Two thirds of all executive leaders participating in IBM’s worldwide study Capitalizing on Complexity admitted to being bewildered and befuddled by complexity.
Being perplexed by the complexly interconnected nature of the business processes for which they assumed ultimate responsibility foreshadows their ineffectiveness at leading change initiatives to resolve systemic problems, and to steer the company onto a new strategic course. After all, change is the opposite of routine, and you cannot succeed changing any routine operations without understanding how the business functions as a singular, unique, integrated, and open system. Any attempt at doing so, while unable to predict its outcome, is called trial-and-error.
Problems–discrepancies between a business’ desired state and its current state–come in two flavors; effectiveness and efficiency. Effectiveness problems are the more serious ones because of their immediate effect on buyers and users of your products or services. Efficiency problems, on the other hand, are an internal matter about which buyers couldn’t care less. Yet, repeated initiatives to increase efficiency–by relentless implementation of more drastic cost-cutting measures, and standardization, thus converging your value proposition to match competing offers–undermines operational effectiveness, which risks buyers to reconsider their decision to do business with you or any of your competitors.
What I’m advocating is for executive leaders to have at least an elementary understanding of a business system’s functions and processes, because they are the only people in a leadership position with ultimate authority to approve initiatives to change those functions and processes, which makes them ultimately responsible for the success and failure of those functions and processes.
Just like no one expects an airline pilot to be an aeronautical engineer, a mechanic or an avionics expert, we can be assured that they are aware of the systems under their command, and that they can identify and tell them apart, and understand their inter-connectedness and inter-dependencies.
In comparison to pilots, how many executive business leaders know, for example, the difference between the sales department and the sales process? Why is that important to know? Because of their CEO Effectiveness at directing change initiatives! The sales process extends way beyond the sales department, and its work flow has many interactions and inter-dependencies with other departments, such as finance, warehousing, and shipping. By making changes to the processes of one department, you risk disrupting the successful operations of processes of other departments, which shows that a system is a network. Welcome to the intriguing world op Human Error: symptoms of a failing system for which the CEO assumed ultimate responsibility.
The better your understanding of business as a singular, unique, integrated and open system, the more fun you’ll have at your job, and the more successful you’ll become. Oh, don’t forget that understanding enhances your creative abilities and thus opportunities for innovation. That’s why I wrote The Root Cause: Rethink Your Approach to Solving Stubborn Enterprise-Wide Problems. In order to lead differently, you’ll first have to think differently. That’s the implication of the universe’s most fundamental law of cause and effect; thought is cause, and real life experiences are its effects.
Email me at Hans@AnticipatedOutcome.com when you are ready to embrace systems thinking, human error, change management, CEO Effectiveness, and Creating Authentic Solutions. I look forward to showing you how to think differently and thus obtain different outcomes.