This month, I want to highlight how some of my 2006 summer reading influenced my thinking on strategy execution and rekindled my belief in information as a key differentiator within 21st century business management.

Evolving Our Business

In June, Eric Beinhocker came out with the book Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics.1This book makes a compelling case for explaining our economy as a complex adaptive system and begins to explore the consequences for organizations as they rethink strategy management and organizational dynamics. The book is engaging and easily read with references for those who want to dig deeper. Recognizing that I may not do justice to the entirety of Beinhocker's thoughts, I would like to highlight some key ideas here.

In the Origin of Wealth, organizations are depicted within an evolutionary market landscape. This landscape is characterized as being complex, changing and volatile. The opportunity, or the mandate, is subsequently established that for organizations to survive, they must constantly adapt to meet the needs of their external marketplace. While not being contradictory, organizations are set in a never-ending state of constant evolution - each day these organizations are being judged by the marketplace which evaluates their organization's fitness to meet the needs, wants and expectations of their various marketplace stakeholders. Therefore, those organizations that can best understand their environment have a jumpstart on outperforming their competitors. Beinhocker summarizes, "In evolutionary systems, sustainable competitive advantage does not exist; there is only a never-ending race to create new sources of temporary advantage."

If the necessity for information is not obvious, let me state it. Information is at the heart of this evolutionary process. By assembling information assets, organizations build a picture of their business and its business environment. The ongoing interpretation of this information provides a perception of the exact marketplace that we seek to serve. If we have an accurate perception of our marketplace, we can act to meet its needs. If not, we ultimately perish. In my rendition, information about our businesses and their environment is becoming the currency of corporate sustainability and, ultimately, wealth.

Figure 1: The Environment Provides Power in Business Selection


Empowering the Organization

This summer, I also had the opportunity to take a deep dive into Stafford Beer's decades-old work on the viable systems model. This management framework is an exploration and thesis for how organizations should be structured to adapt and survive within their environment.

Beer's viable systems model challenges us to consider how to structure our organizations so they are able to evolve to meet the needs of their business environment. It is a recursive model that extends the autonomy for business innovation and change to all levels of the organization - including empowering those areas that are closest to the environment (e.g., client, employee, etc.). Here, we are challenged to equip the proletariat with the information to garner insights, make decisions and constantly drive business innovation.2

Competing for the Future

Taken together, we can conclude that emerging market leaders are those companies that 1) constantly articulate the clearest, most accurate picture of their businesses and of their marketplaces throughout their organizations and 2) have empowered their organizations to debate and evolve their internal capabilities to continuously converge with the needs of their external marketplace. Therefore, market leaders compete in their ability to adapt. Information is a key, if not the key, resource that informs this process of business adaptation.

But hasn't information been viewed as a key asset for several decades now? Sure, but it has yet to be truly leveraged as a strategic asset. The data warehouses of the 1980s were eclipsed by the crazed focus and spending on enterprise resource planning (ERP) systems, Y2K fixes and e-commerce in the '90s and the early years of the 21st century. Now that we have settled down to exploit and explore our new 21st century business models, information and information management are surfacing as the catalysts for delivering this temporary competitive advantage.

If we step back to our ongoing discussion of strategy execution, we can develop a nuanced view of the balanced scorecard and strategy management. The balanced scorecard articulates a set of measures that both monitors our internal capability to execute our current strategy and provides feedback from our external environment on the fitness of our strategy. If we watch these measures, we monitor our organization's fit with its environment. And, as we cascade these measures throughout our organizations, we begin to empower the organizations to innovate with their marketplaces. We move from a top-down approach of strategy management to an "environment in" approach of strategy execution. Information management becomes the heart of our success in competing for the future.

I would be remiss not to encourage you to read Origin of Wealth and to consider holistic management models such as Beer's. I have made many leaps of logic to keep this column within its limits. The soil is fertile and the seed has been planted. If you want to pursue this discussion further, feel free to contact me at george.veth@palladiumes.com.    


References:

  1. Eric Beinhocker. Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. New York: Random House Business Books, 2006.
  2. Stafford Beer. The Heart of the Enterprise. Hoboken, NJ: John Wiley & Sons, New edition 1995.

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