Organizations of the Future

IBM recently released the 2009 version of the Global CEO Study. The study included in-person interviews with 1,130 CEOs, general managers and senior public sector and business leaders from around the world. The study was intended to understand the differences between financial out-performers and under-performers. While financial performance is just one facet of success, no organization can exist without revenue or income of some kind.

The results of the study indicate that organizations are bombarded by change. 80% of the CEOs see significant change coming and a growing gap between the expected changes and their ability to manage it. The outperformers see demanding stakeholders not as a threat, but as an opportunity to innovate.

Whether your organization calls those it serves customers, clients or the public, there are lessons to be learned. The study reports that financial outperformers are making bolder plays. Nearly all CEOs are adapting their business models, two-thirds are implementing extensive innovations. The organization of the future is characterized as:

• Hungry for change - capable of adapting quickly, shaping and leading change. They see change as a chance to move ahead of others competing for the same resources and revenue.
  
• Innovative beyond imagination - surpassing the expectations of increasingly demanding constituents and customers, the out-performers form deep collaborative relationships to make primary stakeholders, partners and themselves more successful.
  
• Globaly intergrated - ready to access the best capabilities, knowledge and assets wherever they reside in the world. If you're a local or regional organization, the implication is also true for you. Allow your thnking to take you beyond traditional narrow boundaries while delivering value and services locally.
• Disruptive by nature - spend time thinking about where the next disruption will come from and be ready to design and lead changes to the way you create and deliver value to your partners and primary stakeholders. For non-profits this means creating solutitions that benefit your mission as well as the communities in which they live and work.
  
• Genuine, not just generous - are you collaborating with non-profits and for-profits? Are you gaining insights from current government initiatives that can be applied to serve your primary stakeholders? How are you ensuring that the value you create is consistent with your stated values and policies?

Leading systemic change is about creating the future you desire for your primary stakeholders, employees and organization. You can't do one for long if you're not attending to the other two. These findings should not be considered as an answer, but a catalyst to build the capacities your organization will require to sustain itself now and into the future.

Part 2: The Sources of Innovation: Understanding The Impact of Organizational Systems

Have you wondered why the current economic crisis felt like it hit us so quickly and severely? Have you wondered why fixing the economy is both slow and difficult. Understanding the impact of organizational systems in the context of the change continuum (see Part I) may shed some light on both the cause and how best to respond.

Innovation and change leadership go hand-in-hand and involves much more than the creation of flashy new products and services, information systems and management fads. Innovation is really the only engine that can move us forward in complex and uncertain times. Understanding organizational systems is an invisible gateway to understanding how to access the sources of innovation in any organization.

Organizational systems is a term I use to describe almost any social system, be it businesses, governments, non-profits, agencies, communities, work groups, and even individuals. All organizational systems are social systems with a set of inter-related and interdependent sub-systems. A good way to picture the dynamics of an organizational system is to envision a hanging mobile with concentric rings and a small sphere at its center. Each ring represents a critical organizational sub-systems and the center sphere represents both the inter-section of all sub-systems as well as a fourth sub-system created by the inter-dependence of the other sub-systems. No sub-system is more important than the others; all rely on each other and are impacted by the health and stability of the rest.

In most organizations, there are three primary sub-systems that can be described as:

1. Organization Systems: the formal rules and structures by which an organization operates and plans for the future. These systems include such things as the espoused mission and values, formal policies and procedures, strategic plans, and organizational development.
2. Technology Systems: the administrative, technical and physical resources and activities that allow an organization to operate and monitor its performance day-in and day-out. Examples include training, information technology, human resources, financial management, and roles and responsibilities.
   
3. People Systems: all of the ways that human being interact such as team functioning, leadership performance at all levels, personal and professional growth and learning.

At the center of our mobile is the fourth sub-system we call culture. Culture is at the intersection of the other three organizational sub-systems. Cultural Systems includes the assumptions and norms that people operate under, both consciously and unconsciously and their behavior. Another way to think about cultural systems is that they tend to be how things really get done. Cultural systems tends to be most stable and therefore the most difficult to change.

Reflecting on the number of variables of any sub-system and how each impacts one another is a tiny microcosm of what we experienced when the the global economy began to fail and slow down. The shear number complex systems involved is one reason it was difficult to predict precisely when the market crisis would overcome market stability. When the dynamic patterns of the financial markets finally reached a tipping point, the impact seemed quite sudden, yet the forces leading to that point has been in place since the 1980s. Further when a sub-system as large at the global financial system changes its pattern, the ripple affect is quite severe creating an economic tsunami.

The importance of understanding organizational systems and the complexity continuum provides a rational guide to a chaotic situation and a way to understand how to best leverage the sources of innovation.

Coming up: More about complexity and why it matters.

-- Sources of Innovation is based on collaborative work developed in partnership with my colleague and friend, Dee Endelman. For information on workshops and speaking engagements email inquiries info@northshoregroup.net

(c)2009, Lucy E Garrick. All rights reserved. Written permission is required prior to reproduction.