Systems view required (Chapter 3)

Introduction to chapter (page 25)

New world of networked companies

In this new world of rapidly changing networked companies business leaders must recognize that their view of what they lead needs to change. They are not just leading organizations, hierarchies, business units or employees. (1)

Companies are value-adding systems

Rather, they lead a value-adding network, goal determined, self-organizing and social – in other words: their business system.[1]

The systems view recognizes the company as one element in its business ecosystem. Within that it is a self-organizing and self-creating living being gifted with both physical and social features, where one function can constrain the whole.

[1] Hans-Peter Liebmann, Professor em. of Marketing and Sales, University of Graz (Austria).

A non-negotiable prerequisite

A clear, shared view of your business ecosystem is a non-negotiable prerequisite for constraint focused, agile operational leadership. You will require this view for each step of building or agile adjustment of your operational plan, to make certain that your plan based on facts  and not on intuitive gut feel.

Four rules for adopting a system view of business

1. Recognize that you lead a business ecosystem, not just an organization

Your company organization is just the instrument, which you expect to make the functions in your company perform as you desire. Your company system (or business ecosystem) however goes far beyond these internal functions. It contains all elements which can help or hinder your entire eco system to deliver your operational goal. (see illustration above)

2. Recognize that your enterprise is a self designing /self organizing system

Some claim that a company is NOT a self designing / self organizing system. We claim, that it is. We see this as a matter of point of view:

  • If you perceive management NOT as an integrated function of the ecosystem a business system may not be self-organizing.
  • If you perceive management as part of the system, with tasks like a nervous system:
    Cognition: observing and recognizing external and internal facts,
    Adaptation: initializing and executing changes within the system and
    Knowledge: the ability to make the right decisions
    ... you probably can agree, that a business is a self designing / self organizing system. 
This point of view stresses the role of management as the business nervous system. As leaders we are responsible, that it functions well.
The body of management must:
  • Focus all efforts on the essential operational goal,
  • Quickly recognize threats and opportunities in the entire eco system,
  • Lead projects rapidly and successful to results, within budgets.

3. Create a shared view of your business ecosystem

Build a shared system view with your entire operational team. Everyone who plays a role in the business ecosystem must attend and find their responsibilities represented in the view.

Agree on

  • One complete one-page view of your business ecosystem (illustration above)
  • Single owners for each function,
  • "Must achieve for the goal" performance indicators: values and trends

4. Identify the function which constrains your business system

With the entire operational team find agreement on "the weakest link in the chain" - the function with the largest difference between "must

achieve for the goal" and "actual performance". This is a candidate to focus on in the constraint focused operational plan

5. Identify functions which you predict to become obstacles

If your goal is for consistent growth it is inevitable that some functions will reach the limit of their capacity with growing load. These are candidates for obstacles in the operational plan.