The 7 Forces Driving an Organization
Dealing with complexity is not an easy task. First and foremost you require a worldview that will enable you to understand and deal with the complexity. I am not sure which is more difficult – understanding it or dealing with it! The worldview that I am a strong proponent of though, is the systemic worldview. In this regard one needs to understand what a systemic worldview is about.
A system is an entity that can take various forms. It gets meaning from the processes or activities within the system. These activities can be from the system to an external entity, or within the system itself to inform or make possible the activities from the system to the external system, or be it activities within the system for the sake of the system itself. The outward oriented activities include processes that link with the outward processes of clients; the inward oriented processes include the expertise required to execute the outward processes; and the self-directed processes include activities such as the development of people within the organisation. These 3 types of processes need to be aligned as well, otherwise we tend to develop silos!
Examples of systems include entities such as individual people, teams, sections, divisions, departments, companies, industries, societies, nations, cultural groups, etc.
A person can be, and is, a member of various systems. Should the requirements of these systems place different pressures on the individual, it could lead to depression and inappropriate behaviour on the part of the individual. The clever people speak of cognitive dissonance. An example would be were the individual is a member of a cultural group where certain values and behaviours are expected of him, and at the same time work at an organisation where a different set of values and behaviour are expected of him. Choosing between the expectations of these two systems can create a situation where the individual will inevitably forsake the one to the benefit of the other. Clearly defined recruitment policies can help to deal with issues such as this.
The systems thinking school of which I am a big fan of, is the Biomatrix school of systems thinking. They state that that there are 7 forces in a system that constitutes the system. They are as follows:
- The ethos of the system
- The environment of the system
- The aims of the system
- The processes of the system
- The structure of the system
- The resources of the system
- The governance of the system
The Biomatrix school posits that in terms of sequence I should swop the last 2 around, but I am more comfortable with my sequence above. I am not sure that this deviation makes a practical difference in the end!
When you want to understand your company or organization (irrespective of whether you are a business or non-profit or NGO) as a system, you need to have an understanding of these 7 forces. Let’s have a look at each of these forces as to what they constitute. What follows are my understanding of the 7 forces of the Biomatrix school of systems thinking.
The Ethos as the first force of the system is extremely important. It refers to the culture, the values, the attitudes, the world views, and the mental models of the system. It is the DNA of the system, the identity of the system. The core purpose of the company forms part of its ethos, and refers to the essential reason for its existence. This core purpose rises above the products and services it provides, and actually refers to a higher order ideological reason, such as “growing the future of the country” instead of “delivering scholars to universities.” For me the ethos deals with the soul of the system – its psyche. It gives meaning in so many ways that it is one of the crucial forces of a system. And yet I find that most companies deal with this very superficially, if at all.
The ethos is important as it will determine what the system (be it company, industry, or society) will see as important, as well as the meaning it will attach to whatever it sees as being important. The mental models and worldviews of the system and its sub-systems will drive this “what we see in the environment.” And yet organizations tend to pay lip service to this force. It develops a set of values and puts this on the walls of the company and on its annual report. That is unfortunately frequently as far as it goes. They mostly have no idea of the power of mental models and the power of diverse world views!
Why do we have to understand the ethos of our company? To ensure that we take it into consideration when we develop strategies, so that there is alignment between our strategies and our ethos! If there is no alignment, we will develop strategies that will not be implemented as they are in conflict with the ethos of the company.
In addition, we should understand the ethos of our customers. When we develop products and services for our customers, we should know what they will value and whether they will believe our marketing story. Seth Godin states that our marketing story should be aligned to the world view of the customer, otherwise he/she will not believe it. Do yourself the favour and read Seth on “All Marketers are Liars.” It is a fascinating book.
Furthermore, you need to understand the world view of your competitors. You need to understand how they make sense of the world in order to be able to understand how they will react to the market forces you have identified. Behaviour of organizations are driven by the world views, mental models, and value systems of the organizations and their members. You need to understand this of your competitors as well should you want to compete in a meaningful and successful manner.
A company that quickly comes to mind that does deal with its ethos in a meaningful way, is Spier Wine Estate outside Stellenbosch, South Africa. They talk about it, they write about it, and they work with it, constantly! Check their website for their sustainability report. It makes for interesting reading. SABMiller and the Shoprite Group are other favourites of mine in this regard.
The second force, i.e. the Environment of the system, is a complex force. As stated, the DNA of the system will determine what it sees as being important in the environment. There are broadly speaking 3 kinds of environments. The contextual environment refers to what we know as the macro environment. We typically use the PEST tool to gain understanding of this environment. We have no control or influence over this environment, and have to adapt to it. Not only are we able to identify drivers of change from this environment (forces that will change how and with whom we do business with, and how we will need to innovate our business model), but we will also be able to start identifying opportunities and threats from a careful analysis of the macro environment.
The second kind of environment refers to the transactional environment, and refers to the industry and the market. Who are your customers, your competitors, and what does it take to be successful in this environment. There are various tools to gain an understanding of the transactional environment, such as Porter’s 5 Forces model, the SPACE model, and the GE 9-Cell matrix, to name but a few. Companies have influence over this transactional environment, but no control (or should have no control).
It is important to understand who the different stakeholders are in these two environments, as well as what they want from us and what we want from them in return. We would also be able to identify opportunities and threats from this external environment.
The third environment is the system itself. We also refer to this environment as the internal environment, where we look at aspects such as the vision, mission, operating model, etc. and identify the strengths and weaknesses of the company.
To do this in more detail we look at the third force, namely the Aims Perspective. This force refers to the vision, mission, objectives, business model, and strategies of the company. It is important that this force is aligned with both the ethos of the company and the external environment. Should it not be, we would be developing strategies that will either not address the opportunities and threats of the external environment, which could be life threatening, or not be implemented as it is in conflict with the ethos. Both scenarios are equally devastating! I have already dealt with the concept of a business model in a previous article, i.e. “Are You a Strategic Architect?” which can be found at http://johanhburger.com/are-you-a-strategic-architect/.
The fourth force refers to the Processes or activities of the system. We can also refer to this as the operating model or the value chain of the company. It should be aligned with the strategies and business model of the company. Should there be a disconnect between the processes and aims force of the company, the strategy will not be implemented. The same goes for when we develop processes that are in conflict with the ethos of the company. My reference above where I spoke of the different types of processes (outward, inward, and self-directed), would be applicable here.
The processes have to be organised into a coherent Structure, the fifth force of a system. Structure not only follows strategy, but also the processes. Having said so, it is well known that an existing structure can force strategy in the short-term, until certain adjustments can be made in the long term. Again, as is the case for the process force, the structure also needs to be aligned with the ethos.
It is also important that the processes, structure, and the ethos are dealt with carefully to avoid silos. The processes should be designed in such a way that tapping takes place, meaning that the one process is linked tangibly with the other. The structure should be designed so that tapping is facilitated, while the ethos is designed as to encourage a culture and value system which draws the divisions together into a cohesive whole.
The sixth force deals with the Resources of the company. This deals with issues such as financial resources, people, equipment, and intangible resources such as the company’s brand.
The seventh force refers to the Governance of the company. This deals with issues such as control and power, policies and procedures, and communication. If there is a disconnect between what the company says its values are and what it deems to be important, it could be picked up in the manner in which the company exercises its governance. If the company, for example says that its people are important to it, check the people policies and actions. All companies tend to say “our people are our most important asset”. When times get tough, these exact same most important asset tends to become less important and mostly gets fired!
Together these 7 forces constitute a system. They need to be in alignment with each other, in a mutually reinforcing manner. In cases where this is not the case, the company will not stand the test of time. However, we frequently find organizations going through a restructuring exercise without really taking the processes, the strategies, or even the ethos into consideration! I can name two who after a restructuring had to go back and rehire some of the employees who had been let go, at a much higher cost to the company! I can still see the broad smile on the one woman when she told me why she could not refuse the kind offer her company was forced to make to get her back to do the job only she was qualified to do!
These 7 forces are also adequate (much more than adequate, actually!) to house all the knowledge fields any company or individual can be exposed to. I frequently tell my MBA students that they should use this framework to integrate all the knowledge they are exposed to, irrespective where they pick it up. This will provide the context for the information relative to the other kinds of information, and will facilitate an understanding of what you are busy with.
It is also important to understand that each of these forces is multi-dimensional. Amongst others, these dimensions include aspects such as the psychological dimension, the cultural dimension, the economic dimension, the political dimension, and the technological dimension.
When we look at the complexity dealt with in the previous article, the 7 force framework is ideally suited to deal with complexity.
The next article will deal with the multiple dimensions of a system.
To get a better academic and deeper understanding of these 7 forces, read “Biomatrix Systems Approach to Organisational and Societal Change” by Elisabeth Dostal and her co-authors.