A previous blog – “12 Characteristics of Organizational Excellence” – identified the following set of characteristics exhibited by sustainably successful organizations.
But where does one start to identify what needs to change in a business missing some of these characteristics? Would it be possible to locate a typical ‘recipe’ or small and manageable list of Critical Success Factors that every organization can follow to achieve these characteristics? According to Einstein, it would seem prudent to widen the search. According to Einstein, it would seem prudent to widen the search.
“We cannot solve our problems with the same thinking we used when creating them.” – Albert Einstein
Closer inspection reveals that a prosperous business would need to be resilient and have a substantial competitive advantage in the market. It, therefore, seemed prudent to widen my research to other fields such as:
- The reasons why previously flourishing societies collapsed
- Strategies used for war
- New insights presented by science
Reasons why previously flourishing societies collapsed
I have always wondered why great civilizations/societies would disappear into obscurity. Since they are also complex adaptive systems, it may be possible to compare the insights contributing to the rise and fall of such societies to the business world.
Joseph A. Tainter describes similar thought patterns in “The Collapse of Complex Societies”. He defines complex societies as characterized by centralized decision making, high information flows, excellent coordination of parts, formal channels of command, and pooling of resources. He continues to query their demise in the following manner – “With their administrative structure, and capacity to allocate both labour and resources, dealing with adverse environmental conditions may be one of the things that complex societies do best. It is curious that they would collapse when faced with exactly those conditions they are equipped to circumvent.” And then continues to postulate – “One supposition of this view must be that societies sit by and watch the encroaching weakness without taking corrective actions.”
In “Collapse – How Societies Choose to Fail or Survive,” Jared Diamond proclaims the root cause to be failures in group decision-making because of one or more of the following factors:
- The group fails to anticipate the problem before it arises;
- When the problem does occur, the group still doesn’t perceive it;
- When they do identify the problem eventually, the group is unable to define an adequate solution for the problem; and
- When they have ultimately determined a solution, they are unsuccessful in implementing the solution.
These factors are very relevant to the business world, where organizations often assume relevance in the market, operational efficiencies, and the relevance of strategic goals based on past successes.
Strategies used for war
Wars are intrinsic to humankind, resulting in one party triumphing over one/more competitors. However, the costs and devastation associated with wars initiated thinking that we now refer to as strategic planning.
When reading the advice presented in ancient texts, they still seem relevant and most pertinent to business strategy development. For example, let’s examine the insights from Sun Tzu’s book, “The Art of War”:
- Choose your battles – He wins who knows when to fight and when not to fight.
- Success breeds success – Maintain momentum and be agile.
- Disguise your plan – “When able to attack, seem unable. When using force, seem inactive. When near, make them think you are far; and when far away, make them think you are near.”
- Know yourself, know the enemy –
- “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, you will also suffer a defeat for every victory gained. If you know neither the enemy of yourself, you will succumb in every battle.”
- “We are not fit to lead an army on the march unless we are familiar with the face of the country – its mountains and forests, its pitfalls and precipices, its marshes and swamps.”
- “…what enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men, is FOREKNOWLEDGE.”
- Change represents opportunity – Even amid chaos, there is opportunity.
- Have a unique plan – Do more extensive preparations, and be more innovative than everyone else.
- No one profits from prolonged warfare – Strike effectively and quickly; don’t wait forever to make a move.
New insights presented by science
Two fields that have changed how we think about the world are Quantum Theory and Complex Adaptive Systems.
I am not an expert in these fields, but their revelations explain so much of our current difficulties in optimizing organizations that I had to mention them here.
Quantum theory reveals that how a person views a situation (or any object, for that matter) depends on the individual’s perceptions formed by previous experiences, fields of knowledge, and preferences – their paradigms. This phenomenon became evident with the famous ‘double slit’ experiment
where a single light photon behaves either as a wave or a particle, depending on the observation conditions.
In simpler terms, it is much like the ancient Indian parable of the six blind men examining different parts of an elephant while trying to identify the animal. In each case, the man explains the elephant according to the limited section of the elephant he is examining.
Quantum theory also reveals that we live in a connected universe and are, therefore, impacted by everything else – which is also the precepts of Complex Adaptive Systems theory. For example, organizations, societies, economic markets, and weather patterns can all be classified as complex systems because they all consist of many components with multiple inter-relationships. These systems are ‘adaptive’ because of their ability to react to or reorganize themselves based on stimuli or changes in the environment.
The effects of such adaptive behavior are never linear and can be positive or negative. It is positive if it uses its feedback loops to improve the system’s overall performance to more than the sum of the parts. However, it can also be harmful when hostile behavior leads to the collapse of the whole system. An example of such negative behavior is a financial market crash that ends in an economic decline.
Therefore, it is essential to understand that the more complex an organization’s operating and resourcing models, the more feedback loops will be active in the environment, and the more challenging it is to predict the ultimate impact of strategic and tactical changes.
For example, consider the situation where employees don’t align with the organization’s purpose, the strategy is misunderstood or not agreed with, or decision-making principles and controls are not in place. In that case, each employee can change their behavior in a way that serves their definition of achievement, and chaos ensues. Another example would be where tactical actions are planned only locally – without consideration for their effect on the more extensive system – this increases the organization’s overall complexity and, therefore, its ability to perform optimally as a whole.
Combining the insights into 3 Critical Success Factors
Interestingly, even though we considered very different areas of research, our findings culminated into the following three critical success factors:
- DECISIVE INSIGHT:
It is of crucial importance to have views on both the organization’s internal and external environments. Financial performance indicators are essential, but they form only a part of the whole picture. Different perspectives, motivated by actual data and communicated pervasively, will go far to align perceptions and plan activities across the organization. Examples of additional views are:
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- Relate Its performance trends to internal strengths and weaknesses and external opportunities and threats.
- Be aware of internal and external changes as a result of both planned and unplanned actions.
- Be sure to review the holistic impact of all proposed solutions.
- ALIGNED FOCUS
It is essential to align the growth and development of the organization. An aligned focus would need the following:
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- Define a unique and unifying purpose, important to both customers and employees.
- Create a holistic change plan to drive all other changes and innovations across the organization and measure success against this plan.
- Divide the plan into smaller plans of which the achievement can motivate the achievement of the larger goal. Even though some of these changes may be small and agile, and others may be larger and more impacting, their outcomes must be aligned to ensure the most significant impact on the market.
- It also may be good to balance transition periods with periods of stabilization to evaluate the holistic impact of changes made fully.
- ENFORCED SIMPLICITY
Complexity creates uncertainty, unwarranted effort, and unplanned consequences. Therefore, it is crucial to constantly ensure simplicity in the organization’s business, operating, and resourcing models, as this will provide a competitive advantage in the long run!
