It is said that one cannot lead what one does not understand. So, how are we taught to understand business? Well, we take business as an organic whole, break it up into its component parts, sub-divide every one of them in ever finer levels of detail, and analyze individual parts to death in order to develop ever more efficient methodologies, tools and technologies for the sole purpose of optimizing their efficiency; i.e. reduce cost and increase their individual contribution margin to bottom line results for the organization in its entirety.
This all too common practice—known as reductionism—is perpetuated by the many academic departments, industry groups, and self-proclaimed gurus dedicated to optimizing their preferred area of expertise. The implied—albeit erroneous—assumption is that optimizing every single part individually and independently of any other part will optimize the organic whole in its entirety. This line of reasoning is mistaken because it omits the countless relationships, interactions, and interdependencies—interfaces—among component parts, and with their environment outside the organization. The late Col. John Boyd described this unfortunate phenomenon as Learning More-and-More about Less-and-Less Until We Know Everything about Nothing.
Note that interfaces structure or glue all organs of an organism together into an organic whole. However, no organization can be sufficient for its successful operation without help from the outside world, also known as its environment.
Furthermore, there seems to be a season for every silo of specialized knowledge; it once was strategy but leadership—in its continuously invented new flavors—is the current favorite. Yet, every silo seems to be impervious to outside information that may contradict their doctrine. And, what is doctrine on day one will be dogma for every day thereafter.
In short, not only is reductionism destructive to interfaces with the world outside the silo, it also isolates every single silo from its own immediate environment from which it derives its unique purpose. Consequently, looking through the lens of a single silo of specialized knowledge in an attempt to understanding the organization as a singular, unique, integrated, and open system—i.e. a network of nodes and their interactions—is doomed to fail from the outset, because it creates confusion and disorder. Isn’t that what we are experiencing today on a daily basis? A common symptom or unintended and unwanted effect seems to involve employees; the fact that they are disengaged, perceive their job as a ’just a pay-check”, and are constantly looking to switch employers. Have you ever wondered about its cause; why this symptom seems so pervasive?
Yet, undeterred by unintended and unwanted outcomes, decision makers plough ahead with all the familiar tools at their disposal. They attack symptoms and effects with remedies geared towards efficiency, while ignorant of any root causes and the effectiveness of their measures to reduce or eliminate any of those root causes. No wonder problems linger, persist, and keep coming back, albeit in different guises.
Thinking from the tools in one’s toolbox, solutions become limited to a decision maker’s tool of choice, the design of that tool, and the tool wielder’s skillset. In addition, relying on trusted advisors with the same toolbox as yours creates entropy because you go around in circles always reaching the same conclusion. Boyd called this form of counseling incestuous amplification; one agrees with the advice one receives because it confirms one’s own beliefs and convictions. As a result human energy is—temporarily—not available for critical thought, creativity, and innovation, which increases entropy and the risk of organizational collapse.
Instead of thinking from one’s tools—what is believed to be valid and true about business—why not think from the business; what it needs to function as a singular, unique, integrated, and open system? This approach encourages the opening of new and different toolboxes, which allows for entropy to dissipate—free the mind to think differently. Note that these toolboxes are based on a different level of thinking; on different beliefs about what is true and valid about business. Yet, the fact that you’re unfamiliar with these beliefs does not mean they are new or difficult; they’re just different. What is hard and difficult is overcoming your own resistance to embracing a new level of thinking. Consequently, the challenge before every decision maker is his or her willingness to open their minds to the suggestions their might be a different way to understand business.
At its core, a business is about exchanging products and services for a monetary equivalent value. Prospective buyers and users perceive value or utility as a ratio of their needs and the extent to which the wants they create satisfy those needs. Value or utility determines the price—profit margin—a prospective buyer or user is willing to pay.
To help you understand this dynamic, compare business to an electric diagram. Business is the appliance, and the market place where demand and supply meet is the battery. Powering the appliance has two requirements:
- A potential difference—tension between supply and demand
- A closed circuit–no interruptions or open switches
Now, put on your deerstalker—a Sherlock Holms hat—grab a magnifying glass and start sleuthing. Find out where there’s resistance within the circuit. Look for any components that are defective or just obsolete or outdated, and don’t forget to check that no wires and connectors are disconnected, lose, or frayed because that generates heat, increases internal resistance and causes fires. If so, fix it! Let your findings determine which tool to use. You’ll be surprised how the cause of structural problems is found in a series of relatively small issues that do not require any of the impressive tools in your current toolbox.
Do this frequently as a preventative measure because small issues have a tendency to puncture holes in any of your system defenses. Although this may not cause an acute problem it does, however, set up the system for future failure when holes in multiple system defenses line up to create a so called Trajectory of Accident Opportunity. Then, all that is needed is an otherwise insignificant event to unleash a chain reaction of unintended and unwanted effects. There’s no stopping this chain reaction because no one can predict which parts will be involved and how they rank in the chain of events. This phenomenon is known as Human Error, which is NOT the cause of failure but a symptom of a failing system.
Yes, humans are fallible—failing either in commission or omission—but they’re set up to fail by the system’s design, structure or organization, implementation or operation, maintenance, and management, which are EXCLUSIVE executive responsibilities!
James Reason, who studied Human Error, concluded that Although we cannot change the human condition [human fallibility], we can change the conditions under which humans work. It is these “conditions” that determine employees’ level of engagement, their pride of workmanship, their intrinsic motivation to give it their all, to go the extra mile, to stick it out when things get tough, to take a chance at tapping into their resourcefulness, to create, to innovate, . . . to be alert for latent conditions and take action!
Which tool in your current toolbox, which current belief about business can do that for you? How much did it cost you to acquire these beliefs and tools? How much does it cost you to overcome your resistance to opening unfamiliar toolboxes and change your mind about what you believe about business is true and valid?
You calculate your Return on Investment!