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In the spring of 1804, explorers Lewis & Clark and their party, began an assent of the Missouri River from St Louis in search of an overland passage to the Pacific Coast. They were on a mission of discovery at the request of President Thomas Jefferson, who had added a vast tract of land to the country through the Louisiana Purchase, made up largely of the Mississippi River basin. After a cold winter in present-day Montana with the Mandan Indian tribe, Lewis & Clark arrived at Lemhi Pass in August 1805, on the continental divide, where they hoped to see a gentle plain sloping to the Pacific Coast. Instead, they saw more and more mountains, some capped with snow, as far as the eye could see.
Oliver Wendell Holmes, Sr. (poet and medical reformer of Boston) was quoted as saying: “For the simplicity on this side of complexity, I wouldn’t give you a fig. But for the simplicity on the other side of complexity, for that, I would give you anything I have.” At Lemhi Pass, Lewis & Clark found themselves lost in the middle of a complex series of mountains, and their expectation for a simple route to the coast had fallen apart. At that point, they would have given anything they had for simplicity on the far side of the complex situation they found themselves in, but they would not successfully complete their journey to the Pacific for many more months.
When management is considered as a field of study, it appears rather complex. There are numerous terms, techniques, and approaches to be considered, and there are luminaries of the field (both past and present) that have written extensively on the topic. When today’s organizations find themselves in the midst of a complex situation, there are management consulting firms that offer their services. Yet hiring an outside firm may be only the beginning of a voyage of discovery with no satisfactory end in sight. Managers are too often presented with a choice among simple answers to the complex environment they face. Such choices can become traps, because they represent simplicity on this side of complexity. Like Lewis & Clark, it may be a long time before they find simplicity on the other side of their complex situation, if at all.
While organizational effectiveness is the most important form of organizational performance, much of current management practice is based on the Goal Model, where an organization is said to be effective if it achieves its stated goals and objectives. Yet the goal model serves an aging, and largely top-down, bureaucratic reality. Let’s call it “last century” technology. It is not reliable, because it accepts arbitrary goals that often focus on the wrong things.
The traditional approach to management is to set up a particular organizational form (organizational chart), program the organizational units with a series of goals and objectives, then lead and direct the staff to fulfill them. This is the basic idea behind Management by Objectives, which utilizes the goal model for effectiveness. The problem with this approach is that the goal model will accept almost any goal that management wishes to use, and not all goals have any relation to improvements in organizational effectiveness. It is impossible to know whether the right goal has been specified, and even if a stated goal is achieved, it may not mean that the organization is effective.
For example, selecting a new executive team with a new set of goals can be a risky strategy with unpredictable results. In 1974, Peter Drucker wrote in response to a rash of reorganizations in large American firms, “the main causes of instability are changes in the objective task, in the kind of business and institution to be organized. This is at the root of the crisis of organization practice.”
In fact, it appears that the more single-minded an organization is in focusing on a narrow financial goal (such as maximization of profit or shareholder value) at the expense of everything else, the more likely it is that instability and dysfunction will emerge. That is because organizations are complex adaptive systems and can respond in unexpected ways when forced down a self-defeating path. This is explained in more detail in my 2017 book, Become Truly Great: Serve the Common Good through Management by Positive Organizational Effectiveness.
Our view of organizational effectiveness is based on a model that pairs a defined concept of effectiveness with a way to verify it in the field, overcoming a key limitation of the past, and forming the basis for a new management approach called Management by Positive Organizational Effectiveness (M+OE).
Compared to current management practice, the new approach differs in seven key areas:
1. The goal model has been discarded, because it will accept virtually any goal that management chooses to use, without a way to discriminate between useful and non-useful goals. Within the new approach, by contrast, the goal of every organization is the same, that is, to be effective within its environment. Organizations that consider their goals to be the maximization of profit, shareholder value, or other such goals driven primarily by financial & economic gain are not using M+OE.
2. The approach uses a new outcome-focused model (OFM) to gage effectiveness of an organization’s individual offerings, and in turn, the overall effectiveness of the organization’s portfolio of offerings. Expected external outcomes (EEOs) are the demand-side behaviors of customers and other actors that can be observed in the field to validate effectiveness, confirming that the supply-side of the organization is offering what the demand side in the environment willingly takes up, adopts, and uses.
3. It counsels the incorporation of positive values within the organization from the start, to instill virtuousness, attract & amplify success, and be protective on the journey toward greatness.
4. Our new approach offers a way to make both manual workers and knowledge workers productive. While Taylor’s “scientific management” enabled manual worker productivity by increasing task efficiency through time and motion studies, the new model enables the production of internal outputs and their conversion into expected external outcomes through the management of benefit exchanges at the supply/ demand interface. The new approach programs the organization for knowledge worker productivity because tasks can be specified once an offering’s results chain and expected external outcomes (EEOs) have been determined.
5. The new approach encourages an organization, once it verifies the effectiveness of its offerings, to occupy one or more niches within its environment, and to serve them so well that the competition is irrelevant.
6. The approach encourages an organization to co-create value over time with stakeholders in the environment in order to continuously adapt to change and to serve the needs of the environment more fully. In this way, a pipeline of new offerings can emerge to replace mature products and services that become outdated, or to expand offerings in promising new areas. Observations of demand-side behavior are instructive as feedback to hone the preferred attributes of an organization’s offerings over time.
7. Within the new approach, effectiveness is an instantaneous measure that can be observed in the field every day (or measured periodically, as appropriate). True greatness, on the other hand, is the longer-term and cumulative impact of effectiveness that is associated with an organization’s reputation and impact over time. An organization can expect to spend at least five years applying the principles of effectiveness (while maintaining positive values) to become firmly established as a truly great organization in its chosen niche.
Utilizing M+OE within your organization means that product and service teams are empowered to consider a key question every day, “How can we serve our environment well today?” Businesses, government agencies and nonprofits have the same challenge. It’s a probing question, and the answer may change over time. It’s a question that will be difficult to answer quickly in a bureaucratic, top down, command-and-control management system. It is best handled by flexible, team-based management focused on the success of individual offerings to the environment by capable teams of knowledge workers. Of course, we are not suspending the principles of accounting, economics, or finance, in making such decisions, but these are not necessarily constraints. To the extent that the approach generates true greatness, it is likely to deliver superior financial and economic performance as well.
Does being truly great and occupying a niche mean that you don’t have competitors? Perhaps not, but it does mean that you are paying attention to the big things and the little things that create effectiveness at the supply-demand interface, and that you are always testing new things to serve your environment better. So, why isn’t the goal of every organization to be great rather than to be effective? Well, because an organization needs to focus on something that can be observed every day, to provide feedback and correction. Greatness (and superior reward) is something that is a natural outgrowth of being effective over time, together with serving your environment using positive values.
Truly great organizations know their environment well and serve it effectively with their offerings. They closely monitor demand-side behaviors to determine if the environment is behaving as expected, to be alert for emerging new behaviors that need to be studied further. Once an organization has developed and tested a portfolio of results chains (with more in the pipeline), it has the keys within hand to survive and thrive. Continuous adaptation to the environment is critical for survival, since the danger over the mid- to long-term is that the environment will change in ways that make the organization’s offerings irrelevant. Major catastrophic events such as 9/ 11 (or the 2008 recession in the US) can compress this timeframe, of course, and make the need for an appropriate response immediate.
The single-minded pursuit of profit, shareholder value, or any other objective (other than effectively serving your external environment, and improving the whole) can create instability within an organization’s complex adaptive system for a variety of reasons.
Evolutionary processes operate on the population of organizations, while adaptive pressures act on individual organizations, to enforce “survival of the effective” over time. Ineffective organizations are marginalized or eliminated by their environment in the absence of a sufficient exchange of benefits across the supply/ demand interface. Organizations that intentionally harbor negative values are continually at risk, and can become unstable and short lived once the environment recognizes and rejects their corrosive attributes, then actively engages in efforts to expose and eliminate the offenders among them.
A new age of organizational effectiveness will arrive when C-suite teams and other executives and managers “think different” using the principles outlined above. In the new age, small and large organizations alike (whether business, government, or nonprofit) will serve their environment and be rewarded in return, thus managing capitalism for the common good. The world needs organizations that are virtuous, effective, and truly great. Such organizations represent simplicity on the far side of management complexity.
Charles G. Chandler, Ph.D.
[email protected]
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