized in a way that collectively promotes the organization's purpose, and perform zero or sustainable negative entropy for the organization. While there is much to discuss about entropy and organizations, a straightforward macro explanation is that entropy occurs when a system's resources are depleted over time and its subsystems descend into chaos. Zero entropy is thus a state where resources do not deplete over time, and negative entropy where resources growth over time; in both cases with the subsystems maintaining current relevance and focus on the law purpose.
In the auto enterprise example, it needs to define its market, the range of products and services for that market, and how to yield and deliver those products and services in an change with the auto market, in a way that its resources do not get depleted. When it achieves that, the auto enterprise will have reached a state of enterprise sustainability. Of course all associates would like to grow, and not just mouth the business; any way we all know that growth needs to be kept sustainable or the supervene could be detrimental. For example, if the auto enterprise increases its store share so rapidly, that it is unable to match that pace with getting the habitancy and systems it needs in place to ensure good potential control, then it could get into problems. In Systems Theory, when we talk about negative entropy in flourishing systems, it is always about sustainable negative entropy.
It can be argued that assuming the organization knows its true purpose, then how that organization's subsystems are organized will rule the success or failure of the organization. Subsystems, functions, and their inter-relationships are thus optimized to perform the organization's purpose; this is positive from optimization of subsystems for their own purposes. Consequently, if a subsystem does not have a role in the organization's purpose, then it does not belong in the organization system.
It kind of sounds like we are back to the original response of auditing departments doesn't it? But did you note the difference? This time we defined a purpose first. We identified what our role is in the higher-level system. We know what we must do to supervene in that higher-level system. It's only after we have that firmly established that we use it to rule the organization and effectiveness of our subsystems.
Outside-Inside
Let's ratchet this up a level and get you thinking in even broader terms. We talked about seeing our purpose in the next higher-level law but it well doesn't stop there. The sufficient leader has to look beyond the immediate higher-level system, and get an appreciation for how the next-higher-level law and even-higher-level systems and so on, can impact the purpose of the organization.
Say for example, the green environmental movement successfully lobbied to legislate that all cars will be required to duplicate their kilometers per liter rating in 5 years, while at the same time reducing emissions by 50%. This is a political/regulatory factor driven by the inter-related troops of ecological imperatives and the public awareness of consumers, etc., that now directly impacts the auto company. This factor, which the auto enterprise has no operate over, effectively changes what the enterprise must deliver to fulfill its purpose in the higher-level systems in which it operates. The flourishing auto company, with enlightened administration adopting the systems perspective, would have seen this decision coming by identifying the inter-related driving troops foremost to this decision, well ahead of their competitors; it would have already began redefining its outputs and reorganizing its subsystems and their inter-relationships for this new reality.
It's foremost to view enterprise as a part of larger systems. enterprise does not exist in a vacuum. The arrogance of some organizations, particularly those too big to fail, is disturbing and it's positive that they have not learned from past lessons. One only has to look at the auto commerce worldwide, the railroad commerce in the United States, and the steel commerce commonly to see examples of once noteworthy and rich organizations who finally didn't understand, or care, about what their purpose was in the higher-level systems. Today many old giants in those industries are shells of what they were, supplanted by organizations who understood what the law needed and where they fit in.
Systems law and the Leader
Systems law is a noteworthy tool that will take your thinking to an entirely new level. It is an exceptionally honest and sufficient recipe for comprehension the purpose of an organization and for performing an sufficient analysis of its subsystems. However, without an advocate, it remains just a theory. That's where your accountability as a senior level leader begins.
Systems law when applied to human organizations is the only administration understanding rooted in natural science! It makes perfect sense and is well logic and common sense driven. Commit yourself to view all you do and see in terms of interrelated systems.
Start by defining the higher-level law that your organization serves. What purpose, what value, and what fulfillment of needs does your organization offer that system? What products or services does your organization offer that best fills the purpose? Are you gift products or services that don't serve this law but may serve another?
All flourishing living systems are open systems, and facts and resources flow across them. Fulfilled, systems, i.e. Systems that insulate themselves from, and do not interact with, the higher-level law or other systems, are destined to fail. One of the reasons, though not the only one, is that if they do not interact with other systems, how will they be able to adjust to the evolving purposes of the higher-level-systems and hence define their useful role?
To keep your law healthy, what facts (business or store intelligence, etc.) do you need to get from your higher-level system? What facts (marketing, communications, etc.) do you need to send to the higher-level systems? What resources (raw materials, component parts, etc.) do you need to get from the higher-level systems and the other subsystems within it? Are there resources (shared services, public bargaining, etc.) that can be shared with other subsystems? What useful resources (products, services, etc.) can you provide to the law and its other subsystems that they need and that you do best in?
Lastly you have to make your subsystems to promote your purpose. A prime directive in Systems law is that every subsystem must lead to the success of the system's purpose. Teams, managers and personel workers are all subsystems, and components of subsystems. If the guy on the loading dock, or the lady at the front desk, does not understand how he/she is promoting the purpose then he/she cannot be as sufficient a member of your law as he needs to be.
Once your organization is focused on and designed for purpose, you as the leader have to spend time interacting with other systems in the higher-level systems. Obviously you want to spend time within your immediate higher-level system, because that's where your organization operates. However, you need also to involve yourself with even-higher-level systems like your society and its Npos, and society. In the inter-connectedness of the world, the health of your society will in the end have a direct impact on your organization's purpose.
Conclusion
Ultimately, we all need to view ourselves and our respective organizations as parts and subsystems of the successively higher-level systems, our roles in the purposes of those successively higher-level systems, and how we all lead or detract from the success of the highest-level law we live in, namely the eco-system of earth. That will make the discourse over sustainability in its widest definition a whole lot easier, but that is other subject for other time. For a start, let's start thinking in systems, so that we and our organizations can be more sufficient and successful.
Through applying Systems law to administration and leadership you will serve not only your enterprise but your whole environment. That's what exceptional leaders do.
A Systems View of the club
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