Understanding your Organization as a System

The Concept:

Over the past several years, a dramatic change in our understanding of the way successful businesses operate has taken place. If you are like the vast majority of organizations, you probably have heard bits and pieces of this change, but haven’t really thought about what it means for YOUR organization.

“Learning organizations,” “matrixed management,” and “management by walking around” are concepts of which you may be familiar that are just skirting the edge of the true breakthrough in understanding how we can do business better. What all of these concepts and techniques are pointing to is the idea of the organization as a “system” or as a living organism rather than just a set of boxes on an organizational chart or a flowchart.

What does this mean, “organization as a system?” What it means is that, like a living body, an organization is best understood as a whole, rather than in parts. For example, let’s say you have lower back pain. You go to a doctor for a diagnosis of your problem. A “Classical view” doctor might say “hmm… Lower back pain – looks like a slippage of one of your discs. We’ll operate and get that fixed right up.” This sounds fine on the surface, but may be missing underlying factors. A “Systems view” doctor might look a little deeper. He or she would notice that one of your legs is slightly longer than the other resulting in a subtle limp and therefore unbalanced stresses on your spine. The “Systems view” doctor might recommend special insoles for your shoes in conjunction with physical therapy. It is the relationship between your back and the other parts of your body that is causing the pain. Although we see this routinely in medicine, science, and engineering, it is amazing how often we fail to view our business in the same manner.

You may be thinking “that sounds obvious – of course my organization is more than just a set of boxes on a flowchart, of course the relationships matter,” but the implications are more drastic than you might realize. With our “classical view” of business and business problems, too often our first action is to attack the problem “classically.” How often have you experienced the following?

· The IT organization decides to change key policies without consulting any of its client/customer organizations. As a result, those organizations that interact with IT are now scrambling to change their processes to fit the new IT policies. Massive disruptions to the business processes occur.

· Problems are occurring within a particular process. Management decides to redesign that process only – systems, training, leadership, other processes – all off-limits. As a result, management doesn’t get the expected results and employee morale is dampened.

· A new leader is hired for an organization or division. In quick order, that person makes major changes to the organization and the ripple effects – both tangible and intangible – are felt everywhere in the business. No one questions these changes - after all, it is the new leader’s right to make changes.

· A senior employee complains that he constantly gets calls directly from customers, from sales, from engineering, etc. with problems to fix. This person states that the process for getting issues fixed is broken and that this is why he gets all the calls. According to him, he gets work done “in spite” of the process, not because of the process. This person is dismissed as a “complainer” and is ignored.

These are all symptoms of the classical, non-systems view of an organization. By not understanding the critical importance of relationships between processes, between employees, and between actions and results, leaders risk huge, unintended consequences from actions that they perceive to be inconsequential.

Simple Applications for the Executive:

So the organization is a complex, dynamic, “system” with intricate interrelationships between all of its parts. What does this mean for the leader of a business organization?

  1. Understand that your actions may have widespread “ripple effects”

As a leader, you have immense impact on not just your organization, but the company as a whole. Don’t believe this? Imagine what would happen if you told a few employees in your group that you were no longer going to use your IT organization’s services, but rather were going to outsource the next project. How quickly would this “rumor” get around the company? Might it impact how IT treated your current projects? It is critical that you consider the systematic implications of the decisions you make every single day as a leader. Are you going to change a policy? Make sure that you think about how it might affect upstream and downstream organizations. Are you going to communicate a new direction to your employees? Think about how that communication might be perceived by other leaders, organizations, and potentially customers. Little actions can have big consequences.

  1. Foster relationships everywhere

Organizations run on relationships. Relationships between people, between processes, with customers, etc. Encourage (in fact, insist that) your managers meet regularly with their peers in other organizations to discuss issues and what they are seeing in the trenches. Encourage managers to sit down with their employees and conduct a “round-table” to discuss the issues of the day. None of this needs to be very formal, but it does need to happen and it does need to be “risk free” (no one gets fired for discussing problems). Many of our performance improvement “breakthroughs” with clients have been the result of just getting people – many of whom have never even met before – to sit down in one room and discuss the processes they use and the problems that they face. Foster the building of strong relationships and many process gaps will naturally fill themselves in.

  1. “De-isolate” Your Organization

Like the doctor who looks beyond just the lower-back pain to discover the root causes, you must open your organization up to the rest of the company. This means that if you redesign a process, you must consider the impacts that leadership, other processes, communication, hiring practices, training, morale, and many other factors all have on your process’s performance. You can build the ultimate process for your organization, but if you don’t understand the relationships and the connections to the rest of the business, you will have major problems.

Hold open-house meetings occasionally to discuss projects your group is pursuing. Actively seek feedback from your employees, your peers, and other organizations. The simple acts of recognizing that your organization is intimately connected to many parts of the business and behaving as a part of the whole can eliminate many potential problems and radically improve performance down the road.


About the Author:

Kevin Smith is a co-founder and managing partner at NextWave Performance LLC.

©2006 NextWave Performance LLC