Saturday, November 20, 2010

Macro Planning--Putting it Together

I am not sure I'll be able to connect all the dots for you here, but what I'd like to do is riff off this brilliant except from Herbert Simon's "Strategy and Organizational Evolution", courtesy of the top notch Farnam Street blog.

It's a longish post and well worth the read. Here's the bit I'd like to riff on:

Institutionalizing intelligence activities
How can a firm organize so that it will scan the horizons with sufficient vigor, identifying potential problems and potential opportunities? It is no accident that the eyes and ears are located on the surface of the body and not in its interior. Intelligence requires continual contact with the relevant environments, and in the case of business firms two of the most relevant and important environments are the end-use (customer) environment and the science and technology (research and development) environment. Other parts of the firm should not be excluded from the search for information, but these are perhaps the two most important in it.
The marketing function is not simply a function of selling and distributing products to customers. It is equally a function of acquiring, through contact with the end-use environment, information about the future of the firm's markets and of markets into which it might enter. Salesmen and sales engineers may play an important role in this intelligence activity, but only to the extent that it is an explicit part of their function, they are trained to do so and they are linked effectively in communication with top management, planning and design units. Specialized units may also provide various kinds of intelligence—products of customer polls, for example. I shall not attempt to describe in detail how one organizes intelligence about the end-use environment, but simply call attention to its importance.

This is a big part of what the three pillars approach is designed to do.
One-- is to create the culture for what Simon calls "institutionalizing intelligent activities".
Two--systems thinking is understanding that all the 'parts' of an organization cross function is a multitude of ways, and in a non-linear fashion.
Three--Organizational and personal learning is an autonomous incentive cycle that creates the organizational intelligence across all boundaries internal and external to the organization.
Four--Social media technologies are very well suited and evolving rapidly for a organization to fully embrace, utilize and extend it's internal and external intelligence.

Unlike a mechanical system approach to organizational behaviour, where the default mindset is everything has to be measurable to discern value, the living systems approach is process oriented where value is an emergent result of the process.
What we really need to remember here is all successful long term enterprises are based on relationships.
Relationships with your employees, relationships with your suppliers, relationships with your customers, and these all interconnect in ways that are increasingly unmeasurable. This is not something that is quantifiable through data.
When we really dig down, it is based on trust! 

To build and maintain trust and relations, any organization must have a culture and system in place to constantly develop and nurture that trust and those relationships. This is the very heart of the three pillars approach.

Extending this further, the days are increasing behind us where the organization, particularly publicly owned corporations, can be thinking of themselves as separate or above the larger socio-economic system. Enterprises that are going to last, and prosper in the rapidly changing environment of the future will noticeably be seen as part of the solutions to today's and tomorrow's challenges.
The internet and the social media technologies it has spawned will make it increasingly difficult to have a disconnect  between the values of the organization and the values of society at large.

Seeing the world from a living systems point of view means recognizing that we are all part of the larger system, and it's long term health depends on the quality of us and our organizational behaviour.

Winning organizations of the future will actively have a culture of macro planning with organizational intelligence where the long term health of the organization and that of the socio-economic environment on which it depends supersedes that of the short term incentives that most humans and organizations are prone to.
This is both a profitable and winning strategy.

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