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.

Advancing Your Global Leadership

It is no secret we are in an era of global business. Interconnected markets, processes and operations affect virtually every industry, company and worker.

And while issues differ by industry and size of organization, everyone is impacted. If your organization is small and operates locally, it is likely part of a value chain linked to a multi-national or transnational organization. Either you or your service providers relay communications and rely on technology, products and services that likely have critical interdependencies in Europe, India, China, Viet Nam, Taiwan, Korea and South Africa. Your bank, internet service provider or telecommunications company likely has back office operations in Bangalore, India. The depletion of natural resources in one part of the world is causing illnesses that reduce workforce productivity and health care costs half a world away. What impacts in one part of the world, impacts us all.

For larger companies the impact is already direct, changing the criteria for competitive advantage. The implications are that adaptability and resilience have become required core competencies for leaders of all organizations. Assuming that domain knowledge of an industry, functional area or even cultural sensitivity to foreign markets is all that is required is a gross simplification. While these competencies are critical, they are now only part of the learning curve equation, and the easier part at that.

Learning to lead in complex, uncertain and fast-paced change requires that organizations attract and develop the learning capacities in all of its workers, regardless of role. The table below demonstrates a shift to a new performance paradigm needed by organizations in today’s global environment.

To maintain competitive advantage and integrate local initiatives today’s organizations will have to develop global competency. Global competency begins by creating a global mindset and a commitment to the process of global learning. Because change is constant and the world complex, the commitment to learning will become more important than existing knowledge. The development of global competencies is a strategic imperative for today’s industries and organizations. Fortunately, it can also be a rich source of personal and professional pride as well as a source for competitive advantage.