abilityFrom Helfat et al (2007, 37, 121): Capability refers to the capacity to perform a particular task, function, or activity. A capability, dynamic or otherwise, implies a potential for action. A capability is the ability to perform a particular task or activity. The word "ability" refers to the power or capacity to act. But until the capability is exercised, the action remains latent.
absorptive capacityAbsorptive capacity is used to measure firm's ability to value, assimilate, and apply new knowledge. It is studied on multiple levels (individual, group, firm, and national level). Antecedents are prior-based knowledge (knowledge stocks and knowledge flows) as well as communication. It is studied involving a firm's innovation performance, firm's aspiration level, and organizational learning. Absorptive capacity is also said to be a reason for companies to invest in R&D instead of simply buying the results (e.g. patents). Internal R&D teams increase the absorptive capacity of a company. The theory involves organizational learning, industrial economics, the resource-based view of the firm and dynamic capabilities. Reference -- It was first introduced by Cohen and Levinthal (1990, Absorptive capacity: A new perspective on learning and innovation. In: Administrative Science Quarterly, Volume 35, Issue 1 pg. 128-152). Source: Wikipedia contributors, ""Absorptive capacity,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Absorptive_capacity&oldid=84551314 (accessed January 29, 2007).
abstract-systematic frameworkAbstract, or systematic, frameworks, are essential to effective communications and sharing knowledge. Humans form these frameworks within which to talk about their worlds. For example, there is the framework of physics within which some talk about the material environment we live in. See symbols for more.
accuracyAccuracy refers to correctness in all details. For example, in order to make accurate observations, the right things must be observed.
adaptAdapting makes something suitable for a new purpose. Adaptation is a learning process with an objective of being more suitable for new circumstances. Every successful adaptation reduces, to some degree, the flexibility of the organization to face changing circumstances.
adaptionist causalitySee causality.
adaptive learningAdaptive learning, or adaptive learning and management, is a process to sense changes, threats, and opportunities, assess those changes, make decisions, and perform according to those decisions. In its basic form, adaptive learning is also referred to as single loop learning. With the addition of changes to the decision making process itself, it becomes a double loop learning process. Russell L. Ackoff provides a model for adaptive learning. The basic steps of the model are: Identification of actual and potential problems, both threats and opportunities. Use a symptom and presymptom analyzer for organizational and environmental surveillance coupled with decision support to provide information, knowledge, and understanding needed to make decisions. Decision making. Maintenance and improvement of performance under changing and unchanging conditions. This requires a memory and comparator for the decisions made, along with their expectations, assumptions, information, and the processes used to make the decision. This is a system of record. Also required is diagnosis and prescription. Using the deviations from expectations to prescribe improvementst to the processes involved in making decisions then creates a double loop learning process. For a comprehensive view of Ackoff's model see: Russell L. Ackoff, Re-Creating the Corporation, Oxford University Press, 1999, pp 166-172 See learning levels of for a framework of types of learning.
advantage thinkingAdvantage thinking is thinking and activities that build the strategic thinking competency to find and define a competitive advantage. Competitive advantage is both adaptive and evolutionary advantage - more than adapting to the environment by shaping the environment to your advantage while ethically doing good. The following segments present views of how this is achieved. Stretching strategic thinking (Abraham, 2005) -- Strategy implies competing and outwitting competitors. This requires management to think about different and better ways of competing, delivering customer value, and growing. Strategic thinking is about coming up with alternative viable strategies or business models that deliver customer value. Five approaches to conceiving of and producing advantage are described -- being successfully different -- Either find a way to play a different game than anyone else is playing OR play the same game others are playing but play it differently. Differently means some form of differentiation by being better or different in respects valued by customers - quality, features, performance, reliability, ease of use, stronger, simpler, faster, smaller, or better looking. emulating entrepreneurs -- see opportunity everywhere look beyond the conventional view dissatisfaction from the customer's point of view come up with opportunities before you need to have a robust repeatable process for creating and nurturing new growth business finding new opportunities -- develop continuous opportunity finding mechanisms perform continual idea generation perform continual proposal generation and screening ask opportunity seeking questions -- What other type of customer could benefit from our product, even if used in a different way? What other products or ancillary services could we produce for the same customers? What other products could we produce, for any customers, that use the skills, techniques, technologies, and know-how that we have? Is there a way of reinventing our business model that would give us a competitive edge? What unmet needs do people or companies have that we could meet, even if it means acquiring the necessary know-how and expertise? What are the highest-growth industries now and in the foreseeable future that we might enter? being future oriented -- One useful method is scenario planning. It is a rigorous externally facilitated process that requires significant commitment, but is highly education and helps management to hone, direct, or change their thinking. Scenario learning principles are as follows (Fahey, 2003) -- Scenarios are only a means to an end. They have value only to the extent that they inform decision-makers and influence decision-making. Scenarios cannot be allowed to become irrelevant to the key issues facing the company and the decisions corporate leaders must contemplate and make. Scenarios only add value to decision making when managers and others use them to systematically shape questions about the present and the future, and to guide how they go about answering them. In each step of developing scenarios, the emphasis must be on identifying, challenging, and refining the substance of managers' mindsets and knowledge-what lies between their ears-and not on refining and perfecting scenario content. Alternative projections about some future must challenge managers' current mental models by creating tension about ideas, hypotheses, perspectives, and assumptions. The dialog and discussion spawned by considering alternative futures directly affects man-agers' tacit knowledge. Scenarios are not a one-time event. They generate indicators that allow managers to track how the future is evolving. Thus, learning induced by scenarios never ends. See scenario planning, scenario learning, and scenario thinking. being collaborative -- The bottom line in assessing collaboration is ""do any of these methods of collaboration provide strategic benefits, making the company a stronger competitor?"" Collaboration areas include outsourcing, licensing (nonequity), shared resources or competencies (nonequity), partial non-controlling acquisition, joint ventures, and acquisitions. The key questions to ask when considering any of these moves are -- Will we become a stronger competitor? Does it fit with our existing strategy? Will it improve our situation? Will it give us a competitive edge or distinctive competence we lack? What is the risk, and is it worth taking? Is it a means of acquiring ""disruptive"" innovation that might sustain the firm in the long term and that we couldn't develop in house? Customer collaboration can occur in the R&D area, operations, creating experiences, and in adding value to the experience of using the product. Further questions to ask to stimulate strategic thinking -- Are there ways the company can differentiate it-self or its products and achieve a competitive advantage? Can it create its own game and rules, and win? By ""walking in the customers' shoes""-as entrepreneurs do-are there products or services currently offered that one could improve upon? What are customers' dissatisfactions, and could the company provide the solution? Is the company's search for opportunities wide-ranging enough? Has it examined every combination of customer needs, current capabilities, and technological advances? Are there opportunities in other growth industries? Can it rein-vent its business model? Is the company investing in R&D and experiments now that will, in time, become one of its core businesses? What steps is the company taking to address uncertainty in the future? Has it mapped out a number of likely futures? Does it assume a certain future will happen, but has contingencies in case things turn out differently? Is the company dependent on ""whatever"" the future will bring, or is it trying to ""define and design its own future?"" Is there a preferred future it would like to bring about? Has the company explored taking advantage of opportunities that become feasible only through forming a strategic alliance or merging with-or acquiring-another company? Are there ways in which it could co-create value with its customers? Thinking differently for adaptive advantage (Kelly, 2006) -- Adaptive advantage requires the ability to anticipate and sense change and the capacity to respond quickly and coherently. Following are developmental priorities for adaptive advantage -- Thinking differently -- more complex environments require increasingly complex thought outside-in - in contrast to inside-out. See ways of thinking. connective - make creative connection between disparate ideas and trends. This is analogous to systems thinking but focuses on new patterns of possibility. scenario -- anticipate the future without trying to predict it or ignoring it. Scenarios are stories -- stories help to overcome the inertia and denial of the future as a scary place. See scenario planning and scenario thinking. Learning differently -- literacies for the future - focus on a few external developments that are low impact today but may be greater in the future. Establish core areas for focused learning. learning networks - for continual exposure to a broader range of ideas and developments. Link members with a wide variety of expertise and experience. Include internal and external people. learning journeys - learning journeys are truly exploratory - pushing the envelope of what is known and redefining the boundaries of what is possible by exposing the participants t striking new experiences, places, people, and ideas. This is in contrast to fact-finding or benchmarking expeditions that tend to be confined to current paradigms, perceptions, and hypotheses. Acting differently -- act experientially - imagine, design, and execute small scale experiments in new opportunity spaces - do hypotheses formation and testing. Systematically expect learning form both success and failure. Swiftly move on to the next iteration. act inclusively - include others in relation to the purpose of your business (beyond making money). Dialog and collaborate with broadly defined stakeholders. Include previously untapped markets, such as the 4 billion that are poor in this world. at ethically - a deep ethical consciousness throughout the organization as a core principle to serve as a shared ethical compass while navigating quickly through complex environments. These ways of being different, fit into an overall model with three pillars of adaptive advantage - thing->learn->act - in order to develop competitive advantage. Beyond adaptive advantage to novel advantage -- The invention or discovery of the truly novel produces unique advantages that go beyond adaptation to environment shaping. Developing or unleashing the creative potential of the organization to generate novel possibilities can be fostered by organizational actions. iterative inquiry - rigorous execution of iterative inquiry extends thinking well beyond existing preconceived notions. dynamic interaction - the variations arising from engaging in diverse dynamic interactions are the seeds for organization evolution. See responsive processes, evolutionary organization theory, and organization evolution. learning of uncertainty - breaking the mold of traditional thinking biases to seriously understand and consider uncertainty learning serendipitously - keeping in motion, encountering new stimuli, shifting contexts, etc. contribute to serendipitous learning. act throughout the organization - develop a culture where all are listened to and all are encouraged and rewarded for innovation. Evolving from experimentation to pattern recognition in pursuing innovation and competitive advantage (Christensen, 2006) -- There are three general steps that occur with innovative offerings - In almost every industry, the initial methods of development involve experimental, unstructured problem-solving and prototyping. In the second stage, patterns of cause and effect begin to emerge, enabling people whose training is less sophisticated to design and manufacture the products. Ultimately in the third stage scientific progress transforms industries into a rules-based mode, where well-researched and tested guidelines enable people with even less training, experience, and intuition to create even higher performing products and services than the world's experts could a generation earlier. Appling this line of thought to innovation - historically the ability to conceive and launch successful new growth businesses resided in the intuition, experience, and skill of the best venture capitalists and entrepreneurs in the world. When they succeeded, they really succeeded - but 80% of their attempts failed. Now however, an emerging body of well-researched theories is shifting the ability to create new growth product and businesses out of the unstructured realm of trial-and-error experimentation into the pattern recognition realm. Identified are the patterns in which plans and actions will lead a company towards success, and which will cause it to fail, in different contexts. Though the rules-based realm has not been discovered, the patterns are clear. Some of those patterns -- You beat competitors by disrupting them, not by bringing better products to market. You can define a product that customers will be sure to buy if you've segmented your market by the jobs that customers are trying to get done, rather than by product categories or customer characteristics. For new technologies, the best customers are non-consumers of the traditional product, and the best consuming occasions are those where consumption was not historically possible. Proprietary architectures are important to success when the functionality and reliability of a product are not yet adequate for what customers need. When these have improved beyond the ability of the customer to utilize further improvement, then modular, open architectures will dominate. What should you outsource, and what should you do in- house? Above-average profitability will always be earned by integrating across the interfaces in the value-added chain where you can better solve a problem that is not yet being solved well enough. The stage in that chain where attractive money can be made today is unlikely to be where the money can be made tomorrow. How should you structure your organization to innovate effectively? Functional or lightweight teams work well when you're innovating within an existing architecture. A heavyweight team is the tool needed to create new architectures efficiently. An autonomous unit is required when the business model required to succeed is disruptive relative to the model of the core business. New ventures that employ a deliberate strategy process will fail. They need to follow an emergent, discovery- driven process. Capital whose owners are willing to incur significant losses in order to grow the business to be very big very fast is bad money-it will cause the venture to fail. Good money is impatient for profit, and patient for growth. For further thought stimulating questions see competitive advantage factors and for the basis for advantage see competitive advantage.
agencyIn organizational theory and management science, agency refers to the capacity of the individual human for making choices and taking action on those choices. Agency refers to the freedom of the individual to act and denotes those causes of human action to be found in the individual. Agency means doing, human agency means human bodies doing something. Agency is concerned with what causes human bodies to do what they do (Stacey, 2001, 93)
agency theoryThe simplest agency model involves a single individual, called the agent, who acts on behalf of another, called the principal. Examples include an employee and employer; a board member and shareholders; or a contractor, lawyer, or broker and the client. The returns to the agent's actions accrue to the principal except for those personal costs that the agent directly bears. The challenge of agent-principal relationships is to motivate the agent to work as hard, cleverly, and effectively as the principal wants within the bounds of what the principal is willing to pay for the agent's activities on the principal's behave. )Roberts, 2004, pp 126-127) The basic theory of agency assumes that enforceable contracts can be written on the observed performance measures, even though the actual desired behavior is not directly contractible. There are issues with contracts were performance cannot be clearly articulated, mutually understood, and have an unambiguous basis for evaluating performance. (Roberts, 2004, pp 159-160) Two types of difficulties with subjective contracts -- with a firm's incentive to actually carry through on it promises to pay the appropriate rewards when they have been earned with subjective performance evaluations once the job has been done, the principal may gain by reneging on the promise to pay rewards, claiming shortcomings in the performance also, perceived arbitrariness and ambiguity in evaluations can undermine incentives or, rewards may be paid that were not really earned the subjective performance evaluation may be subject to influence by the agent, marshaling arguments and evidence of performance, even if that means doing the same to try to make others look bad. Solution to subjectivity issues -- The solution to subjectivity issues in contracting agents lies in the principal's reputation to be trusted to not act opportunistically or be swayed by influence activities.
agentIn systems science an agent is something that has the ability to interact with its environment. The environment can include other agents. An agent is purposeful in and of itself. Social systems are made up of agents. Agents can be people, families, project teams, organizations, agencies, governments, etc.
ambidextrous organizationReconciling process excellence and innovation. Developing an organization that does both exploitation and exploration well. Source: Jeneanne Rae, Viewpoint: Have it both ways -- ""Ambidextrous"" companies can handle incremental change and bold initiatives, Business Week, JUNE 11, 2007, Inside Innovation Section ""I can't stand this,"" said a senior executive of a Standard & Poor's (MHP ) 500 company recently. ""One minute the management team is telling us to innovate, and the next minute they are giving us our marching orders in deploying Six Sigma. It's crazy to tell people they should be focused on becoming more efficient while at the same time you want them to explore untapped growth potential. This is making me nuts."" The objectives of Six Sigma seem noble enough for any organization. So what's the rub with simultaneous efforts to innovate? By its nature, Six Sigma fosters a very low tolerance for risk because risk increases variation. Innovation, on the other hand, seeks to brave undiscovered, uncertain territory. Such fledgling efforts are inherently inefficient. Innovation requires a tolerance for risk-taking and failure. A corporate culture dominated by Six Sigma management theory will be inclined toward inwardly focused, continuous, incremental types of improvements in process, customer service, systems, operations. A culture that fosters disruptive innovation will be more entrepreneurial, outwardly focused on new markets, technologies, and business models. You explore big new growth platforms that add significant chunks of revenue and profit. Given the huge management and cultural implications inherent in each approach, it would be difficult to launch both efforts at the same time. Most organizations, like General Electric (GE ), become grounded in one and then attempt the other. In GE's case, Six Sigma came first, and its new innovation initiative, Ecomagination, is now rolling out. Exploitation vs. Exploration -- In a Harvard Business Review article, ""The Ambidextrous Organization,"" Charles O'Reilly III and Michael Tushman, business school professors at Stanford and Harvard, respectively, acknowledge the paradox of exploitative vs. explorative efforts. They conclude that smart companies separate the more ambitious efforts at innovation from ongoing efforts at continuous improvement. That allows for different processes, structure, and cultures to emerge within the same company. The Ambidextrous Organization -- An ""ambidextrous"" organization, they write, has independent project teams integrated into the existing management hierarchy. A tightly integrated senior team makes sure the activities of the right hand don't work at cross-purposes with the goals of the left. Both the traditional business and the fledglings report to the same executive team but are managed under a very different set of rules, depending on where each is in its maturity cycle. Remarkably, in the professors' study of 35 attempts at breakthrough innovation, ambidextrous structures were successful 90% of the time. Other models, such as cross-functional teams and unsupported skunkworks-style groups, were successful less than 25% of the time. Jim Burnick, senior vice-president for quality and productivity at Bank of America (BAC ) and leader of the bank's innovation efforts, says that if managed properly Six Sigma and innovation can go hand in hand. Thanks to Six Sigma, ""... it is now possible for us to think as one organization across fiefdoms and business units to improve every type of customer's experience. This ends up as business-model innovation, which in the banking business is very uncommon."" Achieving simultaneous exploitation and exploration -- Here are three strategies for managing incremental and disruptive innovative initiatives simultaneously: Separate the efforts. Don't expect people running mature businesses to behave the same as those in charge of startups. Each type has its own incentives, organizations, and talent needs. Appoint an ambidextrous senior manager to oversee both efforts. A general manager with responsibility for both traditional and new businesses will foster efficiency by sharing such resources as HR, marketing, and finance, and by promoting integration of the initiatives when the time is right. Support both teams appropriately. Don't shortchange one over the other. It kills me to see so much investment in reengineering, training, and employee time being poured into Six Sigma initiatives in the name of cost savings when innovation gets starved for critical research requirements like white-space analysis, ethnographic research, or prototyping. It's as if leadership believes companies can shrink their way to greatness. Innovation and Six Sigma are different methods that beget different results and require different management styles. They can coexist. Just recognize that each requires its own formula for success.
ambitious goalsAmbitious goals is one of the four key elements making up the purpose of an organization. The organizational values, reason for being, ambitious goals, and vision. These goals are what Collins calls Big, Hairy, Audacious Goals (BHAGs), ambitious plans that rev up the entire organization. They are long-term, maybe requiring 10 to 30 years' work to complete. They also require the development of new capabilities. Finally, they are clear. Ambitious goals become one more factor in liberating rules, like values, that guide and inspire the members of the organization in an informal inspiring manner, rather than in a formal controlling manner.
analysisAnalysis is how knowledge is gained. Analytical process taking apart the thing to be understood or explained trying to understand the behavior or properties of the parts taken separately trying to assemble this understanding into an understanding of the whole, or aggregating these explanations into an explanation of the whole Management implications -- Analysis, and analytical thinking, is characterized by phrases such as -- ""cut is down to size"" and ""divide and conquer."" An analytical management approach tends to focus on improving parts of the organization. The likely result is that the parts are optimized while the performance of the whole is either not affected or decreases. Also, thinking more knowledge is needed, vs. understanding, can lead to costly and unproductive searching for and gathering of detailed information with no beneficial, and possibly detrimental, impact. Source: Ackoff, 1981 and Gharajedaghi, 1999
analytical thinkingAn analytical thinking orientation focuses the efforts to understand and design systems on the structure of the system. Understanding of the whole is sought based on understanding the parts of the system and how they are assembled to form the whole. Traditional Western management thinking -- Analytical thinking orients systems inquiry towards analysis as opposed to synthesis or a process orientation. The thinking of Western business leaders has traditionally been analytical in nature. Traditional thinking characteristics -- Focusing on events vs. understanding patterns and their causes. Viewing behavior of organizations as being driven by external forces. This tend to lead to overly complex models which have many variables outside the control of management. An obsession with detail and measurement accuracy. Correlation vs. rigorous causal thinking. Simplistic causality as a linear set of cause and effects. Paying more attention, and giving more weight to, things that can be measured and refining measures. This is to the neglect of relevant variables that defy current accurate measurement. Seeking of frameworks and models which are true, as opposed to focusing on understanding their effectiveness and applicability, knowing that all models are wrong to some degree.  
AnotherTestEntryA second Test Entry
apparent complexitySee complexity.
apply scienceSee strategic management activities for explanations of the four stages of strategic management activities -- generate wisdom - understand why the organization is the way it is an its trajectory create art -- unleash the imagination apply science -- design the future wage war -- execute
archetypeArchetypes are common patterns or models of something, like a concept. In systems science archetypes of systems behaviors are a systems tool for ferreting out the underlying systemic structure of complex situations.
Aristotle on causalityStacey on Aristotle's causality -- Aristotle introduced a theory of causality, for the first time in human thought, which brought together elements of various thinkers of his time. He reaffirmed ""becoming"", arguing that change is not an illusion but that humans actually experience nature as change. Reality is not some external given, but an experience one perceives. Humans can trust their experience; indeed, this is the only way of making sense of reality. (Stacey, 2000, pp 195). Aristotle first introduced this theory of causality as a way of understanding the human experience of physical nature. There may be multiple causes, but there is one cause, the final cause, the fundamental source of becoming, which is teleology. Teleology is then the one overarching source of change. Aristotle argued that there is a fundamental source of becoming in everything, that everything tends towards some end, or form. All other sources of becoming, whether formal, efficient, or material cause in Aristotle's scheme of causality, are subordinate to the overarching teleological movement. (Stacey, 2000, pp 196). Within this movement toward a final form or end, Aristotle distinguished other sources of becoming that are subordinate to the overarching teleological movement -- formal cause -- One of these sources is what has come to be known as ""formal cause."" This is the human experience of the form of the phenomenon as it moves toward its final form. In other words, this is the human experience of pattern, of the given sequence of changes in the form. So, while the teleological is concerned with the final form, the formal source of change is the changes in form that lead up to it. In the above examples, these are the infant and the young adult, or the acorn and the sapling. This is what is meant by the formal source of becoming. efficient cause -- Next, Aristotle distinguished a source of becoming which has come to be known as ""efficient causality."" Here humans experience change in terms of what went before the present state. For example, a tree is now experienced as being on fire because in the preceding state it was hit by lightning. This link between the lightning strike and the subsequent fire is what developed into the if-then sequence of efficient causality. material cause -- Lastly, Aristotle talked about what has come to be known as ""material cause."" Here humans experience change as they do because one source of becoming is the material of which a thing is made. For example, a tree is experienced as a tree because it is made of wood. The translation from Aristotle's sources of becoming to what we understand today as causality is rather difficult because causality has become so identified with efficient causality of the if-then kind. Furthermore, Aristotle was talking about the source of human experience of change in physical nature whereas today one thinks of causality as pertaining to that physical nature itself rather than the human experience of it. Human organizations can, however, be understood in terms of all of today's modern descendants of Aristotle's four causes. For example, a pharmaceutical company is as it is because of material cause in the sense that it depends upon the nature of the chemicals it produces. Change and stability in the organization depend in this way on change and stability in chemical matter. An organization can also be understood in terms of efficient cause when, for example, reward systems are used to motivate people. If sales incentives are increased, then sales people sell more products. Formative cause would identity the source of change and stability in the functioning of a system - for example, an information and control system. Then, the processes of, say, the accounting system would be formatively causing the organization to become what it becomes. Teleological cause would be the objectives that the organization was seeking to achieve - for example, the profit objectives. This kind of definition of the four causes seems to us to be typical of the dominant discourse on management. It is a definition that takes for granted the source of change. Transformative teleology as an overarching cause -- However, this way of thinking about the descendants of Aristotle's four causes does not capture the manner in which goals and values, the motivators of human action, continually emerge in the self-organizing complex responsive processes we discuss in this volume. Instead, the motivational process (that is, the source of goals and values) is hidden within the categories of efficient and formative cause. In this sense teleology is subordinated to the other causes, rather than embracing them as in Aristotle's thinking. In the above examples, what motivates people is reduced to a cause (sales incentive) and effect (change in sales) link, or is simply stated as a profit goal without taking account of how such a goal arises in the self-organizing complex responsive processes we are pointing to. In using the term Transformative Teleology we are trying to draw attention to the self-organizing complex responsive processes of emerging values, goals, strategies, and so on. This restores teleology to its overarching position in a theory of causality. Source: Stacey, 2000, pp 196 - 197 Overviews of Aristotle's causality -- Aristotle (300s BC) -- In the Aristotelian world, physics was modeled on biology, not biology on physics. For Aristotle, just as the behavior of humans (and other animals) is motivated by specific purposes, so the behavior of any physical object could be explained by understanding its purpose. For Aristotle, an object could only be understood in relation to its purpose or function. Aristotle's four causes are each a different way of explaining why a thing is as it is. The four causes are four aspects of the purpose of a thing. All four causes together bring a complete view of the object under consideration. To understand an object, one must understand -- its formal cause - the form received by a thing, a form taken by the movement or development material cause -- the matter underlying that form, a material efficient cause -- the agency that brings about the change, something to act upon it, an if - then sequence of causality, cause based on what went on before the current state the final cause -- the purpose or goal served by the change As an example, the Aristotelian answer to the question of why the statue of David is as it is, is answered as such - Because it was made by Michelangelo (efficient cause) out of marble (material cause) with the shape of David (formal cause) to glorify the Medici family (final cause). For Aristotle, the final cause is final because it is pre-eminent in explaining why a thing is as it is. Aristotle's causality -- Source: Wikipedia contributors, ""Causality,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Causality&oldid=88995105 (accessed November 27, 2006). In his Metaphysics and Posterior Analytics, Aristotle said: ""All causes of things are beginnings; that we have scientific knowledge when we know the cause; that to know a thing's existence is to know the reason why it is"". With this formulation, he set the guidelines for all the subsequent causal theories by specifying the number, nature, principles, elements, varieties, order of causes as well as the modes of causation. Aristotle's account of the causes of things may be qualified as the most comprehensive model up to now. According to Aristotle's theory, all the possible causes fall into several wide groups, the total number of which amounts to the ways the question ""why"" may be answered; namely, by reference to the material worked upon (as by an artisan) or what might be called the substratum; to the essence, i.e., the pattern, the form, or the structure by reference to which the ""matter"" or ""substratum"" is to be worked; to the primary moving agent of change or the agent and its action; and to the goal, the plan, the end, or the good that the figurative artisan intended to obtain. As a result, the major kinds of causes come under the following divisions: The Material Cause is that ""raw material"" from which a thing is produced as from its parts, constituents, substratum, or materials. This rubric limits the explanation of cause to the parts (the factors, elements, constituents, ingredients) forming the whole (the system, structure, compound, complex, composite, or combination) (the part-whole causation). The Formal Cause tells us what, by analogy to the plans of an artisan, a thing is intended and planned to be. Any thing is thought to be determined by its definition, form (mold), pattern, essence, whole, synthesis, or archetype. This analysis embraces the account of causes in terms of fundamental principles or general laws, as the intended whole (macrostructure) is the cause that explains the production of its parts (the whole-part causation). The Efficient Cause is that external entity from which the change or the ending of the change first starts. It identifies 'what makes of what is made and what causes change of what is changed' and so suggests all sorts of agents, nonliving or living, acting as the sources of change or movement or rest. Representing the current understanding of causality as the relation of cause and effect, this analysis covers the modern definitionsnew of ""cause"" as either the agent, agency, particular causal events, or the relevant causal states of affairs. The Final Cause is that for the sake of which a thing exists, or is done - including both purposeful and instrumental actions. The final cause, or telos, is the purpose, or end, that something is supposed to serve; or it is that from which, and that to which, the change is. This analysis also covers modern ideas of mental causation involving such psychological causes as volition, need, motivation, or motives; rational, irrational, ethical - all that gives purpose to behavior. Additionally, things can be causes of one another, reciprocally causing each other, as hard work causes fitness, and vice versa - although not in the same way or by means of the same function: the one is as the beginning of change, the other is as its goal. (Thus Aristotle first suggested a reciprocal or circular causality - as a relation of mutual dependence, action, or influence of cause and effect.) Also; Aristotle indicated that the same thing can be the cause of contrary effects - as its presence and absence may result in different outcomes. In speaking thus he formulated what currently is ordinarily termed a ""causal factor,"" e.g., atmospheric pressure as it affects chemical or physical reactions. Aristotle marked two modes of causation: proper (prior) causation and accidental (chance) causation. All causes, proper and incidental, can be spoken as potential or as actual, particular or generic. The same language refers to the effects of causes; so that generic effects assigned to generic causes, particular effects to particular causes, and operating causes to actual effects. It is also essential that ontological causality does not suggest the temporal relation of before and after - between the cause and the effect; that spontaneity (in nature) and chance (in the sphere of moral actions) are among the causes of effects belonging to the efficient causation, and that no incidental, spontaneous, or chance cause can be prior to a proper, real, or underlying cause per se. All investigations of causality coming later in history will consist in imposing a favorite hierarchy on the order (priority) of causes; such as ""final > efficient > material > formal"" (Aquinas), or in restricting all causality to the material and efficient causes or, to the efficient causality (deterministic or chance), or just to regular sequences and correlations of natural phenomena (the natural sciences describing how things happen rather than asking why they happen).
artThe most common usage of the word ""art,"" which rose to prominence after 1750, is understood to denote skill used to produce an aesthetic result. (Evelyn Hatcher, ed. Art as Culture: An Introduction to the Anthropology of Art. 1999 Art is the aspects of design beyond the reach of science. A product of creative skill that has less to do with the analytical and tangible nature of things and more to do with the more ethereal, such as visual appearance, feeling, emotion, aesthetics, etc. Art evokes understanding Art is something that stimulates an individual's thoughts, emotions, beliefs, or ideas through the senses. It is also an expression of an idea and it can take many different forms and serve many different purposes. Although the application of scientific theories to derive a new scientific theory involves skill and results in the ""creation"" of something new, this represents science only and is not categorized as art. (Source: Wikipedia contributors, ""Art,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Art&oldid=195562739 (accessed March 4, 2008).) ""Ideas make art -- In conceptual art, the idea or concept is the most important aspect of the work . . . all planning and decisions are made beforehand and the execution is a perfunctory affair. The idea becomes the machine that makes the art."" - Sol LeWitt, 1967
aspectAn aspect is a perspective, the way in which something can be viewed, whether tangible like a building or intangible like a business organization. Multidimensional objects, whether tangible or intangible, challenge out ability to ""see them all at once."" For example, a building can be viewed from the outside from any of 360 degrees or any of several elevations up to straight down on the building. The inside can be viewed through the windows. The inside can also be viewed from a myriad of points within the building. All of these views are 'true', but only provide a portion of the 'truth'. It is only through the collective understanding of multiple views that the whole can be appreciated and understood. Inquiry process -- Aspects are an essential part of the inquiry process. For example, the social system aspects form the foundation for the business design construct that guides the iterative inquiry used to understand and design business organizations. Pragmatic limits to views -- There is a limit to the useful views one takes of a system in order to understand it. The level of views taken depends on the purpose of the inquiry. A prospective tenant of a building may view its appearance, setting, size, and traffic flows. On the other hand, a telecommunications service provider may view the circuitry and wiring. Aspects and business model elements -- An aspect is a particular perspective of the whole that draws attention to particular attributes or variables of the whole. Inquiring by aspect followed by the integration of the aspects, leads to a comprehensive understanding of the whole. Elements, or business model elements, are the particular parts of a system, as is the business organization. These parts are interrelated, the network of the parts and their interrelationships being responsible for the behavioral characteristics, thus capabilities, of the whole. The elements are a place for the answers to the inquiry. The elements and their structure, such as the business model, provide the form the answer to the inquiry takes.
aspect integration inquiryThe comprehensive inquiry is the most extensive of the business organization inquiries. It is used for both understanding and designing a business organization. The aspect integration inquiry is done as a complement to the inquiries focusing on each of the four aspects of the business organization. The aspect integration delves into the interrelationships between the aspects and the competitive advantage factors, those interrelationships which produce competitive advantage. The specific inquiries are as follows -- Aspect combination inquiries -- These inquiries look at the integration of each aspect with every other aspect. More complex integrations will certainly be considered for those element networks most critical to competitive advantage, i.e. three and four way, but the following inquiries initiate the process -- purpose - function -- This is the integration of the purpose, the reason for being in the environment, with the results produced in the environment, including the offerings. Questions... Is the architecture of the purpose congruent with the architecture of the function? Are there portions of the offering that do not support the purpose of the organization? Can the offerings serve a similar purpose on other markets? What is the core customer and market need addressed by the offering? How effectively does the offering fulfill the purpose? What are the gaps between the organization's purpose and its offerings? Is the need broader or narrower than currently defined? What ancillary benefits could be delivered consistent with the purpose? What is the context for the use of the offering? What does the context suggest for opportunities? function - process -- This is the integration of the results produced in the environment, including the offerings, with the processes, the activities and the competencies embedded in them. Assess the harmony between the architecture of the offerings and the processes. Questions... Is the architecture of the offerings congruent with the architecture of the processes? Do the competencies fully align with the offering? Any gaps? How might they be closed? What other offerings use the same or similar processes? process - structure -- This is the integration of the processes, the activities and the competencies embedded in them, with the resources and structure. Assess the harmony between the architecture of the processes and the structure of the organization and value system. These questions are regarding the configuration of the resources and the processes of the business organization. Is the structure of the value system and organization congruent with the architecture of the processes? How we manage the interfaces between different assets, knowledge, and processes? (Hamel, 2002) Can we configure assets, skills, and processes in unique ways? (Hamel, 2002) Has anyone in our industry our domain configured their strategic resources in an unconventional way? (Hamel, 2002) Do they gain any advantage from this configuration? (Hamel, 2002) Can we imagine very different configurations that what we have at present? (Hamel, 2002) structure - purpose -- This is the integration of the resources and structure with the purpose, the reason for being in the environment. Questions... Is the structure of the value system and organization congruent with the architecture of the purpose?
asymmetric informationSee information asymmetry.
ATestEntryThe first test entry.
authentic leadershipSee leadership
authenticitySomething that is authentic is of undisputed origin, genuine, true, trustworthy, truthful, honest, faithful, credible. In the realm of existentialist philosophy, authenticity relates to a mode of human life, one that is emotionally appropriate, significant, purposive, and responsible. Pine & Gilmore on Authenticity -- (Sources: Joe Pine - Various presentations and discussions and (Gilmore & Pine, 2007)) -- Authentic offerings -- Customers value authentic offerings over fake offerings. Business creates the perception of authenticity by rendering the offerings authentic, whether they are fake or real. Offerings are authentic if they are deemed authentic by the customer. An offering that is inherently real, which customers perceive to be fake, is valued as a fake. Authenticity principles -- Polonius advises his son Laertes, ""This above all, -- to thine own self be true; And it must follow, as the night the day. Thou canst not then be false to any man."" - Shakespeare, Hamlet. Principle no. 1 -- Be True to Yourself. What governs the relationship between a person an one's own self. Self-directed traits makes one authentic -- earnest, consistent, etc. Principle no. 2 -- Be What You Say You Are. What governs the relationship between that person others. Other-focused qualities keep one authentic - trustworthy, honest, etc. Axioms of Authenticity -- If you are authentic, you don't have to say you're authentic. If you say you're authentic, you better be authentic. It is easier to be authentic, if you don't say you're authentic. Rendering Authenticity & Fake Offerings -- All economic offerings are inherently fake, thus authenticity must be rendered. Authenticity is more easily understood by noting what it is commonly viewed as not being -- Something is authentic if it is not of man - if it is not done under the rules of society. ...authentic if it is not of machine - e.g. mass production is the height of inauthenticity. ...authentic if it is not of money - i.e. as in ""selling out"", doing something for money, or just for the money. Yet all economic offerings come from man, machine, and are sold for money. Therefore, ontologically, every offering is fake, but phenomenologically, an offering can be rendered authentic. Making a buck is a measure of how well you do in achieving your purpose. Profits are the oxygen every business needs to survive. Authenticity is conformance to self-image - it is personal. Two people may have completely opposite perceptions of an offering or business authenticity. The following 2X2 matrix defines the authentic aspects of an offering. Value can be produced in every quadrant, thus this is a classification of offering types for assessment of the nature of an offering. Real-Fake -- IS what it says it is and IS NOT true to itself. E.g. Universal City Walk in LA. A downtown you can stroll about in is definitely not true to LA. Fake-Fake -- IS NOT what it says it is and IS NOT true to itself. E.g. Metrodome baseball. First it is a football stadium. Second, the hit balls bounce over the fielders' heads. If you don't like something that is fake you call it 'fake', otherwise it is 'faux'. Fake-Real -- IS NOT what it says it is and IS true to itself. E.g. Disney World is a fake fantasy world. This is being very true to the heritage of Disney. Real-Real -- IS what it says it is and IS true to itself. What you say matches who you are. E.g. Baseball in Camden yards in Baltimore. Phony, or inauthentic -- To be seen as phony: 1) move away from your heritage, 2) be untrue to yourself, and 3) say you are something other than what you are. Elements of Authenticity -- Identity -- Authenticity begins with being true to Self. Self is identity - your body of values, substance of purpose (reason for being), effects of heritage, kinds of offerings, and nature of entity. This identity can be discovered, not created. Once discovered, it can be represented. Representing identity -- Representation of identity comes from assigned names of the company and its products, expressed statements, established places of your offering, declared motivations, and displayed appearances. Offering types and genre of authenticity -- Following are ways to appeal to authentic sensibilities by type of offering. Transformation -- Authenticity is associated with influence... calling us to a higher purpose. Experiences -- Authenticity is referential ... it refers to something that is authentic. E.g. Venice, Italy or the Venetian in Las Vegas. Services -- Authenticity is associated with the exceptional ...doing better than you can do it yourself. E.g. Ritz Carlton. Goods -- Authenticity is associated with originality... original in design, not a copy. E.g. Apple, Levis, Coke, Harley Davidson, Tide, Disney. Commodities -- Authenticity is associated with natural ... organic foods, natural cosmetics. Ogilvy - Existentialism, authenticity, and strategy -- (Ogilvy, 2003) -- James Ogilvy addresses what authentic strategy is based on existentialist philosophy. This provides insight from yet another perspective which aligns nicely with the philosophies of Drucker, Collins, Hamel, Prahalad and other strategists. Existential philosophy stresses the importance and robustness of individual choice. Following are characteristics of existential philosophy, their related strategy principles, and the manifestation of these principles in the strategy formation process. Freedom to pursue your passion -- Speaks to caring, pursuing what you truly care about. This aspect is pursued in the discovery of mission and passion in defining the core ideology of the vision. Freedom to find your up-side possibilities -- Speaks to one's throwness or bent, innate skills and abilities from one's experience and DNA - finding out what it is and using it. This aspect is pursued in identifying and defining one's distinctive competency as one of the key three elements of strategic focus. Freedom to decide -- Speaks to one's finitude. All people and organizations have bounds - you cannot do everything. If you don't decide (from Latin decidere-""cut off""), you won't flourish and likely die. This aspect emphasizes the need to focus -- to pursue a passion, build a distinctive competency in pursuit of that passion, and exploit that competency to produce a superior value proposition. The strategic focus sets the bounds of the business organization at a point in time. Freedom to explore -- Speaks to being-toward-death, recognizing the possibility of death and generating the motivation that results in survival. From exercises in strategic assessment, scenario planning, imagineering, risk assessment, etc. - the exploration of possibilities builds strategic thinking skills and business savvy. Being authentic -- Being true to one's passion, freedom, bent, and personal responsibility. Authenticity is being true to yourself, having fidelity with one's past and openness to future possibilities. Strategy is about recognizing one's path dependence while addressing the need to evolve, exploring possibilities for future survival and opportunities to thrive. See evolutionary algorithm.
authenticity inquirySee Authenticity inquiry.docx
autonomous strategy processThe autonomous strategy process is variation increasing, produces a degree of instability, changes the identity of the company, and explores new opportunities. The autonomous strategy process results in strategies emergent to the company which are incorporated into the corporate strategy. (Burgelman, 2002) -- Autonomous strategic action -- Autonomous strategic action involves initiatives of individuals or small groups that are outside the scope of the corporate strategy at the time they come about.Autonomous strategic initiatives typically involve new combinations of competencies (invention) that are not currently recognized as distinctive or centrally important to the firm. They often come about because a company's competencies are fungible and lead to new businesses that are different from the company's core business. Autonomous strategic initiatives may be complements or substitutes from the perspective of the core business. So-called disruptive technologies, for instance, often spring up as autonomous initiatives in established companies. While autonomous strategic action often emerges fortuitously and is difficult to predict, it is not random because it is rooted in and constrained by the company's set of disruptive competencies at any given time. (See path dependence.) Emerging external environments -- If genotype is a metaphor for a company's induced strategy process, mutation is one for its autonomous strategy process. Like most mutations, most autonomous initiatives do not survive because they cannot continue to obtain resources. But like some mutations, some autonomous initiatives are important for the company's continuing evolution. This is so because the autonomous-strategy process typically takes place in unfamiliar, emerging environments. Many of these emerging environments never grow to become important, but some do and may extend (complement) or even replace (substitute) the company's familiar environment. Strategic context -- At the time it comes about, the relation of autonomous strategic action to the firm's current strategy remains indeterminate: top management is not sure about its strategic importance and whether the company has the competencies to successfully pursue it. To resolve the indeterminacy, the strategic context for the autonomous initiative must become defined. Strategic context determination serves to evaluate and select autonomous strategic actions outside the regular structural context (see induced strategy process), usually through interactions of various types of champions and top management. In contrast, to the structural context, strategic context determination processes select initiatives for which official strategy becomes fully articulated after the fact. Strategic context is thus also part of the internal selection environment. Strategic context determination provides top management with the opportunity to evaluate the adaptive potential of autonomous strategic initiatives in an informed way. From an evolutionary point of view, only after it has become reasonably certain that an autonomous initiative is viable can top management legitimately amend corporate strategy. Such amendment, in turn, integrates the autonomous activities with the induced strategic process. The willingness of managers at operational and middle levels to engage in autonomous strategic action is influenced by their assessment of the probability that the strategic context determination process can be activated and successfully completed. Strategic contexts can also dissolve as autonomous strategic action leads new business opportunities to directly compete with existing ones for limited resources. This internal competition may lead to new businesses replacing existing ones, causing strategic business exits through abandonment or divestment. Creating linkage -- A key function of the strategic context is to link new business opportunities to the corporate strategy, thereby amending it. Lacking these created linkages, new business opportunities may be able to linger on for some time in the shadow of the core business but they will become resource starved and forgo the opportunity to demonstrate their full potential. The genetic metaphor for this process is mutation, which changes the genetics of the successive generations of the organization, in contrast to the induced strategy process's metaphor of genotype, where genetic makeup of the organization is faithfully replicated through successive generations. Contextual application -- see strategic dynamics for the contextual application of the induced and autonomous strategy process.
autopoiesisAutopoiesis is a natural process which includes the potential for transformation, the creation of novelty, from within the organization itself. Source: Autopoiesis. Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Autopoiesis (accessed: March 18, 2007). Autopoiesis literally means ""auto (self)-creation"" (from the Greek: auto - αυτό for self- and poiesis - ποίησις for creation or production) and expresses a fundamental complementarity between structure and function. The term was originally introduced by Chilean biologists Francisco Varela and Humberto Maturana in 1973: ""An autopoietic machine is a machine organized (defined as a unity) as a network of processes of production (transformation and destruction) of components which: (i) through their interactions and transformations continuously regenerate and realize the network of processes (relations) that produced them; and (ii) constitute it (the machine) as a concrete unity in space in which they (the components) exist by specifying the topological domain of its realization as such a network."" (Maturana, Varela, 1980, p. 78) ""[...] the space defined by an autopoietic system is self-contained and cannot be described by using dimensions that define another space. When we refer to our interactions with a concrete autopoietic system, however, we project this system on the space of our manipulations and make a description of this projection."" (Maturana, Varela, 1980, p. 89) The canonical example of an autopoietic system, and one of the entities that motivated Varela and Maturana to define autopoiesis, is the biological cell. The eukaryotic cell, for example, is made of various biochemical components such as nucleic acids and proteins, and is organized into bounded structures such as the cell nucleus, various organelles, a cell membrane and cytoskeleton. These structures, based on an external flow of molecules and energy, produce the components which, in turn, continue to maintain the organized bounded structure that gives rise to these components. An autopoietic system is to be contrasted with an allopoietic system, such as a car factory, which uses raw materials (components) to generate a car (an organized structure) which is something other than itself (a factory). dissipative structures -- More generally, the term autopoiesis refers to the dynamics of a non-equilibrium system; that is, organized states (sometimes also called dissipative structures) that remain stable for long periods of time despite matter and energy continually flowing through them. Actually, this flow is what maintains the organization of the open system. A vivid example of such a non-equilibrium structure is the Great Red Spot on Jupiter, which is essentially a gigantic whirlpool of gases in Jupiter's upper atmosphere. This vortex has persisted for a much longer time (on the order of centuries) than the average amount of time any one gas molecule has spent within it. From this very general point of view, the notion of autopoiesis is often associated with that of self-organization.
business"""Business can be defined as a process that converts an outside resource, namely knowledge, into outside results, namely economic values."""" (Peter F. Drucker, Managing for Results, Harper, 1964, page 5) "
BAiBusiness Architecture, Inc.
balanced scorecard
balancing loopSee causal loop diagram.
BaldrigeSee quality.
behavior""Behavior can be viewed as responses in search of pretexts (i.e. stimuli -- reasons, excuses or something put forth to conceal a true purpose) for expression -- (context, Mead's point rephrased) people notice stimuli that permit them to do what they want and/or need to do. Though an organization may contain stimuli unlike those encountered in nonorganizational settings, these stimuli remain only potential stimuli until they are noticed. And Mead's point is that response repertoires control noticing. The person carries this repertoire and its response repertoire and its implications for noticing everywhere. If an observer gains an understanding of response repetoires, and the conditions under which attention is controlled by the content of their repertoires, then a more substantial theory about organizations and behaviors can be built. (Weick, 1979 32). See organizational behavior for the logical extension of this theme to organizations.
being rightSee good-to-great.
BHAGBHAG is an acronym for ""big hairy audacious goal"", a term coined by Jim Collins. It has elements of both idealism and realism. Therefore it is an ambitious goal, not attainable in the short run, for ten to thirty years out. It is based on understanding and fits within what Collin's calls the Hedgehog Concept, therefore it reflects the organization's core values and core purpose. Lastly, it must be clear and compelling. A BHAG, whether given that term or some other, is an essential element of an effective strategy. It further clarifies the direction the organization is going, it reveals the yawning gap between what the organization is today vs. what it can be tomorrow, and complements a compelling vision with clearly established goals. See: jimcollins.com
boundarySystems, or models, are defined by what is within and outside of the system. What separates the inside from the outside is the boundary. A boundary can be though of as having two dimensions -- the extensive boundary, which demarcates what to include and what to exclude, and the intensive boundary, which defines how detailed to be in representing what is included. Boundaries and systems thinking -- The setting of meaningful boundaries for a system is essential to effective systems thinking. Intensive boundaries set too high or too low will miss the meaningful cause and effects being searched for. A rule of thumb is to not include elements in a system that cannot be controlled, especially when building models. The intention of systems thinking is to keep the focus on what can be controlled and improved. Boundaries and self-organizing systems -- Tapping the power of self-organization to drive organization evolution changes the nature of boundaries. With complex self-organizing systems, boundaries are a place of meeting and exchange, rather than defining what is 'inside' vs. what is 'outside.' As new relationships with individuals form to solve problems or develop new opportunities, the traditional boundaries of the organization will be crossed in many ways as solutions are not always found in interconnections with individuals 'inside' the organization. The interconnectedness of stakeholders crosses over the systems view of boundaries.
bounded rationalityThe concept of bounded rationality keeps the concept of rationality from becoming practicably useless (Simon, 1957, pp 33-41). The essence of the notion is that individuals have perceptual as well as information-processing limits, and even though they may intend to act rationally, they can do so only in a limited fashion. This limited fashion consists of action on the basis of sufficient knowledge rather than complete knowledge (the concept of satisficing), ; of using simple, unlaborious rules to search for a solution when a problem arises (e.g., searching in the immediate vicinity of the problem); and of using shortcuts whenever possible. Weick, 1979, pp 20. For the implication of bounded rationality on decision making see localized problem solving.
business""Business can be defined as a process that converts an outside resource, namely knowledge, into outside results, namely economic values."" (Peter F. Drucker, Managing for Results, Harper, 1964, page 5) A business is an application of resources to create products and services to meet the market needs, in relation to the competitors. (Stanley M. Davis, Future Perfect, Addison Wesley,1987) ""A business ... transforms matter, energy, and information from one state into another with the goal of making a profit."" (Eric D. Beinhocker, The Origin of Wealth, Harvard Business School Press, 2006, pg 280)
business architectureBusiness architecture described -- Business design and strategy are inextricably linked, with strategy inferring a business design and business design requiring a strategy. The term business architecture to brings attention to the design side of strategy. Business design and building design are analogous in some respects. Building architecture is the art and science of designing buildings to suit a purpose within an environment. Business architecture is the art and science of designing businesses to suit a purpose in their environment. Architecture refers to the art and practice of design and construction as well as the style, principles, and rules incorporated into the design. A business organization design is implicit in every strategy. Explicit recognition of business design stimulates the ideas and constructs needed to develop a formal body of knowledge on the subject. The ideas and constructs produced through the exploration of the architecture of a business organization stimulates strategic thinking, innovation, and improves upon the strategies produced. The object of strategy is the business organization. The objective of business architecture is to develop design constructs, principles, and guidance to produce better strategy and improving the odds of successful strategy deployment. Systems and architecture -- Both building and business architecture deals with the design and management of systems. As such, they are both multidisciplinary fields. Building architecture integrates mathematics, science, art, technology, social science, politics, history, philosophy and so on. Business architecture integrates management science, economics, systems science, social science, politics, history, philosophy, strategy, quality, and so forth. Architecture is a discipline that rises out of many other sciences. Business and building architecture differences -- As the saying goes, no analogy is perfect. The end result of building architecture is a relatively static monument. The end result of business architecture is a flexible adaptable evolving dynamic system able to transform itself as need be to achieve and sustain a competitive advantage. Well designed business organizations have a flexibility that is unheard of with buildings. Business and building architecture similarities -- Both architectures seek to provide stability and durability as well as suitability to meeting a purpose in an environment. Building stability and durability come from such elements as the foundation, the structural design, and materials. Business stability and durability comes from finding the right stable elements such purpose, mission, vision, and strategic focus complemented by the organization's learning capability and flexibility to reconfigure its resources to adapt to an ever changing environment. Principles of ""business architecture"" -- Design factors -- Architecture requires a design theme consistent with the nature of the environment and the culture of the organization as it needs to be to thrive in that environment Though economic systems and the businesses within them evolve, the business organization does not evolve randomly. It evolves with design guidance that generates, selects, and replicates new technologies that capitalize on current competencies and resources while identifying new competency opportunities which make sense for the organization. As the organization evolves, the congruency of the organization's elements and their interrelationships are maintained or redeveloped as necessary to keep the organization aligned to its purpose. A design direction with a theme, some element of consistency, builds stronger competencies faster than random actions. There is a respect for both path dependence and the evolutionary algorithm to drive business innovation to develop and sustain advantage. Consideration is given to design modularity -- explicitly determining where the stability, performance, redundancy, and flexibility will be in the ""system"" of the organization. A business organization is an information processor. Much like following principles of object oriented software development, establishing the right pattern of design for the modules of the organization will enhance its adaptability, flexibility, and transformability. Modularity is explicitly addressed in designing the overall architecture and sub-architectures of the business model Executes a process which explicitly addresses key elements of the design, their integration, and validation of the expected outcome of the design Architecture is an ongoing process to keep the current business design competitive while observing and updating the design principles and patterns of the business The design recognizes the socio-cultural nature of the business organization as a multi-minded purposive system The design explicitly addresses the learning and transformational needs of the business organization Views a business organization as a system which processes information, develops knowledge, creates understanding, and generates wisdom. See intelligence hierarchy. Making business organization design explicit -- Architecture, as a style, refers to themes and harmonious configuration of the parts of the system being designed. The objective of business design, and strategy, is to produce a competitive advantage. The objective of business architecture is to produce a harmonious business design that enables that advantage to be achieved and sustained. It seeks harmony between the mission, competencies, market demands, offerings, processes, organization structure, and so forth. Architecture thus speaks to the explicit design of the business, begs the question as to what the elements of the design might be, asks how those elements fit together, guides the expression of the design, and demonstrates how the design ties to the business's objectives. Seeking harmony in design -- A business organization design is made up of many 'architectures', the architectures of the subsystems. These architectures include organization architecture, value system architecture, processes architecture, information architecture, etc. Collectively, these architectures form the overall business architecture. The rationale for the explicit pursuit of harmonious design is that the harmonious and thematic design is more efficient or effective than one where there are incongruities in the design. Viewed from an architectural perspective, the incongruities between strategy and business design becomes evident in a quick and meaningful manner. More importantly for the sustained advantage of the business organization, business innovation is energized in an organization when given an inspiring purpose and bounded by a direction where the efforts to innovate and the reward for innovation are harmoniously linked. Architecture and the strategy formation process -- The create art stage of the strategic management process is where the architecture of the business organization is defined. Architecture happens -- consciously or unconsciously, explicitly or implicitly. All businesses have architecture. The question is does it have the right architecture. Architectural design seeks to produce a synergistic harmony between the aspects, the elements, the environment and purpose, the offerings and the processes, the structure and the transformational needs. Designing a new architecture is more challenging than just producing a new business design from the existing architecture. The design stakes are higher because of the investment in developing the design principles, the joining rules for the elements of the business, and the validation of the overall architecture. This investment is expected to pay off in a more flexible and responsive organization which transforms itself more quickly and for less cost. A well designed architecture will serve the business through many generations of business models and ease the pain of the inevitable transformations that keep the business competitive. Knowing ahead of time whether the creative design intends to tackle a full scale architectural design, or not, is important to managing the approach, resources, and expectations of this stage of the process. It may be that the team is not experienced enough to take on a higher-order design. It may be the problems are so pressing that a more immediate response is required. There is also the approach of putting your most experienced people on an architectural design outside of the main strategic management cycle. As the architectural design principles and elements are established, they are fed into the business design process as they come available. A superior architecture can be a significant advantage which is difficult to imitate while it can also be more costly to design and contain greater risks of the design falls short of its objectives. Architectural view of a business organization -- A business organization has an overall architecture made up of several other architectures. Primary foundational architecture -- The foundational architecture of the business organization is a comprehensive architecture covering the whole of the business organization. This foundational architecture is made up of four sub-architectures derived from the four primary aspects of the business organization. (See system aspects). These aspects and architectures, structures of the business model elements, are the basis for the business model and business design construct as well. Function -- There is an architecture of the offerings, with their degrees of modularity, integration, and configurability. The information, insight, relationship dynamics, and pricing all have architectural elements which interrelate with the offerings. The architecture of the offerings is related to the effectiveness with which those offerings fulfill the purpose of the business organization. See function architecture. Process -- The process design both integrates with the other architectures, but also has its own architecture. The modularity requirements of the processes will be determined by the configurability needs and definability of the processes. See process architecture.
business conceptA business concept, as defined by Gary Hamel, is a business model during its conceptualization prior to being put into practice (Hamel, 2002, pp 65-66). Hamel's business model -- Hamel's business model is comprised of the major components of -- core strategy strategic resources customer interface value network The three ""bridge"" components of -- customer benefits -- intermediating between the customer interface and core strategy configuration -- intermediating between the core strategy and the strategic resources company boundaries -- intermediating between the strategic resources and value network The four factors that determine its profit potential efficiency uniqueness fit profit bosters This business model is described in detail in Hamel, 2002, pp 73-118. The BAi business model -- The BAi business model is structured differently than Hamel's model, deriving its structure from the aspects of a social system. The models have similarities in the elements and the queries on the integration and synergy of those elements.
business designBusiness design and strategy -- Business design, or business organization design, is the other side of the coin of strategy development. The output of strategy development is not only the actions to take and performance results expected, but the objective of those actions in the form of a business model which is intended to produce the performance results. Business design innovation stimulates strategy formation; strategy formation stimulates business design innovation. Business design approach -- The business design is done in conjunction with strategy development in the create art stage of the strategic management process. The business model provides a ""guiding light"" to the inquiry processes used to explore design alternatives. Business organization inquiry - with its inquiries such as comprehensive inquiry, strategic focus inquiry, and culture inquiry -- produces idealized designs to spur innovation of the business organization. The comprehensive inquiry delves into all aspects of the business organization, including the aspect integration inquiry that delves into the interrelationships that produce synergy, new unique capabilities, and competitive advantage. Specifically, the inquiry includes an exploration of the competitive advantage factors to further spur innovative thinking in regards to competitive advantage. The resulting design is then the basis for the strategy deployment and the business organization transformation. Business design criteria -- To design a business, for business design innovation to reach its full potential, there must be a business design construct and a design process which meets the following criteria -- Logical derivation and organization of the business design construct -- The business model/business design construct is derived from and organized by the social system construct variables, or aspects, of environment-purpose, function, process, and structure. This forms a holistic structure that guides thinking and organizes the elements of the business model. Completeness of the design construct -- All of the elements of the business organization, all of which can have a role in business design innovation and business definition -- must be expressed in the model. Integral to the strategic management process -- Model preparation of the current state and the business design (next state(s) business model) is integral to the strategic management process. It serves to organize the understanding, innovation, and design processes. Simplify the view of complex businesses -- Without a business model / design construct, the business organization is thousands or millions of elements at various levels of detail and with massive numbers of interrelationships. The organization of the business elements allows for multiple representations of the business, some holistic, some of specific aspects, some at high levels of detail, and some at lower levels of detail. The flexibility of the representation of the business organization of the design construct enables management to focus their attention on the business elements and their interrelationships that are essential to the particular are of focus of the task at hand. The use of the design construct to reflect the current business can also reveal unhealthy complexity of the existing business organization. Following systems thinking principles, the level of complexity employed is determined by what is appropriate for the exercise. Unconstrained creativity and innovation -- The design construct is non-prescriptive as to what the strategy or the structure of the business should be. The construct and the strategy formation processes serve to stimulate unrestricted creativity and innovation of the business design. Strategy expression and validation -- As a logically complete expression of the strategy, the business design construct serves as a test for the congruity and completeness of the strategy to verify that the strategy. Simulation of various types can also test for the expected performance results of the model. Focus, iteration, innovation, and competitive advantage -- The model supports the iterative discovery and learning process necessary to stimulate innovation, develop a competitive advantage, and sustain a competitive advantage. See iterative inquiry. Competency development -- The strategy formation exercises associated with the strategy and business model develop stronger organization member capabilities such as strategic thinking and business savvy. Realistic business assessment -- Preparation of the current state business model serves as a strategic assessment tool as well as an initial step in strategy formation. Objectives of business design -- The ultimate objective of strategy and business design is to develop an organization that sustains a competitive advantage. This objective has several dimensions. Achieving an initial advantage -- In order to sustain an advantage, an advantage must be developed in the first place. In one respect or another, this requires the development of a business model with a unique value proposition. A unique value proposition requires some sort of resource and competency advantage - a distinctive competency. Distinctive competencies are generally developed by people motivated to invent and innovate, producing the technologies necessary for the competency. The motivation does not happen randomly or in a vacuum, but in the context of an inspiring purpose. This purpose has implications for societal improvement -- the world being a better place because of the organization's pursuit of its purpose. It is this purpose which energizes the organization members to innovate. Sustaining advantage -- Though it is difficult to develop an advantage, it is much harder to sustain an advantage over time. A business organization able to sustain an advantage must be designed to be an evolving organization, one that has the learning, exploration, adaptation, and exploitation capabilities to both perform in the here and now while transforming the organization to its next advantageous configuration as the existing one fades over time. Management's job -- In light of the ultimate objective, top management's job is not to create strategies per se, but to design and build an organization that is capable of producing competitive strategies and transforming itself to adapt and evolve to advantageous configurations in an ever evolving economy - producing new business concepts. This requires creating what Hamel (2000, pp 244) calls ""habitually and perpetually innovative organizations."" Business design innovation -- Business design innovation is the conscious pursuit of new business designs with heretofore undiscovered competitive advantages. The premise of the BAi approach to strategy is that business design innovation is a core competency required in order for a business organization to sustain a competitive advantage. ...for competitive advantage -- Business design innovation is the means to compete without competing directly. With a unique configuration of business model elements, each business model can be designed to produce a unique value for its customers in a way that is not easily imitated. A business organization has a unique context, competencies, values, mission, culture, etc. Therefore, a business organization design is impractical to replicate. The impracticality of replicating a business model is both due to its complexity and the principle of path dependence.>/p> Development of a business model with a unique advantage is the strongest and most durable form of competition due both to the superiority of the model vs. competitors and the impracticality of replicating the business model. Practically, the only way to defeat a superior business model is to create yet a better model, which is no trivial achievement. This approach to competition avoids the head-to-head competition of similar offerings, produced by similar processes, delivered in similar ways. The objective of business design is to produce an 'unfair' advantage in meeting the needs of the market. ...techniques (Hamel, 2000, pp 138-144) -- Gary Hamel identifies techniques to stimulate the rethinking of a business design (model) in order to spur business model innovation. These techniques are meant to deconstruct the existing set of beliefs around ""what business were in"", ""how we make money"", ""who our customers are"", and so on, then move on to the design of more competitive business models and form strategy based on those models. Those techniques are summarized below. See Hamel, 2000 for further explanation. Make existing paradigms, models, & constructs explicit Explore conflicts & incongruities Challenge convention ""Why"" and ""what if"" - questions to ask on a regular basis Let non-experts ask stupid questions Explore pushing out performance boundary conditions Find the ""and"", eliminate trade-offs Distinguish between form and function - distinguish between the function and the thing Strategy & innovation, not budgets and operations - see strategic vs. operational. idealized design (Ackoff, 1999, pp 87-105) -- See idealized design. Design rules for perpetual innovation (Hamel, 2000, pp 244-275) -- Gary Hamel developed the business design rules for building an organization which habitually and perpetually innovates, thus achieving and sustaining competitive advantage in an evolving economy. These rules are summarized below. See Hamel (2000) for further explanation. Unreasonable expectations - no company outperforms its aspirations. See vision and purpose for a discussion of the power of purpose and ambitious goals related to that purpose. Elastic business definition - sorting out ideology from goals, actual laws from perceived dogma, principles from practices, frees up the organization to see possibilities in line with their values and inspiration reason for being. A cause, not a business - being wedded to a cause is inspiring, motivating, and energizing - leading to ongoing innovation in pursuit of the cause. Being wedded to a business leads to mediocrity if not extinction - all businesses lose their ability to survive over time. An explicit and promoted transcendent purpose gives people the courage to challenge the status quo and transform the business. New voices - New thinking and voices must continually incorporated into the organization. See March (1991) for he vital role of new members and thinking in sustaining an organization. In a turbulent environment with a significant number of competitors, exploration, which brings in an influx of new knowledge from members, new technologies, and cultural diversity all increase the variability of change in knowledge in a positive way, which increases the odds of an organization having a competitive advantage. An open market for ideas - Encourage and invest in new ideas within the organization much like the venture capitalists do outside the organization. An open market for capital - Use venture capital investment criteria - do not screen innovative business concepts based on operational capital investment criteria. An open market for talent - The best talent will go where their talents can produce the best upside for themselves. Get the best talent on the best new opportunities and offer the chance for wealth accumulation that comes with successful ventures. Move from resource allocation to resource attraction, having ideas attract people and investment based on the merit of the idea vs. having a centralized planning function allocate resources from on high. Low-risk experimentation - Experimentation is a must for creating variety and testing hypotheses. Experiments are just that, experiments. Risk is contained. Many experiments lead to increase learning and innovation without ""betting the farm."" See evolutionary algorithm and exploration. Cellular division - Free up new business models from the current dominant model. Though this reduces the potential for scale, it results in speed, flexibility, and focus. Personal wealth accumulation - To develop entrepreneurs, provide entrepreneurial rewards. Decouple compensation from hierarchy and tenure. What business design (model) innovation it is not (Hamel, 2000) - It's typically not blue sky R&D. This type of innovation coming from big science typically removes physical constraints to innovation. Business model innovation needs to deal with removing mental constraints. Industry revolution is conceptual innovation. Forecasting attempts to predict what will happen. This is largely futile. The future is unpredictable. Typically, not scenario planning, which is typically threat focus versus opportunity focus. Strategic flexibility, which certainly helps one to reconfigure products, channels, and skills is essential to maintaining one's relevance in a world that is dynamic. But agility is no substitute for a vision of a radically new business model. If a company is no more than agile, it will be a perpetual follower.
business design constructThe business design construct is a template to guide the inquiry to understand and design the business organization. This construct's structure reflects the aspects of a social system and the elements that make up a business organization. The business design construct and the business model are based on the same template. The term 'business model' refers to the use of the construct to define a particular business organization - defining its elements and their interrelationships. See business model for a comprehensive explanation of the design construct, or model.
business ecosystemThe term business ecosystem stands in contrast to the term environment. The term environment technically means anything outside of an organization. Practically, especially in the realm of strategic management, it takes on the connotation of the most powerful frameworks. The most powerful, influential strategic management framework has been Porter's Five Forces Model that essentially defines environment as industry. This definition is not true to the intent of what needs to be considered 'environment' in order to survive, thus the term 'business ecosystem' came to reflect the more expansive view, and correct view, of environment. The term as used in this strategic management framework -- The term business ecosystem refers to the environment containing a business organization. It is essentially the same as a business environment, ecosystem has a more provocative connotation. This connotation addresses -- the systems nature of the environment and the elements making up that environment, the dynamic interactions of these 'external' systems and the business organization, the evolutionary nature of the environment, the adaptation of the organization, and the coevolution of the business organization and its environment. The ecosystem both sustains and threatens the organization. An alternative usage of the term -- The term business ecosystem has been used to refer to a specific type of environment where ""...clusters of companies that locate their operations in close geographic proximity to each other with a defined focus on a specific type of business or technology. Within the broader focus, these companies may be quite diverse, but they are brought together by the complementary nature of their activities and, in particular, by the perceived value in accessing shared knowledge. A variety of specialized infrastructure service businesses, including finance, legal, executive recruiting, accounting, consulting, and marketing and public relations firms, help provide some of the networks that link the practitioners in these diverse businesses. In addition, other institutions like universities and government agencies may also serve both as magnets and as network nodes within the local business ecosystem."" (Hagel III, 2005).
business intelligenceBusiness intelligence describes the criteria for or abilities related to intelligence that enables effective business performance. cognitive astuteness -- the ability to learn and think strategically. See strategic thinking. technical expertise -- the essential crafts we learn to get work done emotional intelligence -- the ability to manage ourselves and our relationships business literacy -- a working familiarity with key thinking and writings that business people need to keep up with in order to capture insights that make a practical difference -- adding to their business intelligence. business wisdom -- tacitly learned decision rules -- life's lessons -- which constitute the sum total of our wisdom on the matter. A distinguishing quality of business intelligence is the speed of access to key expertise. Source: Goleman, Daniel, (2006), Business Intelligence, in Business the Ultimate Resource, Basic Books, xlv - xlix
business modelWhat follows is the template for a business organization. In its generic form, as presented here, the template can be referred to as a 'business design construct' to distinguish from the same template used to define a particular business organization, in which case the term 'business model' can be used. This usage of these terms is only a suggested possibility. In business literature, there are a variety of definitionsnew of 'business model'. On one end of the spectrum is 'how a business makes money'. This is clear, crisp, and certainly of critical importance. What this definition lacks is guidance as to what to do next to either assess or design a business model. On the other end of the spectrum of definitionsnew is the business model as a comprehensive collection of elements and a structure that represents the totality of a business organization. This type of model is facilitates inquiry and is comprehensive enough to reflect the intended outcome of the actual workings of the current business organization or a strategy. The BAi 'business model' is a comprehensive model. Structure of the BAi model -- The structure of the BAi business model is based on the four aspects, or perspectives, of the business organization -- purpose - environment function processes resources & structure Basis for the BAi model -- The business model definition is based on the systems science definition of the business organization as a complex social system. Systems science is the science of complexity -- complex problems and systems. In addition, the model that follows has been developed by BAi consistent with idealized design, systems principles, the inquiry process, and iterative design principles. Strategy and the model -- Strategy is about the creative innovation of the business. Thus strategy is about designing a business. In order to design something, we must be able to define it, model it, describe it, understand its nature, know its principles, and appreciate its dimensions. If we intend to transform a business, we must be able to understand its current state, its future state, and the gap between the two. A business model guides the business organization inquiry - serving as template to initiate inquiry for understanding the existing state and as a starting point for the inquiry to define a future state. The business model and competitive strategy go hand-in-hand. The business model is a representation of the business whether ""as is"", ""to be"", ""idealized"", ""projected"", or ""planned"". The business model shows the elements of and interrelationships of these elements that make up a business organization. The more explicitly defined and synergistic these elements are the greater the business's competitive advantage. Knitting business model elements together, showing their relationships and interdependencies, expresses the strategy as a business model while providing a blueprint to guide the strategy implementation. The model furthers our understanding of the business as a system. Understood as a system, the better the model elements integrate and compliment one another, the stronger the business model, thus the strategy. The strategic elements making up the business model are described below in logical groupings and sequence. Model - the real and the representation -- A business organization is made up from elements, such as offerings, processes, and people, and their interrelationships. The business organization model represents the actual business organization. This representation serves as a means to classify the elements and understand their interrelationships, thereby understanding the behavior and capability of the business organization. In regards to business innovation and design, the model, as a design construct, serves as the guide. Business model or Business design construct -- When the model is used to facilitate business design and business model innovation, it is referred to as a business design construct. In this case the model serves as a guide for the innovation and design process. The model encourages completeness in thinking through what the business organization is or should be, serves as a mechanism to stimulate innovation, and prompts thorough understanding of the business organization's behavior due to the interactions of its parts. Model - innovation, design, and strategy -- The business model, as a template, serves as a framework, at guiding light, which shapes the inquiry process to understand the business organization. The business model, as a design construct, serves as a starting point, as a guide to the inquiry process for business innovation and design, to define a new or improved business organization. There is nothing about the model -- as a template, construct, or guide -- to constrain the design. If over time the model is found to be incomplete or elements need new classifications, the model could be updated to reflect those needs. Business models and mental models -- Mental models and business models are interrelated. Explicitly understanding the mental models of the members of the organization regarding their business flushes out mental constraints members typically place on business model innovation. See mental models for an explanation. Elements vs. aspects -- Business elements, the parts of the business, are associated with the aspects of the business organization in the business model construct. The elements, though organized by aspect - purpose, function, process, and structure -- do not constitute an aspect. An aspect is a perspective by which to view the business organization as defined above. Said another way, aspects are perspectives of a system and elements are parts of a system, and though for business model representation purposes elements are associated with aspects, the aspects do not ""own"" the elements, that is, an aspect is not a super set made up of parts most visible to that aspect. Thus a particular set of business model elements may be more visible from a particular aspect, but are not ""parts"" making up the aspect. All of the business model elements are visible from any of the aspects, some are just more clearly visible than others. For example, offerings are most clearly visible from the function aspect, but the elements of mission, values, behavioral principles, inputs, and processes are visible as well, if the inquirer looks for those elements as well. All elements are to be viewed, discerned, and contemplated from every aspect at some time during the inquiry process. For example, inquiry on the integration of the aspects requires viewing all of the elements from multiple perspectives. Collectively, the elements making up a business organization are connected in a practically indecipherable network of interrelationships. What the aspects provide is a perspective for inquiry on this mess of interrelationships and to draw attention to a particular subset of elements in the process. This does not mean that the elements of purpose can only be ""seen"" from the purpose aspect. For example, they can also be viewed, discerned, and contemplated from the aspect of function, which is the output of the business organization. Business model contents and structure -- The model structure is based on the system aspects. The elements by aspect are listed below. For more discussion related to the elements see the associated architectures -- purpose architecture, function architecture, process architecture, and structure architecture -- and the associated aspects -- purpose aspect, function aspect, process aspect, and structure aspect. Purpose - environment aspect -- environment -- The environment includes all that is important to the business organization that is outside of its boundaries. The environment is where, or the context within which, the organization defines it purpose. The environment elements include -- Market -- where the firm chooses to compete Competitors -- those firms that compete directly, indirectly or in any other way with the offerings of the firm. Industry -- the collective group of suppliers, affiliates, channel partners, competitors, etc. that make up the industry. Industry can have multiple definitionsnew for a specific firm. A producer of vinyl lineals may be in the window industry, pipe industry, lineal extrusion industry, or construction industry simultaneously. Stakeholders -- Can refer to anyone or party that has some economic exchange with the business. This would include employees, owners (investors), lenders, debtors, suppliers, customers, and the governments (local, state, national, international). Going beyond immediate transactions can include the community at large, beyond governing bodies. Some businesses are held accountable for the communities of their suppliers. Also, affected by the business are future generations. Environment-Purpose aspect -- purpose -- The objective of the business model elements associated with the purpose aspect is two-fold - first is to be purposeful and provide organizational focus and second to seek solutions and opportunities in the environment. These objectives are pursued by the leaders of the business via the strategic management process. The purpose elements include -- Vision (Jim Collins' term) core ideology values - essential and enduring tenants of the organization. Timeless guiding principles. purpose/passion - the organization's fundamental reason for being. envisioned future achievements to be - lofty inspiring and guiding goals well beyond the existing planning cycles. BHAG's. vivid descriptions - a picture of a better world because the organization pursues its purpose. identity -- Identity is the fundamental characteristics of the organization and its members -- those characteristics members most strongly value and form the basis for how they identify themselves. A coherent sense of identity is what frees people to contribute in creative and diverse ways. See identity. Identity is the sense-making capacity of the organization. It is the organization's sense of self, the touch point for all decisions and the collective organization knowledge of who it is. This sense of self, i.e. identity, includes vision, mission, values, and plus factors related to the path the organization is on. This worldview includes interpretations of its history, present decisions and activities, and its sense of the future. (Wheatley, 2005, pp 37-39) Function aspect -- The objective of the business model elements associated with the function is to provide value to the environment in pursuit of the business organization's purpose. Function encompasses offerings, outputs, ends, and effect (see function aspect). Function elements include -- all offering types - commodities, goods, services, experiences, and transformations fulfillment and support - what the business does to market its offerings, reach, service, and support customers information and insight - information exchanged between the customer and the business relationship dynamics - the nature of the interactions between the customer and the organization pricing structure - pricing related to the offerings and their value to the customer value proposition - the value proposition to the customer typically has multiple dimensions, including customer sacrifice customers - even the customers themselves have a pattern to be understood in terms of its architecture and implications for the business organization Process aspect -- The objective of the business model elements associated with the processes is to produce the function. These elements are the activities of the business organization. All activities of the business organization fit the following process classification -- throughput processes - these are the processes which generate and distribute wealth for the business organization demand creation -- branding, advertising, placement, image management sell -- calls, problems solving, contracts, negotiation order -- order taking, offering configuration, order configuration, order processing plan -- plan capacity, plan orders, plan delivery source -- supply base development, supplier selection, resource acquisition, inbound logistics make -- value add processes, material conversion deliver -- channel development, offering delivery, outbound logistics service -- post-delivery servicing, remote support, on site support return -- return mistakes, warranty, end of life organizational processes - these are the processes that enable the throughput and creation of future potential processes measurement -- generate truth; the generation and dissemination of information, understanding, and knowledge decision -- making choices; creating power-to-do; development and duplication of power, authority, and responsibility; provide governance membership -- create commitment; provide meaningfulness and excitement of what is done conflict management -- formation and institutionalization of values for regulation of behaviors and decisions creation of future potential - processes to develop new capabilities, offerings, and businesses skills development -- development of the capabilities of the members of the organization innovation producing processes (see types of innovation) -- research -- search for new technologies process development -- development of new process capability offering development -- development of new offerings business innovation -- business model innovation to improve value provided and the efficiency in delivering that value business startup -- the creation of whole new business models management innovation -- a marked departure from traditional management principles, processes, and practices, or, a departure from customary organizational forms that significantly alters the way the work of management is performed (Hamel, 2006). strategic management -- at its core, strategic management is about producing the ongoing innovation needed to evolve the business organization, sustaining its competitive advantage. competencies -- What are the competencies required to conduct business? Which of those are core to the business, as in critical to the value provided by the business and its strategic success? Of those, which ones are distinctive, unique and critical to a competitive advantage? What is your business better at than anyone else in the world? What could your business be better at than anyone else in the world? value system processes -- What are the processes from the origination of the value system to the end customer and the end of the product life cycle? What are the costs and value added by process? What is the performance by process? Resources & Structure aspect -- The objective of the business model elements associated with the structure is to organize and make available the resources of the business organization. Structure encompasses resources, inputs, means, and cause (see structure aspect). Structure elements include -- Resources -- people -- leaders, managers, innovators, and architects, among others, whose capabilities enable the competencies of the activities of the organization financing -- the sources of capital to fund the firm functional expertise - includes the skills needed by the members of the organization to effectively carry out the activities of the processes of the organization. Functional expertise relates to the skills of individuals in contrast to the competencies of the organization. How skilled people are organized and how effective the process designs are key factors determining the level of competency of the organization. entities -- partners, suppliers, aligned organizations which are essential to the value creation of the organization strategic assets - include tangible and intangible assets - brands, patents, oil field leases, mineral rights, infrastructure, proprietary standards, secret formulations, etc. The more unique and valuable these assets, the more the opportunity exists for them to contribute to a competitive advantage. other necessary resources - includes any non-strategic resources or assets that are necessary to organization to carry out its business, whether people, skills, other physical assets, partners, suppliers, and alliances. consumable resources for conversion - includes those resources acquired and converted to add value, even if the conversion is only to deliver the acquired resources. techniques - particular methods or secrets that produce unique value. brand names contracts equipment, etc. Structure -- networks - personal networks are informal, formal, internal and external. Informal networks often have greater influence in an organization than the relationships displayed on the organization chart. principles - organizational, business, and management principles which guide behaviors -- lessen the need for explicit detailed rules and higher level decision making in response to events and opportunities. ownership - those who hold ultimate sway over the organization. governance - the ultimate authority from which all other authority flows. organizational structure - is certainly the structure of the human resources of the business organization, but more importantly it is the decision making structure of the organization. As the decision making structure it addresses both who and how decision get made - addressing one of the key purposes of a social system, effecting choices. The decision making structure creates the power-to-do within the organization, duplicating power from the very top of the organization down to lower levels (see social system). The lower the level decisions can be made, guided by such things as values and principles, enabled by such things as skills and business savvy, the more efficient decision making is and the more responsive the organization is to events, whether those events are problems or opportunities. value system structure - the organization and ownership of the network of activities making up the channel, supply chain, value chain, and overall value system. This structure determines the degree of control and influence over the value produced by the value system and who collects the benefits of providing the value. physical configuration - addresses the physical structure and geographical location of the assets of the business organization, including its members. Physical location has not only significant impact on costs for such things as the distribution of goods -- but also for the type of community which is best for attracting and retaining the right members for the organization and the culture of the area where the organization is located. Certain types of businesses thrive best in a business ecosystem of similar businesses, such as financial companies in Manhattan and high tech firms in silicone valley in California. Also, the culture of countries have a significant impact on the financial success of their business organizations. information architecture -- the information and its structure which enables the processes of the business organization. culture -- stories, rituals and routines, symbols, organizational structure, control systems, power structures, communications, incentives.
business model elementElements - the parts of the business model -- Business model elements, or simply elements, represent the parts of the business organization. The parts are essentially sub-systems of the business organization. The elements represented in the business model and business design construct are at a low enough level of detail to provide a level of granularity that brings ready understanding to the business model based on the collective elements without an overwhelming amount of detail. On the other hand, each of the elements can be broken down into further granularity for purposes of understanding and design. For example, an offering can be further broken down - goods (vs. service), windows (vs. doors), and further by size, glazing, color, hardware, etc. - to a level of granularity suitable to the purpose. Value chain processes can be decomposed - a fulfillment process into a multitude of sub-processes all the way down to specific tasks. Organization structure can be decomposed - into business units, functions, departments, groups, teams, jobs, and even members. The inquiry on the elements will take each element to the level of detail appropriate for the purpose of the inquiry and no further. Strategy development addresses at least the highest level elements to insure it holistically addresses the business organization. This insures completeness, a consideration of all key interrelationships of the part of the business organization, and compliments the inquiry by aspect (see iterative inquiry). Elements organization -- The business model provides the elements in a structure that serves as a guiding light for the inquiry processes used in strategy formation. A comprehensive model, including aspects and elements, is required to understand and define the business organization for the purpose of strategy development and to convey the business organization design for strategy deployment. In developing the model, the aspects and elements play off of one another. When inquiring on an aspect, attention is drawn to elements, or the need to define the elements, relevant to the inquiry. When observing the business, each part begs the question as too what element it is, or is part of, and what the view of that element is from various aspects. Through this inquiry process, aspects then become a natural framework for organizing the business elements, thus providing the primary structure for the business model. Elements vs. aspects -- Business elements, the parts of the business, are associated with the aspects of the business organization in the business model construct. The elements, though organized by aspect, do not constitute an aspect. An aspect is a perspective by which to view the business organization as defined above. Said another way, aspects are perspectives of a system and elements are parts of a system, and though for business model representation purposes elements are associated with aspects, the aspects do not ""own"" the elements, that is, an aspect is not a super set made up of parts most visible to that aspect. Thus a particular set of business model elements may be more visible from a particular aspect, but are not ""parts"" making up the aspect. Collectively, the elements making up a business organization are connected in a practically indecipherable network of interrelationships. What the aspects provide is a perspective for inquiry on this mess of interrelationships and to draw attention to a particular subset of elements in the process. This does not mean that the elements of purpose can only be ""seen"" from the purpose aspect. For example, they can also be viewed, discerned, and contemplated from the aspect of function, which is the output of the business organization.
business model innovationBusiness model innovation refers to business, business organization, business concept, business design innovation, and business organization transformation which produces a competitive advantage based on how the business is defined, designed, and carried out by the organization. See business design for business design innovation and see innovation for innovation in general.
business objectivesEstablishing meaningful objectives is essential to strategy development. Objectives are set to guide behavior in achieving the business purpose. To help orient thinking for forming specific objectives, here is a generic set of business objectives provided by Russell L. Ackoff (1981, pp 30-45): Survival - continue to exist Growth - increase in size or numbers Development - an increase in capacity and potential Omnicompetence - unlimited power to (the ability or capacity to perform effectively) vs. power over (might or authority). Omnicompetence is an ideal. ""Businesses exist only for their economic function, and if they have no economic function, they have no reason to exist."" (Kay, 2004, pp 92).
business organizationA business organization is one or more businesses controlled in common by a person or group of people. An organization may have one or more businesses. A business may not have more than one organization. Even in the case of franchises, the franchisor is a different business model than the franchisee, even though they exist symbiotically in the same value system. The contractual relationships that bind them differ significantly from the employer-employee relationship that exists within the organization. Business and organization are inseparable. They are simply two aspects of the one thing. For example, note the impact of culture (organizational DNA) on business success or failure. Therefore, business and organization are melded together into business organization as the subject of strategy and strategic management. Why business organizations exist Business organizations form to minimize transaction costs over the transactions costs of a network of freelance contractors. The firm eliminates at least two costs it would have if it instead used the price mechanism to ""organize"" production: (1) discovering what relevant prices are, and (2) the costs of negotiating and concluding a separate contract for each exchange transaction. This includes the cost of incomplete contracts and ""hold-up"" problem of a unique asset owner threatening to back-out unless they get a better deal. (Coase, 1937) Organizations are a vehicle for collective learning, providing a collective storehouse of wisdom, capabilities, and business model designs. (Beinhocker, 2006) An organization exists for a purpose. Hopefully for a moral purpose, or ideal, that is never fully achieved. The organization's pursuit of its purpose requires a structure for cooperation to endure for long periods of time, beyond the people's tenure in the organization. Enduring beyond the tenure of individuals enables more effective pursuit of purpose, with more complex business models, than could be attained if all people were freelance contractors. Objective of business organizations ""...the living company exists primarily for its own survival and improvement: to fulfill its potential and to become as great as it can be."" (de Geus, 1997) To endure (Wheatley, 2005, pp 73). If organization does not have endurance as a guiding principle, the organization members will not be inspired to invest themselves in perpetuating it. Members commit to organizations to the degree organizations commit to them. An organization's long-term commitment releases member's energy and creativity with the inferred promise of long-term engagement and rewards. Nature of business organizations Recognizing that organizations are not machines, but complex self-organizing systems, the principles and methods for effective management, leadership, and change do not fit the command and control model that has been so prevalent in much of management training and practice. See self-organization. Business organization design The flip-side of strategy is business design. The strategy is the actions and their objectives while the business organization design reflects the intended result of those actions. Business design serves both as a stimulus to strategy development, strategy validation, and the design itself, as a documentation of the hypotheses of the strategy. Given that competitive advantage is temporal, business organizations must be continually redesigned and transformed in order sustain advantage. In order to develop an effective design process, the essential attributes of the business organization must be identified. From systems science we find that a business organization best fits what is described as a social system. The construct of a social system provides the basis for legitimate inquiry of a business organization. Bach!
business organization aspectsAspects - a basis for holistic inquiry -- The business organization, being the object of strategy, is the object of inquiry. Strategy requires comprehensive inquiry to produce a deep understanding of the business organization, such as its role in its environment, its behaviors, and its competencies. Competitive advantage, the objective of strategy, is produced from the synergetic interactions of the network of elements making up a business organization. The business elements are representations of parts of the business organization from major subsystems down to, potentially, specific people, processes, principles, etc. Given the complexity of the elements, their variable levels of granularity, and their interrelationships -- effectively tackling the understanding and design of a business requires a simplifying systematic method. Given the systems nature of the business organization, social systems serve as the model for inquiry. The inquiry process, integral to strategy development, is guided by this model. The social system defines the four primary aspects upon which the inquiry process depends to produce a holistic, balanced, and comprehensive understanding without complexity overwhelming the inquirer. An iterative inquiry based on these aspects can then proceed to find the 'truth of the matter', being a simplified but holistic method for systems inquiry. This approach avoids the complexity involved with an inquiry on the business model elements and their interrelationships. Aspects and inquiry (Gharajedaghi, 2006) -- An aspect is a way of viewing a complex system. It is a perspective of a system. Aspects provide the basis for inquiry to understand and define systems. Predefined aspects are the 'preconceived notion' required as a starting point for an inquiry process. (See inquiry for a discussion of the 'preconceived notion'). The four basic aspects -- environment-purpose, function, process, and resources & structure -- are derived from the most basic attributes of a system - outputs, process, and inputs with a purpose in the context of its environment. For inquiry purposes, these aspects are then defined as variables of a system. To be the basis for effective inquiry, these variables must be - mutually exclusive, interdependent, and collectively exhaustive in explaining the system. The inquiry to find the 'truth of the matter' regarding a system is analogous to solving a multivariate equation. These variables co-produce one another, therefore, technically, no one variable dominates others. The variables and multidimensionality -- The rational basis for the selection of these particular variables goes beyond the basic systems attributes. The system characteristic, or behavioral principle, of plurality aids in bringing further understanding and definition to the variables (see social system for a discussion of multidimensionality and plurality). The principle of plurality states that systems can have multiple structures, multiple functions, and multiple processes to produce the same output from different inputs and produce different output from the same inputs. A single structure can produce multiple functions (e.g. one business organization can have a diverse set of functions, i.e. outputs, or the function of fitness training can be produced by multiple means). A single function can be produced by multiple structures (e.g. financial planning is provided by many types of organizations). Processes, rather than initial conditions (the 'cause' of 'cause and effect') are responsible for future states. There is both equifinality -- where a final state may be reached by a number of routes from various initial conditions and multifinality -- where similar initial conditions can lead to dissimilar end states. Note: this principle does not abolish the effects of path dependence. Structure, function, and process work together to fulfill a purpose within the environment. The primary aspects -- The definition for the aspects is not as simple as the terms input, process, and output might imply. Those terms don't convey the full nature of the variables that meet the requirements of mutual exclusivity and collective exhaustiveness in holistically describing a complex system. For example, inputs and outputs encompass such notions as means and ends, cause and effect, and resources and outcomes. Processes are also more than activities strung together; they include the embedded know-how of the organization to perform those activities. And of course these three variables are meaningless without a context to give them a purpose within an environment. The four primary aspects are defined as follows -- Function -- the outcomes or results produced based on the system's function, or role, in its environment; what a system does to fulfill its purpose. Function entails the notion of effect, the change in the environment due to the function. Related to this is the notion of ends, the sake for which the function is performed. The notion of output is included as well, both as something supplied by the system and as a place where offerings and information leave the system. Process -- the network of activities and the know-how to produce the function; how a system acts to fulfills its purpose. This entails the notion of competencies embedded in the activities that add value in producing the function. These activities producing the function in fulfilling its purpose make up the organization's portion of the value system. Process fills the gap between structure and function - between cause and effect, means and ends, and inputs and outputs. Resources & Structure -- the components and their relationships; how a system is organized and resourced to fulfill its purpose. This entails the notion of cause, the thing that gives rise to action, prescribing which events have which effects. Another related notion is means, especially as related to technology, both physical and social. Structure encompasses the notion of input, what is taken in by the processes in producing the function. Environment - Purpose -- the system's reason for being. Why a system exists in its environment. Purpose provides the system an identity and the context and meaning for the function, process, and structure. The purpose is defined by what's important to the business outside the business boundaries. Aspect interrelatedness and competitive advantage -- The inquiry of aspect interrelationships achieves an integrated holistic understanding of the whole. This inquiry gets at how the aspects synergistically combine to produce the uniqueness, efficiency, and other factors of a competitive advantage -- The purpose is defined in the context of the environment. The purpose determines the function. The function fulfills the purpose. The function specifies the process requirements. The process produces the function. The resources feed and perform the processes The structure organizes the process activities. The structure reflects the purpose. The purpose provides for the structure. The structure is the means, the function is the ends Aspects correlation with schools of management (see Gharajedaghi, 2006) -- Interestingly enough, the historical development of the discipline of management can be correlated with a shift in focus from one aspect to the next. The classical school of management prevalent in the first half of the 1900s focused on structure and resources. This focus produced such structures as Ford's River Rouge plant with its integrated resources from steel production to finished automobiles and GM's divisional structure which dominated management thinking for decades. Debates still rage today over the best structure of an organization. Under this school of management, the key approach to thinking is analytical. The neo-classical school came along later in the 1960s. It is characterized as management by objectives with its focus is on function. It has been a basis for many management techniques. It has reached significant heights with such techniques as the balanced scorecard and strategy mapping. Under this school of management, the key approach to thinking is synthesis, with the integration of objectives to produce outcomes. The total quality movement, which began mid-century, first reaching maturity in Japan and moving into the U.S. and elsewhere starting in a big way in the late 1970s, is preoccupied with processes, their control, and their improvement. Lean and six-sigma have developed to new heights in this school of management. Under this school, the key approach is process control, a blend of analytical and synthetic thinking. There are even hints of a school of management forming around purpose, with the attention to values, principles, authenticity, and environmental sustainability (the green movement) ascending in recognized importance. If there is such a school of management, its focus is on purposeful thinking. The answer to competitive advantage does not lie in any one school of management, but in the holistic and systematic approach that recognizes the role and importance of each of them. Aspects and the inquiry process (Gharajedaghi, 2006) -- The inquirer focuses their inquiry on each aspect, one aspect at a time, then considers the integration of the aspects. This approach avoids several potential pitfalls - the inquirer being overwhelmed by the complexity of the overall system and its interrelated parts, the failure to integrate the views to understand their interdependencies, and the inquirer unknowingly limiting their inquiry to one or two aspects of their own making, falling short of a holistic understanding of the system. See inquiry, systems inquiry, and iterative inquiry. Aspects and business models -- The four basic aspects form the basis for the business model. The strategic management process uses the model to guide the inquiry of the business organization. The model structures and elements act as the guiding light for the inquiry. A comprehensive model, including aspects and elements, is required to understand and define the business organization for the purpose of strategy development and to convey the business organization design for strategy deployment. The model inspires business design innovation through iterative inquiry of the interrelationships of the aspects and elements, seeking new advantage creating configurations. In developing the model, the aspects and elements play off of one another. When inquiring on an aspect, attention is drawn to elements, or the need to define the elements, relevant to the inquiry. When observing the business, each part begs the question as too what element it is, or is part of, and what the view of that element is from various aspects. Through this inquiry process, aspects then become a natural framework for organizing the business elements, thus providing the primary structure for the business model. Elements vs. aspects -- Business elements, the parts of the business, are associated with the aspects of the business organization in the business model construct. The elements, though organized by aspect, do not constitute an aspect. An aspect is a perspective by which to view the business organization as defined above. Said another way, aspects are perspectives of a system and elements are parts of a system, and though for business model representation purposes elements are associated with aspects, the aspects do not ""own"" the elements, that is, an aspect is not a super set made up of parts most visible to that aspect. Thus a particular set of business model elements may be more visible from a particular aspect, but are not ""parts"" making up the aspect. All of the business model elements are visible from any of the aspects, some are just more clearly visible than others. For example, offerings are most clearly visible from the function aspect, but the elements of mission, values, behavioral principles, inputs, and processes are visible as well, if the inquirer looks for those elements as well. The inquiry on the integration of the aspects requires viewing all of the elements from multiple perspectives. Collectively, the elements making up a business organization are connected in a practically indecipherable network of interrelationships. What the aspects provide is a perspective for inquiry on this mess of interrelationships and to draw attention to a particular subset of elements in the process. This does not mean that the elements of purpose can only be ""seen"" from the purpose aspect. For example, they can also be viewed, discerned, and contemplated from the aspect of function, which is the output of the business organization. Other than holistic inquiries -- Aspects and their interrelationships are tailored to the needs of the inquiry. The four aspects described above support a comprehensive holistic inquiry of the business organization. There are other inquiries which focus in on a subset of the whole. I the case of these inquiries, the 'aspects' are subsets of the full aspects. Strategic focus inquiry -- The strategic focus is the ""sweet spot"" where an organization's distinctive competencies are used to produce a unique value proposition in passionate pursuit of its purpose. The aspects of the strategic focus include parts of the other four - core ideology, fundamental value proposition, and distinctive competency. See strategic focus. Culture inquiry -- Culture emerges from the fundamental organizational processes of the business organization. Given the power of the culture to replicate the organization, like the DNA of an organism, culture must be addressed explicitly in order to transform an organization. Culture requires effective inquiry as part of strategic management. See culture. Customized aspects -- Once the concept of an aspect is generalized to be a view of the business organization to guide inquiry, the possibility exists to develop other aspects tailored to suit the need of a particular inquiry.
business organization designSee business design.
business organization inquiryBusiness organization inquiry serves to develop understanding of and designs for the business organization. The inquiry process effectively serves both objectives. Understanding the current business means knowing how it operates, competes and behaves; its sources of advantage, potential for advantage, problems, and opportunities. Strategy formation produces a business design. Designing a business develops understanding about a business 'to be'. In either case, the inquiry process is the same, iterating towards an understanding. Types of inquiry -- Inquiry has several variations to satisfy various needs. The strategy formation inquires the business organization using the business design construct, whether in whole or in part. These inquiries include -- Comprehensive inquiry -- The comprehensive inquiry is the holistic inquiry of the business organization, covering all its aspects and elements. This type of inquiry develops people's understanding of the existing organization in preparation for strategy formation. Following this are comprehensive inquiries to explore and prepare business designs when forming strategy. Strategic focus inquiry -- The strategic focus is the ""sweet spot"" where an organization's distinctive competencies are used to produce a unique value proposition in passionate pursuit of its purpose. The aspects of the strategic focus, subsets of the main four, are core ideology, fundamental value proposition, and distinctive competency. See strategic focus. Culture inquiry -- Culture emerges from the fundamental organizational processes of the business organization. These processes are shaped by elements such as values, principles, and organization structure. Given the power of the culture to replicate the organization, like the DNA of an organism, culture must be addressed explicitly in order to transform an organization. See culture. Inquiry questions -- Questions providing inquiry stimulation and guidance are defined for each aspect as well as the integration of those aspects. See each type of inquiry listed above and the related aspects for these questions. Inquiry objectives -- Inquiries are performed with a purpose in mind. To better understand the business organization. To design it. To spur creative thinking and innovation. To build strategic thinking capability and business savvy. To define a competitive advantage. Regardless of the particular reason for the inquiry, all of these purposes will be served in the process. The two stages of strategy formation - generate wisdom, where understanding is developed, and create art, where strategies are formed - both heavily depend upon inquiry processes.
business organization transformationTransformation moves an business organization from one business model to another, developing new capabilities, levels of performance, and a departure from a business model that is no longer competitive. The capability to transform as needed, or even before a need is truly evident, but when a better business model can be achieved, is essential for an organization's survival in a dynamic evolving economy. A business organization can either perform creative destruction on itself or have the market destroy it. See innovation for a general overview of innovation. See business design for the design rules for business model innovation. See insight for guidance on developing new insights as to what might be possible and generate new ideas. See the evolutionary algorithm and pluralism for understanding about the type of dynamic environment an organization needs for innovation. See Hamel (2002, pp 281 - 323) for a model of innovation as a capability, which is essential to a strategic management competency. Hamel's discussion of transformations (Hamel, 2002, pp 207 - 250) Hamel's model of transformation options based on two capabilities -- Capability to innovate with respect to the past and capability to innovate with respect to the industry. Depending on the capabilities, the options for transformation are as follows -- retrenchment -- when neither capability exists renewal -- when only innovation with respect to the past exists revolution -- when only innovation with respect to the industry exists resilience -- when both capabilities exist Examples of what enabled the transformation of the business organization
business planA business plan describes a business, its history, vision, goals, objectives, strategies, market, operational plans and financial plans. It serves as both a blueprint and roadmap, describing the developmental objectives and intended performance results of the business organization. Technological perspective -- Business plans play the role of melding physical and social technologies under a strategy, then operationally expressing the resulting designs in the economic world. (Beinhocker, 2006)
business policyBusiness policy is essentially the study of knowledge, skills, and attitudes constituting general management (Andrews, 1987, pp 1). See policy for a discussion of policy vs. strategy, resources, and tactics. Business Policy as Strategic Management -- Strategic management is about charting how to achieve a company's objectives, and adjusting the direction and methods to take advantage of changing circumstances. It was taught in the 1950s and 1960s under the title of Business Policy (Faulkner (Editor), 2006, pp 3)
business processBusiness processes made up of the activities of the business organization. The activities are grouped, summarized, and classified to bring order and relative simplicity to what would otherwise be thousands if not millions of activities required for a business organization. Below are two common classification schemes that look at two different aspects of business processes and the scheme use by BAi. Hierarchical classification scheme -- There is no standard classification scheme for processes. Since systems are processes and processes make up processes. A hierarchical classification scheme shown below might be used to 'decompose' the processes of a value system -- system or network of processes chain of processes process process element or sub-process tasks activities Common classification scheme -- A common classification scheme differentiates the process types as follows - Management processes - including both strategic and operational management of the business organization Operational or value adding processes - the processes from initial inputs to offerings delivered which direct produce and deliver the offering Supporting processes - processes which are neither management or operational processes necessary to enable the other processes BAi classification scheme (based on Gharajedaghi, 1999, 2006) -- The classification scheme used by BAi is derived from the purposes of a social system, seeking to associate every process to a purpose, a reason why the business organization (social system) exists. See process architecture for more detail. throughput processes - these are the processes which generate and distribute wealth for the business organization organizational processes - these are the processes that enable the throughput and creation of future potential processes measurement -- generate truth; the generation and dissemination of information, understanding, and knowledge decision -- making choices; creating power-to-do; development and duplication of power, authority, and responsibility; provide governance membership -- create commitment; provide meaningfulness and excitement of what is done conflict management -- formation and institutionalization of values for regulation of behaviors and decisions creation of future potential - processes to develop new capabilities, offerings, and businesses skills development innovation producing processes strategic management
business purpose""There is only one valid definition of business purpose: to create a customer."" -- Drucker, Peter F., (1973, 1974), Management: Tasks, Responsibilities, Practices, Harper & Row, pg 61 Russell L. Ackoff's (1981, pp 30-45) general purpose of a business: Production of wealth Distribution of income (significantly via employment) Equitable (not equal) distribution of income Serve stakeholders ""...a social structure that brings together human beings in order to satisfy economic needs and wants of a community"" (Peter F. Drucker, 1993 Introduction to the Concept of the Corporation, 1946). Exploration and definition of a business organization's specific purpose is one of the most critical aspects of the strategic management process. A clear and compelling purpose is essential to unify the design of a business organization. Amongst other things, purpose is essential to forming a strategic focus and strategies.
business savvyPractical understanding or shrewdness relate to business, or a business. To understand or comprehend in a manner that goes well beyond that achieved by analytical techniques. And understanding gained from experience and observation that results in the ability to see relationships and patterns that provide a deep understanding and simplified understanding of complex situations.
business strategyBusiness strategy pertains to a business unit as opposed to the corporation made up of many business units.
business unitA business within the broader business organization, or corporation.
business wisdomSee business intelligence.
cadenceThink of cadence as takt time adapted to activities beyond routine production. In the product development world -- as brilliantly illuminated by our late colleague, Allen Ward -- it is very helpful for a development organization to have a clear sense how many new products are needed per unit of calendar time and to develop a steady pace for initiating and finishing these projects. The demand might be one per year or one per quarter or one per month, depending on the perceived desires of customers. But in every case the demand needs to be determined in advance and projects need to be completed at a steady rate. When there is no steady cadence for starting and completing projects, work starts to bunch up and the resources of the highly trained and integrated development team can't keep up. As a result, projects are delayed or delivered with some functionality missing. Or they are completed with less than the full attention they require for consistently high quality. And in either case development costs are often much higher. So what to do? The answer is simple. But it is hard at first. The senior management must decide how many new products customers might like (usually a very large number) then de-select attractive projects down to a number that the available development resource can actually support. And management must make a conscious decision to start and complete these projects on a steady cadence, without constantly dropping new projects into the system and cancelling others. (Note that completing projects of differing complexity by a given date - for example, ones using a totally new technology or product concept versus those involving only routine applications - will usually require starting them different lengths of time before the completion date. So care must be taken to think through the whole portfolio of projects to start each at the right time.) Another way to think of cadence is heijunka (production leveling) for product development, in which the needs of the customer for new products - which may appear to vary and to bunch up, particularly in highly competitive markets - are set against the capabilities of the development organization. While it might be nice to continually vary the output of the development organization to meet changing customer desires, this is usually impossible if many of the resources are specialized and scarce. The practical alternatives are (a) unrealistic goals and continuous gyrations in scheduling, causing muda, mura, and muri, or (b) an acknowledgement that a development organization can only do so much in a given period of time and that it can actually get more useful work done if everyone is working at a steady pace. In my experience, the organization and the customer are better off with the latter approach, when a clear cadence is established for project completions and the cadence is maintained. Source: Jim Womack [jwomack@lean.org]
capabilityResource-based view of capability -- Capabilities are a firm's capacity to deploy resources (Amit and Schoemaker, 1993, p 35). A firm must have access to the appropriate capabilities to effectively use, or exploit, a resource. See resource-based view.   Discussion -- Capability refers to the power and ability of the organization. In this body of knowledge, capability is more general than and a precursor to competency, as in the organization must be capable before it can be competent. Certain capabilities must be present in order to develop competencies to form and execute strategy to create and sustain advantage. Organizational capabilities derive from the skills and capabilities of the people in the organization and the organizational processes and structures, which collectively produce results for the business organization. Capability encompasses information, knowledge, know-how, and understanding, know-why, on the intelligence hierarchy. Particular organizational capabilities required - Systems thinking, synthesis, to understand complex wholes, needed to form strategy. Particular capabilities include iterative inquiry and modeling of non-linear systems. Analytical thinking, to plan and execute strategy. Induction to exercise intuition, especially useful in forming strategy. Deduction, to solve well defined problems, and to prepare minds for making better intuitive decisions. learning - single loop learning, double loop learning adaptation - adaptive learning including transformational abilities processes thinking - to understand and harness the mechanisms of self-organization and novelty creation Helfat et al's definition of capability -- From Helfat et al (2007, 37, 121): Capability refers to the capacity to perform a particular task, function, or activity. A capability, dynamic or otherwise, implies a potential for action. A capability is the ability to perform a particular task or activity. The word ""ability"" refers to the power or capacity to act. But until the capability is exercised, the action remains latent. Schreyögg's and Kliesch-Eberl's definition of capability -- Schreyögg, Georg, (2007), and Martina Kliesch-Eberl, How Dynamic Can Organizational Capabilities Be? Towards a Dual-Process Model of Capability Dynamization, Strategic Management Journal, Vol 28, No. 9, Sep 2007, pp 913-933 -- The authors address a key strategic management issue. In the resource-based view organizational capabilities have been identified as one major source for the generation and development of sustainable competitive advantages (emphasis added). With the consideration of volatile markets, environmental uncertainty, and change, the reliance on a specific set of nurturing capabilities has been called into question. This question has been answered with some form of dynamic capabilities, where the capability itself is dynamic, adapting to take advantage of the changing environment, thereby renewing organizational capabilities. Capabilities described -- In this discussion, capability does not represent a single resource in concert with other resources such as financial asset, technology, or manpower, but rather a distinctive and superior way of allocating resources. The complex processes that form organizational capabilities are conceived as collective and socially embedded in nature, representing a collectively shared 'way of problem solving' (Cyert and March, 1963). the primary characteristics of capabilities are -- Capabilities are conceptualized in the context of collective organizational problem-solving. These capabilities are attributed to outstanding skills that have proved to solve extraordinary problems. Theses problems are described as complex. Complexity refers to the characteristics of problem situations and decision making under uncertainty, addressing ambiguous, ill structured tasks. Capabilities are close to action; conceptually they cannot be separated from acting or practicing A capability must work in a reliable manner. Capabilities represent a reliable pattern: a problem-solving architecture composed of a complex set of approved linking or combining rules -- proved to be successful across various situations. The meaning of organizational capabilities -- Labels for organizational capabilities include: competence, core competence, collective skills, complex routines, best practices as well as organizational capabilities. The term 'capability' seems to be the predominant one. There seems to be a consensus that a capability does not represent a single resource in the concert of other resources such as financial assets, technology, or manpower, but rather a distinctive and superior way of allocating resources. 'Capability' addresses complex processes across the organization such as product development, customer relationship, or supply chain management. In contrast to rational choice theory and its focus on single actor decisions, organizational capabilities are conceived as collective and socially embedded in nature. They are brought about by social interaction and represent a collectively shared 'way of problem solving' (Cyert and March, 1963). Accordingly, organizational capabilities can be built in different fields and on different levels of organizational activity, for instance at departmental, divisional, or corporate level. Conceptual view of the primary characteristics of capabilities -- problem-solving and complexity -- Capabilities are conceptualized in the context of collective organizational problem-solving. These capabilities are attributed to outstanding skills that have proved to solve extraordinary problems. These problems are described as complex. Complexity refers to the characteristics of problem situations and decision making under uncertainty, addressing ambiguous, ill-structured tasks. action oriented; practicing and success -- Capabilities are close to action; conceptually they cannot be separated from acting or practicing reliable over time -- A capability must work in a reliable manner. Capabilities represent a reliable pattern: a problem-solving architecture composed of a complex set of approved linking or combining rules -- proved to be successful across various situations. Time is a basic dimension of capabilities. Capabilities development takes time and the specific way in which time has taken is relevant for the gestalt of a capability -- its configuration or pattern having specific properties that cannot be derived from the summation of the component parts. It is exactly this time intensive and not fully understandable evolvement that makes up the non-imitable essence of the strategic relevance of organizational capabilities (Barney, 1991; Lenard-Barton, 1992). Capabilities result from... -- Overall, any organizational capability is the result of an organizational learning process, a process in which a specific way of 'selecting and linking' resources gradually develops. Organizational capabilities apply to various problem situations, but not to all situations. They have been formed through successful responses to specific historical challenges and are thus bound to specific types of constellations (Winter, 2003). Problem-solving is embedded in organizational design, information procedures, micropolitics and communication channels as well as other organizational characteristics (culture, control regimes, etc.). All these features shape organizational capabilities and thus define their distinctiveness.   Resources and capabilities -- Capabilities do not actually represent a resource; they focus rather on the combination and linking of resources. Although there are interactions between them, resources and capabilities represent two conceptual levels with their own commitment dynamics. The commitment to resources resulting from specific investment should be clearly differentiated from commitments evolving when practicing capabilities. This differentiation accordingly implies a separation of resource-based inertia and capability-based rigidity (Gilbert, 2005). See organizational inertia.   For further discussion along these lines, see dynamic capability.
capacityFrom Helfat et al (2007, 5): Two dimensions to the term ""capacity"" -- ""capacity"" refers to the ability to perform a task in at least a minimally acceptable manner it implies that the function performed is repeatable and can be reliably executed to at least some extent
categorizationCategorization of phenomena is essential to making sense of the world. Without categorization, all stimulation to the senses would be received a priori equal. In that case, what would be received is noise, which is of no value to the receiver. Categorization includes, excludes, and categorizes stimuli for the benefit of the receiver. See theme for more.
causal loop diagramCausal loop diagrams show the cause and effect relationships between the variables of a system. There are two basic feedback loops at the root of all systems behavior -- balancing and reinforcing loops. Balancing loops tend to keep the system in its current stage and reinforcing loops tend to compound change in one direction. These two loops are the building blocks for describing all complex social and economic systems. A graphic language -- The power of causal loop diagrams is in their ability to capture the reasons systems behave the way they do and portray this understanding in a power graphic manner. Causal diagrams can be though of as a language. This language's syntax is built up from causal loops, which are like sentences constructed by linking together variables of importance and showing the causal relationships between them. Multiple loops can then form paragraphs that tell a story with the graphic representation. Causal loop diagrams focus -- Causal loop diagrams concisely capture and communicate cause and effect relationships that can explain dynamic issues in a concise manner. What they do not do is provide a detailed representation of the structure producing the dynamics. That purpose is served by stocks and flows diagrams. Why diagram a system -- To understand the actual workings of a system, how its outcomes are produced by the circular cause and effect relationships To reveal the interrelationships between the parts of the system To use this knowledge to make better decisions about how to achieve the desired results from changing a system People can better manage relationships and systems that are visible and explicit rather than invisible and assumed Produced by a group, a representation of a system can produce a revealing and full picture of reality and produce significant learning Understanding the system enables the system to be worked on vs. working within the system - enabling the system to be improved in the results it produces See: Kim, 1999. See feedback loop.
causal relationshipsCause and effect relationships -- Causality is the relationship between cause and effect. Simple connections between cause and effect are linear and unidirectional. Complex connections between cause and effect, when organizations are thought of as systems, involve, circular causality, interdependent systems, and non-linearity. Nonlinearity is where one variable can have a more than proportional effect on another due to the very complex connections between cause and effect. With nonlinearity it may become unclear what cause and effect mean, the links between cause and effect may become distant in time and space, and the links between cause and effect may disappear for all practical purposes. The philosophical concept of causality or causation refers to the set of all particular ""causal"" or ""cause-and-effect"" relations. Most generally, causation is a relationship that holds between events, properties, variables, or states of affairs. According to Sowa (2000), up until the twentieth century, three assumptions described by Max Born in 1949 were dominant in the definition of causality: ""Causality postulates that there are laws by which the occurrence of an entity B of a certain class depends on the occurrence of an entity A of another class, where the word entity means any physical object, phenomenon, situation, or event. A is called the cause, B the effect. ""Antecedence postulates that the cause must be prior to, or at least simultaneous with, the effect. ""Contiguity postulates that cause and effect must be in spatial contact or connected by a chain of intermediate things in contact."" (Born, 1949, as cited in Sowa, 2000) Causality always implies at least some relationship of dependency between the cause and the effect. For example, deeming something a cause may imply that, all other things being equal, if the cause occurs the effect does as well, or at least that the probability of the effect occurring increases. However, according to Sowa (2000), ""relativity and quantum mechanics have forced physicists to abandon these assumptions as exact statements of what happens at the most fundamental levels, but they remain valid at the level of human experience."" -- Wikipedia contributors, ""Causality,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Causality&oldid=96799726 (accessed January 1, 2007). Expressing causal relationships -- In natural languages, causal relationships can be expressed by the following causative expressions: a set of causative verbs [cause, make, create, do, effect, produce, occasion, perform, determine, influence; construct, compose, constitute; provoke, motivate, force, facilitate, induce, get, stimulate; begin, commence, initiate, institute, originate, start; prevent, keep, restrain, preclude, forbid, stop, cease]; a set of causative names [actor, agent, author, creator, designer, former, originator; antecedent, causality, causation, condition, fountain, occasion, origin, power, precedent, reason, source, spring; reason, grounds, motive, need, impulse]; a set of effective names [consequence, creation, development, effect, end, event, fruit, impact, influence, issue, outcome, outgrowth, product, result, upshot]. Wikipedia contributors, ""Causality,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Causality&oldid=88995105 (accessed November 27, 2006).
causalityFor related topics -- See teleology for a discussion of causality directed at management practice and organization theory. See history of causality for a philosophical history of the development of views of causality. See Aristotle on causality for a look into Aristotle's view on causality and teleology. See causal relationships for a discussion of cause and effect. See organization for a discussion of ways of thinking about causality and organization. See management science for a discussion of causality and management. See organizational theory for a discussion of causality and organizations. See self-organization for a discussion of causality and emergence of new forms in organizations. Importance of causality to strategy -- Strategy is about organizations, about developing organizations with sustainable advantage. The better we understand organizations, the more effective their development can be. Understanding organization leads to understanding organizations. At the heart of understanding organization is causality. Causality addresses how and why organizations move into the future, becoming what they become. Management's view of causality, whether explicit or implicit, leads to particular approaches to leadership, management, and, of course, strategy. For example, most managers believe there will not be any coherent patterns in the development of an organization without a blueprint or plan. This belief is coupled with a belief in a predictable future, both for the organization and its related population of organizations. This belief infers that cause and effect, causal links, can be identified by managers and be used to predict and control the future. Alternatively, complexity science is now providing insights into the characteristics of complex organizations. This science pegs organizations' primary causality as transformative. With transformative causality, novelty arises in the present, making the future unpredictable. If this is truly the case, then many common management and leadership activities must be based on illusory ideas about what these activities actually achieve (Stacey, 2000, pp 18) The types of thinking associated with the different types of causality, as we will see, are not right or wrong in general, but are better suited for some situations than others. This is especially pertinent in developing and applying thinking types for all aspects of strategic management, such as strategy formation vs. strategy execution. Introduction to causality -- Causality is the relationship between cause and effect. Knowing the cause, understanding the particular type of causality involved, tells you what kind of effects can occur. Management practices have a causality embedded in them. This embedded causality invisibly guides the practice, the desired effect of which may or may not be what management is intending. The search for understanding the causality in management practices has its roots in philosophical explanations of causality and the natural sciences which serve as a source domain for organizational theory and management sciences from which management practices develop. The causalities embedded in management practices follow Stacey's (2007, 2003, 2001, 2000) classification -- efficient, rationalist, formative, and transformative. This classification of causality has its basis in both philosophy and natural sciences. From the philosophers we have - Newton's efficient cause in the mechanical view of the universe, Kant's rationalist and formative causality distinguishing between autonomous humans and formative systems, and Hegel's transformative causality accounting for the emergence of new identity in organization. These causalities are revealed in the natural sciences studies of organization - in the branches of Newtonian physics, systems and complexity science. In general, the natural sciences serve as a source domain for the social sciences, with their causalities preserved in their analogous social sciences. These causalities are then embedded in the management practices that derive from organization theory and management science. Newton's efficient causality is evident in scientific management that arose in the early 1900s. Kant's rationalist and formative causalities are evident in the systems sciences and the plethora of management practices derived from them. More recently, Hegel's transformative causality has become visible in complexity sciences that reveal models for self-organizing self-transforming systems - the insight from which serves to provide understanding of how human organizations evolve and management practices that can foster this evolution. Becoming familiar with the causality associated with management methods can go a long way towards proper application of those methods. This is especially true in strategy formation and strategic management. Causal frameworks -- Ways of thinking about causality -- Stacey (2007, 2003, 2001, 2000) explains causality in the context of why organizations become what they become. Stacey (2007, pp 246) has distilled his explanation of causality into a relatively simple comparison of four different ways of thinking about causality - Efficient cause Nature of movement -- Corrective repetition of past in order to realize an optimal future state Cause of movement -- Universal, timeless laws of an 'if - then' kind Rationalist cause Nature of movement -- Towards rationally chosen goals for the future in order to realize a designed, desired state Cause of movement -- Human reason Formative cause Nature of movement -- Unfolding of enfolded mature form in order to realize that form in the future Cause of movement -- Self-organizing systemic process of unfolding in developmental stages Transformative cause Nature of movement -- Iterated interaction perpetually constructing the future in the present in order to express continuity and potential for transformation in identity at the same time Cause of movement -- Responsive processes of local interaction between entities in the present These four ways of thinking about causality cover the spectrum of causality, at least causality ultimately relevant to human organizations. These causalities are embedded in organization theories and management practices. As such, understanding the underlying causality of the practice enlightens management in the selection of approaches to management based on inherent causality, a practice's bent in -- shaping, organizing -- moving the organization into the future. Constructing a causal framework -- Though there are many dimensions or aspects of causality that can be examined, there are two key dimensions of causality that distinguish one cause from another that is especially relevant to strategy. This distinguishing framework builds around to key questions to reveal, on a very fundamental basis, what is going on in an organization -- 1 - what kind of movement into the future is being assumed? and 2 - why is the organization moving into the future? (Stacey, 2000, pp 14) First is the kind of movement into the future that is being assumed. A key distinction between teleological frameworks is whether the movement toward the future is a -- known or unknown state. Second is the reasons for the movement into the future. ""For the sake of what?"" is a phenomenon moving? A key distinction will be whether it is assumed that a phenomenon moves toward the future in order to realize -- some optimal arrangement a chosen goal a mature form of self continuity and transformation of its identity Sciences and causality -- For the relationship between branches of science and causality see science. Causality in management practices -- For the connection between the branches of natural science and their related causalities with management practices, including strategy, see management science. Causality in views of organizations -- For causal perspectives of organizations, see organization types in organizational theory. These causal perspectives of organizations align with the related causalities assumed in management theories and practices, which, of course, has significant implications for strategy. Causality, organizations, and management -- Why organizations become what they become -- Causality is why organizations become what they become. Understanding causality seeks to answer the ""why"" question regarding organizations. Natural science, a source domain for management practices -- Causality is central to the understanding and effective application of management practices. Management theory and practices are based on branches of natural science, each with their related causality. Natural scientific theories are imported into explanations of human action and organization, that is, natural science serves as a source domain for what ultimately becomes organizational theories and management science. Knowing the natural science roots and the related causality of management practices provides management with discernment regarding their application.
cause and effectThe relationships between the parts of a system are described as cause and effect. Cause and effect are inseparable. Without cause, there is no effect. Without effect, there is no cause. The cause and effect relationships ultimately depend upon the structure of the system, one of the system aspects. Nature of cause and effect -- Cause and effect are not separate. With feedback loops, a cause can drive an effect which drive the cause. Whether an influence is considered a cause or effects is a matter of perspective. Effects may follow cause much later in time, making it very difficult to understand the relationship between cause and effect. Effects may occur far away from the cause, also making it very difficult to understand the relationship between cause and effect. Effects are not necessarily proportional to the magnitude of the cause. A system may be very stable with significant blows from the outside, like a boxer taking a punch. On the other hand, catching the boxer unaware and pinching the right nerve may cause him to collapse with very little force.
changeChange is other than equilibrium. Empirically, change is the normal state of economics, businesses, and organizations. This change has been characterized as creative destruction by Joseph Schumpeter (1942) -- where the newly created, with its new technology, results in the replacement, or destruction, of existing things based on earlier technologies. The ever increasing efficiency and value of newly innovated processes and offerings are continually shifting the competitive landscape, thus changing the relative value of business-organizations in that landscape. External change is the change in the population of organizations making up the organization's environment. An organization must adapt in a timely manner to external change in order to persist. Internal change is the change within the organization. This change is either triggered by the need to respond to external change, internal leadership guidance (e.g. vision, or internal interactive dynamics (see responsive processes). Organizational inertia -- Internal change requires overcoming organizational inertia, with its rigidities in resource investment and routines, and setting a new organizational trajectory. See equilibrium for implications of the equilibrium- vs. change-mindset. See organizational change.
chaordic organizationA chaordic organization is a form of organization formulated by Dee Hock and others in forming the VISA organization (Hock, 1999). The term 'chaord' is formed from the words 'chaos' and 'order'. In the formation of the VISA organization, a means was designed to allow for the simultaneous cooperation and competition of the member banks of the VISA issuing network. This was necessary for the scale and universality needed to make credit cards usable in any geography and to provide low costs of processing each transaction. Dee Hock's vision of this type of organization was largely, but not fully, achieved by the VISA organization at the time it was first formed. Hock's vision of a chaordic organization -- Chaord - (kay'ord) 1: any autocatalytic, self-regulating, adaptive, nonlinear, complex organism, organization, or system, whether physical, biological or social, the behavior of which harmoniously exhibits characteristics of both order and chaos. 2: an entity whose behavior exhibits patterns and probabilities not governed or explained by the behavior of its parts. Chaordic - (kay'ordic) 1: anything simultaneously orderly and chaotic. 2: patterned in a way dominated neither by order nor chaos. 3: existing in the phase between order and chaos. Dee Hock's principles for the VISA design Power and function in the system must be distributed to the maximum degree possible The system must be self-organizing Governance must be distributed The system must seamlessly blend both collaboration and competition The system must be infinitely malleable, yet extremely durable The system must be owned cooperatively and equitably Later, the characteristics for a chaordic organization were defined as -- Enduring in purpose and principle Powered from the periphery, unified from the core Exist to enable constituent parts Equitably distribute power, rights, responsibilities, and rewards Fluid webs of cooperation and competition Cannot be managed; can only be led Compatible with the human spirit and biosphere
chaosChaos theory is the branch of mathematics that deals with chaotic systems-where apparent arbitrarily unpredictable consequences result from a small arbitrary shift from equilibrium in a complex system. This theory attempts to explain the highly complex behavior of apparently complex systems. Chaos theory searches for the underlying order in these systems, much like systems thinking. The difference is, chaos theory delves into far more complex systems than systems thinking. Chaos, or chaos theory, ""describes the behavior of certain nonlinear dynamical systems that under certain conditions exhibit a phenomenon known as chaos. Among the characteristics of chaotic systems, described below, is the sensitivity to initial conditions (popularly referred to as the butterfly effect). As a result of this sensitivity, the behavior of systems that exhibit chaos appears to be random, exhibiting an exponential error dispersion, even though the system is deterministic in the sense that it is well defined and contains no random parameters. Examples of such systems include the atmosphere, the solar system, plate tectonics, turbulent fluids, economics, and population growth, and the vast variety of thermodynamically open systems operating far from equilibrium. ... this technical use of the word chaos is at odds with common parlance, which suggests complete disorder."" ""As well as being orderly in the sense of being deterministic, chaotic systems usually have well defined statistics. For example, the Lorentz system pictured is chaotic, but has a clearly defined structure. Weather is chaotic, but its statistics - climate - is not."" Source: chaos theory. Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Chaos_theory (accessed: November 15, 2006).
chaos theorySee chaos.
chaotic systemsComplex systems with unpredictable behavior. Slight variations in starting conditions cause significantly different outcomes. Though complex, chaotic systems are ultimately deterministic.
choiceHuman choice and freedom are philosophical issues -- in regard to whether and how they exist. The scientific revolution prompted two key questions -- 1) do we know reality and if so how, and 2) do humans have choice, are they free to choose? The question of human freedom arises because -- since humans were part of nature they had to be subject to its deterministic laws but if they were, then it followed that they could not be free. Source: Stacey, 2003, pp 20)
classical economicsClassical economics (Fonseca, 2002, pp 11 - 12) -- Classical economic theory does not deal with the dynamics of growth, but rather with the functioning of markets as resource allocation mechanisms in which demand functions interact with supply functions to determine prices that balance supply and demand, so sustaining market equilibrium. Just as with classical physics, an economy is understood to move according to deterministic laws in which the future is a predictable repetition of the past and the question of innovation does not feature, other than as an unexplained shift in the supply function. Movement into the future proceeds in a regular manner according to the equivalent of natural laws. The purpose of the movement is to sustain a predictable state of equilibrium specified by the economic laws of supply and demand, the equivalent of natural laws. When one talks about the nature and purpose of the movement of some phenomenon one is talking about teleology as the cause of the movement. Movement that is the repetition of the past with the ""purpose"" of sustaining equilibrium is ""Natural Law Teleology"" (Stacey et al., 2000). Classical economic thinking about market systems thus assumes Natural Law Teleology. Within market systems, classical economic theory conceived of people in a particular way, namely, as rational individuals. These rational individuals (economic man) were thought of as operating in a calculating way in markets driven by the laws of supply and demand. Each rational individual calculated the predicted economic consequences of every action as determined by the laws of the market, choosing those actions that maximized their individual utilities. Individuals were assumed to act as profit and utility maximizers and, because they behaved in this way, markets functioned efficiently to optimize resource allocation. Stacey et al. (2000) refer to this way of thinking as ""Rationalist Teleology"". This is a way of thinking about movement as being caused by the rational choices of autonomous individuals in order to achieve their chosen goals. The point, then, is that classical economic theorizing is conducted within dual causal frameworks of Natural Law Teleology at the macro level of market clearing and Rationalist Teleology at the micro level of individual economic agency. In the former there is no choice or freedom and in the latter choice is reduced to a rational calculation. Both of these ways of thinking are incompatible with the notion of novelty or innovation. The articulation and rigorous formulation of the 'classical' system of economics is attributed to David Ricardo, in the early 1800s. Neoclassical economics (Fonseca, 2002, pp 12 - 14) -- In the neoclassical development of economic theory, which continued within the dual causal framework described above, innovation was incorporated as a variable in the supply/production function. Independent variables, or mechanisms, were identified as causes of innovation and it was then a short step to assume that managers, as rational calculating agents, could operate on at least some of these independent variables and so exercise control over innovation. Innovation, then, was equated with independent technological and, less frequently, organizational changes, which were thought of as changing the position and shape of production functions, usually by replacing the labour factor of production with capital. Changes, intentional or otherwise, in the independent causes of innovation had the effect of altering production functions. Consequent output and cost changes disturbed market equilibrium and market forces immediately came into play to produce a new equilibrium state. How the technological and organizational innovations came about in the first place were not explained in neoclassical economic theory, but simply taken as given causes embodied in capital assets or in the knowledge required to manage capital and labour resources. This way of thinking led to a search for the specific variables and circumstances that would cause innovation to occur and enable managers to control it. Although Solow (1957) empirically identified the variable ""technical progress"" as a major explanation of growth, understood as shifts in production functions, it proved difficult to specify appropriate independent causal variables to explain ""technical progress"". Consequently, the cause of ""technical progress"" had to be represented as a ""residual"" in the mathematical models of economic growth; empirical studies showed that these residual variables accounted for 60 per cent of the growth and that 80 per cent of the growth attributed to labour productivity was due to technical development (Denison, 1962). In other words, the models simply showed that innovation was important and that it could not be explained. All that could be said was that innovations appeared and disturbed market equilibria, which were then restored by the operation of the laws of the market. However, it might take a long time for equilibrium to be restored and this could open up the possibility of temporary monopolies, so that innovation becomes a source of monopolistic power and more than ""normal"" profit. The rational assessment of potential monopoly profits then becomes the prime motivator of innovation activity. The neoclassical understanding of innovation, therefore, represents a ""both ... and"" way of thinking. At one level, that of whole economies and markets, innovation is understood as a variable in the economic laws, a form of Natural Law Teleology, which produces efficient outcomes and sustains equilibrium states. At another level, that of the industry, innovation is understood as a choice that organizations make on rational grounds in order to secure temporary monopoly positions and so maximize their profit goals. This is Rationalist Teleology, which is also applied at the level of the individual manager. It is autonomous rational individuals who select innovations on the basis of rational predictions and calculations in order to maximize their organization's profits. Two different ways of thinking are thus employed, sometimes one and sometimes the other, depending upon the level of analysis. In one way of thinking innovation is understood as a variable in a deterministic market system driven by the equivalent of natural laws; in the other way of thinking it is thought of as a variable, the consequences of which rational managers can predict and hence choose to control. In this ""both ... and"" thinking any sense of the paradox of determinism and choice is simply eliminated.
coevolutionIn the world of business organizations, coevolution refers to the systems nature of the organization as well as the system which contains it, the environment or business ecosystem. A business organization, through its interaction with its environment, both adapts to this environment and changes the environment, thus spurring the evolution of both the environment and the organization itself. The business organization and its environment coevolve.
coherenceStrategy done right produces fit, coherence, between three fundamental elements - a business with a competitive advantage, an organization to carry out the business, and the social, legal, technological, and economic environment. (This view of the fundamental elements pertinent to strategy is used in John Roberts' book, The Modern Firm, Oxford University Press, 2004, p 19).
commoditiesCommodities are a type of economic offering. They are sold to a market and exist outside of the buyer.
communicationWhat communication is and how it actually takes place is subject to debate. Here are a couple of different models (Stacey, 2007, pp 271 - 277) cybernetic sender-receiver model -- A thought arises in one autonomous individual's mind which is encoded in language and transmitted to another autonomous individual who then decodes the language so that, when communication is good, the thought in one mind is transferred to the mind of another. If there is a gap between what was transmitted and what was received, then further transmissions are required to close the gap. Here meaning lies in the word, that is, in the vocal gesture of the one making the gesture; the part played by the receiver is simply one of translation until the same meaning is received as was transmitted. It becomes very important, then, to get the communication 'right.' This model is reflected in the dominant discourse when people in organizations talk about insufficient, good, and bad communication. When people in organizations complain about poor communication they are usually thinking in these terms. In this model, communications begins with the sender and ends with the receiver, implying a linear view of time. gesture-response model -- Mead (1934) did not think in terms of a sender and a receiver. Instead he thought of one body making a gesture to another body where the gesture calls out, or evokes, a response form that other body. That response is itself a gesture back to the first body which, in turn evokes a further response. What we have, then, is ongoing responsive processes, which Mead called the conversation of gestures, where beginnings and endings are purely arbitrary. The conversation of gestures is temporal social processes in which the fundamental unit is the social act consisting of gesture and response, where these are phases of the social act and cannot be separated form each other because tougher the constitute meaning in the following way. Mead gave an example of a very simple act of communication between two dogs to explain this point about the social constitution of meaning. One dog makes the gesture of a snarl and this may call forth a counter snarl, which means fight; or the gesture could call forth flight, which means victory and defeat; or the response to the gesture could be crouching, which means submission and domination. Meaning, therefore, does not lie in the gesture alone but in the social act as a whole. In other words, meaning arises in the responsive interaction between actors; gesture and response can never be separated but must be understood as moments in one act. Meaning does not arise first in each individual, to be subsequently expressed in action, nor is it transmitted from one individual to another but, rather, it arises in the interaction between them. Meaning is not attached to an object, formed as a representation, or stored, as in cognitivism, but is created in the interaction. Immediately, knowing becomes an aspect of interaction, or relationship. Here meaning is emerging in the action of the living present (see Chapter 10) in which the immediate future (response) acts back on the past (gesture) to change its meaning. Meaning is not simply located in the past (gesture) or the future (response) but in the circular interaction between the two as the living present. In this way the present is not simply a point but has a time structure. Communication is then a social, relational process so that poor communication means inadequate interaction. The process of gesture and response between biological entities in a physical context constitutes simple co-operative, social activity of a mindless, reflex kind. At this stage, meaning is implicit in the social act itself and those acting are not conscious of that meaning. Consciousness -- For consciousness to arise, Mead argued that our mammal ancestors must have evolved central nervous systems that enabled them to gesture to others in a manner that was capable of calling forth in themselves the same range of responses as in those to whom they were gesturing. This would happen if, for example, the snarl of one called forth in itself the fleeting feelings associated with counter snarl, flight or submissive posture, just as they did in the one to whom the gesture was being made. The gesture now has a substantially different role. Mead described such a gesture as a significant symbol, where a significant symbol is one that calls forth the same response in the gesturer as in the one to whom it is directed. Significant symbols, therefore, make it possible for the gesturer to 'know' what he or she is doing. If, when one makes a gesture to another, one is able to experience in one's own body a similar response to that which the gesture provokes in another body, then one can `know' what one is doing. Possessing this capacity, the maker of a gesture can intuit, anticipate and to some extent predict, the consequences of that gesture. In other words, he or she can know what he or she is doing, just before the other responds. The whole social act, that is, meaning, can be experienced in advance of carrying out the whole act, opening up the possibility of reflection and choice in making a gesture. Furthermore, the one responding has the same opportunity for reflecting upon, and so choosing, from the range of responses. The first part of a gesture can be taken by the other as an indication of how further parts of the gesture will unfold from the response. In this way, the two can indicate to each other how they might respond to each other in the continuous circle in which a gesture by one calls forth a response from another, which is itself a gesture back to the first. As individuals interact with each other in this way, the possibility arises of a pause before making a gesture. In a kind of private role-play, emerging in the repeated experience of public interaction, one individual learns to take the attitude of the other, enabling a kind of trial run in advance of actually completing or even starting the gesture. Will it call forth aggression, fright, flight or submission? What will be the consequences in each case? In this way, rudimentary forms of thinking develop, taking the form of private role-playing, that is, gestures made by a body to itself, calling forth responses in itself. Mead said that humans are fundamentally role-playing animals. Consciousness, therefore, arises in interaction and the body, with its nervous system, becomes central to understanding how we 'know' anything. I want to stress how Mead is arguing that individual human consciousness, mind, arises in the social act, in communicative interaction, so that there cannot be the one without the other. Language -- Mead then argued that the gesture that is particularly useful in calling forth the same attitude in oneself as in the other is the vocal gesture. This is because we can hear the sounds we make in much the same way as others hear them, while we cannot see the facial gestures we make as others see them, for example. The development of more sophisticated patterns of vocal gesturing, that is, of the language form of significant symbols, is thus of major importance in the development of consciousness and of sophisticated forms of society. Mind and society emerge together in the medium of language. However, since speaking and listening are actions of bodies, and since bodies are never without feelings, the medium of language is also always a medium of feelings. As soon as one can take the attitude, the tendency to act, of the other, that is, as soon as one communicates in significant symbols, there is at least a rudimentary form of consciousness. The nature of the social has thus shifted from mindless co-operation through functional specialization to mindful, role-playing interaction made more and more sophisticated by the use of language as silent conversation with oneself. Meaning is now particularly constituted in gesturing and responding in the medium of vocal symbols but these vocal symbols are always aspects of a process that always includes the 'symbols' of feeling. Mind, or consciousness, is the gesturing and responding action of a body directed towards itself as private role-play and silent conversation, and society is the gesturing and responding actions of bodies directed towards each other. They are thus the same kind of process. It is important to note here that the conversational processes of communication described by Mead are not some kind of social determinism and they do not function in some perfect manner. Although I have the physiological potential for calling forth in myself similar responses to my gestures as those evoked in others, there is no guarantee that I will 'get it right', certainly not at the first attempt. This is because there is no fixed causal connection between my gesture and the response evoked in you, which is why Mead's theory is not a form of social determinism. There is no fixed causal connection because at the same time as your response is evoked by my gesture it is also selected by you in a manner that reflects your experience of a lifetime of interacting with others. Although I may be able to anticipate something of the kind of response you may make, I can never be sure because I can never know your life history in full and, even if I could, there is always the possibility of some surprising, spontaneous response from you. Furthermore, the response that my gesture to you evokes in me is also, at the same time, selected by my own lifetime of experience so that what is evoked in me may have to do more with me than with you. The possibility for miscommunication is thus substantial and can only be dealt with in ongoing conversation as we try together to clarify what we mean. This is not a cybernetic feedback process, as in the sender-receiver model, but an ongoing, conversational negotiation of meaning. Sender-receiver vs. gesture-response model -- Mead's mode of communication is thus profoundly different from the sender-receiver one. The sender-receiver model encourages us to believe that good communication will enable us to 'get it right'. So if I translate my thought clearly into language, if there is no 'noise' in transmission caused, for example, by distorting emotions, and if you translate my clear words clearly into thought, then our communication will be good. Or if the communication does not succeed at first then 'feedback' from the receiver will enable the sender to provide a more precise communication. On this view, a leader or manager who is a good communicator will be able to send a message to all the members of an organization and they will immediately understand it. However, people in organizations frequently complain that communication is not good enough and the response is to blame the sender or the receiver. This leads to a call for improvement in communication skills, involving the development of language and presentational skills and the development of detached attitudes to objective communication. This, it is believed, will lead to improved communication in an organization. In terms of strategy it then becomes important to formulate clear plans and communicate them clearly so that people will implement them. Implementation problems are frequently blamed on poor communication. However, in Mead's model of communication, when I make a gesture to a number of people, I can rely on its calling forth many different responses from others, altof whom have different life histories. Since the meaning does not lie in my words alone but emerges in the words and the responses they evoke in others taken together, it follows that I can only know the meaning of what I say in your responses to them. There is no point in blaming you, or your blaming me, because we are having to carry on exploring just what it is we mean - this is the very nature of communication. Sending me for training in communication skills can, therefore, have only a very limited effect in terms of improving the communication between us because you are implicated too. From this alternative perspective on communication it is no use for a leader, or manager, to imagine that they have sent a clear message and leave it at that. Communication ceases to be a one-off event that someone can get right and becomes instead an ongoing conversational process in which meaning is being clarified and, in the course of such clarification, is actually evolving in potentially novel ways. From this perspective, one can no longer think of the strategic plan as a one of communication which must be got right. Instead, one comes to see the activities of strategizing as ongoing conversational processes, essentially involving emotion and fantasy, as well as reason and all the other aspects of conversation. I think leaders, managers and others will act differently with regard to communication and communication skills training if they take this different perspective on communication. The generalized other & role playing -- Mead takes his argument further when he suggests how the private role-play/silent conversation of mind evolves in increasingly complex ways. As more and more interactions are experienced with others, so more roles and wider ranges of possible responses enter into the role-playing/silent conversational activities that precede the gesture, or to be more accurate, are continuously intertwined with, public/vocal gesturing and responding. In this way, the capacity to take the attitude of many others evolves and this becomes generalized. Each engaged in the conversation of gestures can now take the attitude of what Mead calls the generalized other. Eventually, individuals develop the capacity to take the attitude of the whole group, or what Mead calls the game or the social attitude. The whole of society, in a generalized form, then enters the mental processes of each interdependent person. In a fundamentally important way, this constitutes a powerful form of social control through self-control. The result is much more sophisticated processes of co-operative interaction. There is now mindful social behavior with increasingly sophisticated forms of co-operation. Process of self -- In understanding self-consciousness Mead talked about processes in which a person takes the attitude, the tendency to act, of the generalized other, or the group, to himself as an 'I', where that attitude is the 'me'. It is important to bear in mind that Mead was saying something more than that the self arises in the attitude, the tendency to act, of specific others towards oneself. Mead was talking about social, generalizing processes where the 'me' is generalized tendencies across a whole community or society to act to me as a person. For example, what it means to be an individual, a person, a man or a woman, a professional, and so on, does not arise in relation to a few specific people but in relation to a particular society in a particular era. We in the West think of ourselves now as individuals in a completely different way from how people in the West thought of themselves four hundred years ago and in a different way from people in other cultures. In what Mead called the `I-me' dialectic, then, we have processes in which the generalizing of the 'me' is made particular in the responses of the 'I' for a particular person, at a particular time, in a particular place. For example, I may take up what it means to be a man in my society in a particular way that differs in some respects from how others see themselves as men in my own society, in other societies and at other times. What is happening here is the linking of the attitude of generalized other, of the whole group, organization or society, with a 'me' in becoming an object to oneself. The 'me' is one's perception of, one's feelings towards, the configuration of the gestures-responses of the others/society to one as a subject, or an 'I'. A self, as the ongoing relationship between 'me' and 'I', as well as an awareness of that self, that is, self-consciousness, emerges in a life history of social interaction, which includes organizational interaction, and continues to evolve throughout life. Mead argues, very importantly, that the responses of the 'I' to one's perception of the attitude of the group to oneself (the 'me') are not givens but are always potentially unpredictable in that there is no predetermined way in which the 'I' might respond to the 'me'. In other words, each of us may respond in many different ways to our perception of the views that others have of us. Mead's argument, therefore, is not a form of social determinism because the possibility of individual spontaneity means that the response of the 'I' is not given. The response is simultaneously called forth by the gesture of the generalized other and selected or enacted by the responder on the basis of past history reconstructed as the present, always with the possibility of spontaneous variation. In other words, the response of the 'I' is both being called forth by the other and being enacted, or selected by the history, biological, individual and social of the responder. Society's gesture, as 'me', calls forth an 'I' response, but only a response I am capable of making and that depends upon my history. There is a tension of movement in the response, a tension of selection/enactment and evocation/provocation at the same time. The process is one of emergence in which the future of my self is being perpetually constructed and it does not ultimately locate the source of personal change in the individual alone. Mead's concept of the 'I' is sometimes interpreted as the spontaneous impulse of the body (Joas, 2000). However, in complex responsive processes terms, the 'I' is no less social than the 'me' simply because they cannot be separated from each other. The dialectical `I-me' process evolves - it has a history. This means that in any present, the 'I' response reflects a history of social engagement. It is the capacity for imagination and reflection that brings small differences in the 'I' response to the 'me' gesture from one present to another and it is the amplifying propensity of nonlinear interaction that escalates these small differences into transformations of the self. It is essential, if we are to understand the important point Mead makes, not to split the 'I' and the 'me'. They are inseparable phases of one act. The self then is understood as an ongoing activity, an ongoing temporal process of 'I' responding to `me'. It is not that there is a true self called 'I' which is seen in the mirror of the social `me' or that the 'I' engages in some kind of conversation with the 'me' as the voices of other people. In Mead's formulation there is no given, true self. Instead a self is continually iterated, continually emerges in interaction with others and oneself. This self is truly social through and through (Foulkes, 1948). Mead is not denying unique individuality but explaining how such uniqueness emerges in social processes of interaction. What he is clearly denying is any notion of an autonomous self. Elias said much the same when he claimed that the individual was the singular of interdependent people while the social was the plural. The social, in human terms, is highly sophisticated processes of co-operative and competitive interaction between people in the medium of symbols in order to undertake joint action. Such sophisticated interaction could not take place without self-conscious minds but neither could those self-conscious minds exist without that sophisticated form of co-operation. In other words there could be no private role-play, including silent conversation, by a body with itself, if there was no public interaction of the same form. Mind/self and society are all logically equivalent processes of a conversational kind. The result is self-referential, reflexive processes of sophisticated co-operation and competition in the medium of symbols that constitute meaning. These processes, always involving the body and its feelings, both enable and constrain human actions. All of these interactions, private and public, are processes in which humans act within a physical, non-human environment using tools and technology in a co-operative manner. In so acting within the context, humans affect that context, which simultaneously affects them, enabling them to do what they do, and constraining them from doing other things. Individual selves/minds emerge between people, in the relationship between them, and cannot be simply 'located' within an individual. In this way of thinking, individual minds/ selves certainly exist, and very importantly so, but they emerge in relationships between people as iterated processes rather than arising within an individual. The notion of conceptual space with a mind inside a person and society outside is completely avoided in this way of thinking. What relevance does this view of mind and self have for organizations and the activities of strategizing? Organizations and the work activities of their members are social activities which play a very important part in the lives of all of their members. Organizations are ongoing patterns of relating between people in which their very minds and selves are sustained and continue to evolve in important ways. If one thinks in this way then it becomes very difficult to regard people in organizations as its 'human resources', on the one hand, or as autonomous individuals for whom the organization should provide special opportunities for their self-actualization, on the other. People's selves are sustained and evolve in the ordinary, everyday work activities they undertake in their local interactions with each other. Changes in hierarchical reporting structures, divisional or subsidiary company groupings, procedures for accountability, control systems, objectives and targets, performance appraisal systems, to name but a few, will all have implications for how people experience their selves. Changes in how one experiences one's self are bound to be highly emotional and anxiety provoking and this is highly likely to lead to responses which are difficult to understand and may even seem to be bizarre. There are many practical questions which this view raises for managing change and managing people. See the living present, communicative interaction, and complex responsive processes for related information.
communicative interactionCommunicative interaction describes the interactive process that exists amongst members of an organization. In this process, knowledge emerges from the social act of gesture-response. Identity is reinforced, shaped, and sometimes transformed -- as the interaction both results in continuity and has the potential for transformation. Micro-diversity in the interaction that both results in novelty and gives the organization its self-organizing nature (see self-organization). Aspects of communicative interaction -- Gesture-response --gestures fit in with one another in a responsive relational manner that constitutes symbol Accountability, the foundation for communication -- the very possibility of communications rests upon mutual expectations of accountability, without which is would be impossible to negotiate ongoing cooperation Communication process -- Turn-taking -- the associative use of symbols is accomplished in turn-taking and turn-making interactions -- linking symbolic gestures to indicate the further evolution of their actions in the accounting for those actions to each other Linking turns -- turns are made and taken through the use of general linking devices -- such as question and answer Membership categories --One of the principal processes of categorization is that which establishes membership categories, identifying who is to take a turn, as well as how and when they are to do so Evolving communication patterns -- In their turn-taking, humans act in rhetorical ways to persuade each other and thus negotiate an evolving pattern of action. Communicative interaction is a self-referential process in which individual minds are formed by power relationships while they are, at the same time, forming those power relationships in both private relations with themselves and public forms of power relations with other. (Stacey, 2001, 150) Power in communicative interaction -- power and the associative nature of turn taking -- (Stacey, 2001, 150-152) Communicative interaction is the patterning of enabling and conflicting constraints, a central feature of any complex process. (Stacey, 2001, 150) Power enables one to do what one could not otherwise do and constrains one from what one might autonomously like to do. Communicative interaction is a process in which people account for their actions and negotiate their next actions. Communicative interaction is a political process, the exercise of power. Ideology -- membership and preserving power differentials (Stacey, 2001, 152-3) Ideology is a form of communication that preserves the current order by making that order seem natural. Ideology is a patterning process, narrative themes of inclusion and exclusion organizing themselves in perpetual reproduction and potential transformation -- forming ideological themes. Ideology exists only in the speaking and acting of it, mutually reproduced in ongoing communicative action rather than anything shared or stored. Ideological themes serve to preserve power differentials in essentially unconscious, self-organizing ways. Membership -- A key aspect of ideology is the binary oppositions that characterize it and the most basic of these is the distinction between ""them"" and ""us"". Organizing themes of an ideological nature establish, and reinforce, membership categories and differences between those categories. Process of communicative interaction -- communicative interaction is a process of perpetual construction in the living present between human bodies and the context they find themselves in the detailed, self-organizing process of bodily communicative interaction forms and is formed by itself as the same time, in a circular, reflexive, self-referential causality and is the cause of the movement toward a known-unknown future is self-organizing self-organizing the patterns of communicative interaction between people as narrative themes propositional themes which results in variation (novelty) when those interacting are diverse produce themes, patterns of communicative interaction, having characteristics of habit and spontaneity the interaction itself amplifies small differences in communication into discontinuous, novel change, so operating as formative cause fantasy and imagination may elaborate and amplify small fluctuations in individual experience into unique, different forms of role play/silent conversation unique differences between individual persons may be further amplified in their public interaction with each other from the interactions emerges meaning, or knowledge, emerges in this local communicative process in the living present freedom of choice and intention within the conflicting constraints of power relations knowing is the process of communicative interaction Communicative interaction in the living present -- it is local in nature communicative interaction consists of acts of one body directed to others in a particular situation at a particular time themes in the living present the themes patterning interaction are themes local to those who are interacting and attention is therefore directed to themes emerging in local interaction between people rather than thinking in terms of themes across global situations global themes one might want to articulate for an organization or a society have reality only insofar as they are expressed in local situation in the living present themes do not ""exist"" outside of bodily interaction and bodily interaction, by definition, has to be local in their local interaction in the living present people may use highly sophisticated communicative tools, some taking the form of global systems, which have a power impact on the local interaction the present has the temporal structure of communicative interaction (see communicative interaction) a process in which people negotiate and account for their immediate actions to each other in ordinary conversation with its turn-taking/turn-making, gesture-response structure this temporal structure takes the form of gesture-response between living bodies in the medium of symbols in which meaning arises in the social act, not just in the gesture on its own ...involving turn-taking/turn-making process the communicative interaction process patterns itself as narrative and propositional themes, forming while being formed by bodily interactive communication at the same time, leaving behind the traces of history the present has the temporal structure of communicative action patterns -- a simultaneous process of sustaining and shifting ordinary everyday power relations official ideological themes, sustain power relations, thereby giving rise to the dynamics of inclusion/exclusion, which are associated with the evolution of unofficial ideologies that challenge the official ideology with shifting power relations, which form new official ideologies...
communityA business organization is a form of community. The more an organization takes on the characteristics of a diverse health community - embracing the paradox of individualism and connectedness - the more complex and capable the organization becomes. As individuals seek to maximize their freedom and self-interests in the community, the community changes and adapts to its members. This is a coevolutionary process that is beneficial to both the individual and the community. This satisfies the individual's paradoxical needs for freedom and relationships while satisfying the community's need for members to carryout the purpose of the community. For synergy to come from this paradox, the dominant force in the community comes from the heart of the community, its raison d'etre, not the forms and rules of the community. The raison d'etre answers the binding questions for the members - What calls us together? What do we believe is possible together that is not possible individually? What do we hope to bring forth by linking together to form a community? Based on Wheatley, 2005
community of practiceHuman beings live in communities and whatever they do is a joint performance conducted by them in communities of practice. This joint activity is carried out in ongoing conversation between people in which they negotiate what they are doing and how they are making sense of what the are doing. In this activity, they become who they are -- together they construct their identities. Every community of practice is characterized by a dominant discourse, the most acceptable way to converse, which reflects power positions supported by ideologies. Most communities of practice are also characterized by some resistance to, or criticism of, the dominant discourse. A community of practice can change in the tension between the dominant discourse and the critique of it. Source: Stacey, 2007, pp 2)
community of purposeThe community of purpose specifically includes the top leadership team of the business organization, those united by a common purpose. But it also extends to all of the stakeholders, current or potential, who will embrace the purpose of the community - adding strength to the community. Steps to creating a community of purpose (Source: Mourkogiannis, 2005, pp 168) - Create a top tea, all of whose members are leaders. Make efforts to be ""one of us"" - reduce excessive salary differentials, demonstrate respect, and socialize widely. Spend time on the ""front line"" - answering customer calls, working on the shop floor. Tell identity stories that project the group's purpose and aspirations. Present the purpose in ways that make it emotionally real for colleagues - for example by bringing them face to face with the consequences of their actions. Engage in dialogue with individuals and groups, acting as a moral coach, awakening their purpose. If necessary deploy some of the techniques of dependency: Develop corporate rituals, bestow and withdraw favor to cement loyalty to the group.
comparative advantageComparative advantage is a relative advantage. ""Comparative advantage dictates that we should focus on what we do best, rather than on what we do better than other people."" (Kay, 2004, pp 85, emphasis added). While businesses, which exist because of their economic function, should seek competitive advantage, people and countries should seek comparative advantage through pursuing what they do best.
competencyCompetencies reflect the know how of the organization, the demonstrated capacity to perform. Competencies are embedded in and made up from the processes of the business. Competencies are woven into the fabric of the business organization, with skills, past history, culture, and identity being married with the processes of the organization. There are distinctive competencies, core competencies, and all other competencies. Distinctive competencies are unique and enable competitive advantage, core competencies are critical to strategic success, all other competencies are simply that, competencies necessary to operate the business.
competitionCompetition is the independent effort of multiple businesses to secure the business of a third party by offering the maximum value that meets their needs and means. Competition is the pillar of capitalism -- the driving force that stimulates innovation, encourages efficiency, and manages prices.
competitive advantageCompetitive advantage is what enables a business organization to thrive. It is the objective of strategy. It is the combination of elements in the business model which enables a business to better satisfy the needs in its environment, earning economic rents in the process. Resource-based vs. positional view of advantage -- In the realm of strategy, there are roughly two views of the basic source of competitive advantage, the resource-based view and the positional view. The first sees the capabilities of the firm as its primary source of advantage while the latter contends that position within an industry is the source of advantage. Michael Porter is associated with the positional view. Gary Hamel and C. K. Prahalad are associated with the resource view. The resource based view has tended to dominate strategy since the late 1980s with the attention placed on capabilities, core competencies, distinctive competencies, dynamic capabilities, and organization evolution. As dominant companies also shape industries, there is the possibility that resources shape position as well. See positional view of strategy and resource view of strategy. Advantage and sustained advantage (Barney, 1991) -- A firm has a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors. A firm has a sustained advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy. A firm enjoying a sustained competitive advantage may experience these major shifts in the structure of competition, and may see its competitive advantages nullified by such changes. However, a sustained competitive advantage is not nullified through competing firms duplicating the benefits of that competitive advantage. To have the potential of sustained competitive advantage, a firm resource must have four attributes -- it must be valuable, in the sense that it exploit opportunities and/or neutralizes threats in a firm's environment it must be rare among a firm's current and potential competition it must be imperfectly imitable. This can be due to three reasons: 1) the ability of a firm to obtain a resource is dependent upon unique historical conditions, 2) the link between the resources possessed by a firme and a firm's sustained competitive advantage is causally ambiguous, or 3) the resource generating a firm's advantage is socially complex, such as cultural factors that enable a unique synergy amongst managers. there cannot be strategically equivalent substitutes for this resource that are valuable but neither rare but neither rare or imperfectly imitable. These attributes of firm resources can be thought of as empirical indicators of how heterogeneous and immobile a firm's resources are and thus how useful these resources are for generating sustained competitive advantages. Note that physical resources are not on the list. Physical technology, evne complex physical technology, is generally imitable. Finally, sustainable advantage most likely cannot arise from a formal planning process, but is due to emergent strategy. Demand-based perspective of competitive advantage -- Adner and Zemsky (2007) present an analysis of sustainable competitive advantage emphasizing the demand-side factors. In particular, the effects of decreasing marginal utility and consumer heterogeneity across market segments is shown to affect the sustainability of competitive advantage through shifts in consumer willingness to pay. Competitive advantage definition -- The authors define competitive advantage as superior value creation -- with the firm's ability to sustain competitive advantage equivalent to its ability to sustain added value. The demand-side drivers are 1) marginal utility from performance improvements, 2) consumer taste for quality, and 3) the extent of consumer heterogeneity. At the level of firm resources, competitive advantage erodes not only because imitation undermines the uniqueness of resources, but also because consumer valuation of firm differences declines due to effects of decreasing marginal utility. At the level of firm positions, strategic heterogeneity is shown to be rooted not only in differences between firms' internal resources but also in the extent of consumer heterogeneity in the firms' demand environment. The Principle of Competitive Advantage -- Success is based on inventing an offering that addresses a real scarcity in the world, charging a price for it, and inventing a way of making it available that is cheap enough to leave a high margin. -- Kees van der Heijden, Back to basics: exploring the business idea, Strategy & Leadership, 29.3, 2001 Sources of Competitive Advantage -- Differentiation that commands an attractive price or a structurally lower cost to produce a non-differentiated product. -- Porter Specialization and capabilities (Kay, 2004) -- Specialization -- Specialization, with its division of labor, produces economies of scale. Specialization can overrun its usefulness, such as when seeking further scale becomes a disadvantage, as was the case for Ford in the first half of the 20th century. As firms have often reached and exceeded the limits of specialization in providing value, they have shifted to capabilities. Capabilities -- Capabilities, intrinsic capabilities, or distinctive capabilities include secrets of value, established business networks, brands, general management skills, engineering competency, innovation which is not easily copied or ongoing innovation which is not easily caught up with. Unique capabilities provide an opportunity to provide unique value and receive the gains from providing that value. Indicator of Competitive Advantage -- A business organization with a competitive advantage is more profitable than its rivals while this profitability exceeds its cost of capital. Profits in excess of the cost of capital are called economic rent. Sustained economic rents are prima facie evidence of a competitive advantage. Elements of Competitive Advantage -- Uniqueness - finding unique opportunities and solutions is about imagination, insight, foresight, and the courage to pursue it. Unique is new, different, but most important of all, untested and unproven. By the time a unique solution is validated as profitable, it is no longer unique for the next company. Also, if it is a unique business model or business capability, it is likely unapproachable, in the short-term, by competitors. Strategic Focus - Strategic focus comes about from marrying distinctive competency and purpose to form a superior value proposition. Strategic focus is about developing a longer view of competitive advantage with a combination of purpose, competency, and value proposition. This creates an internal environment that has the confidence and implicit support to continue to perfect and develop that focus through creating stronger competencies and further perfecting the value proposition. Strategic Intent/Vision/BHAGs - Strategic intent challenges and guides the organization to achieve the unachievable by having a clear focus on outlandish objectives which require the development of new capabilities to achieve. Innovation - Innovation is inventiveness put into profitable practice. In an evolving economy, the business organization must innovate at a rate that meets or exceeds its environment in order to sustain a competitive advantage. Continual Innovation - Making innovation as an ongoing process on all fronts. Democratic Principles - Democratic principles are needed to fully engage the active participation of diverse thinkers from across the organization. Broad and diverse participation improves innovation. Strategic Management as a self-improving learning process - Strategic management must become, amongst other things, a learning and self-improvement process for the organization. Dynamic Capabilities - Sustainable competitive advantage is ultimately based on dynamic capabilities, the capability to produce and utilize new capabilities on a continuous basis. John Kay; competitive vs. comparative advantage -- Competitive advantage is an absolute advantage of a business organization to offer greater value to its customers. Businesses should seek to find their competitive advantage, as opposed to their comparative advantage. They should focus on what they can do better than any other business. This may be something different than what they are best at doing. This maximizes the value of a business's economic function. Porter's framework for competitive advantage Environmental determinants of advantage (Porter, 1991) -- Firms create and sustain competitive advantage because of the capacity to continuously improve, innovate, and upgrade their competitive advantages over time. Upgrading is the process of shifting advantages throughout the value chain to more sophisticated types, and employing higher levels of skill and technology. Successful firms are those that improve and innovate in ways that are valued not only at home but elsewhere. Competitive success is enhanced by moving early in each product or process generation, provided that the movement is along a path that reflects evolving technology and buyer need, and that early movers subsequently upgrade their positions rather than rest upon them. In this view, firms have considerable discretion in relaxing external and internal constraints. Four broad attributes of the proximate environment of a firm have the greatest influence on its ability to innovate and upgrade. These attributes shape the information firms have available to perceive opportunities, the pool of inputs, skills and knowledge they can draw upon, the goals that condition investment, and the pressures on the firm to act. The environment is important in providing the initial insight that underpins competitive advantage, the inputs needed to act on it, and to accumulate knowledge and skills over time, and the forces needed to keep progressing. Factor conditions -- general, specialized, generic, local, global, natural resources, labor Firm strategy , structure, and rivalry -- intensity of competition, susceptibility to substitutes, actual rivalry, potential rivalry Demand conditions -- customer demands, sophistication, fickleness Related and supporting industries -- suppliers, customers, synergy, dependency Early (1960s) answers to the determinants of a firm's success (Porter, 1991) -- internally consistent set of goals and functional policies that collectively define the business's position in the market this internally consistent set of goals and policies aligns the firm's strengths and weaknesses with the external (industry) opportunities and threats -- aligning the company with its environment a firm's strategy be centrally concerned with the creation and exploration of its so called distinctive competencies -- unique strengths a firm possesses. Solving the cross-sectional problem of strategy, getting to an operational understanding of competitive advantage (Porter, 1991) -- The cross-sectional problem refers to having the understanding of what underpins a competitively advantageous position in an industry. Success requires the choices of -- a relatively attractive position given industry structure the firm's circumstances the positions of competitors, and bringing all the firm's activities into consistency with the chosen position. Competitive advantage grows out of discrete activities. A firm's strategy is manifested in the way it configures and links the many activities in its value chain relative to its competitors. Discrete activities are part of an interdependent system in which the cost and effectiveness of one activity can be affected by the ways others are performed. These interdependencies are called linkages. Knowing this still does not operationalize competitive advantage. For that, the competitive advantage drivers of the activities must be identified. Drivers of competitive advantage in an activity -- scale cumulative learning in the activity linkages between the activities and others the ability to share the activity with other business units the pattern of capital utilization in the activity over the relevant cycle the activity's location the timing of investment choices in the activity the extent of vertical integration in performing the activity institutional factors affecting how an activity is performed such as government regulations the firm's policy choices about how to configure the activity independent of other drivers Solving the longitudinal problem of strategy, getting to an operational understanding of competitive advantage (Porter, 1991) -- The cross-sectional solution solves the problem of achieving a desirable, competitively advantageous, position. That leaves the longitudinal problem of getting to advantage again and again, even initially. There are two factors at work here -- initial conditions and managerial choices. Since initial conditions have come about from past managerial choices, ultimately the longitudinal problem is solved only by managerial choices. This requires management that is competent to achieve a competitive advantage. Their strategic thinking, strategic management framework, and strategic management process execution are key factors of management's strategic management competency. Rumelt's framework for competitive advantage See firm theory of for Rumelt's explanation of competitive advantage in the context of his strategic theory of the firm. Competitive advantage factors -- For an in depth list of competitive advantage factors to stimulate activity design, see competitive advantage factors. Measuring Competitive Advantage -- See enterprise value and the Barney reference there.
competitive advantage factorsCompetitive advantage comes about from general elements described in competitive advantage and from types of innovation described in innovation. The strongest forms of competitive advantage come from business model innovation and management innovation. Below are categories of questions to prompt creative thinking of the possibilities for creating a competitive advantage with a business model design. These questions are from Hamel, 2000. There are four factors considered in determining the wealth potential of any business concept -- the extent to which the business concept is an efficient way of delivering customer benefits; the extent to which the business concept is unique; the degree to a fit among the elements of the business concept; and. the extent to which the business concept exploits profit boosters that have the potential to generate above-average returns. Efficient -- To create wealth, a business model must be efficient in the sense that the value customers place on the benefits delivered exceeds the cost of producing those benefits. Have we tested our assumptions about the value customers will actually derive from our products or services? Do we understand in detail the costs we will incur in providing that value? Unique -- The greater the convergence amongst business models, the less the chance for above-average profits. The goal is to create a business model that is unique in its conception and execution. Of course, the goal is not uniqueness for its own sake. To produce profits, a business model must be unique in ways that are valued by customers. To what extent does our business concept, depart from the average within are our industry or domain? How many points of difference can be identified across the major components of the business concept? Will these points of difference bring new benefits to customers? Fit -- A business concept generates profits when all its elements are mutually reinforcing. A business concept has to be internally consistent -- all its parts must work together for the same in goal. Do all of the elements of the business model positively reinforce one another? Are there some elements of the business model that are at odds with other elements? What's the degree of internal consistency in our business model? Is there anything that looks anomalous to customers? Define the synergy between the major element interrelationships. Does the network of the parts make the whole more than the sum of the parts? Profit boosters -- Profit boosters, fall into four categories. The first two, increasing returns and competitor lock-out, are synonyms for monopoly. The entire goal of strategy is to create imperfect competition. Increasing returns. Network effects Do we have a business concept that taps into the network effect? Can we find opportunities that create network economics where none currently exist? If not, can we somehow hitch our business concept to the network multiplier? Positive feedback effects. Where's the flywheel that will perpetuate our early success? Where are we creating a virtuous cycle of increasing returns? Where could we create positive feedback effects within our business model? Can we set up a very short learning cycle that will allow us to improve our products and services faster than anyone else? Should we be heavily discounting our products or services, or giving them away for free as a means to generate positive feedback effects that would allow us to outpace competitors? Learning effects What parts of our business model might be subject to learning curve effects? Where does accumulated volume count, and how much does it count as a percentage of total costs? Are we taking full advantage of every opportunity to learn? Are we building that learning into our products and services on a real-time basis? Competitor lock-out Preemption. Do you risk becoming a perpetual follower? Are there any first-mover advantages implicit in your business concept? Where do you plan to preempt, and how do you plan to follow-up on that? How are you going to turn being first once into being first again and again? Choke points Is there some standard, some protocol, an interface, or bit of infrastructure that you could uniquely own? Are you creating any assets that will be critical to the success of other companies -- so critical that you can effectively charge a ""toll""? Are there some scarce assets or skills that you'd like to deny your competitors? Can you lock up these assets or skills in some way? Customer lock-in. You have to be careful; a customer that feels locked-in is a particularly angry beast. You've got to use velvet ropes. Customer lock-in is just a fancy way of saying ""switching costs"". Could this business concept reduce our customers' ability or desire to buy from other suppliers? Is there anything in this business concept that would induce customers to limit their freedom of choice? How could we bind our fate with the fate of our customers even more tightly? Strategic economics Scale. Scale can drive efficiencies in many ways: better plant utilization, greater purchasing power, the muscle to enforce industry-wide price discipline, and more besides. Does our business model offer us a chance to build scale advantage? Where does size payoff in this business concept? Will the scale advantages outweigh any loss and flexibility? Focus. A company with a high degree of focus and specialization may reap economies compared with competitors with a more diffuse business mission and less coherent mix of services or products. Focus is not about efficiency in a cost sense; it's about efficiency in don't-get-distracted, get-all-the-wood-behind-one-arrow sense. Does our business concept have a laser-like focus? If not, do we run the risk of trying to ""boil the ocean""? What advantages would we gain by being more narrowly focused? What economies of scope, would we lose if we were more focused? Scope. The idea here is almost the inverse of focus. The company that can leverage resources and management talents across to broad array of opportunities may have an efficiency advantage over firms that cannot. Scope economies come from sharing things across business units and countries: brands, facilities, best practice, scarce talent, IT infrastructure, and so on. Where are the potential economies of scope with our business concept? Can we find any ""dual use"" assets -- things we can exploit in more than one business? What skills could we leverage across businesses, countries, or activities? Strategic flexibility. Portfolio breadth. Focus is great, but if the world moves against you, you may lack other options. Linking the fortunes of your company to the fortunes of a single market can be a high-risk gamble. The company with a broad offering may be more resilient in the face of rapidly shifting customer priorities and a more narrowly focused competitor. A portfolio can consist of countries, products, businesses, competencies, or customer types. The central point is that it helps to hedge a company's exposure to the vagaries of one particular market niche. What are the advantages of a wide portfolio of products and businesses? How can we hedge our bets in this business concept? Does this business concept force us to put all our eggs in a rather small basket? Is the reduction of earnings variability, for example, a positive strategic benefit? Operating agility. A company that is able to quickly refocus its efforts is better placed to respond to changes in demand and can thereby even out profit swings. How quickly does the demand function in our business change? Is there an advantage to investing in flexibility (i.e., in processes and facilities that would allow us to respond rapidly to shifts in demand)? Could we earn consistently higher profits, if we were able to respond more quickly to changes in demand, or to changes in input needs (e.g., were able to quickly incorporate the latest components in our designs)? Lower breakeven, a business concept that carries a high breakpoint is inherently less flexible than one with a lower breakpoint. Capital intensity, a big debt load, high fixed costs -- these things tend to reduce the financial flexibility of a business model. In doing so, they also reduce strategic flexibility, and that they make it more difficult to pay off one thing so you can go on to do another thing. Does our business concept give us a lower breakeven point than the traditional business models? How could we tweak the business model to lower breakeven point even further? What would be the benefits of a lower breakeven point? Could use a lower breakeven point to buy ourselves more flexibility or deliver more variety to customers? For value chain activity drivers of competitive advantage see competitive advantage.
competitive strategyAnother term for business strategy.
complementarityThe quality or state of being complementary. For example, in biological science, ""The correspondence or similarity between nucleotides or strands of nucleotides of DNA and RNA molecules that allows precise pairing."" Sources: complementarity. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/complementarity (accessed: September 30, 2007). complementarity. Dictionary.com. The American Heritage® Stedman's Medical Dictionary. Houghton Mifflin Company. http://dictionary.reference.com/browse/complementarity (accessed: September 30, 2007).
complex adaptive systemA business organization is a purposeful complex adaptive system. It has its purpose within an environment. Its members have their own purposes independent of the organization. The interrelationships between the,elements and members make the system complex. The organization will have varying degrees of adaptability. See social system for a full description of what defines a business organization as a social system.
complex responsive processesComplex responsive processes is one of several views of how complex organization becomes what it becomes. The dominant alternative view is the systemic process view. See organization for a summary of causal ways of thinking about organization. Complex responsive processes of relating is descriptive, what people are doing in organizations, not prescriptive, what they could or should be doing. It describes the joint action of the members of the organization that results in, knowledge creation with its perpetual construction of the future as identity and difference. The complex responsive processes perspective the organization dynamics of complex organizations based in insights from complexity sciences. This perspective, sometimes labeled as the responsive processes view, explain organization evolution and transformation. Complex responsive processes explain the evolving processes of relating between people who form an organization. This is the basis for a theory, or perspective, of strategy, where human interaction is perpetually constructing the future as the known-unknown, that is, as continuity and potential transformation at the same time. This perspective reflects a theory of transformative causality -- a fundamentally paradoxical theory of causality. (Stacey, 2007, pp 435) See communication for the complex responsive processes perspective on communication, the gesture-response model, and how it contrasts with the cybernetic sender-receiver model based on systemic thinking, or a systemic processes view of organization. See communicative interaction for an explanation of its nature and structure based on a complex responsive processes view of human interaction. Aspects of the complex responsive processes view of human organization -- Complex responsive processes of relating encompass joint action, identity creation, knowledge emergence -- Joint action -- Humans are fundamentally social animals The distinctive feature of humanity is the sophisticated manner in which individual human bodies undertake joint action... cooperation with each other in order to survive and develop undertaken to transform their environment in the interest of their survival and development accomplished by the use of tools requiring continuous communicative interaction between them communicative interaction accomplished in the medium of proto, significant, and reified symbols and in that interaction emerges the very identity of humans, both individual and collective Complex responsive processes of relating are the basis for all forms of human joint action using tools, not matter how sophisticated those tools might be Identity, a sense of self, is formed and transformed. See identity. Difference in identity as a source of novelty. See identity. Meaning, knowledge, emerges from this process. See knowledge creation. Knowledge cannot be stored, but reified symbols can be stored as artifacts, that is, ""abstracted"" themes describing past interactions and the qualities that emerged in those interactions. See symbols. Complex responsive process view - an alternative to the systemic process view (Source: Stacey, 2007, pp 4) -- Complex responsive processes is an interpretation of the insights from the complexity sciences, departing altogether from the notion of organization as a system and from the focus on the individual. Instead it draws on certain strands of thinking in sociology that stress human interdependence and regard individuals as thoroughly social selves that arise in human interaction. That interaction can be described as complex responsive processes of human relating. These responsive processes of interaction take the form of -- conversation (see communication, communicative interaction, and conversational processes), patterns of power relations, and ideological based choices (see ideology) These responsive processes are -- continually iterated, occur as the living present and, are essentially local in nature. It is in such responsive local interaction that population-wide patterns emerge. Responsive processes conceptualization of organizations -- Organizations are population-wide patterns of responsive processes that form a collective identity. Organizational identity co-evolves with individual identity, emerging from continually iterated responsive processes that are essentially local in nature and occurring in the living present. Organizations are thus conceptualized as ongoing patterning in the interactions between people and denies that it constitutes a system or even that it is useful to think of the organization 'as if' it were a system. No one can step outside the ongoing responsive processes of interaction and so no one can influence the emerging patterns from an external position. The only influence any of us can have is in our participating in the ongoing responsive process of relating to each other. This is not to take an ideological position in which relating is somehow good, because oppression, ethnic cleaning, racial abuse, murder, and war are also iterated, ongoing, responsive processes of people relating to each other. The dominant discourse separates macro (global or population-wide) In organization theory, the term 'macro' refers to global or population-wide levels of existence or study, in contrast to 'micro' that refers to local levels of existence or study. These terms reflect the systems thinking construct that distinguishes parts from wholes and the separation of the individual and the group, whether the group is an organization or society. (Stacey, 2007, pp 5) Complex responsive processes and strategy -- Complex responsive processes is a responsive processes theory of strategy, in contrast to the systemic theories. This theory refers to the evolving processes of relating between people who form an organization. This is the basis for a theory, or perspective, of strategy, where human interaction is perpetually constructing the future as the known-unknown, that is, as continuity and potential transformation at the same time. This perspective reflects a theory of transformative causality -- a fundamentally paradoxical theory of causality. (Stacey, 2007, pp 435) This theory refers to the evolving processes of relating between people who form an organization. This is the basis for a theory, or perspective, of strategy, where human interaction is perpetually constructing the future as the known-unknown, that is, as continuity and potential transformation at the same time. This perspective reflects a theory of transformative causality -- a fundamentally paradoxical theory of causality. Strategy is the evolving pattern of what an organization is, its identity. It is the evolving pattern of what an organization is. An organization is what it is because of a history of relating and it will become what it becomes in the local communicative interaction and power relating between people in the living present. The complex responsive processes perspective regards interaction between people as iterated processes of communication and power relating. There is no notion here of a system, and what people are producing in their interaction is further patterns of interaction in which they imaginatively construct 'wholes' which they tend to idealize. Such imaginative 'wholes' are understood as ideologies rather than systems. The theory of complex responsive processes, therefore, represents a move from a spatial metaphor of inside and outside to temporal processes of continual reproduction and potential transformation. Complex responsive processes are fundamentally conversation in nature, forming and being formed by power relations and ideologically based choices. The analysis focuses at a micro level and concentrates on the paradoxical dynamics of stable instability in which local interaction produces emergent population-wide patterns in relating and these could take novel forms through the amplification of diversity and human spontaneity. This perspective emphasizes the importance of diversity and deviance as essential to the internal capacity to change spontaneously. In this evolving, potentially creative process, unpredictability is central, inviting further exploration of how people act into the unknown.
complex systemsComplex systems include a broad array of things that are networked together. Their common attribute is that their behavior is difficult to explain, model, and predict. The focus of strategic management is on business organizations, a subset of complex systems, which can be described as purposeful social adaptive complex systems.
complexityThe term complexity has no standard definition, in layperson terms or scientific terms. Many aspects of complexity can be explored. We start with the one of greatest significance to strategy and management. The most significant aspect of complexity -- The most significant aspect of complexity is the insight it offers into organizations that is radically different from other scientific perspectives and the dominant management discourse. The importance of complexity as a concept, and as a science, comes from the insights produced regarding organization, self-organization, and organization evolution. These insights from natural science offer insights into social science, thus organization theory and management, offering radically different explanations for and perspectives on strategy development and the management of organizations.. Ralph Stacey's view of complexity insights (Stacey, 2007, pp 3) -- The term 'complexity' refers to important insights coming from the natural complexity sciences to do with -- the intrinsic uncertainty and unpredictability of a great many natural phenomena, the importance of diversity in the evolution of novel forms, and the self-organizing emergent nature of that evolution The insight from complexity -- The insight is that novel global, population-wide forms emerge unpredictably in self-organizing, that is local, interaction, in the absence of blueprint, programme or plan for global, population-wide form. Challenge to the dominant management discourse (Stacey, 2007, pp 4) -- Complexity insights are a major challenge to the dominant management discourse, which is based on a systems, vs. complexity, view of organizations. The dominant discourse is based on assumptions to do with -- predictability and planning the whole organization Other aspects of complexity -- Complexity refers to more than the state of being complicated. In the realm of strategy, complexity is what business organizations have to deal with -- a complex world, complexity economics, organizations as complex social systems, complex decisions, and so forth. Systems complexity -- In regards to systems, there are a couple of ways of describing complexity. The first way relates to the number of elements in the system and the relationships between those elements, which when combined explain the overall system complexity -- detail complexity and dynamic complexity. Complexity of detail refers to the number of elements or things making up a system. Dynamic complexity refers to the number and nature of the relationships between the elements. ""The first lesson of systems thinking is to know whether you are dealing with detail or dynamic complexity -- a jigsaw puzzle or a chess game"" (O'Connor 1997). The second way to describe complexity is apparent and inherent complexity -- Systems with apparent complexity are those that are complicated in appearance but have relatively simple underlying patterns which create that appearance. Understanding these systems is within reach of systems thinking. Systems with multiple, simultaneous feedback loops, described as chaotic systems, have inherent complexity. Attempting to understand these systems is in the realm of complexity science. Relationship to information technology -- Dynamic complexity has increased rapidly in no small part due to the information technology. Information technology has virtually eliminated time and space as limitations to interactions of the elements of systems, thus enabling an exponential increase in complexity of social systems. Thus while information technology enables the understanding, development, and management of increasingly complex systems, it also drives the increasing complexity of social systems, including organizations and business strategies.
complexity economicsClassical or neoclassical economics both take a systemic view of economics where the system tends towards equilibrium. Changes to the system come from outside the system. The system readjusts to a new equilibrium resulting from the change. The dynamic of economic growth is considered a move toward equilibrium. Evolutionary and complexity economics makes the radical departure from classical and neoclassical economics in that the dynamic of growth is a continuous disequilibrating process where innovations continually disturb equilibrium states. This requires organizations to adapt or evolve in order to survive. Both evolutionary and complexity economics brings innovation into the economic system and its effect of keeping the system in disequilibrium rather than equilibrium. Evolutionary economics causality is both adaptionist/formative for the macro system, or an organization, and rationalist, with the innovator at the micro level. Complexity economics opens the door for transformative causality, which brings the innovator into the system itself. In transformative causality there is no distinction between the individual and the group. With transformative teleology, innovation no longer depends on the intuition of the entrepreneur, but results from micro-diversity of the ongoing interactions within the organization.
complexity researchSee systems science.
complexity theoryComplexity theory enables understanding the realities of the evolutionary, dynamic, and complex nature of organizations, businesses, and economics. This understanding is necessary to develop an evolving organization capable of producing and sustaining a competitive advantage. Understanding complexity means it is explainable, not that complex systems are predictable, whether unpredictable due to the complexity itself or that the system is truly indeterminate. Chaos theory, systems theory, and complexity -- Chaotic systems are deterministic. Complexity theory is about systems that can learn, like business organizations. Thus the term 'complex adaptive system' describes organizations. Stacey (2000, pp 209 - 210) posits the notion that systems thinking is an inadequate 'source domain' for understanding business organizations and prefers to tap directly into complexity as the source for analogy - thinking of organizations as complex responsive processes instead of complex adaptive systems. There does not appear to be any standard for how systems, chaos, and complexity theory fit together. Complexity theory can be thought to fit within the umbrella of general systems theory, but departs from systems thinking and chaos theory in the belief that many complex systems, including social systems, such as business organizations and economic systems, are non-deterministic. Complexity theory certainly does apply to areas of science and study where reductionism has fallen short and may rightfully push thinking towards principles and processes and away from structures and seeking deterministic understandings that are at best impractical and at worst impossible to find. With complex systems (regardless of how 'complexity' is specifically defined) plus dynamism, the 'half-life' of a deterministic explanation would be of limited value, even if it could be found, as it would only last for a brief span of time.
comprehensive inquiry The comprehensive inquiry is the holistic inquiry of the business organization, covering all its aspects, elements, and interrelationships. This inquiry is at the core of strategy development, used in the creation of strategy for business model innovation -- the design of business organizations 'to be'. It is used for understanding the existing business organization - its problems, opportunities, behaviors, etc., employed for strategic assessment. This inquiry is complemented by the strategic focus inquiry and the culture inquiry. The business model serves as the guiding light (see inquiry) for the comprehensive inquiry, with its four aspects and business model elements. See business organization aspects for an explanation of the aspects and their role in inquiry. See business architecture for an architectural view of the business organization based on the four basic aspects. Comprehensive inquiry process -- The inquiry follows the basic structure and principles of systems inquiry as explained in inquiry, systems inquiry, and iterative inquiry. The comprehensive inquiry has five sub-inquiries which collectively make up a holistic inquiry of the business organization. These inquires are each performed in iterative cycles -- one cycle being the execution of each of the five inquires listed below. Each inquiry execution fills in a portion of the business model. Portions of the model are further completed and refined with successive iterations. -- purpose inquiry -- An inquiry of the business organization from the purpose perspective as defined by the purpose aspect and focusing on, but not limited to, the business model elements in the purpose architecture. function inquiry -- An inquiry of the business organization from the function perspective as defined by the function aspect and focusing on, but not limited to, the business model elements in the function architecture. process inquiry -- An inquiry of the business organization from the process perspective as defined by the function aspect and focusing on, but not limited to, the business model elements in the process architecture. structure inquiry -- An inquiry of the business organization from the structure perspective as defined by the structure aspect and focusing on, but not limited to, the business model elements in the structure architecture. aspect integration inquiry -- An inquiry of aspect and business model element integration. This inquiry focuses on the interrelationships that result in the efficiencies, uniqueness, capabilities, and competitive advantages of the business. Inquiry results -- The primary result of the inquiry is a business model for the actual business, either 'as is' or 'to be'. Other results include improved strategic thinking and business savvy. In the case of strategy formation, the process results in a business design alternatives, one or more of which are deployed.
conceptual frameworkSee framework.
configurationConfiguration refers to how the components, parts, or elements of a system fit together. Highly modular elements can be dynamically configured into a diverse set of higher level systems or products. Modularity is a key element of mass customization. Product configuration -- Product configuration is a useful model for all types of systems configuration. Product configuration process defined -- A product configuration process is used to -- define the features and options of products to support the selection (select, quote, order) and conversion processes. filter product offering based on customer rules, pricing rules, manufacturing rules, and/or marketing rules. create specifications for products dynamically on demand (bill-of-material, routing- process requirements) Related definitionsnew -- feature -- primary product selection criteria options -- choices related to the primary selection criteria configured item -- set of choices that define a complete product constraint/rule -- limits on an attribute Rules -- configuration rules -- defines boundary conditions for what is allowed validation rules -- ensures proper selection of component/route or predefined items parameter rules -- proper selection and use of calculated or tabular lookup values Examples of rules include marketing programs, maximum and minimum dimensions, performance limits, manufacturing capabilities, shipping and safety constraints, and component availability. Use of product configuration by business processes -- business development -- development of product and process platforms product realization -- product and process development demand creation -- sales profiling revenue generation -- proposal generation, guided selling, product information for potential customers fulfillment -- quote and order, plan, source materials and processes, manufacturing, delivery post sales service -- as built product information, service fulfillment support and development -- product information for costing, designing, upgrades, etc. Application of configuration by type of conversion processes -- Invention -- Configuration with designers for specification. Configuration by engineers for defining product and manufacturing process. Mass production -- Catalog or simple configuration for product selection. Configuration not needed for product and manufacturing process. Continuous improvement -- Configuration simple for selection, quote, and order. Configuration may or may not be needed for product and manufacturing process. Mass customization -- Configuration for complex selection, quote, and order. Configuration for defining the product and process for manufacturing.
consciousnessConsciousness relates to a person knowing what they are doing and what to expect from their gestures. The gesture becomes what is called a significant symbol (see symbols) because it calls forth the same response in the gesturer as in the one to whom it is directed. This constitutes one 'knowing' what one is doing. Consciousness ties in with gesture-response communicative interaction because it is in this interaction that consciousness arises. Complex responsive processes view of consciousness (Stacey, 2007, pp 272-273) -- For consciousness to arise, Mead argued that our mammal ancestors must have evolved central nervous systems that enabled them to gesture to others in a manner that was capable of calling forth in themselves the same range of responses as in those to whom they were gesturing. This would happen if, for example, in the case of the encounter of two dogs, the snarl of one called forth in itself the fleeting feelings associated with counter snarl, flight or submissive posture, just as they did in the one to whom the gesture was being made. The gesture now has a substantially different role. Mead described such a gesture as a significant symbol, where a significant symbol is one that calls forth the same response in the gesturer as in the one to whom it is directed. See symbols. Significant symbols, therefore, make it possible for the gesturer to 'know' what he or she is doing. If, when one makes a gesture to another, one is able to experience in one's own body a similar response to that which the gesture provokes in another body, then one can `know' what one is doing. Possessing this capacity, the maker of a gesture can intuit, anticipate and to some extent predict, the consequences of that gesture. In other words, he or she can know what he or she is doing, just before the other responds. The whole social act, that is, meaning, can be experienced in advance of carrying out the whole act, opening up the possibility of reflection and choice in making a gesture. Furthermore, the one responding has the same opportunity for reflecting upon, and so choosing, from the range of responses. The first part of a gesture can be taken by the other as an indication of how further parts of the gesture will unfold from the response. In this way, the two can indicate to each other how they might respond to each other in the continuous circle in which a gesture by one calls forth a response from another, which is itself a gesture back to the first. As individuals interact with each other in this way, the possibility arises of a pause before making a gesture. In a kind of private role-play, emerging in the repeated experience of public interaction, one individual learns to take the attitude of the other, enabling a kind of trial run in advance of actually completing or even starting the gesture. Will it call forth aggression, fright, flight or submission? What will be the consequences in each case? In this way, rudimentary forms of thinking develop, taking the form of private role-playing, that is, gestures made by a body to itself, calling forth responses in itself. Mead said that humans are fundamentally role-playing animals. Consciousness, therefore, arises in interaction and the body, with its nervous system, becomes central to understanding how we 'know' anything. I want to stress how Mead is arguing that individual human consciousness, mind, arises in the social act, in communicative interaction, so that there cannot be the one without the other.
consensual validationSee organizing.
consilienceConsilience, or the unity of knowledge (literally a ""jumping together"" of knowledge), has its roots in the ancient Greek concept of an intrinsic orderliness that governs our cosmos, inherently comprehensible by logical process, a vision at odds with mystical views in many cultures that surrounded the Hellenes. The rational view was recovered during the high Middle Ages, separated from theology during the Renaissance and found its apogee in the Age of Enlightenment. Then, with the rise of the modern sciences, the sense of unity gradually was lost in the increasing fragmentation and specialization of knowledge in the last two centuries. The converse of consilience in this way is Reductionism. The word consilience was apparently coined by William Whewell, in The Philosophy of the Inductive Sciences, 1840. In this synthesis Whewell explained that, ""The Consilience of Inductions takes place when an Induction, obtained from one class of facts, coincides with an Induction obtained from another different class. Thus Consilience is a test of the truth of the Theory in which it occurs."" The Scientific method has become almost universally accepted as the exclusive method for testing the status of any scientific hypothesis or theory. ""Inductions"" which arise out of applications of the scientific method are, by definition, the only accepted indicators of consilience. The word had remained shelved until the end of the 20th century, when it was vividly revived in Consilience: The Unity of Knowledge, a 1998 book by the humanist biologist Edward Osborne Wilson, as an attempt to bridge the culture gap between the sciences and the humanities that was the subject of C. P. Snow's The Two Cultures and the Scientific Revolution, 1959. Wilson's assertion was that the sciences, humanities, and arts have a common goal: to give a purpose to understanding the details, to lend to all inquirers ""a conviction, far deeper than a mere working proposition, that the world is orderly and can be explained by a small number of natural laws."" This is the essence of consilience. Source: Wikipedia contributors, ""Consilience,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Consilience&oldid=117654447 (accessed April 9, 2007).
constellation of variablesThe business organization can be described as a constellation of variables -- variables whose inclusion or exclusion, organization, and interactions, i.e. their configuration, determine the outcome -- the value of the offering and the performance of the firm in producing the offering. Competitive advantage is the result of superior configurations of the constellation of variable making up the business organization -- producing the advantages of Porter's generic focused strategies of cost leadership or product differentiation. An alternative to executives wrestling with one of these two strategies, a focus on coherence may be much more effective, then testing that coherence against the extremes of cost leadership and product differentiation to ascertain its robustness and viability to compete effectively.
constitutive idea A constitutive idea, or hypothesis, is a statement of what actually happens in reality. For example if we say that an organisation actually is a system operating to fulfill some real purpose, then we are putting forward a constitutive idea. We are saying that the organisation really exists and it is really fulfilling some real purpose. However, if we put forward an hypothesis in which we are thinking about an organisation 'as if' it were a system operating 'as if' it had a purpose, then we are thinking in terms of regulative ideas. Obviously Kant would not talk about constitutive ideas because he held that we could never know reality in itself. The activity of the scientist then becomes clear in Kant's scheme of things. The scientist has a mind consisting of categories of time, space, causal links and the capacity for forming 'as if' hypotheses, which enable him or her to formulate hypotheses about the appearances of reality and then test them, not about reality itself. Source: Stacey, 2003, pp 20-21)
constrained designSame as bounded design. See idealized design.
constructA construct is a representation of a concept, such as a conceptual representation of a business organization, which shows the variables and their interrelationships. It is essentially the same as a framework in its abstract completeness, but less like a model, in that constructs lack the simplicity and logical precision required of models.
contextContext is the setting or circumstances of the actions. Each organization has a unique and evolving context, the understanding of which is developed in the strategy formation activities. The better the context is understood, the more effective its exploration for advantage. Pettigrew on context (Pettigrew, 1987, pp 650) -- ""...context refers to the antecedent conditions of change, the internal structure, cultural, and political context within which leadership occurs, as well as broad features of the outer context of the firm from which much of the legitimacy for change is derived."" Contextual Variables -- Context, a key variable in strategy formation, is actually many variables -- Context includes all relevant elements of the business organization's environment - stakeholders, regulators, competitors, customers, markets, communities, governments, etc. Context also includes elements within the business organization such as mission, vision, values, culture, and capabilities. Other contextual factors include environmental ambiguity, environmental dynamics and complexity, competitive position, and the stage of life of the business. Strategic management competency itself is a contextual factor to be considered in the selection of strategies to pursue. Context from a complex responsive process perspective -- Context in the complex responsive processes view of organizations is both the living present and the history of experience. It is related to the notion of path dependence. All human action is history dependent. Any current action, whether in the medium of symbols or using tools is both enabled and constrained by the actions preceding it Actions are patterned by both previous history and current context (Stacey, 2001, pp 101) context is the ""real"" lived in world and the history of lived experience the gesture-response structure of communication of people takes place in a context the gesture-response action is shaped and given meaning by context context for both the gesturer and responder is the living present and the historical background from which the gesture-response action evolves symbols are always a social action in the context of the living present of time and place constituted by other humans, their interactions, and the historical experience of each of the interacting individuals interactions with each other and between those around them. beyond the current and historical context in symbols is the historical development of abstract-systemic explanatory frameworks of all kinds. This category of contextual things, these frameworks, can be classifies as reified symbols. This is because meaning goes beyond the gesture-responses and the meanings of words. In the case of the contextual abstract framework of physics, the words ""gravity"" and ""relativity"" refer to a whole abstract systematic framework and the responses those words call forth in each must also refer to that framework if they are to continue to discuss physics.
contingency theory...strategists ""observe the winners and look for what makes them win. The most basic method in economic sociology [and organization theory] is to observe large numbers of firms and look for what explains differences in their behavior . the new strategies they choose are shaped by public policy, imitation, network position, power, and historical happenstance"" (2000: 2). As a result, studies of the interaction among strategy, structure, and performance have become comparatively rare in organization theory. The Triumph of Antimanagerial Theory? Some lament this neglect of performance as an egregious wrong turn by American scholars beginning somewhere in the mid-1970s, a departure from the promising open systems/contingency theory consensus. Donaldson (1995) summarizes the various strains of contingency theory in terms of the SARFIT (structural-adaptation-to-regain-fit) model. In an open systems world, environments create requirements for organizations that their managers address in part by adopting strategies. These strategies in turn create contingencies-size, technology, level of diversification, or others-for which some organizational structures are better suited than others. When managers of an organization find themselves with a structure that does not match its contingencies (e.g., because these contingencies have changed), their organization's performance suffers, and they endeavor to change its structure to one with a better fit, to improve performance. In short, fit affects performance; a change in the contingency variable (technology, diversification, etc.) causes misfit; misfit leads to structural change; and change in structure leads to new fit, which restores performance. Yet just as structural contingency theorists had arrived at a plausible model of how organizations interact with their environments, with useful implications for managers (e.g., Burns and Stalker, 1961; Lawrence and Lorsch, 1967; Thompson, 1967), Donaldson and similar critics were dismayed to see American ""antimanagement"" theorists respond with paradigms viewing managers as Machiavellian (Pfeffer and Salancik, 1978), lemminglike (DiMaggio and Powell, 1983), perverse (Meyer and Rowan, 1977), or unable to overcome inertia in order to make sensible organizational changes (Hannan and Freeman, 1977). These critics suggested that delight in novelty had apparently overcome a commitment to cumulative knowledge building founded on the sold rock of contingency theory (Donaldson, 1995). Source: Scott & Davis, 2007, p 311
conversational processesThree classifications of conversational processes -- Conversation, the dynamics of the process of communicative interaction in the living present required for the emergent unstable-stability in the perpetual construction of novel futures in the living present. (Stacey, 2001, 181-183) Displaying the dynamics of stability conversation is patterned by habitual, highly repetitive themes the conversation has little to no potential for transformation identity arising in this type of conversation is continuity with little variation neurotic -- conversational qualities are lifeless, depressing, even obsessive and compulsive Displaying the dynamics of instability coherent pattern is lost as fragments of conversation trigger other fragments of little thematic structure the conversation is disintegrative, identity is destroyed psychotic -- the conversational qualities are manic confusion and distress with fragmenting identity Displaying the dynamics of the ""edge of chaos"" conversation is where patterning themes have the paradoxical characteristics of continuity and spontaneity at the same time the conversation has the potential for transformation the identity arising is potentially new the conversational qualities are liveliness, fluidity, and energy along with a feeling of grasping at meaning and coherence there is excitement at the same time as tension and anxiety
core competencyA core competency is a competency critical to the strategic success of a business organization. For example, all automobile manufactures need to have a core competency, a proficiency, in automobile assembly in order to compete effectively. This competency may not be a distinctive competency, but is nevertheless critical to the business. Distinctive competencies are unique and enable competitive advantage, core competencies are critical to strategic success, all other competencies are simply that, competencies necessary to operate the business. Tests of core competencies -- a core competency... ...will provide potential access to a wide variety of markets ...should make a significant contribution to the perceived customer benefits of the end product or service ...should be difficult for competitors to imitate (Source: Prahalad, C.K., (1990), and Hamel, Gary, The Core Competence of the Corporation, Harvard Business Review, May-June, 1990 Comparison of two concepts of the corporation, the SBU vs. Core Competence -- basis for competition SBU -- competitiveness of today's products Core Competence -- interfirm competition to build competencies corporate structure SBU -- portfolio of businesses related in product-market terms Core Competence -- portfolio of competencies, core products, and businesses status of the business unit SBU -- autonomy is sacrosanct; the SBU ""owns"" all resources other than cash Core Competence -- SBU is a potential reservoir of core competencies resource allocation SBU -- discrete businesses are the unit of analysis; capital is allocated business by business Core Competence -- businesses and competencies are the unit of analysis; top management allocates capital and talent value added of top management SBU -- optimizing corporate returns through capital allocation trade-offs among businesses Core Competence -- enunciating strategic architecture and building competencies to secure the future (Source: Prahalad, C.K., (1990), and Hamel, Gary, The Core Competence of the Corporation, Harvard Business Review, May-June, 1990 Value of core competencies -- If growth is dependent on the successful actions of the firm in a volatile and competitive environment, the probability of success will increase if underpinned by one or more core competencies. Process for defining a business's core competencies -- Make a list of what a company must do. Question ever aspect of what is actually done to arrive at what it truly must do. Make a list of the things the company should do. This may include discretionary elements, should include things being done, and can include thing not being done but will establish and sustain critical synergies. Make a list of discretionary activities currently being done that generate unnecessary burdens, costs, stress, etc., which may dilute or disperse scarce resources or activities Sort through the listed activities to seek opportunities to increase efficiency, improve flexibility, enhance competitiveness, and anticipate the future - evaluating each activity's contributions in an objective a manner. For any suggested changes, test the for congruence with raison d'etre and identity, adverse impacts in the short or long-run, benefits gained vs. disadvantages, all the while being honest, objective, and calculating the costs. Source: Coate, Patricia, (2007), Interview with Richard Pech, Business Strategy Series, Vol 8 No. 1, 2007, pp 8-13, Emerald Group Publishing Limited Leveraging the core -- HP -- DRUG DELIVERY. Hewlett-Packard (HPQ ) has come up with an unusual adaptation for its ink-jet printing technology--a skin patch for drug delivery. The patch is covered with an array of microneedles that just barely penetrate the skin, painlessly. Above the needles are a number of wells containing one or more drugs, and a miniature firing device to push the medicine through to the bloodstream. HP has licensed the patch to Crospon, an Irish medical device maker, for commercialization, and expects it to reach the market in three to four years. (Source: Business Week, Oct 1, 2007, pg 75, From HP, Skin-Jet Printing) Microsoft -- Using Spam Blockers To Target HIV, Too. Cut-rate painkillers! Unclaimed riches in Nigeria!! Most of us quickly identify such e-mail messages as spam. But how would you teach that skill to a machine? David Heckerman needed to know. Early this decade, Heckerman was leading a spam-blocking team at Microsoft Research. To build their tool, team members meticulously mapped out thousands of signals that a message might be junk. An e-mail featuring ""Viagra,"" for example, was a good bet to be spam--but things got complicated in a hurry. If spammers saw that ""Viagra"" messages were getting zapped, they switched to V1agra, or Vi agra. It was almost as if spam, like a living thing, were mutating. This parallel between spam and biology resonated for Heckerman, a physician as well as a PhD in computer science. It didn't take him long to realize that his spam-blocking tool could extend far beyond junk e-mail, into the realm of life science. In 2003, he surprised colleagues in Redmond, Wash., by refocusing the spam-blocking technology on one of the world's deadliest, fastest- mutating conundrums: HIV, the virus that leads to AIDS. Heckerman was plunging into medicine--and carrying Microsoft (MSFT ) with him. When he brought his plan to Bill Gates, the company chairman ""got really excited,"" Heckerman says. Well versed on HIV from his philanthropy work, Gates lined up Heckerman with AIDS researchers at Massachusetts General Hospital, the University of Washington, and elsewhere. Since then, the 50-year-old Heckerman and two colleagues have created their own biology niche at Microsoft, where they build HIV-detecting software. These are research tools to spot infected cells and correlate the viral mutations with the individual's genetic profile. Heckerman's team runs mountains of data through enormous clusters of 320 computers, operating in parallel. Thanks to smarter algorithms and more powerful machines, they're sifting through the data 480 times faster than a year ago. In June, the team released its first batch of tools for free on the Internet. A new industry for the behemoth to conquer? Not exactly. Heckerman's nook in Redmond represents just one small node in a global AIDS research effort marked largely by cooperation. ""The Microsoft group has a different perspective and a good statistical background,"" says Bette Korber, an HIV researcher at Los Alamos National Laboratories. The key quarry they all face is the virus itself, which is proving wilier than any of Microsoft's corporate foes. While Heckerman has high hopes that his tools will lead to vaccines that can be tested on humans within three years, his research sits outside of Microsoft's business plan. ""It has nothing to do with Microsoft,"" he says, ""except that we can help."" From the company's perspective, the sums invested in HIV research amount to a rounding error--only a couple million dollars per year in a research and development budget of $7 billion. The potential payoff would be to contribute to the holy grail of AIDS research, successful vaccines. In the optimal scenario, drug companies would distill such research into targeted varieties of vaccines, which would help defend millions around the world from the scourge. The business payoff? Well, if helping to conquer a plague doesn't justify the effort--and burnish Microsoft's image--it might just be that a virus-sniffing tool could perhaps drive spam into submission. If it seems strange that spam-blockers would end up studying nucleic acids, it shouldn't. Research is growing increasingly quantitative. Nearly everything these days, from atoms and cells on up, is described in data. When the work involves finding statistical relationships in mountains of bits, two things happen: First, mathematicians and computer scientists gain sway, which means an expanding role in research for powerhouses such as Microsoft and IBM (IBM ). Second, as researchers find common patterns, they start jumping from one discipline to the next. CALCULATING ODDS -- The battle against HIV draws loads of such jumpers. Several scientists at Los Alamos, for example, were teaching machines to recognize patterns in satellite imagery. This led them to HIV, where they're building tools along the lines of Microsoft's. And many of the 800 researchers at Microsoft cross disciplines every which way. One of them, Michael Cohen, started out building software to stitch photos into a panorama. Now he's piecing thousands of brain scans into 3D models for scientists. For Heckerman, the connections between spam and HIV boil down to mathematics. He analyzes both scourges by studying statistical relationships among their ever-changing features. Consider the word ""Viagra."" Sometimes it shows up in legitimate e-mails. Often it appears in spam. If researchers study thousands of e-mails, they can calculate the percentage of e-mails with that word that are spam. That's one clue. But the spam-filtering machine needs to know more than that. What other features in an e-mail signal that it's spam? Are certain fonts particularly spammy? What about e-mail addresses or types of punctuation? The trick is to figure out which combinations of these features identify an e-mail as spam. Each decision can involve thousands of variables and millions of different calculations. From Heckerman's perspective, HIV is like a cagey spammer. After attacking a cell, it injects its own genetic material and proceeds (much like a spam jockey who has commandeered an unprotected computer) to manufacture thousands of copies of the virus. It's a notoriously sloppy copier, but that adds to its vigor. Each mistake launches mutant viruses into the system. Many fail. Some, though, survive--and resist the drugs. One challenge for HIV researchers is to find the variables that point to an infected cell. Ordinarily, the first clues--the cellular equivalent of the variations in fonts and words that Heckerman has discovered in his spam research--are bits of protein that sit atop each cell. These communicate to passersby, including armies of antibodies, what's going on inside the cell. For years, researchers have been striving to single out the combinations of protein that point to an HIV-infected cell. Once they do, the next step is to package those bits of protein into a vaccine. In theory, this would introduce a person's immune system to an entire gang of undesirables, so that it could recognize and attack those cells. The trouble? Complexity and mutations. HIV-infected cells often wear mutated nameplates that immune systems haven't learned to read. In this sense, vaccines have been like faulty spam filters, the ones that block e-mails promoting ""Viagra"" while letting ads for ""V1agra"" scoot through. This leads some researchers to throw up their hands. ""We've thrown billions down the black hole of AIDS vaccines,"" laments Leroy Hood, co-founder of the Institute for Systems Biology in Seattle. But Heckerman is upbeat. He argues that by revving up the computing power and blending thousands of new variables--including dizzying genetic differences in each patient--researchers are making progress. One key, he says, is to map the patterns of mutation and incorporate them into medicine. These mutations, he says, appear to vary according to a person's immune system. If researchers can find the patterns, they'll be closer to making effective vaccines. Yet if they conclude that the mutations are utterly random, then ""we're in big trouble,"" says Heckerman. The hunt goes on. No one is betting on miracles from Microsoft. But in a research community desperate for answers, the hum of those computers churning in Redmond is a welcome sound.
corporate strategyCorporate strategy pertains to the overall enterprise consisting of more than one business unit. This is the aspect of strategy that addresses the advantage provided the business units due to their affiliation with the corporation. For this affiliation to be justified, the competitive advantage gained by the business unit must be outweigh the corporate burden. Porter provides a classification of approaches to corporate strategy -- Spectrum of corporate strategic approaches (Porter, 1987) -- Portfolio management -- Not sustainable in mature financial markets. Very low cost corporate staff. Restructuring -- Hold BU's until restructured. Corporate staff focuses on turnaround and strategic repositioning. Transfer skills -- Can be sustainable in the long-term with ongoing skills transfer. Corporate staff serve as integrators and skills managers. Sharing activities (processes & competencies) -- Sustainable in the long-term due to the synergy between BU's. Corporate Staff very active in the strategic planning and integration roles. Key questions a corporate strategy needs to answer (Collis, 1995) -- What businesses should the company be in? How should it coordinate activities across businesses? What role should the corporate office play? How should the corporation measure and control performance? See David J. Collis & Cynthia Montgomery, Creating Corporate Advantage, HBR, Jul-Aug, 1995 for a methodological approach to defining corporate strategy.
couplingCoupling refers to the joining together and complementarity of the elements, or variables, of an economic system, such as a firm. Tight coupling -- A system that is ""tightly coupled"" has both the highest possible performance from a given set of resources but also is the most susceptible to disruption because effective change is extremely difficult, because every variable has such a ""tight"" relationship to every other variable. Loose coupling -- A ""loosely coupled"" system is not nearly as optimized in its effective use of resources as a tightly coupled systems, but it is much easier to change one or more elements without bringing the whole system of interrelationships to a point of failure, thus the whole system does not need to be restructured to make a change in one part of it. Strategy implications -- Strategy requires to know when and where to loosely and tightly couple in order to produce, sustain, and renew a competitive advantage. If the firm's competition is tightly coupled, and the environment is relatively stable, the firm must either innovate in a manner to destabilize the environment, thus gaining competitive advantage, or optimize to match the competitive prowess of the industry. Rapidly changing environments require a more loosely coupled organization that has the flexibility to rapidly adjust to threats and opportunities. Of course, this flexibility, if not properly managed, also leaves the firm susceptible to a firm that tightly couples, becoming highly efficient and more competitive. This is where the concept of coherence comes into play -- success involves a strategy and organization that are coherent with the environment.
create artSee strategic management activities for explainations of the four stages of strategic management activities -- generate wisdom - understand why the organization is the way it is an its trajectory create art -- unleash the imagination apply science -- design the future wage war -- execute Types of activities in the create art stage creative explorations discomforting living in a new space idea generation getting silly towards new and greater strengths - strategic focus inquiry conflict exploration opportunity exploration imagining the future brainstorming alternative generation identification of experiments - define experiments idea nurturing and management models of the future generation of alternatives - high-level comprehensive inquiries define hierarchy of models culture inquiry building tools - a basis for problem solving conflict dissolution opportunity realization capability development needs towards the next destination - an idealized future refinement of alternative - mid-level comprehensive inquiries performance assessments - simulated and expectations strategic activities identification - towards deployment actions constrain elimination towards the next destination - bridging the gap gap definition bridges, roads, paths, leaps, steps, stages, phases incremental learning opportunities incremental benefit opportunities risk management
creative destructionSchumpeter (Schumpeter, 1942) theorized that profit motivates the innovation which is the precursor to creative destruction that is the key to his theories. Profit is ""the premium put upon successful innovation in a capitalist society and is temporary by nature: it will vanish with subsequent process of competition and adaptation."" Schumpeter's key points (Schumpeter, 1942)-- evolutionary economics -- ""...in dealing with capitalism we are dealing with an evolutionary process."" (pp 82) fundamental economic impulse -- ""The fundamental impulse that sets and keeps the capitalist engine in motion comes form the new consumers' goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates."" (pp 83) creative destruction -- ""...industrial mutation...incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process or Creative Destruction is the essential fact about capitalism."" (pp 83) essential problem for economics -- ""...the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them."" (pp 84) business organization optimization -- ""A system - any system, economic or other - that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of time, because the latter's failure to do so may be a condition for the level or speed of long-run performance."" (pp 83)
creativityFrom: Tharp, Twyla, (2008), Creativity Step by Step, Harvard Business Review, April 2008, 47-51 -- an interview with Twyla Tharp. Creativity is available to everyone. Everyone can be creative but you must prepare for it with routine. Don't confuse talent, genetic gifts, with creativity. The best creativity is the result of habit and hard work. And luck, of course. To be creative, get busy. Don't worry so much about copying or originality. Real learning leading to insights and creative output will come. Twyla's personal strategy -- keep yourself bouncing, don't allow yourself to get comfortable, don't do just what you want to do, and keep out of a rut, getting stuck. All real change involves failure. If you only do what you know and do very well, chances are that you won't fail in the traditional sense, you will stagnate, your work will become less interesting and you will fail by erosion.
cultural webThe term cultural web comes from Johnson, Gerry, (1987), Strategic Change and the Management Process, Oxford: Blackwell. The web identifies the interrelated elements that help to make up what Johnson and Scholes call the ""paradigm"" - the pattern or model - of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn't working, and what needs to be changed. These elements are overlapping and collectively influence the cultural paradigm. The elements are: Stories - The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior. Rituals and Routines - The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management. Symbols - The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes. Organizational Structure - This includes both the structure defined by the organization chart, and the unwritten lines of power and influence that indicate whose contributions are most valued. Control Systems - The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.) Power Structures - The pockets of real power in the company. This may involve one or two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction. Communications -- Informal network and grapevine (not included as a separate element in later models). Incentives -- Financial, career, interesting work, etc. (not included as a separate element in later models).
cultureCulture explains why an organization does what it does. It is the sum total of shared ideas, beliefs, customs, values, and knowledge which are then manifested in the behavior of the organization members. The members of the organization both create their culture and the culture ""creates"" the members. The culture is the most powerful emergent characteristic of an organization. It consists of the behaviors and practices of the organization which are ingrained into the very being of the organization. Culture effects and influences are largely unconscious. Cultural factors tend to influence behavior whether the behavior is leading to an organization's demise or causing it to thrive. Culture characteristics - Management behavior, customs, community role, etc. Culture serves as a default decision maker. Culture is the DNA of the organization, and, without intervention, the organization reproduces itself. Culture is the firm's autopilot...the ""second order machine"" which locks the system into its existing pattern. Culture is not a single business model element because, like strategic focus, it is the result of several elements' interactions. Culture eats strategy for breakfast. Culture emergence - Culture is a collective behavior which emerges from four of the five basic processes of the business organization (see social system). These processes are the fundamental activities of the organization, which contain the fundamental behaviors and embody the beliefs of the organization. The culture derives from how the organization -- Generates truth - generation and dissemination of information, knowledge, and understanding Effects choices - make choices; create power-to-do; development and duplication of power, authority, & responsibly - provide governance Creates commitment - provide meaningfulness and excitement for what is done Institutionalizes values- form and institutionalize values for regulation of behaviors & decisions Cultural norms contributing to company's success (Beinhocker, 2006, pg 371) - performance orientation honesty meritocracy mutual trust reciprocity shared purpose nonhierarchical openness fact-based challenge - competitive urgency Culture of discipline -- See culture of discipline for the role of discipline as an essential factor, embedded in the organization's culture, in the ongoing success of a business organization. Culture inquiry -- See culture inquiry and the related inquiry processes for a guide as to how to both understand culture and get a handle on what it might take to change the culture. Culture and performance (Barney, 1986a) -- Organizational culture typically is defined as a complex set of values, beliefs, assumptions, and symbols that define the way in which a firm conducts its business. In this sense, culture has pervasive effects on a firm because a firm's culture not only defines who its relevant employees, customers, suppliers, and competitors are, but it also defines how a firm will interact with these key actors (Louis, 1983). This conception of organizational culture blurs classical distinctions between an organization's culture and its structure and strategy (Tichy, 1983) because these attributes of a firm are direct manifestations of cultural assumptions about what business a firm is in and how it conducts business. For a similar view, see cultural web. Imitability -- There is significant evidence which suggests that valuable and rare organizational cultures often may be very difficult, if not impossible to imitate. Path dependence -- The constellation of persistent symbols, beliefs, and values that characterize a firm's culture at least partially reflect the unique early history of the firm, including the pattern-setting influence of company founders. Culture and sustained superior financial performance -- In order for a firm's culture to provide sustained competitive advantages, and thus, by implication, be a source of sustained superior financial performance, three conditions must be met (Barney, 1985a). First, the culture must be valuable; it must enable a firm to do things and behave in ways that lead to high sales, low costs, high margins, or in other ways add financial value to the firm. Because superior financial performance is an economic concept, culture, to generate such performance, must have positive economic consequences. Second, the culture must be rare; it must have attributes and characteristics that are not common to the cultures of a large number of other firms. Third, such a culture must be imperfectly imitable; firms without these cultures cannot engage in activities that will change their cultures to include the required characteristics, they will be at some disadvantage (reputational, experience, etc.) compared to the firm they are trying to imitate. Contrasting cultures -- For an example of two contrasting cultures, see police culture for a contrast between police and intelligence culture. A similar type of antithetical cultural difference exists between exploration and exploitation. See institutions for the organizational ecology view of structure in the organization related to culture.
culture architectureThe business model elements, their structure, and their interrelationships that form the culture of the organization. This is also referred to as social architecture. See culture inquiry.
culture inquiryCulture emerges from the fundamental organizational processes of the business organization. These processes are shaped by elements such as values, principles, and organization structure. Given the power of the culture to replicate the organization, like the DNA of an organism, culture must be addressed explicitly in order to transform an organization. See culture. The inquiry is conducted with the same approach as the comprehensive inquiry, with an inquiry on each part of the aspect, and the aspect integration inquiry pertinent to culture.
culture of disciplineA ""culture of discipline"" is Jim Collins' description of what ""great"" companies have that makes them great. See good-to-great for an overview of what makes companies great. A disciplined culture is one that is rigorous, not ruthless, with rigor starting at the top. The disciplines that make an organization great ... performing well beyond the norm, are -- disciplined people -- Level 5 Leadership - Paradoxical blend of personal humility and professional will with incredible ambition first and foremost for the institution, not themselves. If things go well, they give credit to others. If things go poorly, they hold themselves responsible. Practicing the disciplines that follow helps the organization leaders to achieve level 5. First Who - The right people, following the right disciplines, will make an organization great. These are the people who will develop and execute the plans to achieve greatness. Strategy development does not precede getting the right people to carry it out. The right people develop, own, and achieve the right strategy. This is the principle of ""first who, not what."" Do -- get self disciplined people on the bus in the first place when you know you need to make a people change, act. put your best people on your biggest opportunities, not your biggest problems. Don't -- try to discipline the wrong people into the right behaviors hire when in doubt...keep looking disciplined thought -- Confront the Brutal Facts - Breakthrough results come about by a series of good decisions, diligently executed and accumulated one on top of the other. The tie to leadership: The moment a leader allows himself to become the primary reality people worry about, rather than reality being the primary reality, you have a recipe for mediocrity, or worse. Retain faith that you will prevail in the end, regardless of the difficulties AND at the same time confront the most brutal facts of your current reality, whatever they might be. (Stockdale paradox). Create a climate where truth is heard -- lead with questions, not answers engage in dialog and debate, not coercion conduct autopsies without blame build ""red flag"" mechanisms - to turn information that is critical to competitive advantage into information that cannot be ignored. Adopt a Hedgehog Concept -- Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything. This reduces a complex world, with all of its challenges and dilemmas to simple ideas. Anything that does not relate to the hedgehog idea holds no relevance. This approach keeps the organization focused on what it can best do to achieve greatness, a sustainable competitive advantage. Motto, see what is essential, and ignore the rest. A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, or a plan to be the best. It is an understanding of what you can be the best at. Focusing solely on what you can potentially do better than any other organization is the only path to greatness. Building a sound economic engine requires profound insight into the economics of the organization. This insight should be expressed in terms of the one economic denominator that is most critical to the organization. In a business, this is expressed as ""profit per __"". The search for this denominator forces a deeper understanding of the key drivers of the economic engine. Form a council -- The council exists to gain understanding about important issues facing the organization. It is made up of the leading executives of the organization. It is a standing body that exercises the principles and disciplines of a great company. They are the people at the core of the Hedgehog Concept. Guided by the three circles (strategic focus), they ask questions, dialogue and debate, make executive decisions, and perform autopsies and analysis, in an ongoing iterative process. Do -- confront the brutal facts of reality, while retaining resolute faith that you can and will create a path to greatness persist in the search for understanding until you get your strategic focus (knowing what you are really good at, what you get paid well for doing, and what you love to do) seek continual improvement Don't -- Lose focus Get distracted by growth opportunities outside your strategic focus disciplined action -- Freedom and responsibility within the framework of a highly developed system...manage the system, not the people. Build a culture around the idea of freedom and responsibility, within a framework. Fill that culture with self-disciplined people who are willing to go to the extreme lengths to fulfill their responsibilities. The will ""rinse their cottage cheese."" Don't confuse a culture of discipline with a tyrannical disciplinarian. Adhere with great consistency to the Hedgehog Concept, exercising an almost religious focus on the intersection of the three circles. Equally important, create a ""stop doing list"" and systematically unplug anything extraneous. We will not launch unrelated businesses, make unrelated acquisitions, do unrelated joint ventures. If it doesn't fit, we don't do it. Discipline is required to find the Hedgehog Concept in the first place, not just to build consistently within it. The most effective investment strategy is a highly undiversified portfolio when you are right. ""Being right"" means getting the Hedgehog Concept. ""If you have Level 5 leaders who get the right people on the bus, if you confront the brutal facts of reality, if you create a climate where the truth is heard, and work within the three circles of the Hedgehog Concept, if you frame all decisions in the context of a crystalline Hedgehog Concept, if you act from understanding, not bravado - if you have a Council with a cyclical management process involving the key strategic thinkers in the business that asks questions, dialogues & debates, provide executive decisions, and performs autopsies and analysis in order to define the strategic focus and stick to the strategic focus if you act from understanding, not bravado if you stop doing the wrong things if you do all these things, then you are likely to be right on the big decisions."" Once you know the right thing to do, will you have the discipline to do the right thing and stop doing the wrong things? Do -- have a disciplined understanding of he strategic focus (economic value, best in world competency, and passion), and a vision of what the firm is able to achieve have both a stop doing list as well as a to do list Don't -- jump to disciplined action without going through the first two steps. disciplined action without disciplined people is impossible to sustain. depend upon a disciplined leader at the top launch unrelated businesses make unrelated acquisitions do unrelated joint ventures do it if it does not fit your firm's strategic focus hedge your bets Source: Collins, 2001. See: jimcollins.com
cybernetic system
dataFacts, measurements, or statistics used for reference or analysis. Stored observations. Symbols that represent the properties of objects and events. Data processed to be useful in some way is information.
datumPhilosophy - any fact assumed to be a matter of direct observation or any proposition assumed or given, from which conclusions may be drawn. Epistemology - also called 'sense datum', the object of knowledge as presented to the mind, in contrast to ideatum. Source: datum. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/datum (accessed: February 18, 2007).
David RicardoDavid Ricardo (18th April, 1772-11th September, 1823), a political economist, is often credited with systematizing economics, and was one of the most influential of the classical economists, along with Thomas Malthus and Adam Smith. (Wikipedia contributors, ""David Ricardo,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=David_Ricardo&oldid=120057834 (accessed April 12, 2007). David Ricardo was one the most important figures in the development of economic theory. He articulated and rigorously formulated the 'classical' system of political economy. The legacy of Ricardo dominated economic thinking throughout the 19th Century. His 'Law of Rent' is still recognized today as it relates to effective and advantageous use of resources.
decisionDecision, or decision making, is the process of making a choice in the face of uncertainty, doubt and risk. Because of uncertainty and ethical considerations, decisions require judgment. The hardest part of deciding is identifying what you choose NOT to do. If you don't decide (from Latin decidere-""cut off""), you won't flourish and likely die. Business decision making criteria -- the solution must be implementable it must not produce unacceptable adverse consequences it must allow for flexibility Data and decision making -- ""There is no such thing as a data-driven decision. You get real data only after the fact. I love one of the phrases from Goethe, the German philosopher-poet. He said something like the moment you make a decision, a lot of things come to help you that you could have never seen before you made. So without taking that leap of faith, you can never know if you're going to make it. ...Mario Andretti said, 'If everything seems under control, you're not going fast enough.' ...you will never have the data that you want to have before you make that decision."" from an interview with Eastman Kodak CEO, Antonio Perez -- Source: Maney, Kevin, (2008), Picture Imperfect, Condé Nast Portƒolio, January.08, pp 107. Related references -- See organizational action for a historical recap of the development of decision making theory. See rational choice, garbage can decision process, and decision making as rule following. See March, 1994 for a Primer on Decision Making.
decision makingReflecting on how decisions are actually made, how decisions actually happen, provides a understanding of the extreme difficulty in making intelligent choices. ""The idea of decision making give meaning to purpose, to self, to the complexities of social life. It ennobles as it frustrates."" (March, 1994, 271-212). March's aspects of decision making March, 1994) -- March identifies the following aspects of decision making with these aspects collectively forming a complete multi-faceted picture of decision making. Limited rationality -- the idea of rational choice. See rationality and bounded rationality. Rule following -- decision making as rule following. Multiple actors - teams and partners -- the implications of interpersonal consistencies and inconsistencies. Multiple actors - conflict and politics -- the implications of power, coalitions, participation, decision, and instabilities with one or more actors. Ambiguity and interpretation -- order, ambiguity, loose coupling, garbage can decision process, construction of meaning, and understanding. Decision engineering -- defining decision intelligence, improving adaptiveness, using knowledge, and creating meaning.
decision making as rule followingSee March, 1994, pp 57-58. When individuals and organizations fulfill identities, the follow rules or procedures that they see as appropriate to the situation in which they find themselves. Neither preferences as they are normally conceived nor expectations of future consequences enter directly into the calculus Rule following is grounded in a logic of appropriateness. Decision makers are imagined to ask (explicitly and implicitly) three questions: The question of recognition: What kind of situation is this? The question of identity: What kind of person am I? Or what kind of organization is this? The question of rules: What does a person such as I, or an organization such as this, do in a situation such as this? Contrast with rational choice.
decision theoryDecision theory is an interdisciplinary area of study with how decision makers make decisions, how optimal decisions can be made, and what decision making methods are best suited to various circumstances. Normative or prescriptive decision theory seeks to prescribe how decisions should be made. Descriptive or positive is the term to describe how people actually make decisions in the real world. Both descriptive and prescriptive decision theory are closely related -- descriptive study provides hypotheses for prescriptive consideration, while prescriptions are hypotheses to be tested in the real world. See organizational action for a historical recap of the development of decision making theory.
deductionDeduction, or deductive reasoning, is reasoning in which the conclusions must follow logically from a set of premises. Deduction only works on well defined problems. For deduction to work, it cannot have any information missing or ambiguity. Humans are relatively poor at deduction. Computers are good at deduction. Characteristics -- Deduction is perfectly logical, slow, and though precise, breaks easily. Strategy development implications -- See reasoning.
definitionThe primary function of a definition is to help us to distinguish one phenomenon from another. (Scott & Davis, 2007, 28),/p>
descriptiveDescriptive refers to the quality describing. A description of something, a description of what ""is."" In management science this is the realm of case studies, anecdotes, and narratives of actual events, situations, methods of solving problems, and means of understanding opportunities. 'Description' is heavily relied upon to provide 'prescription, what 'ought to be' vs. what 'is.' Prescription often follows from description with little or no rigor - without clear identification of the relevant cause and effect in the in the case of what 'is', little guidance to insure the same cause and effect is at work in the prescription of 'ought', little examination of contextual factors, and so forth. Nearly all prescriptions, actions, result in an effect. Without understanding the true cause and effect, along with the contextual implications, all prescriptions are suspect. See is-ought problem.
determinism""Determinism is the philosophical proposition that every event, including human cognition and action, is causally determined by an unbroken chain of prior occurrences. No mysterious miracles or wholly random events occur."" (Source: determinism. Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Determinism (accessed: November 15, 2006).) Deterministic system -- ""A deterministic system is a conceptual model of the philosophical doctrine of determinism applied to a system for understanding everything that has and will occur in the system, based on the physical outcomes of causality. In a deterministic system, every action, or cause, produces a reaction, or effect, and every reaction, in turn, becomes the cause of subsequent reactions. The totality of these cascading events can theoretically show exactly how the system will exist at any moment in time."" Source: deterministic system (philosophy). Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Deterministic_system_(philosophy) (accessed: November 15, 2006). Determinism and non-determinism -- Some believe that all systems are deterministic and all phenomena then predictable, it is just a matter of time before all causal interactions and effects are determined. At this time, there is strong evidence for non-deterministic behavior. Quantum physics finds what are believed to be truly random events. ""Quantum indeterminacy is the apparent necessary incompleteness in the description of a physical system, that has become one of the characteristics of the standard description of quantum physics. Prior to quantum physics, it was thought that (a) a physical system had a determinate state which uniquely determined all the values of its measurable properties, and conversely (b) the values of its measurable properties uniquely determined the state."" Source: quantum indeterminacy. Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Quantum_indeterminacy (accessed: November 15, 2006).
deterministicThe philosophical doctrine that all events, including human choices and decisions, have sufficient causes. Every act, event, and decision is the inevitable consequence of antecedent states. With sufficient knowledge, the future is ultimately predictable and true novelty does not exist.
developmentDevelopment is an increase in capability and competence. Development is primarily a matter for learning. Development is what results from the resolution of conflicting objectives into higher order solutions which eliminate, or dissolve, the conflict. This is referred to as finding the ""and"" instead of accepting the ""or"" in choices to be made. This results in purposefully increasing integration and differentiation at the same time. Examples of this abound in the evolution of businesses. There was once a time that you could get quality ""or"" low price. Now quality ""and"" low price are common. Faster communication used to cost more, now email is instantaneous and essentially free while long-distance calling services are a commodity. Development is co-produced by integration and differentiation tendencies. Differentiation is required to develop unique high value solutions in response to commoditization. Integration is required to bring order and efficiency to the chaos that differentiation tends to produce. For example, uniqueness and uniformity combine to create innovation. Combing complexity and order requires higher orders of organization. Change and stability combine to form adaptability. Development enables an organization to create the future rather than just react to the present. But there is more to development than the technique of dissolving conflicts. It comes from an impassioned desire to achieve a purpose. Passion for the purpose of the business motivates the pursuit of development, providing the impetus to overcome the challenges of conflict. A significant and virtuous purpose provides a positive identity to the associates of the organization, stimulating the inspired pursuit of greater capability to achieve the purpose. Strategic management seeks to develop a strategic focus which produces a synergy from the integration of the business's purpose, competency, and value produced in pursuing the purpose. This strategic focus provides the guidance and motivation for continual development of higher order solutions. Primary sources: Jamshid Gharajedaghi, Social Dynamics, Dichotomy or Dialectic, White Paper, www.interactdesign.com; Gharajedaghi, 2006; Ackoff, 1999a
dialecticThere is the Kantian dualistic view of dialectic and the Hegelian paradoxical view. Kant -- In the Kantian view, dialectic is regarded as a conflict, like a debate, with opposing forces. In this view, opposites are resolved in a way that eliminates paradox. There is a dualism of thesis and antithesis which is resolved by the formation of a synthesis. This is commonly described as the antithesis overthrowing the thesis to produces a new thesis as synthesis. This implies a linear view of time in which there is a past consisting of an opposition of thesis and antithesis and a future in which they will be synthesized, creating an impression of closure in which there is not paradox. Hegel -- Hegel dialectic is from the paradoxical nature of thought and interaction with a non-linear understanding of time. Hegel's view of though is that it is inherently paradoxical, having continual simultaneous conflict. Internal gesture-response is the singular form of plural-gesture response, where the difference in these gestures and responses, whether in individually or between individuals, take place in the dynamic living present. Diversity, the difference in identity-difference, results in both continuity and the emergence of changed identity, novelty. Time in Hegel's view, is that of the living present, where the movement of the living present recreates the history, or past, together with the expectation of the future, out of which the individual initiates acts. The ongoing gesture - response produces continuity with the potential for difference, i.e. novelty, resulting in transformation. It is Hegel's view of dialectic which is at the heart of transformative causality and organizational evolution.
dichotomyAt the heart of any theory of strategy and organizational change is how it treats opposing ideas that form in organizations and groupings of people . Opposing ideas may be seen as dichotomies, dualisms, or paradoxes, (Stacey, 2003, pp 2-6, 12-13), or are they seen as logical flaws to be eliminated. In the dichotomy view, opposing ideas are seen as a whole split into two non-overlapping parts, typically viewed as opposites (Stacey, 2003, pp 2-6, 12-13). Viewed this way, the treatment of opposing ideas is to keep them separate and largely ignoring any potential for interaction. Dualism or duality takes a step in the direction of one belief system, where the conflicting ideas, the opposite 'things,' make up the whole, where the thing is either one or the other 'thing' but not simultaneously both.>/p? In the paradoxical view, conflicting ideas, opposites, simultaneously exist without being resolved. This take on opposites permits the genuine simultaneous coexistence of two contradictory movements. The diametrical view to paradox is reconciliation. In the reconciliation view, opposing unreconciled ideas are a logical flaw. With this view, management focuses on resolving the conflict as opposed to embracing it. In the real-world, the paradoxical-world, this is an effort in futility.
differenceDifference refers to one side of the organization dynamic interplay of stability and change, identity and difference (Stacey, 2000, pp 12) -- the sameness of identity, stability, and difference of changes in that identity, change See organization for related discussion.
disciplineDiscipline has two distinct meanings -- Controlled behavior -- Great discipline is required to develop and follow a strategic focus. While the focus needs to be followed, it must not be followed blindly. Discipline is required to continually say 'no' to those opportunities outside the strategic focus while constantly testing the hypothesis of the focus and renewing it before performance tanks. Discipline pertains as much, if not more so, to what not to do -- to reject investments and moves into areas not proven to be within the strategic focus. It also takes great discipline and courage to face the facts regarding your theory of business. This requires a culture of openness, honesty, and broad participation. Branch of knowledge -- Discipline is also a branch of knowledge and the associated activities. Disciplines make up an innovation in human behavior like technologies make up an engineering innovation such as the airplane or personal computer. As such, a discipline is a body of theory and technique that must be studied and mastered to be put into practice. A discipline is a developmental path for acquiring certain skills and competencies. Some people will have an innate ""gift"" for a exercising a discipline and others will develop proficiency through practice (Senge, 1990, pp 10-11). See strategic management discipline for its application to strategic management. Practicing a discipline is radically different than emulating a model, or best practice. Practicing a discipline builds general knowledge of the discipline and contextual knowledge of its application to the organization at hand. Culture of discipline -- See culture of discipline for the role of discipline as an essential factor, embedded in the organization's culture, in the ongoing success of a business organization. Arthur Rubenstein, Polish pianist, on discipline -- ""When I don't practice for a day, I know it. When I don't practice for two days, the orchestra knows it. And when I don't practice for three days, the world knows it.""
disciplined pluralismSee pluralism.
discontinuous changeDiscontinuous change, or discontinuous technological change, refers to external changes that require internal adaptation along a path that is nonlinear relative to a firm's traditional innovation trajectory. (Chirstensen & Bower, 1996; Tushman, Smith, Wood, Westerman, & O'Reilly, 2003 in Gilbert, 2005).
discourseDiscourse is the conversational form in a community of practice. Discourse is of central importance, because in establishing what is acceptable for people to talk about in a community, and how it is acceptable to talk, the conversational form, or discourse, establishes people's relative power positions and therefore who they are and what they do together. Every community of practice is characterized by a dominant discourse, the most acceptable way to converse, which reflects power positions supported by ideologies. Source: Stacey, 2007, pp 2)
discoveryDiscovery involves the obtaining of knowledge, learning of, or find out of something previously unseen or unknown. Discovery is not innovation.
disruptive decision makingDisruptive innovation changes the shape of markets and industries. There are three things that can be done to make better decisions in areas susceptible to this type of innovation . (Christensen, Clayton, and the Innosight Team, Innovators' Insights #97: The Dangers of Data, Strategy & Innovation, September 18, 2007). First, is to let patterns inform decisions. A simple pattern connects these seemingly disparate developments: There is an important problem that can't be adequately solved by current solutions An innovator develops a different way to solve the problem that focuses on simplicity, accessibility, affordability, or customizability The innovator adopts an approach that powerful competitors would find unattractive, uninteresting, or difficult to mimic in the near term The solutions is commercialized with a business model that creatively maximizes revenue potential while minimizing fixed costs Second, it is critical to remember the importance of focusing on assumptions, not answers. See if there are analogs or benchmarks that can provide insight into whether there are reasons to believe that major assumptions might bear some kind of semblance to reality. Always be on the lookout for simple ways to turn assumptions into knowledge. Third, companies can turn to emerging tools like prediction markets, where people buy and sell virtual shares based on their belief about the likelihood of certain events. Prediction markets take advantage of the ""wisdom of crowds"" phenomena noted by James Surowiecki: The collective almost always does a better job at answering questions than any one individual. Prediction markets such as the University of Iowa's Iowa Electronic Market have proven to provide accurate forecasts of presidential elections and Oscar nominations.
disruptive innovation...disruptive innovation is a technological innovation, product, or service that eventually overturns the existing dominant technology or status quo product in the market. Disruptive innovations can be broadly classified into lower-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at mainstream customers who were ignored by established companies. Sometimes, a disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill (as more expensive, lower capacity but smaller-sized hard disks did for newly developed notebook computers in the 1980s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has begun to replace film photography). By contrast, ""sustaining technology or innovation"" improves product performance of established products. Sustaining technologies are often incremental; however, they can also be radical or discontinuous. The term disruptive technology was coined by Clayton M. Christensen and introduced in his 1995 article Disruptive Technologies: Catching the Wave, which he coauthored with Joseph Bower. He describes the term further in his 1997 book The Innovator's Dilemma. In his sequel, The Innovator's Solution, Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is the strategy or business model that the technology enables that creates the disruptive impact. The concept of disruptive technology continues a long tradition of the identification of radical technical change in the study of innovation by economists, and the development of tools for its management at a firm or policy level. Source: Wikipedia contributors, ""Disruptive technology,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Disruptive_technology&oldid=160259906 (accessed September 30, 2007).
distinctive competencyA distinctive competency is a competency unique to a business organization, a competency superior in some aspect than the competencies of other organizations, which enables the production of a unique value proposition in the function of the business. A distinctive competency is the basis for the development of an unassailable competitive advantage. The uniqueness differentiates this competency from all others, whether a core competency or simply a competency. Leader's responsibility regarding competency -- ""...the task of building special values and a distinctive competence into the organization is a prime function of leadership."" Source: Selznick, 1957, pp 27. Sources of distinctive competency -- Distinctive competencies, the basis for competitive advantage, can come from technology, industry position, market relations, cost, business processes, manufacturing processes, people, customer satisfaction, or just being first. The insightful integration of complementary elements of the business model is the strongest form of competitive advantage known. This is because it is so difficult for competitors to understand and even more difficult to replicate, especially when the business model elements of value, purpose, vision, culture, and identity are intertwined in a powerful business solution. Examples of distinctive competency -- Toyota has a distinctive competency in lean manufacturing. GE has a distinctive competency in management development. These companies also have core competencies, core to their particular lines of business. They also have competencies necessary to operate their business but of not of strategic significance, such as payroll, the processes used to pay their employees. On the other hand, a company like ADP, which provides payroll and benefits services, certainly has payroll processing as a core competency, if not a distinctive competency. Competency and advantage -- For a business to develop and sustain a competitive advantage, it must have some sort of competitive advantage, based on a distinctive competency, which enables it to produce a unique value proposition. A distinctive competency is a competency that is maintainable in the face of competition. It is not imitable, at least for a while. This can be thought of as an ""unfair advantage"". In a dynamic environment, ultimately distinctive competencies, or the uniqueness of the value proposition produced using them, becomes less distinct or less unique. Therefore, in order to sustain advantage, competencies must be dynamic, evolving to more favorable forms in order to sustain advantage over the long haul. Dynamic capability refers to the development of competencies, both in reaction to the environment and deliberately as part of learning and knowledge development. See dynamic capability for a perspective on the development of capability, i.e. competency. Distinctive competency should be explicitly defined to insure that it is profoundly understood, it should be protected from loss to competitors whether through trade secrets, intellectual property, or simply by making it such an integral component of an overall competitive business model that it cannot be replicated. Leadership must nurture, tune, and renew the distinctive competency in order to have it remain distinctive. John Kay on distinctive competency -- (Kay, 1999) The success of corporations is based on those of their capabilities that are distinctive. Companies with distinctive capabilities have attributes which others cannot replicate, and which others cannot replicate even after they realise the benefit they offer to the company which originally possesses them. Distinctive vs. reproducible capabilities -- The opportunity for companies to sustain competitive advantage is determined by their capabilities. The capabilities of a company are of many kinds. For the purposes of strategy the key distinction is between distinctive capabilities and reproducible capabilities. Distinctive capabilities are those characteristics of a firm which cannot be replicated by competitors, or can only be replicated with great difficulty, even after these competitors realise the benefits which they yield for the originating company. Distinctive capabilities can be of many kinds. Government licences, statutory monopolies, or effective patents and copyrights, are particularly stark examples of distinctive capabilities. But equally powerful idiosyncratic characteristics have been built by companies in competitive markets. These include strong brands, patterns of supplier or customer relationships, and skills, knowledge and routines which are embedded in teams. Reproducible capabilities can be bought or created by any firm with reasonable management skills, diligence and financial resources. Most technical capabilities are of this kind. Marketing capabilities are sometimes distinctive, sometimes reproducible. The importance of the distinction for strategy is this. Only distinctive capabilities can be the basis of sustainable competitive advantage. Collections of reproducible capabilities can and will be established by others and therefore cannot generate rents in a competitive or contestable market. Matching capabilities to markets -- So the strategist must first look inward. The strategist must identify the distinctive capabilities of the organisation and seek to surround these with a collection of reproducible capabilities, or complementary assets, which enable the firm to sell its distinctive capabilities in the market in which it operates. While this is easier said than done, it defines a structure in which the processes of strategy formulation and its implementation are bound together. The resource based view of strategy - which emphasises rent creation through distinctive capabilities - has found its most widely accepted popularisation in the core competences approach of C. K. Prahalad and Gary Hamel. But that application has been made problematic by the absence of sharp criteria for distinguishing core and other competencies, which allows the wishful thinking characteristic of vision and mission- based strategising. Core competencies become pretty much what the senior management of the corporation wants them to be. The perspective of economic rent - which forces the question 'why can't competitors do that?' into every discussion - cuts through much of this haziness. Characteristics such as size, strategic vision, market share and market positioning - all commonly seen as sources of competitive advantage, but all ultimately reproducible by firms with competitive advantages of their own - can be seen clearly as the result, rather than the origin, of competitive advantage. Strategic analysis then turns outward, to identify those markets in which the company's capabilities can yield competitive advantage. The emphasis here is again on distinctive capabilities, since only these can be a source of economic rent, but distinctive capabilities need to be supported by an appropriate set of complementary reproducible capabilities. Markets have product geographic dimensions, and different capabilities each have their own implications for the boundaries of the appropriate market. Reputations and brands are typically effective in relation to a specific customer group, and may be valuable in selling other related products to that group. Innovation based competitive advantages will typically have a narrower product focus but may transcend national boundaries in ways that reputations cannot. Distinctive capabilities may dictate market position as well as market choice. Those based on supplier relationships, may be most appropriately deployed at the top of the market, while the effectiveness of brands is defined by the customer group which identifies with the brand. Since distinctive capabilities are at the heart of competitive advantage, every firm asks how it can create distinctive capabilities. Yet the question contains an inherent contradiction. If irreproducible characteristics could be created, they would cease to be irreproducible. What is truly irreproducible has three primary sources: market structure which limits entry; firm history which by its very nature requires extended time to replicate; tacitness in relationships - routines and behaviour of ""uncertain imitability"" which cannot be replicated because no-one, not even the participants themselves, fully comprehend their nature. So companies do well to begin by looking at the distinctive capabilities they have rather than at those they would like to have. And established, successful companies will not usually enjoy that position if they do not enjoy some distinctive capability. Again, it is easy to overestimate the effect of conscious design in the development of firms and market structures. The evolution of capabilities and environment -- Strategy, with its emphasis on the fit between characteristics and environment links naturally to an evolutionary perspective on organisation. Processes which provide favourable feedback for characteristics which are well adapted to their environment - and these include both biological evolution and competitive market economies - produce organisms, or companies, which have capabilities matched to their requirement. Recent understanding of evolutionary processes emphasises how little intentionality is required to produce that result. Successful companies are not necessarily there because (except with hindsight) anyone had superior insight in organisational design or strategic fit. Rather there were many different views of the firm capabilities a particular activity required: and it was the market, rather than the visionary executive, which chose the match that was most effective. Distinctive capabilities were established , rather than designed. This view is supported by detached business history. Andrew Pettigrew's description of ICI shows an organisation whose path was largely fixed - both for good and for bad - by its own past. The scope and opportunity for effective management strategic choice - both for good and bad - was necessarily limited by the past. This is not to be pessimistic about the potential for strategic direction or the ability of executives to make important differences, but to reiterate the absurdity and irrelevance of using the blank sheet of paper approach to corporate strategy. New paradigm -- The resource based view of strategy has a coherence and integrative role that places it well ahead of other mechanisms of strategic decision making. I have little doubt that for the foreseeable future major contributions to ways of strategic thinking will either form part of that framework or represent development of that framework. After thirty years or so, the subject of strategy is genuinely acquiring what can be described as a paradigm - to use the most overworked and abused term in the study of management.
diversityDiversity, true diversity, is required for the creation of novelty by an organization. This requires eschewing the harmony often sought in organizations in order to allow the conflict necessary to produce novelty. This requires handling conflict paradoxically, dealing simultaneously with conflicting views. There is a systemic view of diversity, plurality, which focuses on diversity as essential for the novelty required for the 'top-down' definitionsnew and leadership and transformation of the organization. This systemic view is a kind of deliberate view of strategy formation. The processes view of diversity positions diversity in the local conversations throughout the organization. From these local conversations, variation and novelty arise due to the micro-diversity, resulting in the transformation of the organization through its tendency for self-organization. This is an emergent view of strategy formation.
double loop learningDouble loop learning is a learning process which introduces the possibility to change the decision maker's worldview based on the feedback resulting from the actions of decisions. An element of worldview or mental models is added outside the causal loop of single loop learning, making the model a double-loop, with the second loop consisting of: feedback on results of the actions (a single loop element) existing worldviews or mental models (the new double loop element) decisions (a single loop element) This second loop can be both a reinforcing and a balancing loop. It is a reinforcing loop when the feedback reinforces the worldview or mental models. It is a balancing loop when the feedback challenges and changes them. In order for balancing to occur, the purpose of the first loop must include the desire to continuously improve beliefs about the real world. (Heracleous, 2003, 43) ""Double-loop learning...occurs when the correction of mismatches is arrived at by examining and altering the governing variables for action and then the actions themselves.""
dualismIn general, the view that the world consists of or is explicable as two fundamental mutually irreducible substances, such as mind and matter, or two conflicting ideas brought together into one system of belief. Dualism is in contrast to monism and pluralism. Examples of dualism - Cartesian belief that the world is composed of two distinct substances: physical stuff and mind stuff. Kant's transcendental idealism Aristotle's organic vs. intellective soul figure-ground individual vs. organization Dualism as pejorative -- Especially as related to Cartesian dualism, the term has become not so much to elucidate understanding as an epithet or insult, to be hurled at those whose views you disapprove. To call someone a 'dualist' is to insinuate that he is somehow irrational or unscientific. To call oneself a 'materialist,' on the other hand, is to suggest that one is rational and scientific. (Malik, 2000, pp 340). Strategic management and views of opposing ideas -- See dichotomy for a comparison of dualism, dichotomy, paradox, and reconciliation and their implications for approaching strategic management.
dynamic capability""A dynamic capability is a learned and stable pattern of collective activity through which the organization systematically generates and modifies its operating routines in pursuit of improved effectiveness."" (Zollo, 2002). An earlier definition is from Teece (1997) ""A firm's dynamic capabilities are the firm's ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments."" The first definition is preferable in that it eliminates the need for a rapidly changing environment as a requirement, leaving firm to integrate, build, and reconfigure their competencies at their own pace and under any circumstances. The first definition is also not a tautology, as the second one is, or nearly is. Dynamic capability development -- Zollo (2002) Starting from the characterization of dynamic capabilities as systematic patterns of organizational activity aimed at the generation and adaptation of operating routines, Zollo and Winter proposed that dynamic capabilities develop through the co-evolution of three mechanisms -- tacit accumulation of past experience -- the relative effectiveness or accumulated experience increases directly with task frequency. knowledge articulation -- articulation builds capability more quickly than experience itself for low to medium volume task frequencies knowledge codification processes -- codification efforts force the drawing of explicit conclusions about the action implications of experience, something that articulation alone, much less experience alone, does not do. Codification's more effective than experience accumulation and articulation for infrequent tasks, including newly created tasks. Codification ""done right"" can be expressed as the following principles -- codification should aim at developing and transferring ""know why"" as well as ""know how."" This exposes action-performance links. codification efforts should be emphasized at an appropriate time in the course of learning. Premature codification risks hasty generalization from limited experience, with attendant risks of inflexibility and negative transfer of learning. Long deferred codification risks careful examination of the causal relationships frustrated by the entrenched results of tacit accumulation, which may have attained high acceptance for both superstitious and rational reasons. codified guidance is to be tested by adherence. It is clear that codification cannot be an instrument of continued learning if the guidance developed after trial 7 is simply ignored at trial 8 and later. Testing also avoids inappropriate application. there is a need for a supporting structure, exercising judgment, regarding departures from the standard guidance. How Dynamic Can Organizational Capabilities Be? -- Schreyögg, Georg, (2007), and Martina Kliesch-Eberl, How Dynamic Can Organizational Capabilities Be? Towards a Dual-Process Model of Capability Dynamization, Strategic Management Journal, Vol 28, No. 9, Sep 2007, pp 913-933 -- The authors address a key strategic management issue. In the resource-based view organizational capabilities have been identified as one major source for the generation and development of sustainable competitive advantages (emphasis added). With the consideration of volatile markets, environmental uncertainty, and change, the reliance on a specific set of nurturing capabilities has been called into question. This question has been answered with some form of dynamic capabilities, where the capability itself is dynamic, adapting to take advantage of the changing environment, thereby renewing organizational capabilities. Capabilities described -- In this discussion, capability does not represent a single resource in concert with other resources such as financial asset, technology, or manpower, but rather a distinctive and superior way of allocating resources. The complex processes that form organizational capabilities are conceived as collective and socially embedded in nature, representing a collectively shared 'way of problem solving' (Cyert and March, 1963). Capabilities are developed in the context of organizational resource allocation which is embedded in idiosyncratic social structures. On this basis capabilities are conceived s distinct behavioral patterns which are complex in nature involving both formal and informal processes (Dosi, Nelson, and Winter, 2000; Hofer and Schendel, 1978; Sanchez and Mahoney, 1996). Capabilities represent a repository of historical experiences and organizational learning (Winter, 2000). In the case of superior performance and a unique historical development, capabilities are assumed to build the foundation for sustainable competitive advantage. Capabilities do not actually represent a resource; the focus rather on the combination and linking of resources. Dynamic capabilities -- In the capability debate, the issues of volatile markets, environmental uncertainty, and change have come to the fore. Building on the observation that markets and superior market positions have increasingly become subject to erosion processes, the reliance on a specific set of nurtured capabilities has been called into question. Instead the emphasis has shifted to the ability to change and quickly develop new organizational capabilities as a critical prerequisite for sustaining competitive advantages. The salient concepts in this debate are 'dynamic capabilities' (Teece, Pisano, Shuen, 1997; Kusunoki, Nonaka, and Nagata, 1998; Eisenhardt and Martin, 2000; Zollo and Winter, 2002; Zollo, 2003) or 'dynamic core competencies' (Danneels, 2002; Lei, Hitt, and Bettis, 1996), both call for a profound dynamization of organizational capabilities. The notion of 'dynamic' is devoted to addressing the continuous renewal of organizational capabilities, thereby matching the demands of (rapidly) changing environments . The concept of dynamic capabilities revises the resource-based view of strategy and competitive advantage insofar as not only the markets but also the organizational capabilities are conceptualizes as being dynamic and flexible (Helfat and Peteraf, 2003: 998). The postulation of continuous renewal on the one hand and the patterned architecture of organizational capabilities on the other constitutes a serious disparity implying far-reaching theoretical and practical consequences. The idea of dynamizing capabilities is prone to 'throwing out the baby with the bath water.' The suggested dynamization is likely to crowd out the genuine essence of an organizational capability. The bottom line - a capability cannot be an advantageous capability and be dynamic at the same time. The meaning of organizational capabilities -- Labels for organizational capabilities include: competence, core competence, collective skills, complex routines, best practices as well as organizational capabilities. The term 'capability' seems to be the predominant one. There seems to be a consensus that a capability does not represent a single resource in the concert of other resources such as financial assets, technology, or manpower, but rather a distinctive and superior way of allocating resources. 'Capability' addresses complex processes across the organization such as product development, customer relationship, or supply chain management. In contrast to rational choice theory and its focus on single actor decisions, organizational capabilities are conceived as collective and socially embedded in nature. They are brought about by social interaction and represent a collectively shared 'way of problem solving' (Cyert and March, 1963). Accordingly, organizational capabilities can be built in different fields and on different levels of organizational activity, for instance at departmental, divisional, or corporate level. Conceptual view of the primary characteristics of capabilities -- problem-solving and complexity -- Capabilities are conceptualized in the context of collective organizational problem-solving. These capabilities are attributed to outstanding skills that have proved to solve extraordinary problems. These problems are described as complex. Complexity refers to the characteristics of problem situations and decision making under uncertainty, addressing ambiguous, ill-structured tasks. action oriented; practicing and success -- Capabilities are close to action; conceptually they cannot be separated from acting or practicing reliable over time -- A capability must work in a reliable manner. Capabilities represent a reliable pattern: a problem-solving architecture composed of a complex set of approved linking or combining rules -- proved to be successful across various situations. Time is a basic dimension of capabilities. Capabilities development takes time and the specific way in which time has taken is relevant for the gestalt of a capability -- its configuration or pattern having specific properties that cannot be derived from the summation of the component parts. It is exactly this time intensive and not fully understandable evolvement that makes up the non-imitable essence of the strategic relevance of organizational capabilities (Barney, 1991; Lenard-Barton, 1992). Capabilities result from... -- Overall, any organizational capability is the result of an organizational learning process, a process in which a specific way of 'selecting and linking' resources gradually develops. Organizational capabilities apply to various problem situations, but not to all situations. They have been formed through successful responses to specific historical challenges and are thus bound to specific types of constellations (Winter, 2003). Problem-solving is embedded in organizational design, information procedures, micropolitics and communication channels as well as other organizational characteristics (culture, control regimes, etc.). All these features shape organizational capabilities and thus define their distinctiveness. Paradox of organizational capabilities; capability-rigidity paradox -- This capability paradox can be summarized as the inherent tendency to inertia vs. the need for dynamism. See organizational inertia. The inertia built-up in the replication of successful selection and complex selection and linking patterns is the dark side of capabilities. This becomes evident particularly in volatile environments and dynamic competition with changing rules of the competitive game. In all of these cases organizational capabilities may easily invert form a strategic asset to a strategic burden. While the inertia drivers identified below dampen the dynamism of capabilities, it would be misleading to conceive of organizational capabilities as totally immobile entities. As is true of all social artifacts, capabilities are subject to some alteration processes over time. The gradual evolution of capabilities takes place in the course of aging. This procedural idea of an ongoing process of slight capability development is limited to an organic development and therefore does not dissolve the threatening diagnosis of the dark side of capabilities and the self-reinforcing rigidity dynamics. The strengths of capability-based behavior and its recursive reproduction can add up to a barrier to adaptation and a burden with respect to flexibility and change. The critical focus is on the inability of organizations to change their familiar 'ways of doing' when confronted with ne development. This inherent tendency to inertia forms the very basis of the recent capability debate resulting in the call for 'dynamic capabilities', the title which captures the paradox. The three causes of this paradox are as follows -- 1 - Path-dependency and lock-in -- Path dependency means first of all that 'history matters' (David, 1985), i.e., that a company's current and future decisions capabilities are imprinted by past decisions and their underlying patterns (Arthur, 1989; Cowan and Gunby, 1996). In many cases, path dependency means more than mere historical imprinting: it refers to forceful dynamics called 'increasing returns' (Arthur, 1983). That is, once successful combinatorial activities generate positive feedback loops, thereby emergently constituting self-reinforcing processes. Empirical studies show that such self-reinforcing processes may establish strategic paths which are prone to dramatically narrowing the scope of strategic management. In the worst case, a specific orientation becomes locked, i.e., any other alternative is excluded. 2 - Structural inertia -- In their evolutionary framework, Hannan and Freeman stress the importance of the 'unusual capacity to produce collective outcomes of a certain...quality repeatedly' (Hannan and Freeman, 1984: 153) for the survival and sustainable success of an organization, insofar as they consider 'organizational inertia' as a precondition for organizational success. Inertia is needed in order to make an organization reliable and identifiable as a distinct unit. It is therefore a requirement for guaranteeing survival. Paradoxically, it is exactly this inertia that brings the risk of maladaptation. In the face of a changing environment, organizations are bound to their stabilized structures and action patterns. Central to survival is the ability to overcome organizational inertia. This paradox is found in many perspectives of this issue - Focus on learning in one area crowds out learning in other areas -- In the context of organizational learning, focusing on improvements of existing capabilities makes experimentation with alternatives less attractive (Benner and Tushman, 2003,; Henderson, 1993; Levitt and March, 1998; Repenning and Sterman, 2002). Exploitive competence crowds out exploration -- By exploiting current strengths, there is a tendency to crowd out explorative activities which go beyond the beaten track: 'As organizations develop greater competence in a particular activity, they engage in that activity more, thus further increasing competence in a particular activity, they engage in that activity more, thus further increasing competence in a particular activity more, thus further increasing competence and the opportunity cost of exploration' (Levinthal and March, 1993: 106) Learning increases organizational rigidity -- these exploitation processes not only lead to a fixation to existing capabilities but also prevent the developing of new capabilities or, put differently, 'the pitfall is that this learning increases the rigidity of the firm' (Kogut and Kulatilaka, 2001: 755) Learning to exploit crowds out exploration -- Thus, capability development resides in the well-known trade-off between exploitation and exploration processes in organizational learning (March, 1991), emphasizing the dysfunctional dynamics of exploitative learning processes. Icarus Paradox -- organizations facing a long period of (outstanding ) success inherently develop the fatal tendency to (over) simplify their operational procedures and to blind the organization to discrepant feedback (Miller, 1993, 1994). A once successful pattern mutates into its opposite: a pattern of failure. The cause of failure paradoxically resides in what was once the source of success. 3 - Psychological commitment (cognitive traps) -- Commitment to a particular strategic thrust is considered the prerequisite for sustained competitive advantage. The argument is advocated from both an economic and psychological point of view. The economic dimension focuses on resource investments. On the one hand, firm-specific (and therefore sticky) investments are needed to build heterogeneity and superior performance, i.e. to generate high quality, economies of scale, etc. (Ghemawat and Del Sol, 1998). On the other hand, investments in firm-specific resources are likely to be irreversible and rigid because the cost of separating and abandoning such sticky resources is too high. In consequence, resource commitment tends to restrict organization's options and flexibility (Bercovitz, de /Figueiredo, and Teece, 1996). The more dynamic the environment, the higher is the implied flexibility risk (Winter, 2003). As mentioned above, capabilities do not actually represent a resource; they focus rather on the combination and linking of resources. Although there are interactions between them, resources and capabilities represent two different conceptual levels with their own commitment dynamics. The commitment to resources resulting from specific investment should be clearly differentiated from commitments evolving when practicing capabilities. This differentiation accordingly implies a separation of resource-based inertia and capability-based rigidity (Gilbert, 2005). Going forward, only capability rigidities of concert to the dynamization of capabilities will be addressed. Psychological commitment traps include: don't rock the boat -- the tendency to act in favor of the consented current thought and to avoid confrontation with deviating negative feedback and signals (Miller and Nelson, 2002; Tripas and Gavetti, 2000) groupthink -- one of the best known effects in this context is groupthink (Esser, 1998; Janis, 1982) which is likely to commit the grout to their perspectives once developed. The commitment driver is the cohesion of the group and the willingness to protect the group against disturbances and disharmonious themes. escalating commitment -- another well-known effect fostering an ultra-stabilization of capabilities is 'escalating commitment' (Staw, 1976). The argument draws on psychological sunk costs or the phenomenon that people sometimes 'throw good money after bad.' Although there is a great deal of theoretical controversy concerning the basic causes escalating commitment, it is predominantly explained as being the outcome of self justification processes (Festinger, 1957; Staw and Ross, 1978). The tendency to become entrapped with a failing course is explained by the decision maker's unwillingness to admit that their prior investment (resource allocation) was in vain. The strong urge to 'save face' in their own and other's eyes (Brockner and Rubin, 1981; Brockner, 1992) leads decision-makers to support further insufficient investment thereby (re)affirming the correctness/usefulness of the earlier decision. As a result, they start an escalation of commitment which excludes more and more reversibility of the once chosen direction - in this context, a once developed capability. selective perception and mind maps - tendencies similar to escalating commitment stem from other cognitive effects such as self-reinforcing 'selective perception' (Walsh, 1988) or 'mind maps' (Weick and Roberts, 1993) to give examples. The point of departure here is the bounded capacity of actors in processing information and the necessary building of selection patterns. Due to reinforcing tendencies these patterns are likely to become trapped. Such processes are the more prominent, the more uncertain and unambiguous the situation is perceived to be. Heiner (1993) stresses the effects of complexity perception: the more difficult it is for an actor to decipher the environmental demands, the more likely the actor will impose familiar patterns of response to match the challenge (also North, 1990, 23). The same is true for perceived threats. socialization mechanisms - Persistence of capabilities in the face of changing environmental demands is also caused by socialization mechanisms. Managers become socialized into the belief system in which these capabilities are embedded. Socialization into belief systems that take for granted the current capability pattern and its internal links is likely to mobilize cognitive and emotional resistance against critical signals urging a shift in the familiar patterns of acting. They do not reflect on these deep beliefs, they simply practice them, thereby becoming reluctant to acknowledge the need for changing a once brilliant problem-solving architecture and its underlying coordination pattern (Westphal and Bednar, 2005). hidden imprints -- What is still more intriguing is the fact that even when people are aware of the need to change and willing to change capabilities, the hidden imprints of the capability pattern may lead them to look for alternatives only in the neighborhood of current practices (Johnson and Johnson, 2002). Thus, managers reinforce current capabilities (via project budgeting and investment policy), thereby unintentionally suppressing new unconventional project initiatives (Burgelman, 2002b; Leonard-Barton, 1992). Strategic threat of capabilities -- Paradox implications for capability management The inherent tendency of capabilities to persist amounts to a strategic threat which cannot be neglected. Management faces a paradoxical situation: on the one hand, the building of complex and reliable problem-solving architecture constitutes strength and allows for developing sustainable competitive advantage. On the other hand, this advantageous side of capabilities is, however, attained by (unconsciously) suppressing alternatives, pluralistic ignorance and reduced flexibility. Any capability therefore contains an inherent risk, i.e. the risk of rigidity and helplessness in the face of fundamentally changing conditions. As a consequence, organizations are confronted with a dilemma: on the one side, they have to develop reliable patterns of selecting and linking resources in order to attain superior performance and competitive advantages and on the other side this endeavor constitutes-at least in volatile markets- a considerable risk of becoming locked into exactly these capabilities. How can this paradox be resolved? Approaches to dynamic capabilities -- The capability-rigidity, or simply capability, paradox drivers are primarily, as described above -- path dependency structural inertia psychological commitment Dynamic capabilities is the most salient suggestion to overcome the capability paradox (Eisenhardt and Martin, 2000; Kusunoki et al., 1998; Teece et al., Zollo and Winter, 2002; Winter, 2003). This notion of developing dynamic capabilities to provide a solution to resolve the capability-rigidity paradox is examined below. Dynamic capabilities are the idea as to how to solve the capability-rigidity paradox. Three different theories of dynamic capabilities can be identified: 1 - radical dynamization, 2 - integrative approach, and 3 - innovation routines. 1 - Radical dynamization approach to dynamic capabilities -- radical dynamization treats dynamic capabilities as a functional equivalent to classical capabilities in dynamic environments. The core idea of total dynamization is to transform the conception of capabilities into full-blown adaptability - at least in high velocity markets. Based on a differentiation between different degrees and patterns of dynamic capabilities, a contingency approach of dynamization depending on the degree of market dynamic is advocated (Eisenhardt and Martin, 2000). A clear distinction is drawn between moderately dynamic and high velocity markets. moderate dynamic markets -- require dynamic capabilities which come close to the classic conception of capabilities, i.e. the pattern-driven conception of problem-solving with some incremental changes. high-velocity environments -- mastering high velocity environments with rapidly and discontinuously changing market conditions and rules (Bourgeouis and Eisenhardt, 1988). Radical dynamic capabilities are conceived to master this volatility. The linking and selection process has to continuously create new combinations of resources: 'They are in a continuously unstable state' (Eisenhardt and Martin, 2000: 1113). Dynamic capabilities in this sense build different types of capabilities, which amount to experiential, improvisational, and highly fragile processes of reconfiguration, integration, and acquisition of resources. They make use of real-time information, simultaneously explore multiple alternatives, rely on quickly created new knowledge, are governed by very few simple rules, do not get stored in the organizational memory, and thus do not produce predictable outcomes. Their strength no longer flows from architecture but rather from its ability to continuously produce new constellations and solutions. The new basis for building competitive advantages is seen in the encompassing capability to change very quickly and to master unforeseeable environmental demands (Eisenhardt, 2002). This conception of dynamic capabilities comes very close to the functioning of adhocracy (Mintzberg, 1979) or the 'total learning organization' (Pedler, Burgoyne, and Bydell, 1991; Vaill, 1996). The distinguishing characteristic of the learning organization is that all activities permanently operate in the learning mode, i.e., they are not bound to history/experience or any rules. The learning organization is always ready to revise hitherto cognitions and change expectations; they are in flux or, as Weick (1997) puts it, they are 'chronically unfrozen.' Issues with the radical dynamization approach -- The solution to the high-velocity markets capability paradox essentially denies the need for capabilities, as they are the subject dynamized, meaning the generation and reproduction of capabilities are no longer needed or even become dysfunctional. The only organizational capability left in high velocity markets is the ability to learn and to improvise effectively. Problems are solved without relying on previously built expertise and competitive advantages can only be gained from rapid learning and flexible pacing (Eisenhardt and Martin, 2000: 1116). Organizational type and functioning implications - A total learning system strikes at the heart of the logic for organizations. A total learning system is supposed to react to any signal from a volatile environment in a new way. Organizations could no longer observe and handle environmental developments on the basis of proven selection patterns and operating rules. The handling would have to be created case by case from scratch without any guidance from the past and experiences of successful practices. This approach advocates spontaneous acting throughout the system. Any capability structure for guiding the development of these activities would hinder the advanced full flexibility. However, it is hard to see how organizations can build resource heterogeneity and sustainable superior performance on this basis. The working of such improvised solutions cannot be anticipated because they are supposed to be new each time and thus there are no experiences that allow for properly assessing the effects of the new solutions. The success of mere spontaneous reactions is likely to depend on mere luck and/or intuition only. This mode of adaptive acting does not meet in any way the basic dimensions of a capability as outlined earlier. Winter (2003) points out that such streams of newly created activities and spontaneous adaptations cannot be understood as exercising capabilities; rather they represent a completely different mode of acting and practicing, namely ad hoc problem solving. Tending toward markets, denying the need for a firm - Winter (2003) holds that the mode of ad hoc problem-solving can be considered as a functional equivalent to building dynamic capabilities. In his view organizations, in volatile circumstances, are well advised to calculate whether ad hoc problem-solving is - compared to capability building - the preferable option since it does not require longer-term investment in resources. Following this line of thinking, the need for an organization, i.e. a firm, begins to be called into question. It is also hard to see how this mode of acting could amount to a sustainable advantage. The more fundamental question raised is why this type of coordinating activity should be conducted in the realm of an organization. The logic of mere ad hoc problem-solving comes so close to the (unpatterned) mode of market coordination that the boundaries blur. Ultimately, the mode of total flexibility (ad hoc problem solving) eliminates the very reason for creating organizations/hierarchies instead of market coordination (Williamson, 1975). There is no rationale why ad hoc problem-solving in organizations should outperform market coordination. Systems theory support for organizations-superior scheme building for complex environments - Modern systems theory (Luhmann, 1995) and cognitive schools of organizational thought (e.g. Daft and Weick, 1984; March and Simon, 1958) can provide further insights to substantiate this argument. They all see pattern building and structuring as both preconditional and being the actual motive for creating and maintaining organizations. Their argument starts with environmental complexity and ambiguity and the requirement to provide orientation by developing workable schemes for enabling action. Volatile environments do not appear on the 'organizational screen' in terms of clear-cut problems; rather than actors must actively construe models for understanding and deciphering the complex world in order to survive. Collective actors/organizations are considered to provide superior schemes, which is ultimately the reason for their existence. Organizations have to safeguard and cultivate their knowledgeable and actionable schemes to guarantee effectiveness. At the same time, the safeguarded schemes for the organizational boundary by drawing distinction between inside and outside. If organizations refrained from doing so, they would simply merge with the environment after having solved a specific problem. The distinction, and thus the boundary, would vanish as there is no such thing as a boundaryless organization. A world of fully dynamized 'capabilities' would come close to a world without organizations. Cognitive psychology support for organizations as pattern producing and containing systems - Learning is structurally bound to the existence of cognitive patterns or mental maps. They are the precondition for perceiving and thinking and subsequently for learning. The lesson is that there is no unconditioned observation and perception. In the same way, to be able to act and learn, organizations need their own sense-making patterns to reduce environmental complexity to an appropriate level. Organizational capability reiterated - The notion of organizational capability essentially builds on patterns and maps. It is the very function of the capability to enable an organization to skillfully get along with these complex challenges from a volatile environment and possibly provide a platform to master these challenges in a better way than competitors are able to. Summary of the radical dynamization approach to dealing with the capability paradox - Full blown dynamization of capabilities means in the final analysis not only eliminating the operating basis for the organization but also to drop the idea of capability building. If there are no patterns, no organizational memories, and no assets then there is no basis to grow for any capability at all-irrespective of whether we address classical or dynamic capabilities (Helfat and Peteraf, 2003).
dynamic complexitySee complexity.
dynamicsDynamics refers to patterns of movement over time, for example, whether the pattern is regular or irregular. (Stacey, 2007, pp 3) See strategy for an explanation of dynamic phenomena pertinent to strategy and organizational change.
dynamismDynamism - the rate and unpredictability of technical change in the environment (Dess and Beard 1984, Miller 1987). Levels of dynamism vary as a function of technological evolution, with higher levels of dynamism prevailing in the initial phases of a technological paradigm (Dosi 1982) or technological discontinuity (Tushman and Anderson 1986) due to the multiple technological trajectories that are possible, and the uncertainty surrounding their development. Primary Source: Sidhu, 2007
economic offeringSee offering.
economic profitSee economic rent and economic value added.
economic rentWhat firms earn over and above the cost of capital employed in their business (Kay, 1999) ...""rents"" are returns that are in excess of the minimum needed to attract a resource to a particular use in the first place. (Roberts, 2004, p 116). Growing economic rent it the objective of strategic management. Source of the term -- The term economic rent comes from David Ricardo's Law of Rent formulated around 1809. This law explains economic advantage of using a resource for its most productive use. In his day the chief resource was land, thus the term 'rent' was applied to the resource. The principle though, pertains to all resources of the firm. This principle is part of the heritage of the 'resource view' of strategy, where advantage stems from the internal resources of the enterprise and not from its position in a market or industry, the 'positional view.'
economic valueEconomic value is the difference between the perceived benefits gained by a customer who purchases a firm's products or services and the full economic cost of those products. A firm has a competitive advantage when it is able to create more economic value than rival firms. Source:Barney, 2007, pp 17 See enterprise value for application of this concept.
economic value addedEVA, economic value added, is a phrase coined by the Stern Stewart consultancy to describe its definition of economic profit, or economic rent. EVA is the value created over and above the expectations of investors and reflected in the market valuation of the enterprise. (Stern, 2004, pp 4-5). A firm creating EVA is creating value. One that does not create EVA is destroying value. In the EVA framework, all costs are measured, including the cost of equity, measuring, in effect, all factors of production. In other words, EVA is the ""capital employed multiplied by the difference between the return on capital vs. the cost of that capital."" EVA incorporated into resource usage decisions aligns the manager's interests with those of the owners. (Stern, 2004, pp 44-45).
economic wisdomSee wisdom.
economicsEconomics is ""The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems."" -- Source: economics. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/economics (accessed: March 26, 2007). Stowell on economics -- Without scarcity, there is no need to economize -- and therefore no economics. ""Economics is the study of the use of scarce resources which have alternative uses."" -- Lionel Robbins, British economist. In other words, economics studies the consequences of the decisions that are made about the use of land, labor, capital, and other resources that go into producing the volume of output which determines a country's standard of living. Those decisions and their consequences can be more important than the resources themselves, for there are poor countries with rich natural resources and countries like Japan and Switzerland with relatively few natural resources but high standards of living. (Stowell, 2007, p 2). Economics schools of thought -- There are many economics schools of thought beyond the ones profiled here. These four schools of thought parallel the developments in management and organizational theory and are representative of the developing natural sciences and the analogous socials sciences -- classical economics neoclassical economics evolutionary economics complexity economics Classical/neoclassical vs. new economics -- The fundamental differences between the classical economics and evolutionary or complexity economics is related to their assumptions about equilibrium and decision making. Classical assumptions include (Faulkner, 2006, pp 2-3) -- markets tend inexorably to move towards equilibrium decision makers are always rational and try to profit maximize at all times decision-making is always based on available information and is always rational long run supernormal profits are not sustainable, except where there are unscalable barriers to entry differences between products in a given market, and between companies, tend to become minimal over time economic decisions are taken deterministically in response to economic forces, and not as a result of discretionary management judgment one management decision begins to look much like another, and the concepts of entrepreneurship or even idiosyncratic management style do not sit easily even in modern economic theory Given these assumptions, it is clear why economics has been of little help in assisting managers in building profitable companies. The ideological inclinations have been at odds with the business strategist who is continually seeking imperfect markets and imperfect competition. Evolutionary and/or complexity economics recognizes markets as being in continual disequilibrium and as firms continually evolving, driving this disequilibrium. Economics and strategy (Some material sourced from Kay, 1990) -- To begin with, there are two broad branches of economics -- Macroeconomics -- Macroeconomics is the part of economic theory that deals with aggregates, such as national income, total employment, and total consumption. Such factors as output, growth, and inflation are the lifeblood of macroeconomics. With macroeconomics dealing with aggregates, it contributes little, if at all, to strategy, which seeks and understanding of specific elements and situations. Microeconomics -- Microeconomics is the part of economic theory that deals with particular elements of the economy, such as industries, products, households, organizations, and individuals. Costs, prices, industries, markets, and individual preferences are the lifeblood of microeconomics. Technically strategy is in the domain of microeconomics, but economics has failed to address the types of questions business people need answered -- there are two groups of questions - (1) the internal organization of the firm and its relationship between its suppliers and customers, and (2) the nature of strategic interaction between small groups of firms. Strategy and economics -- Economics has almost no influence on business policy. The evolution of microeconomics over the 1900s was based on such tools as a 'representative firm.' The role of individual agents was played down. This did little to build a body of knowledge concerning the environmental setting with which enterprises operate and in how they behave in these settings as producers, sellers, and buyers. There is nothing to explain why one firm varies from another. Strategy origination -- (see strategy) Economics failure to penetrate the boundary of the firm left a vacuum due to the need for business leaders to have knowledge of how to lead, manage, grow, develop, and compete with their firms. Igor Ansoff is generally credited with founding the subject of corporate strategy (Ansoff, Corporate Strategy, 1965). He was critical of economists who had shed little light on decision-making processes in a real world firm. Corporate Strategy focused on the process of executive decision making, as indicated in the subtitle, An Analytical Approach to Business Policy for Growth and Expansion. Ansoff's work was certainly complemented by many precursors which contributed to the strategy body of knowledge up to that time, such as -- Ronald H. Coase's The Nature of the Firm (1937) Joseph A. Schumpeter's Capitalism, Socialism, and Democracy (1942), with its insights into entrepreneurial behavior and innovation Peter F. Drucker's Concept of the Corporation (1945), identifying management as a discipline; The Practice of Management (1954), defining the discipline of management and knowledge work & workers; Managing for Results (1964), identifying opportunity pursuit, vs. problem fixing, as essential to competitive success and growth. Edith Penrose's The Theory of the Growth of the Firm (1959), a, if not the, the seminal work in the 'resource-based' school of strategy and competitive advantage. Knowledge creation within the company is identified as critical to the ability of a firm to grow. Alfred D. Chandler, Jr.'s Strategy and Structure (1962), examining the growth of major American corporations.
economies of scaleEconomies of scale occur when firms are able to lower their unit costs due to being larger. This may happen for a variety of reasons. A larger firm may be able to buy in bulk, it may be able to organise production more efficiently, it may be able to raise capital cheaper and more efficiently. All of these represent economies of scale. Specialization -- Specialization brought the division of labor. Economies of scale result from job specialization applied to activities where scale could be brought about through the divison of labor.
economies of scope
edge of chaosThe state of an organization from which both stability and novelty arises. Systemic view -- From the systemic view, the edge of chaos is a state a system is pushed to by an autonomous agent it order to spur the creativity needed to create novelty and transform the organization. Too little chaos and no transformation occurs. Too much chaos and the organization disintegrates. This is a state of tension which is supposed to be energizing for the members of the organization. Responsive processes view -- From the processes view, the edge of chaos describes a healthy organization, which embraces paradox, fosters true diversity, and allows novelty, thus strategy, to emerge from the micro-diversity of the local conversations in the organization. This organization will self-organize, producing stability with the potential for transformation. Three classifications of conversational processes -- Conversation, the dynamics of the process of communicative interaction in the living present required for the emergent unstable-stability in the perpetual construction of novel futures in the living present. (Stacey, 2001, 181-183) Displaying the dynamics of stability conversation is patterned by habitual, highly repetitive themes the conversation has little to no potential for transformation identity arising in this type of conversation is continuity with little variation neurotic -- conversational qualities are lifeless, depressing, even obsessive and compulsive Displaying the dynamics of instability coherent pattern is lost as fragments of conversation trigger other fragments of little thematic structure the conversation is disintegrative, identity is destroyed psychotic -- the conversational qualities are manic confusion and distress with fragmenting identity Displaying the dynamics of the ""edge of chaos"" conversation is where patterning themes have the paradoxical characteristics of continuity and spontaneity at the same time the conversation has the potential for transformation the identity arising is potentially new the conversational qualities are liveliness, fluidity, and energy along with a feeling of grasping at meaning and coherence there is excitement at the same time as tension and anxiety
effectivenessEffectiveness is doing the right thing. The effectiveness of behavior necessarily takes the value of its outcomes into account. Effectiveness in the pursuit of an end is the product of the efficiency of that pursuit and the value of that end (see wisdom, the expected value. Therefore, the inefficient pursuit of a valuable end may be more effective than the very efficient pursuit of one that has little or negative value. -- Russell L. Ackoff
efficiencyEfficiency is doing things right. The efficiency of a course of action is usually measured either by -- its probability of producing an intended outcome when a specified amount of resources is used; the amount of resources required to attain a specified probability of success; or a function of resources and probability, such as ""expected cost.""
efficient causalitySee causality.
efficient causeSource: Wikipedia contributors, ""Efficient Cause,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Efficient_Cause&oldid=80613236 (accessed November 27, 2006). Efficient cause is a concept used by Aristotle. It is perceived to be the immediate force or precursor of all existence with the respect to the existence of a universe. That view eliminates a prime mover because no prime mover could be honestly or intellectually conceived. The need for a first cause generates the meaning of God. This is the agent which brings something about, for example, in the case of a statue, it is the person chiselling away, and the act of chiselling, that causes the statue. This answers the question, how does it happen? It is the sort of answer we usually expect when we ask about cause; the thing which happened to bring about certain results. Efficient cause can be thought of as ""if - then"", timeless laws of linear causality.
emergenceThis is a characteristic of a complex system. See complex adaptive system.
emotional intelligenceEmotional intelligence is an ability, capacity, or skill to perceive, assess, and manage the emotions of one's self, of others, and of groups.
emotional wisdomQuoted from: Bennis and Nanus, 1985, pp 61 - 63 Positive self-regard is related to maturity, but we'd prefer the phrase ""emotional wisdom"" to ""maturity."" Maturity sounds too much like the point where one outgrows childish behavior. But our leaders seemed to retain many of the positive characteristics of the child: enthusiasm for people, spontaneity, imagination and an unlimited capacity to learn new behavior. Emotional wisdom, as we've come to understand it, reflects itself in the way people relate to others. In the case of our ninety leaders, they used five key skills: 1. The ability to accept people as they are, not as you would like them to be. In a way, this can be seen as the height of wisdom-to ""enter the skin"" of someone else, to understand what other people are like on their terms, rather than judging them. 2. The capacity to approach relationships and problems in terms of the present rather than the past. Certainly it is true that we can learn from past mistakes. But using the present as a takeoff point for trying to make fewer mistakes seemed to be more productive for our leaders- and certainly was more psychologically sound than rehashing things that are over. 3. The ability to treat those who are close to you with the same courteous attention that you extend to strangers and casual acquaintances. The need for this skill is often most obvious- and lacking-in our relationships with our own families. But it is equally important at work. We tend to take for granted those to whom we are closest. Often we get so accustomed to seeing them and hearing from them that we lose our ability to listen to what they are really saying or to appreciate the quality- good or bad-of what they are doing. Personal feelings of friendship or hostility or simple indifference interfere. There are two aspects to this problem of overfamiliarity. The first is that of not hearing what is being said: selective deafness leads to misunderstandings, misconceptions, mistakes. The second is the matter of feedback we fail to provide to indicate our attentiveness. 4. The ability to trust others, even if the risk seems great. A withholding of trust is often necessary for self-protection. But the price is too high if it means always being on guard, constantly suspicious of others. Even an overdose of trust that at times involves the risk of being deceived or disappointed is wiser, in the long run, than taking it for granted that most people are incompetent or insincere. The ability to do without constant approval and recognition from others. Particularly in a work situation, the need for constant approval can be harmful and counterproductive. It should not really matter how many people like leaders. The important thing is the quality of work that results from collaborating with them. The emotionally wise leader realizes that this quality will suffer when undue emphasis is placed on being a ""good guy."" More important, it is a large part of the leader's job to take risks. And risks by their very nature cannot be pleasing to everyone.
empiricismIn philosophy generally, empiricism is a theory of knowledge emphasizing the role of experience in the formation of ideas, while discounting the notion of innate ideas. In the philosophy of science, empiricism is a theory of knowledge which emphasizes those aspects of scientific knowledge that are closely related to experience, especially as formed through deliberate experimental arrangements. It is a fundamental requirement of scientific method that all hypotheses and theories must be tested against observations of the natural world, rather than resting solely on a priori reasoning, intuition, or revelation. Hence, science is considered to be methodologically empirical in nature. Philosophical view -- The doctrine of empiricism was first explicitly formulated by John Locke in the 17th century. Locke argued that the mind is a tabula rasa (""clean slate"" or ""blank tablet"") on which experiences leave their marks. Such empiricism denies that humans have innate ideas or that anything is knowable without reference to experience. Scientific view -- A central concept in science and the scientific method is that all evidence must be empirical, or empirically based, that is, dependent on evidence that is observable by the senses. It is differentiated from the philosophic usage of empiricism by the use of the adjective ""empirical"" or the adverb ""empirically"". Empirical is used in conjunction with both the natural and social sciences, and refers to the use of working hypotheses that are testable using observation or experiment. In this sense of the word, scientific statements are subject to and derived from our experiences or observations. In a second sense ""empirical"" in science may be synonymous with ""experimental"". In this sense, an empirical result is an experimental observation. The term semi-empirical is sometimes used to describe theoretical methods which make use of basic axioms, established scientific laws, and previous experimental results in order to engage in reasoned model building and theoretical inquiry. Wikipedia contributors, ""Empiricism,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Empiricism&oldid=104334154 (accessed January 31, 2007).
empiricistEmpiricism is a doctrine that all knowledge is derived from sense experience. It is associated with the empirical methods, i.e. scientific methods. See causality. Empiricists stand in contrast to rationalists.
enacted environmentSee environment under views of.
enactmentSee organizing process and evolutionary algorithm.
enterprise valueMeasuring enterprise value is challenging. There are no perfect measures. Several measures include -- ROIC - return-on-invested-capital -- EP - economic profit -- MVA - market value add -- Tobin's q -- see Barney, 2007, pp 20 - 46 for the definition and discussion of these terms. Future vs current value -- There is a component of the enterprise value that is due to the current value of the firm and the future value the firm is expected to produce. This is discussed in the article: ROLAND J. BURGMAN , DAVID J. ADAMS , DAVID A. LIGHT and JOSHUA B. BELLIN, The Future Is Now, WSJ, Oct 27, 2007, pg R6. Imagine you are the CEO of a company that has just enjoyed a year of record sales and earnings. In your annual letter to shareholders, you assure investors that the company's health and growth prospects have never been stronger. And yet you've seen the company's share price drop 5% over the past year, even as competitors' stocks gained 10%. Worse, the scenario replays itself the following year: Profit margins and profits again increase, but the stock price treads water while rivals' shares rack up impressive gains. What's going on here? -- The problem is a common one: The boost that outstanding current performance gives to shareholder value can be offset when investors' faith in a company's future begins to evaporate. To avoid this nightmare, executives need a complete picture of both these components of their business's value. Executives have become increasingly sophisticated in the past couple of decades at analyzing the value of current operations and at using that analysis to help them manage with the goal of increasing shareholder value. But they still need to supplement the well-developed tools they use for value-based management with one that can analyze their company's future value, the portion of the share price that isn't based on the earnings from current operations or products. We have devised an approach that allows executives to gain a clear outlook on both the current and future components of their company's share price. This can give them a better understanding of how the stock market is evaluating their company's prospects for long-term success. And that can help improve their long-term decision making, by showing them whether, in the eyes of investors, they have struck the appropriate balance between short-term and long-term goals. A Limited Approach -- By the early 1990s, companies were increasingly zeroing in on whether business operations were adding value. Value-based management tools remain popular today, among them EVA, or economic value added, which takes after-tax operating profit and subtracts from it a charge for the capital employed to generate that profit. However, a variety of academics and consultants have pointed out the limited usefulness of EVA and other value-based performance measures, particularly given a propensity toward current-period and short-term, backward-looking performance evaluation. For example, EVA fails to quantify the increased value a company might realize in the future through, say, higher levels of investment in programs aimed at increasing brand loyalty, developing talent, generating patents or bolstering research-and-development capabilities. True value-based management requires executives to look both backward and forward. How important is future value to share prices in concrete terms? As an example, an analysis by AssetEconomics Inc. of the companies in the Russell 3000 Index as of May 2003 found that future-value expectations represented 59% of their overall enterprise value -- the market value of a company's equity plus the net value of its interest-bearing debt obligations. In 12 of 22 industry groups analyzed, future value made up more than half of enterprise value. To put those figures into dollar terms, approximately $7.6 trillion of the Russell 3000's total enterprise value of $13 trillion was bound up in future value. And that was three years after the market began correcting itself for the inflated expectations of the dot-com bubble. Even in 2006, after corporate profits -- and therefore current value -- had risen significantly over a three-year period, some $6.6 trillion of the Russell 3000's total enterprise value of $19.5 trillion, or about one-third, was represented by future value. What investors are doing here is placing a significantly higher value on these companies than would seem warranted by the success of their current operations. They are saying, in effect, ""We see that your current operations are worth such-and-such, but we're going to reward you well above that level because we have faith in your growth prospects."" That extra amount investors are willing to pay is the company's future value. Mathematically, it can be calculated for any company by subtracting current value from the business's overall enterprise value. So, start with enterprise value, which again is the market value of a company's equity plus the net value of its interest-bearing debt obligations. Then subtract current value, which is after-tax operating profit divided by the weighted average cost of capital. The result is future value. Future value and current value can then be expressed as percentages of enterprise value. This exercise allows executives to put a number on the market's view of how the company is doing today, and what its expectations are for tomorrow -- eliminating the need for guesswork or the temptation of wishful thinking. While it's crucial for executives to know their company's future value, there is no optimal percentage that any particular company should strive to achieve. The significance of future value lies largely in how it compares with the future values of the company's industry peers. Depending on how a company's industry as a whole is positioned, a future-value component of 20% of enterprise value may be exceptionally high, exceptionally low, or average -- and the same is true for a figure of 80%. Another crucial consideration is which way future value is heading. A decline can be a warning that a company's growth plan needs to be revisited, because it suggests investors have growing doubts about the strategy. Shaping Strategy -- To understand how an analysis of future value can help executives shape business strategy, consider the big-box retailing sector. For years, large retailers were rewarded with higher share prices for opening new stores at a breakneck pace. But growth through expansion may be nearing its limit for these retailers as their markets become saturated. In our research on a select set of major retailers, we saw a downward trend for future value in the industry as a whole. From 1998 to 2006, most of the retailers continued to invest heavily in new-store openings, fueling an increase in the companies' current value. Future value, however, didn't keep pace with the growth in current value. In fact, future value as a percentage of enterprise value for the group as a whole declined from almost 75% to 30%, an indication that investors were losing faith in simple market-penetration and geographic-expansion strategies. Had these companies been tracking future value regularly, they might have recognized earlier that a strategy based on increasing scale was running out of room and begun investing differently for growth. Best Buy Co. is an instructive exception to the industry trend. In 2002, the retailer faced a huge challenge: Wall Street had come to expect growth of 20% a year, but the company, because of saturation of the North American market, could no longer rely as heavily on adding new stores to generate that growth. Best Buy then launched its ""customer centricity"" strategy, which was designed to pinpoint the most profitable and fastest-growing customer segments in each store. Once it determined the nature of these segments, Best Buy realigned its stores and empowered employees to target those favored shoppers with products and services that would encourage them to spend more and come back often. The strategy has had remarkable results: The newly formatted stores generated sales at twice the rate of Best Buy's traditional format. And the company largely maintained its future value over the period we examined. All the company's stores now employ the centricity strategy, which has evolved to emphasize the personal experiences and ideas that each employee can bring to bear in serving the unique needs of each customer. That isn't to say that Best Buy has completely turned its back on scaling up operations. At the beginning of 2007, the company announced it would open 130 new stores in the U.S., Canada and China. It is clear, though, that Best Buy's growth strategy doesn't depend primarily on penetration, and that investors have shown their approval with their assessment of the company's future value. The Objective: Executives who are managing with the goal of increasing shareholder value need to be able to analyze their company's future value -- the portion of the share price that isn't based on the earnings from current operations or products. The Process: A relatively simple mathematical formula can be used to determine how much of a company's share price is based on current value and how much on future value. Those proportions can then be compared with those of competitors and can be monitored for signs of changes in how the stock market is evaluating the company's prospects. The Payoff: A clear picture of both the current and future components of a company's share price can give executives a better sense of whether they have struck the appropriate balance between short-term and long-term goals. Tracking a Turnaround -- A similar lesson can be found in McDonald's Corp.'s ability to renew investors' confidence in recent years. Before 2003, the fast-food chain had focused heavily on scale growth, aiming to rapidly open large numbers of new restaurants around the world. That strategy worked well for many years, but eventually investor confidence ebbed. The share price peaked in 1999 and dropped more than 70% by early 2003. The company then announced that it would close 175 stores and cut 600 jobs. In the ensuing turnaround initiated by a new leadership team, increasing same-store revenue became the new focus of top management. Doing so meant renewing the brand through marketing and advertising. It also involved a radical change in the product assortment, with an expanded menu including salads, snack wraps and new sandwich and burger options. Restaurant renovations and redesigns, including the introduction of wireless Internet access, have had a striking impact, along with efforts to make drive-through service faster and more convenient. With increased confidence in the company's future, McDonald's investors have sent its share price skyrocketing from about $12 at its low to $43 by the beginning of 2007 and above $50 for much of this year. How did the company's future value track over this period? In 1998, future value was around 60% of enterprise value, but by 2002, it had dropped to around 5%. Following the turnaround, the number had risen above 50% by 2006, indicating investor confidence in management's ability to continue to take advantage of future growth opportunities. We're not saying that Best Buy or McDonald's changed strategy following a future-value analysis such as the one we lay out here. We are saying that any company can use this tool to gauge how investors feel about its strategy and can then consider changes based on that information. Future-value analysis can be especially valuable in detecting early-warning signals that may not show up in the share price if earnings from current operations are robust, thus obscuring long-term flaws in company strategy. Managing for shareholder value, current and future, requires some technical knowledge to get the numbers right. But it is far more a matter of establishing a mind-set within an organization -- one in which employees at all levels understand how they are adding value. And in the case of future value it is a matter of orienting everyone in the organization toward longer-term horizons. Executives can help foster this mind-set in a number of ways. They must ensure that the company's investor-relations communications clearly convey a convincing growth story. And analysts aren't the only target of such messages. Top management must continually reinforce the logic of future value for the organization as a whole. Also, many companies have executive compensation plans, management systems and cultures that reward people and units for achieving accounting results that are set for the coming quarter or year. Integrating future value into incentive plans can help reorient a company's focus so that it is more balanced between the imperatives of today and tomorrow. --Mr. Burgman is the founder of AssetEconomics in New York and a fellow of the Accenture Institute for High Performance Business in Boston. Mr. Adams is a senior manager with Accenture Ltd.'s Finance and Performance Measurement practice in Chicago. Mr. Light is a research fellow and Mr. Bellin is a research associate at the Accenture Institute for High Performance Business. They can be reached at reports@wsj.com
entityAn entity is something that has a distinct, separate existence, though it need not be a material existence. In particular, abstractions and legal fictions are usually regarded as entities. In general, there is also no presumption that an entity is animate. Entities are used in system developments as models that display communications and internal processing of say documents compared to order processing An entity could be viewed as a set containing subsets. In philosophy, such sets are said to be abstract objects. The word entity is often useful when one wants to refer to something that could be a human being, a non-human animal, a non-thinking life-form such as a plant or fungus, a lifeless object, or even a belief; for instance. In this way, entity could be seen as a ""catch all""-word. Sometimes, the word entity is used in a general sense of a being, whether or not the referent has material existence; e.g., is often referred to as an entity with no corporeal form, such as a language. Taken further, entity sometimes refers to existence or being itself. For example, the former U.S. diplomat George F. Kennan said once that ""the policy of the government of the United States is to seek . . . to preserve Chinese territorial and administrative entity."" In law, an entity is something capable of bearing legal rights and obligations. It generally means ""legal entity"" or ""artificial person"" but also includes ""natural person"". -- Wikipedia contributors, ""Entity,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Entity&oldid=91820777 (accessed January 1, 2007).
entrepreneurshipAn entrepreneur often sees new patterns where others see existing patterns or chaos -- seeing the new patterns is called vision. It may not all come at once, but may develop over time as the entrepreneur chips away at an opportunity, seeing a richer vein of opportunity develop as he or she progresses. Innovation is the tool of entrepreneurs. With the entrepreneurial activity driving the change in the business world, this change must be anticipated. Anticipating ongoing advances in the yield of resources and the value obtained by consumers from resources does not mean precisely predicting the future. That is foolhardy. But it does mean being savvy enough to understand which way the wind is blowing and insure the organization has sufficient adaptive learning capability to capture and capitalize on these dynamic forces of change, to the benefit of the organization. Innovation and entrepreneurship go hand-in-hand. Following Drucker's (1985) perspective, the three aspects of innovation and entrepreneurship are --
environmentFrom a systems perspective, or that of a business organization, the environment is everything of significance to the business organization, the firm, which lies outside the boundaries of the organization. The boundaries are quite permeable, variable, and largely established by management decisions. The environment contains competitors, partners, suppliers, customers, markets, governments, investors, unions, banks, retailers, etc. See business environment for a perspective on why that term came about to capture the expansive notion of what the term 'environment' should represent. See system for a definition of a system and a concise systems science oriented definition of environment. What is within the boundaries of a business vs. in its environment is also determined by the role played by an element of the system. For example, an employee, playing the role of an employee, is within the boundary and part of the system. That same employee, as a parent, or recreational enthusiast, is outside the boundary of the system, thus part of the environment. Environmental change -- Environmental change comes from all of the organizations in the population of organizations making the environment. If an incumbent firm in an industry is driving this change, that is generally in their favor, enabling them to define competitively advantageous positions in the environment. This would be the case where a firm practices internal creative destruction. If the environment is change faster than the incumbent firm, the firm must find a way to more rapidly adapt or be threatened with annihilation by forces in its environment. This is external creative destruction, where change is driven by the firm's environment. Views of environment (Smircich, 1985) -- Real, material, and external - a systems worldview -- Objective - an organization is ""embedded"" in an environment that has an external, independent, and tangible existence The open systems analogy provides a common way of thinking about the relationship between an ""organization"" and its objective ""environment"" - organization-as-organism as one example Strategists search for opportunities or threats in the ""environment"" and search for strengths and weaknesses inside an ""organization."" This view emphasized recognition of what already exists. Environmental analysis thus entails discovery, of finding things that are already somewhere waiting to be found. Strategy is defined as the fit between ""organization"" and ""environment."" A spectrum of views of the relationship between the ""organization"" and its ""environment"", at one extreme - Organizations can select their environmental domains - strategic choice. At the other extreme, Most organizations flounder helplessly in the grip of environmental forces - the weak-organization theory In either case, the strategist must look out into the world to see what is there - accessing, organizing, and evaluating data to produce information useful to the formulation of strategy Within an objective environment, a strategist faces an intellectual challenge to delineate a strategy that will meet the real demands and real constraints that exist ""out there."" Perceived - strategists are permanently trapped by bounded rationality and their incomplete and imperfect perceptions of the ""environment"" From a practical standpoint, the challenge for strategists, who must labor within the confines of flawed perceptions, is minimizing the gap between these flawed perceptions and the reality of their environment. Whether objective or perceived - ""environments"" are envisioned as concrete, while material ""organizations"" are within and separate from real material ""environments"" Enacted -- Organization members actively form (enact) their environments through their social interactions - an interpretive world view Organization and environment are created together (enacted) through social interaction processes of key organizational participants. From an interpretive worldview, separate objective ""environments"" simply do not exist... Instead, organizations and environments are convenient labels for patterns of activity There are no threats or opportunities out there in the environment, just material and symbolic records of action The strategist, determined to find meaning, makes relationships by bringing connections and patterns to action Strategists create imaginary lines between events, objects, and situations so that events, objects, and situations become meaningful for the members of an organizational world Enactment implies a combination of attention and action on the part of organizational members. Processes of action and attention differentiate the organization from not-the-organization (the environment) An enactment model implies that an environment of which strategists can make sense has been put there by strategists' patterns of action - not by a process of perceiving the environment. In other words, managers and other organization members create not only their organization but also their environment. Enactment theory abandons the idea of concrete, material ""organizations/environments"" in favor of a largely socially-created symbolic world. Organization and Environment from an Interpretive Perspective (Smircich, 1985, p 727) - The metaphoric and symbolic bases of organized life that create and sustain these organizational ideas are often ignored in approaches to strategic management. An interpretive perspective places these processes and symbolic entities at the center of analysis. An interpretive definition of organization - Organization is defined as the degree to which a set of people share beliefs, values, and assumptions that encourage them to make mutually-reinforcing interpretations of their own acts and the acts of others. Organization exists in this pattern of on-going action-reaction among social actors From an interpretive perspective, such organization is different form the everyday conceptualization of legally constituted ""organization,"" and refers instead to a quality of interaction. Organization can extend across ""organizations."" Some ""organizations"" are disorganized. An interpretive definition of environment -- The term ""environment"" refers only to a specific set of events and relationships noticed and made meaningful by a specific set of strategists. An interpretive perspective does not treat environment as separate objective forces that impinge on an organization. Instead, environment refers to the ecological context of thought and action, which is not independent of the observer-actor's theories, experiences, and tastes. Multiple groups of people enact the ecological context; neither historical necessity nor the operation of inexorable social laws imposes it on them. From the standpoint of strategic management, strategists' social knowledge constitutes their environment. Implications of an interpretive perspective (Smircich, 1985, p 727-731) - ""Organization"" and ""environment"" are key concepts in the vocabulary of strategic management. The reconceptualization of these building block concepts that flows from an interpretive changes perspectives as well as words. From an interpretive perspective the interesting questions concern how patterns of organization are achieved, sustained, and changed. An interpretive perspective on strategic management and the environment asks questions about the processes of knowing - those social processes that produce the rules by which an ""organization"" is managed and judged. The interpretive perspective highlights personal involvement with knowledge; it emphasizes that knowledge is standpoint dependent. Strategic management implications - 1. Abandoning the prescription that organizations should adapt to their environments The conventional wisdom of strategic management that urges organizations to adapt to their environments is more problematic than it appears. It obscures a good deal of complexity, ambiguity, and abstractness in the strategic management process. When one theorizes from the present into the past as strategic analysts often do, one find what seems to be a powerful argument about adaption to an objective ""environment."" But the power of this explanation ends in the present. Although the argument about environmental adaptation may initially seem appealing, it does not provide much help for strategists in the here and now. The advice from much strategic management literature that stresses fit, congruence, and alignment is not sufficient for dealing with issues in day-to-day management. The executive in an industry cannot simply stand outside the action and adjust themselves to trends; their actions make the trends. Trends are complex functions of multilateral behavior, making future outcomes problematic. The nature of what constitutes adaptation can only be stated retrospectively, never prospectively. The admonition to adapt to trends and forces is not very helpful. An interpretive perspective argues that strategic managers can manage their organizations only on the basis of their knowledge of events and situations. But events and situations are always open to multiple interpretations. The facts never speak for themselves. If facts seem to ""go without saying,"" it is only because observers happen to be saying very similar things. Each view of the environment flows from applying certain preconceived, limited frameworks to available contexts. An unlimited number of guiding images or views are possible. It is in terms of these multiple views that expectations and strategic action will congeal and shape the future. Whatever is possible depends on which visions people believe in and act on - not on environmental fiat. Analysis of a firm's environment cannot aspire to the status of a science, because there are no independent authoritative observers. Instead, the choice of frameworks and interpretations becomes a creative and political art. Strategists need to concentrate on their choices vis-à-vis frameworks and interpretations. Novel and interesting frameworks may stimulate novel and interesting environments that could in turn preface novel and interesting strategic initiatives. 2. Rethinking constraints, threats, opportunities -- Managers face a tidal wave of situations, events, pressures, and uncertainties, and they naturally resort to collective discussion (in the broadest sense) to negotiate an acceptable set of relationships that provide satisfactory explanations of their social worlds. The scope and meaning of events are funneled down to manageable dimensions by formal and informal processes leading to industry wisdom. This collective discussion by strategic managers leads to a corresponding problem. The strategic managers end up holding untested assumptions, unwittingly colluding to restrict their knowledge and thus can suffer from ""collective ignorance."" What everyone knows about an industry translates into an opportunity for those who do not know. Many, if not most, really novel and exciting new strategies that invade an industry, are perpetrated by outsiders who do not know the rules. The way social reality if formed in organizational settings suggest a powerful prescription for strategic managers - They must first look to themselves and their actions and inactions, and not to ""the environment"" for explanations of their situations. Recognize that in many cases top managers' thinking patterns can cause crises, not the external environment. If people want to change their environment, they need to change themselves and their actions - not someone else... Problems that never get solved, never get solved because managers keep tinkering with everything but what they do (Weick, 1979, pp 152). Help managers reflect on the ways in which managers' actions create and sustain their particular organizational realities. With greater capacity for self-reflection, all organization members can examine and critique their own enactment process. By maintaining a dual focus of attention - 1) an ability to transcend the momentary situation in which they are entangled and 2) to see and understand their actions within a system of meanings that is continually open to reflection and reassessment - strategic managers can challenge the apparent limits and test the possibilities for organizational existence. 3. Thinking differently about the role of strategic managers -- The enactment model places strategy makers in an entirely different role from that envisaged by the objective or perceived models. Environmental scanning in those models send managers ""out"" to collect facts and to amass an inventory of information. A strategic manager is portrayed as a decision-formulator, an implementer of structure, and a controller of events who derives ideas from information. The interpretive perspective, on the other hand, defines a strategist's task as an imaginative one, a creative one, an art. In the chaotic world, a continuous stream of ecological changes and discontinuities must be sifted through and interpreted. Relevant and irrelevant categories of experience must be defined. People make sense of their situation by engaging in an interpretive process that forms the basis for their organized behavior. This interpretive process spans both intellectual and emotional realms. Managers can strategically influence this process. They can provide a vision to account for the streams of events and actions that occur - a universe within which organizational events and experiences take on meaning. The best work of strategic managers inspires splendid meanings. The juxtaposition of events and context, figure and ground, is one mechanism for the management of meaning. Through this process, strategists work in the background to construct the basis on which other people will interpret their own specific experiences. The interpretive background makes a difference because people use it to decide what is happening and to judge whether they are engaged in worthwhile activities or nonsense. How can strategic mangers generate the context for meaning in organizational life? Through values and their symbolic expression, dramas, and language. Strategic managers can sharpen their strategic impact by gaining awareness of the less than obvious values/symbols that pervade their organizations. Dramas include the standard ceremonies and rituals of an organization (meetings, socialization, training, parties, etc.) as well as unique happenings (""campaigns,"" ""challenges,"" ""struggles to the top,"" ""takeovers,"" new image or brand, etc.). The standard ceremonies provide continuity and reaffirmation of values, status, individual and collective achievements. The ""big meetings"" are occasions for heightened awareness, reawakening, and sometimes exciting change. Strategic managers should be aware of the impact of these dramas can have and realize that they (the managers) exercise wide discretion in defining what dramas are and when and how they will occur. Powerful language metaphors set a tone, provide direction, and gain commitment. Wise strategic managers take advantage of language, metaphors, and stories to convey their messages. They also pay attention to language, metaphors, and stories that originate elsewhere. Values, dramas, and language comprise the symbolic foundations that support the everyday prosaic realities of management information systems, hierarchy, incentive systems, and so on - the surface architecture of organizations. Traditionally organizational design problems have been addressed exclusively in terms of surface architecture. These conventional approaches to designing organized activity have been further restricted by focusing nearly all attention on intellectual (rather than emotional) issues and on massive, unremitting control (rather than imagination). An interpretive approach, probing the subjective process of reality-building, redirects the strategic manager's attention toward deep images of organizational life. Strategic managers can improve their efforts - make them more strategic - by recognizing the powerful nature of those deep images and by consciously approaching this deeper level. Summary of the interpretive orientation world view on strategic managers' thinking and behavior - Rather than concentrating on issues of product-market strategies, for example, a strategic manager would concentrate on process issues. Rather than concentrating on decisions or design of decision making structures, a strategic manager would concentrate on the values, symbols, language, and dramas that form the backdrop for decision making structures. Rather than confining themselves to the technical/intellectual aspects of organizational structures, many strategic managers would learn to express and to elaborate on the social/emotional basis for organizational life. Managing in an enacted world (Smircich, 1985, p 731-733) - Managerial analysis - The idea of enactment underscores a view that one's own actions and the actions of others make an -organization"" and its ""environment."" Because of this sequence, environmental analysis is much less critical than managerial analysis. Managerial analysis means challenging the assumptions on which managers act and improving managers' capacity for self-reflection-seeing themselves as enactors of their world (Litterer & Young, 1981; Mason & Mitroff, 1981). This dual (active-reflective) posture toward action is difficult for managers to maintain, In fact, consultants often are called in to help organization members get a different perspective on what members are doing. Consultants state the obvious, ask foolish questions, and doubt - all of which helps organization members get outside of themselves. Management groups can institutionalize the role of ""wise fool"" (Kegan, 1981) in order to provoke the capacity for critical self-examination. Creation of context - The answers to such questions as ""Who are we? What is important to us? What do we do? and What don't we do?"" set the stage for strategy formulation- These questions elicit the values framework within which activity becomes meaningful. Current literature (Peters & Waterman. 1982) suggests that excellent companies have top management groups who can articulate clear value positions. The creation of context is different from setting objectives, Setting objectives implies that an organization falls short in some way, needing to move from point A to point B. This sort of striving characterizes many strategic management models, suggesting that organizations have a place at which to arrive- Objectives present a management orientation of going-to-be instead of already-is (Davis. 1982). An interpretive perspective promotes managerial deliberations about the present---especially about management values and actions. Encouraging multiple realities - An interpretive perspective urges the consideration of multiple interpretations. But, in strategic management. multiple interpretations often are viewed as communication problems to be overcome by more information, rather than as a natural state of affairs. Successful strategists have often contemplated the same facts that everyone knew, and they have invented startling insights (e.g., Ray Kroc and the hamburger restaurant chain, or Gene Amdahl'snsight into the strategic inflexibility of IBM's pricing). Interesting enactments blossom when strategists draw out novel interpretations from prosaic facts. Quite often, novel interpretations occur when companies enter an industry for which they have no specific experience. They try out novel strategies that run counter to conventional assumptions (e-g., Philip Morris in the beer i»dustry. Honda in motorcycles, Wendy's in hamburgers). Companies might be able to enlarge their capacities for novel interpretations by systematically varying metaphors, by hiring in-house experts from distant industries, and by encouraging novel and conflicting viewpoints (e.g. a coal company hires an environmentalist; Caterpillar hires a top executive from Komatsu, who remains outside the Caterpillar culture; or a company hires a philosopher). These efforts legitimate and expand the managerial capacity for tolerance of differences. Testing and experimenting - Every industry is saddled with a long list of do's and don'ts. These stipulated limits should be tested periodically, Enactment means action as well as thinking. Exxon followed such a strategy with the Reliance Electric deal and other active attempts to discover whether it could push its technical skills in certain directions (Kaufman, 1982). Proctor and Gamble seems to be experimenting within the soft drink industry (Smith, 1980). Assumptions about what is related to what, what works (or doesn't), what we can do (or can't), should be tested periodically by acting as if counter assumptions are viable (Wick, 1979). Strategists should learn to act ambivalently about what, they know, so that they do not become straitjacketed by what they know. Learning compels forgetting. In fact, organizational wisdom may require continuous unlearning (Nystrom & Starbuck, 1984). Managerial analysis, creation of context, encouraging multiple realities, and testing and experimenting are managerial principles derived from an interpretive world view, recognizing that people enact their symbolic world. These principles of variety are largely ignored by approaches to strategic management that stress scanning of an objective/perceived environment, setting objectives, and manipulating managerial controls. Can any reality be enacted? - This argument may seem to imply that people can enact any symbolic reality that they choose. In a limited sense the present authors are saying precisely that. Individual people occupy personal. subjective space--space in which intentions. meaning, and sensibility often are quite idiosyncratic-what the world means to them. And even those isolated lifeworlds can sometimes be transformed into social worlds (e.g., Hitler, Gandhi, Marx. Darwin). But in this paper the special concern is with enactments in which. numerous people collectively participate, in which people experience limits to what they can enact. First, organized people often struggle within the confines of their own prior enactments. Patterns of enactment rooted in prior personal, organizational, and cultural experiences powerfully shape ongoing organizational and cultural options. Starbuck (1983) calls these patterns ""behavior programs"" and emphasizes how past thinking gets concretized into standard operating procedures, job specifications, buildings, contracts, and so on that take on the aura of objective necessity. Behavior programs-institutionalized as unwritten rules and taken for granted assumptions-seem to dictate how things are and must be done (Zucker, 1977}. Changing these patterns requires people to intentionally forget some of what they know and to disbelieve some of what they believe_ Depending on the weight of prior commitments, changing may seem risky, foolish, or taxing. Second, enactment means thinking and acting. Enactments test one's physical, informational, imaginative, and emotional resource. Without sufficient resources (or without the ability to think imaginatively about what might constitute resources), one simply cannot support many conceivable enactments. Finally, enactments may compete with each other. In an election, for example, the candidates struggle mightily to discredit an opposition candidacy. In a corporate context, various strategic initiatives compete in a similar fashion. For sizable organizational enactments to succeed, a critical mass of belief and acceptance must be reached. But reaching the critical mass depends on persuasion rather than objective factors. For these reasons-prior enactments, problems with resources, and competing enactments- organizational enactment processes can be distinguished from fond hopes and castles in the air. Conclusion - Strategic Management in an Enacted World (Smircich, 1985, p 734-735) - The implications of the enactment perspective for strategic managers give here are extensive and provocative - The eclipse of the ""organization/environment"" dichotomy A different mode of strategic analysis An entirely different role for the strategist from the role presently envisaged by most analysts A different research focus The general acceptance of a deceptively persuasive ""organization-environment"" metaphor blinds one to the largely symbolic, social nature of organized life. This draws attention away from a perspective of an undisciplined environment enacted by multiple interest groups. Strategic managers might begin to -- think of themselves as playwrights more than heroes. As creators rather than coaligners To think more about how they get to know what they know and think less about what they know. The strategic managers' most enduring contributions may rest with their unique roles as background-generators and context-composers, not on their direct roles as decision makers and commanders. The strategic analyst should guide the strategic practitioner toward critical self-examination. Strategic Management in an enacted world -- From an interpretive perspective, strategic management consists of those processes through which patterns of ""organization"" and ""environment"" are created, sustained, and changed. Cause-effect logic is eschewed in favor of examination of the rules that people follow, people's reasons for their acts, and the meanings people assign to events. The interpretive perspective offers a realistic alternative to the positivist rationalistic model of the strategic planning process, the conventional model, that cannot account for the way that strategies get formulated. Key characteristics of an enacted approach to strategic management - Rather than taking a detached Olympian perspective on an industry or firm, the interpretive view takes a participant view. Rather than trying to merge the incompatible views of multiple actors into a single objective explanation, the interpretive view recognizes that differences are essential for understanding strategic action and strategic change - studying the complex shifting patterns and configuration of organizations making up an industry. Focus management not on adaption to apparent current trends but on becoming aware of the ways that their ability to think critically about events and relationships has become strait-jacketed. Work with managers to understand where options have been traded for assumptions, inadvertently and unconsciously, in order to invent new ways to understand present events and to envision viable futures for their companies. In the process, de-emphasize the current tendency to react to the take-for-granted ""environment"" and to highlight the role of autonomous action in creating environments. Avoid case studies which are typically less ambiguous than reality, typically wrapped around an explicit or implicit acceptance of a normative, rational model of organizational decision making, and typically ignoring the affective, symbolic, and linguistic aspects of organizational processes.
environmental changeThe environment of business-organizations are subject to ongoing change. This change maybe be slow, for a time, meaning the environment is stable. A stable environment offers a 'safe haven' for the firm and its business model. Rapid environmental change simply means that the types and use of technology are rapidly shifting the value of offerings in in the industry or market, shifting the very definition of market and industry can be a result as well. Discontinuous change refers to change that comes in leaps in technological change -- what is sometimes referred to as disruptive innovation, where the value proposition is radically altered.
envisioned futureAn organization's envisioned future is made up of its vision and ambitious goals in pursuit of that vision. While the ideology of most truly great companies is unchanging, the envisioned future is revised as needed to keep it timely, in line with the strategic focus, and reflecting current strategies and goals.
epistemologyEpistemology can be called the theory of knowledge. It is a branch of Western philosophy that studies the nature of knowledge and belief. Defined narrowly, epistemology is the study of knowledge and justified belief. As the study of knowledge, epistemology is concerned with the following questions: What are the necessary and sufficient conditions of knowledge? What are its sources? What is its structure, and what are its limits? As the study of justified belief, epistemology aims to answer questions such as: How we are to understand the concept of justification? What makes justified beliefs justified? Is justification internal or external to one's own mind? Understood more broadly, epistemology is about issues having to do with the creation and dissemination of knowledge in particular areas of inquiry. Stanford Encyclopedia of Philosophy, http://plato.stanford.edu/entries/epistemology/ (accessed January 31, 2007).
equilibriumA condition in which all acting influences are canceled by others, resulting in a stable, balanced, or unchanging system -- equilibrium. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/equilibrium (accessed: January 01, 2008). Equilibrium is the assumed natural state of thing in classical and neoclassical economics. Observed changes or disruptions are viewed as anomalies to be resolved as the system returns to equilibrium. This is in contrast to complexity and evolutionary economics, which assumes that change is the normal state of things. Implications of a stability vs. change mindset -- The implications of these two starting points on the methods employed and the psyche of business leaders is profound. In one case, the business leader constantly seeks stability, defends stability to sustain or increase advantage, and deals with disruptions to stability as an anomaly to be overcome. In the other case, the business leader expects continual change, prepares to be adaptive to external change, and seeks to drive internal change to increase advantage.
ethics Kant distinguished between knowledge and ethics. 'While the power of representing truth is knowledge', he wrote in 1764, 'that of perceiving the good is feeling and ... these two must not be confused with one another. Kant places he responsibility for moral action within an inner faculty of the mind. Moral duty arose from the nature of the mind itself and appeared as a 'categorical imperative.' Moral judgment derives from an 'inner voice' - what we might call 'conscience' - that was unique to every individual and could never be alienated (transferred) to an external authority. Locke's also developed the idea of the individual as an autonomous moral agent, but with important difference from Kant. For Locke, human beings are both autonomous agents and socially malleable creatures. He saw no contradiction in this because he saw no contradiction between self-interest and social-interest. In Locke's time, the providential view of Man, in which God had created every facet of the cosmos for the benefit of humanity, was still highly regarded. Source: Malik, 2000, pp 72 - 73 See knowledge. Ethics and philosophy -- In philosophy, meta-ethics is the branch of ethics that seeks to understand the nature of ethical properties, and ethical statements, attitudes, and judgments. Meta-ethics is one of the three branches of ethics generally recognized by philosophers, the others being ethical theory and applied ethics. Ethical theory and applied ethics comprise normative ethics. Meta-ethics has received considerable attention from academic philosophers in the last few decades. While normative ethics addresses such questions as ""Which things are (morally) good and bad?"" and ""What should we do?"", thus endorsing some ethical evaluations and rejecting others, meta-ethics addresses the question ""What is (moral) goodness?"", seeking to understand the nature of ethical properties and evaluations. Wikipedia contributors, ""Meta-ethics,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Meta-ethics&oldid=104262376 (accessed January 31, 2007).
evaluative themeIn the view of complex responsive processes, evaluative themes are the basis of our choices of actions. Ideologies is an evaluative themes. See ideology. (Stacey, 2007, pp 348).
evolutionSee evolutionary algorithm.
evolution of organizational knowledgeSee Zollo, 2002 for a description of the knowledge evolution cycle. See dynamic capability for how the evolutionary cycle can develop organizational capabilities.
evolutionary algorithmThe evolution, as defined by the algorithm below, is at the heart of evolutionary economics, the economics of creative destruction, and complexity economics. The algorithm is both descriptive, in explaining what actually happens to populations of firms, and prescriptive in what firms must do in order to evolve and prosper vs. being destroyed by the forces of creation in the business ecosystem. Weick's organizational view -- See organizing process for the equivalent algorithm in the context of organizing by intelligent agents. The evolutionary algorithm is a compelling explanation of how complex systems are changed and new ones created. This algorithm comes in many forms, but has the basic characteristics of a driving force which creates variation that is selected and applied for successful adaptation and advantage of the system involved. This algorithm serves to explain economics (see complexity economics and the ever changing competitive landscape. Schumpeter's creative destruction, the ever increasing development of new technologies by entrepreneurs which destroys the economic value of what become legacy technologies. The algorithm's driving force -- Technological change arising from intelligent actions taken by people who respond to market incentives (Romer, 1990). The wealth accelerator -- Knowledge is an asset with increasing returns, the more there is the more knowledge that is generated. This knowledge is applied to ever increasing technological innovation and wealth creation. The evolution steering wheel -- The intentional investment decisions made by profit maximizing agents. The algorithm -- Variation -- New technology variations, new technological possibilities, are produced in hopes of their selection to produce wealth. See unjustified variation. Selection -- The technologies fit for a purpose are selected to generate wealth through increasing order and complexity. See selection. Retention -- Fit designs are replicated. The more fit they are the more broadly they are replicated, throughout an organization, an industry, and diverse businesses. This replication stimulates the development of more variations Economic change, growth and development, is explained by an evolutionary algorithm, the generation of an ever increasing variety of new technologies, their selection, and broad application.
evolutionary economicsConventional, or neo-classical, economics has its roots in physics. Its assumptions and attributes include scarcity, rational agents, perfect information, deterministic laws, exogenous impacts to equilibrium, and that single equilibrium points are ultimately achieved in competitive situations. Evolutionary economics arises from what can now be characterized as a systems science or complexity theory heritage. Its roots are in biological systems, evolutionary theory, social systems, and studies of human behavior and decision making. Classical or neoclassical economics both take a systemic view of economics where the system tends towards equilibrium. Changes to the system come from outside the system. The system readjusts to a new equilibrium resulting from the change. The dynamic of economic growth is considered a move toward equilibrium. Evolutionary and complexity economics makes the radical departure from classical and neoclassical economics in that the dynamic of growth is a continuous disequilibrating process where innovations continually disturb equilibrium states. This requires organizations to adapt or evolve in order to survive. Both evolutionary and complexity economics brings innovation into the economic system and its effect of keeping the system in disequilibrium rather than equilibrium. Evolutionary economics causality is both adaptionist/formative for the macro system, or an organization, and rationalist, with the innovator at the micro level. Complexity economics opens the door for transformative causality, which brings the innovator into the system itself. In transformative causality there is no distinction between the individual and the group. With transformative teleology, innovation no longer depends on the intuition of the entrepreneur, but results from micro-diversity of the ongoing interactions within the organization. Creative destruction -- Perhaps the most memorable challenge to neo-classical economics from an evolutionary perspective is Joseph Schumpeter's theory that macroeconomic equilibrium is a dynamic state, where value is perpetually created and simultaneously destroyed by entrepreneurs who introduce innovations into the economy. This creation of new technologies essentially destroys the value of the previously existing technologies. The common descriptive phrase for this is creative destruction. Evolutionary algorithm -- Evolutionary economics explains the constant change and the state of the results of change based on an evolutionary algorithm. This evolutionary process includes three key mechanisms - generation of variety, selection, and replication. Entrepreneurs provide variety. Decision makers, especially in the form of markets, provide for selection. The selected technologies thrive while the rejected technologies fail, as well as the companies wedded to rejected technologies. Selected technologies, those enabling survival and prosperity are then copied and imitated throughout the economic system. Knowledge -- Knowledge, or accumulated intelligence, is a key aspect of evolutionary economics. Knowledge in economics is analogous to DNA in biological evolution. In evolutionary economics ideas become actual phenomena. Actual phenomena, for example the processes of a business organization, become manifestations of ideas, which contain or embody knowledge. Fonseca on evolutionary economics (Fonseca, 2002, pp 14 - 16) -- A very different way of thinking about innovation is to be found in what has come to be called evolutionary economics, most notably in the work of Schumpeter (1934). He was interested in explaining why economic growth occurs, rather than simply ascribing it to an unexplained residual; his main contribution was to place innovation inside the economic system rather than considering it as an exogenous shock to which economic systems reacted. He argued that an economy could not be understood as an entity independent of society as a whole and that economic growth had to be explained in terms of the dynamics of scientific and technological innovation and the roles of entrepreneurs in organizations. For him, innovation was to be understood in terms of both social/organizational dynamics and individual psychology. Schumpeter distinguished between the entrepreneur who performed a role, and innovation, which was the outcome of entrepreneurial activity in organizations that possessed characteristics making it possible for individuals to take the role of entrepreneur. For him, the ""entrepreneur"" played a central role in the process of economic development. Several people could take this role and none would play it all the time. He therefore thought about economic growth in terms of dynamic processes, rather than in terms of the mechanisms that featured in neoclassical economics. Furthermore, Schumpeter addressed the issue of innovation within a systemic framework. An innovation could thus be a new output that the organization placed in its environment, a new input it received from the environment, or a new way of arranging its internal relations, including the psychological attributes of individuals. Schumpeter was also the first to address the issue of knowledge creation, knowledge transfer and knowledge use, as underlying the process of innovation. In fact this is a central tenet of his views, making of the process of knowledge creation, particularly when embodied into some technological artifact, an endogenous phenomenon of economic realities. Even though he understood innovation as a linear path from basic science to a commercial application of scientific knowledge, he did not restrict innovation to purely scientific ventures. His definition of innovation comprised all ways of doing things differently. Schumpeter's view of economic activity differs from that of neoclassical economics at a fundamental level to do with the nature of movement into the future and the purpose of such movement. As mentioned above, neoclassical economics is a way of thinking in terms of both Natural Law Teleology, in which innovation is ascribed to unexplained external shocks, which are adjusted to according to the laws of the market, and Rationalist Teleology, in which rationally calculating individuals choose how to operate on, or respond to, the external shocks. Schumpeter took a position based on Darwinian evolutionary theory and argued that the movement of an economy into the future was unpredictable because innovation made the future different from the past rather than just a repetition. For him, the dynamic of economic growth was not a move to equilibrium but a continuous disequilibrating process. Chance innovations continually disturbed equilibrium states requiring organizations and individuals to adapt in the present in order to survive. Stacey et al. (2000) have called this way of thinking Adaptionist Teleology. Movement here is toward an unknowable future driven by chance variation and competitive selection, in order to survive. As I have already said, Schumpeter also understood innovation in systemic terms when he talked about organizations having characteristics that made it possible for individuals to take up entrepreneurial roles. This implies that innovation is the unfolding of patterns of behaviour already enfolded in particular organizational dynamics. In the classification of ways of thinking about causality suggested by Stacey et al. (2000), this unfolding of enfolded pattern is typical of systems thinking and they have called it Formative Teleology. Here, movement of the phenomenon is the unfolding of what is already enfolded in it in order to realize a mature state of itself. A shift from neoclassical economics to evolutionary economics as a way of thinking about innovation therefore amounts to a shift from thinking about causality in terms of Natural Law Teleology to a way of thinking in terms of Adaptionist and/or Formative Teleology. In the former novelty and freedom are pure chance and in the latter there is neither novelty nor freedom. However, in his emphasis on the autonomous individual as entrepreneur, Schumpeter retained a place for thinking in terms of Rationalist Teleology. In other words, innovation was also caused by the choices autonomous individuals made about the goals of innovations and the actions required to bring them into being. He did not think about the autonomous individual as a rational calculator but rather as an intuitive, visionary entrepreneur. Schumpeter's thought, therefore, retains a dual theory of causality, namely, both Adaptionist/Formative Teleology of the macro system and the Rationalist Teleology of the individual innovator at the micro level. Once again there is the elimination of paradox, this time the paradox of innovation arising in the operation of competitive selection on chance changes, or innovation as the unfolding of enfolded conditions, and also the purposeful, deliberate choices of individuals. In the end, the origin of novelty lies in individual heads. Nelson and Winter (1982) (as described in Barney, 2001) -- Evolutionary economics has a long history in the field of economics. However, the most influential work in this area is undoubtedly Nelson and Winter (1982). Like all evolutionary theories, Nelson and Winter's theory examines the implications of three fundamental processes: variation, selection, and retention. Indeed, this is what makes Nelson and Winter's work evolutionary in character. In the Nelson and Winter framework, firms vary in the routines they have developed to conduct their business. In this sense, routines become the fundamental unit of analysis in Nelson and Winter's work. In the face of competition---Nelson and Winter's selection mechanism-some of these routines are revealed to be more efficient and effective than others. The least efficient and effective routines are either abandoned or changed or a firm is likely to not be able to survive in the long run. The most efficient and effective routines generate competitive advantages for firms. Unlike neo-classical microeconomics, this evolutionary theory does not apply equilibrium analysis. Instead, through the use of simulations and other methods, Nelson and Winter are able to demonstrate the conditions under which some routines will provide more sustainable competitive advantages than other routines. In this sense, the performance that a routine generates ensures its survival, and thus a routine within a firm is also the mechanism through which retention occurs.
evolutionary organization strategy frameworkSource: Burgelman, 2002. This is a conceptual framework for studying the role of strategy-making in Intel's evolution. It is made up of three different ""tools"" which form the perspectives of the evolutionary organization processes -- variation, selection, retention, and competition (see evolutionary organization theory) -- at three different levels of analysis as well as the interplay between the different levels. Tool I focuses on the big picture, providing a panoramic scene which contains everything related to the industry and company, but does not focus on the details. Tool II zooms in on the strategy-making process at the company-level, with its integrated induced and antonymous strategy process. Tool III looks at the internal corporate venturing associated with the autonomous process. Tool I: Dynamic forces driving company evolution -- This tool in the framework helps examine strategy-making at the industry-company interface level of analysis, and the coevolution of industry-level and company-level forces. This tool has five interrelated variables -- Basis of competitive advantage in the industry -- Most industries contain several viable positions that companies can occupy. External forces determine the basis of competition in each of these positions. Consistent with the traditional industry structural analysis, these forces encompass customers, competitors, suppliers, new entrants, and substitution. Other forces may be significant as well, especially in rapidly evolving industries. Non-market forces, such as the government, are also potentially important. Distinctive competencies of the firm -- Distinctive competencies concern the differentiated skills, complementary assets, and routines that a company possesses to meet the basis of competitive advantage in the industry. The form the basis of the capabilities that a company can deploy. Distinctive competencies are intrinsic to a company's identity and character. For instance, they very much determine the generic corporate strategy -- differentiation or cost leadership -- that a company will pursue.They are not easy to change. Deep competencies are also likely to be a well-spring of new opportunities. Official corporate strategy -- Official corporate strategy concerns top management's statements about the company's intended strategy. These remarks reflect top management's beliefs about the basis of the company's past and future success. Key beliefs concern product-market domain, the relative importance of different distinctive competencies for competitive advantage, core values that help determine what the company will and will not do, and financial and other objectives. These are the most important drivers of a company's strategy. Strategic action -- Strategic action is what the company actually does-the consequential actions that it engages in. Strategic action, position, and competencies mutually support each other. Strategic action without position has limited ability to be exercised and without distinctive competencies is powerless. Position without strategic action is unlikely to fully exploit advantage and without distinctive competencies is precarious, because most positional advantages erode and eventually vanish. Distinctive competencies without strategic action are aimless and without position cannot be fully leveraged. Through strategic action that links position and distinctive competencies in novel ways, a company can attempt to proactively change the basis of competitive advantage in the external selection environment. Often, of course, strategic action must react to the changing external selection environment. Strategic action in large companies is usually distributed over different levels of management and different, specialized groups. Internal selection environment -- In principle, there needs to be alignment between the basis of competition and distinctive competencies and between official strategy and strategic action, but in dynamic environments this alignment is likely to come under severe pressure. The internal selection environment plays a crucial role in helping the company find new ways to reestablish alignment between the dynamic forces. Tool II: Evolutionary Framework of the Strategy Making Process -- Tool II gives substance to the variation, selection, retention, and competition processes by conceptualizing strategy-making in terms of induced and autonomous processes. Induced and autonomous strategic action correspond to variation; the structural and strategic contexts correspond to internal selection; and the concept of corporate strategy corresponds to internal retention. Competition involves the internal struggle of different businesses for corporate resources and the external struggle for survival in the competitive environment. This framework consists of seven interrelated variables which ultimately manifest themselves in the concept of corporate strategy -- the official corporate strategy. Collectively these variables account for the autonomous strategy process and the induced strategy process. See these two processes for an in-depth description. The variables are as follows -- Familiar external environment -- the environment that is the focus of the official corporate strategy, both to adjust to it changes and to shape it to the firm's advantage. Concept of corporate strategy -- the official corporate strategy, shaped by and for the familiar external environment, and made by the combination of the structural context and strategic context. Structural context -- this context encompasses the organization structure, planning and control systems, and other administrative and cultural mechanism that top management uses to maintain the link between strategic action and the existing corporate strategy. This context is shaped by induced strategic action and the official corporate strategy. It also shapes the official corporate strategy and the strategic context for the autonomous strategy process. Induced strategic action -- action initiated by the operational and middle-level managers that fit with the concept of corporate strategy and leverage the organizational learning that it embodies. Emerging external environments -- these are the environments emerging that may become relevant to the company. Autonomous strategic action -- the initiatives of individuals outside the scope of the corporate strategy. Strategic context -- the strategic context for the autonomous initiatives serves to evaluate and select autonomous strategic actions outside the regular structural context. This context is shaped by and shapes the autonomous strategic action. It is shaped by the structure context. I shapes the concept of corporate strategy. The autonomous strategy process is variation increasing, produces a degree of instability, changes the identity of the company, and explores new opportunities. The induced strategy process carries out the strategic intent of the firm, seeks to reduce variation, produce stability, produce continuity, perpetuate the company's identity, and exploit. Related evolutionary ideas -- Emergent and deliberate strategy -- Induced and deliberate strategies are similar, but the induced strategy process provides more detail on what is involved in getting the organization to actually implement corporate strategy.21 The link with autonomous strategic initiatives, on the other hand, is more complicated. Autonomous initiatives involved in generating and developing a new business opportunity usually involve deliberate actions taken by leaders below top management. The deliberate actions taken by these leaders help develop new competencies and help create a new strategic position that may open up a new business opportunity for the corporation. Thus, a strategy that emerges at a high level of the corporation often has its roots in deliberate actions by leaders at lower levels in the corporation. Exploration and exploitation -- The autonomous strategy process dissects exploration into autonomous strategic initiatives and the process of strategic context determination. The latter serves to select viable autonomous initiatives and link them to the corporate strategy thereby amending it. The autonomous strategy process thus goes beyond exploration. It is also concerned with turning the results of exploration into new exploitation opportunities. Ambidextrous organizations -- Ambidextrous organizations are designed to handle both incremental and revolutionary change. The idea is closely related to the framework of induced and autonomous strategy processes. Yet there are two important differences: First, induced and autonomous initiatives do not necessarily map onto incremental and radical technological change. Change in the induced strategy process, while incremental, can be very large. For instance, developing a new microprocessor is incremental for Intel but involves hundreds of millions of dollars in development costs and billions in manufacturing investments. In the induced strategy process, incremental simply means change that is well understood-doing more of what the company knows how to do well. Change through the autonomous process, on the other hand, can be radical but is initially usually rather small. However, it always involves doing things that are not familiar to the company-doing what it is not sure it can do well. Second, change through the autonomous strategy process usually comes about fortuitously and unexpectedly. Initially senior and top management have no clear understanding of its strategic importance for the company and how it relates to the company's distinctive competencies. Resolving this indeterminacy is the most difficult challenge facing autonomous strategic initiatives. This highlights the importance of the strategic context determination process. Strategy-making and self-organization -- The theory of self-organization and of organizations as chaotic systems is a useful perspective in organization theory and strategic management. Self-organizing systems discover answers to their problems through experimentation. Because prediction is difficult in dynamic environments, the organization develops a catalog of responses and stimulates learning through experimentation. Similarly, ideas of deterministic chaos concern organizations that experience counteracting forces that produce nonlinear dynamics. Some forces push the organization toward stability and order; other forces push the system toward instability and disorder. Strategy-making as adaptive organizational capability balances variation-reduction (induced) and variation-increasing (autonomous) processes at any given time and over time. Punctuated equilibrium -- The punctuated equilibrium view of company evolution posits that organizations evolve through long periods of incremental change punctuated by discontinuous, frame-breaking change. While there are many examples of sudden radical changes, punctuated equilibrium views beg the question of where these sudden radical changes come from. Truly exogenous shocks such as large meteorites hitting the earth and destroying existing ecosystems are always a possibility but fortunately a remote one. Many radical changes-technological or otherwise-are the cumulative result of continuous small changes over a long period of time. Sometimes these changes originate in the company's autonomous strategy process and sometimes outside of the company altogether. Often they happen inside and outside simultaneously. Companies always want to spot such changes sooner rather than later. The introduction of intracompany variation, selection, retention, and competition processes to study strategy-making provides a tool for identifying the underlying-more continuous and finer grained-strategic leadership activities that eventually, through sheer accumulation, cause lumpy radical strategic change. Tool III: A process model of internal corporate venturing -- The process model of internal corporate venturing is a matrix-like framework that documents the simultaneous as well as sequential strategic leadership activities of different levels of management (the rows in the matrix) in the different levels of strategy-making (the columns). The model considers three generic levels of management: (1) venture team, (2) middle/senior management, and (3) corporate management. The model also considers two generic levels of strategy-making: (1) corporate-level strategy-making and (2) business-level strategy-making. Corporate-level strategy-making encompasses the determination of the structural and strategic contexts (overlaying processes). Business-level strategy-making encompasses definition and impetus (core processes). The process model documents the set of business-level strategy-making and the corporate-level strategy-making. The model is descriptive, not prescriptive. It serves as a diagnostic tool to better understand key problems that are encountered as well as generated by the organization's strategic leaders who are involved in entering a new business. Simultaneous conflicting forces at work in the framework -- There are two major opposing forces simultaneously at work in the process model. One force derives from the structural context part of the process. Creating the structural context is top management's responsibility; so the first force is to a large extent a top-down force. A second force derives from the definition part of the process. Definition revolves around initiatives driven by strategic leadership activities of operational and middle-level managers. The definition of new business entry usually, although not necessarily, originates at levels below top management. So, the second force is to a large extent a bottom-up force. Forces associated with impetus and strategic context integrate the top-down and bottom-up forces. Impetus is gained if operational-level champions are able to draw resources to their initiative and establish a beachhead in the market with their product or service. The strategic context for the new business initiative can be determined by middle/senior-level champions who convince top management to incorporate the new business into the corporate strategy and to put the full support of the company behind it. An important contribution of the process model is to clearly show that the bottoms- up and top-down forces are opposing forces, and that they are in play simultaneously. The process model provides a tool for representing the simultaneity. Tool III was particularly helpful to examine the strategic leadership activities involved in the development of Intel's chipset venture (chapter 7) and ProShare, Hood River, and networking ventures (chapter 9). Implications -- The tools of the evolutionary research lens helped answer specific research questions. Tool I helped explain why the basis of competition in Intel's core business and its distinctive competencies diverged over time and why the company's strategic actions diverged from its stated strategy. It also helped explain how Intel overcame these divergences and managed to adapt. Tool II helped explain how Intel's induced- and autonomous-strategy processes took shape over time and why strategy could lead to inertia. It also helped explain how autonomous initiatives were selected and retained in Intel's corporate strategy. Tool III helped explain how the activities of leaders situated in different positions in the organization combined in the autonomous process and where and why the process was likely to break down. This book addresses these and related questions, shedding additional light on how Intel attempted to control its destiny in an extremely dynamic environment. The analysis informs two important subjects of evolutionary organization theory- organizational ecology and organizational learning-as well as the practice of strategic leadership. Organization ecology -- The radical view. Organizational ecology emerged as a new theoretical approach in the mid-1970s. The key argument of the original formulation of the theory went as follows. Organizational change must be understood at the level of entire populations of similar organizations and as the result of replacement and selection rather than of adaptation. For instance, suppose one measured the average characteristics of companies in the semiconductor industry in 1960 and did so again in 1999. And suppose one found significant differences in average company characteristics. Organizational ecology would explain these changes in terms of incumbent companies exiting the industry (usually because of failure) and new companies (with different characteristics) entering the industry. Incumbent companies failed in the face of environmental change because organizational inertia prevents them from adapting. In short, organizational inertia causes companies to be selected against. The rates of founding and disbanding drive organizational change. The revised view. During the 1980s, the organizational ecology argument was subtly modified because the original formulation begged the question of why companies would be inert in the first place.28 The revised theory posited that companies need to develop routines and procedures that make their behavior reliable, predictable, and accountable to key constituencies, such as customers, suppliers, employees, and industry analysts. These attributes allow companies to overcome the liabilities of being new, give them legitimacy, and lead them to be selected by the environment over firms that are not reliable, predictable, and accountable. But these very attributes make it difficult for companies to change in major ways after they have been selected. Hence, the new argument was that environmental selection leads to organizational inertia. There is strong empirical evidence in support of this theory of organizational inertia. The study of Intel's exit from its original core business adds to that evidence. Newer views. New organizational ecology research continues to draw attention to important challenges that strategy-making faces. One such challenge concerns multibusiness companies, which often face pressures-inertial and/or political- to shield some of their businesses from the severity of competitive pressures that stand-alone businesses encounter. Multibusiness companies may thus be weakened overall unless their internal selection environment matches the competitive intensity of the external selection environment. Another challenge involves a potential tradeoff between competitive advantage based on position and competitive advantage based on distinctive competencies. Companies that rely on positional advantage shield themselves from competitive pressures and do not need to develop strong distinctive competencies to succeed. But this makes them vulnerable to new competitors using novel strategies to attack their position. On the other hand, companies that rely on distinctive competencies to compete with similar others may be able to hone these competencies and become best in class. But such distinctive competencies become highly specialized and make the companies vulnerable to new competitors deploying different competencies. Still another challenge faced especially by companies in opportunity-rich technological environments, even those with a well-functioning autonomous- strategy process, is that they will not be able to match the variation generated in their environment. Eventually, some variations may threaten the incumbent companies. As an example, witness the enormous variation spawned by the Internet in recent years, which no single established company could possibly match. To reduce this threat, established companies may have to complement the internal variation generated by their autonomous-strategy process with other approaches, such as corporate venture capital. An integrative view. This book integrates strategy-making and organizational ecology. The argument runs as follows. Almost all companies start small and are subject to liabilities of newness (they are unknown, untested, lacking legitimacy, and so on). The major force faced by small, new companies is environmental selection. Most do not survive external selection pressures. Organizational ecology provides a useful theoretical framework within which the evolutionary dynamics of small companies can be more clearly understood. Some companies, however, do survive and become large and established. Although large, established companies continue to remain subject to the selection force of the external environment-and many succumb to it in the long run-these companies have gained the opportunity to substitute internal for external selection. Analogous to external selection, internal selection is concerned with a company's entering new businesses and exiting from failing ones over time. Organization learning -- Indeterminacy. Adopting an evolutionary perspective implies that outcomes are viewed as indeterminate and can be explained only after the fact. As one evolutionary scholar put it, ""We can say that some outcome has occurred because of some prior sequence of events, even though we could not have foreseen, prior to the fact, that particular sequence unfolding.""32 This seems almost the exact antipode of the traditional view of strategy, which is to determine in advance the ensemble of strategic actions that will achieve desired outcomes. There is no conflict, however, with the perspective adopted in this book, which views strategy-making in established companies as a dynamic organizational learning process. Learning in the induced process. The induced-strategy process, which is concerned primarily with exploiting existing business opportunities, deliberately drives strategic action in a more or less foreseeable pattern toward desired outcomes. Induced strategic action commits a company to a course of action that is difficult to reverse. Thorough preparation prior to deciding on such a course of action is important. Equally important is the work that comes afterward, because top management is keen to understand why strategic actions produce the results that the company obtains. Such understanding provides a basis for taking further strategic actions. Sometimes this work involves abandoning a course of action, for instance, exiting from a losing business. Learning in the autonomous process. The autonomous-strategy process, which is concerned with exploring new business opportunities, involves somewhat more complex organizational learning. Here, strategic action at higher levels in the management hierarchy benefits from interpretation of the outcomes of strategic action at lower levels. The effectiveness of the process depends on correct. of results at each level. The learning at a lower level becomes the stepping-stone for more-encompassing strategic action at the next managerial level. Need for balance -- Strategy making as an adaptive organization capability involves keeping both the induced and autonomous processes in play simultaneously at all times, even though one process or the other may be more prominent at different times in the company's evolution. Risks to manage -- exploration consuming the firm's exploitive capacity and capability exploitation crowding out explorative capacity and capability autonomous strategic action that posses a threat to the current strategy, such as disruptive technologies autonomous initiatives having a dissipative effect on the corporate resources and distinctive competencies autonomous strategic initiatives may undermine the existing competitive position of a company without providing an equally secure new position
evolutionary organization theoryStrategy-making and evolutionary organization theory -- (Source: Burgelman, 2002, p 6-7). Evolutionary organization theory uses four generic processes -- variation, selection, retention, and competition -- to explain how organizations emerge and evolve. Dissecting strategy-making in terms of these key processes serves two purposes: First, it facilitates integrating strategy-making as adaptive organizational capability into evolutionary theory. Second, it illuminates facets of strategy-making that other theoretical perspectives do not contemplate. Each company is an ecology within which strategic initiatives emerge in patterned ways. Top management drives most initiatives but leaders throughout the organization also drive initiatives. These initiatives compete for limited organizational resources to increase their relative importance. Variation comes about as individuals (or small groups) seek expression of their special skills and career advancement through different strategic initiatives. These initiatives draw on existing and/or new competencies and routines and take shape if they are able to draw the company's resources to their development. Selection works through administrative and cultural mechanisms that regulate the allocation of resources and attention to different strategic initiatives. Retention concerns the initiatives that survive in the external environment and grow to become important within the company. It also takes the form of organizational-level learning about the factors that account for the company's success. Internal competition arises from different strategic initiatives struggling to obtain resources necessary to grow and increase in importance in the company. Internal competition between strategic initiatives can be more or less tightly linked to the external competition that these initiatives encounter. Strategy-making framework in line with the evolutionary organization theory -- Strategy-making that is in line with the evolutionary organization theory addresses the need to both replicate and transform the company, tailoring the approach to the strategic dynamics encountered by the company. The frameworks employed are described in evolutionary organization strategy framework, which describes the three tools involved. Tool I serves as a lens into the dynamic forces driving firm evolution, Tool II is an evolutionary framework of the strategy-making process in established firms which integrates an autonomous strategy process and induced strategy process, and Tool III is a process model of internal corporate venturing.
existentialismExistential philosophy stresses the importance and robustness of individual choice. See authenticity for Ogilvy's (2003) existential philosophy view of strategy authenticity.
experiencesExperiences are a type of economic offering. Experiences are staged for guests. Experiences are produced for a guest from services, goods, and commodities. Experiential offerings are inherently personal, occurring only within the individual buyer. They are also intangible and of higher value than services and goods. Given that all businesses implicitly or explicitly provide customers with an experience leads to the statement -- ""Work is theatre"" (Pine, 1999).
explicit choiceExplicit choices are found in calculated decisions about alternative investments and competitive strategies. The factors entering into the decision are stated clearly and precisely. This leaves no room for confusion, doubt, or misunderstanding as to what the basis for the choice and how the choice was arrived at.
explicit knowledgeExplicit knowledge is where the elements making up the knowledge are stated clearly and precisely. This knowledge is associated with the analytical left side of the brain.
exploitationExploitation refers to learning and knowledge development intended to increase organizational performance through the exploitation of old certainties. Exploitation can be thought of as the refinement of an existing technology. ""The essence of exploitation is the refinement and extension of existing competencies, technologies, and paradigms. Its returns are positive, proximate, and predictable."" (March, 1991, p. 85) Management considerations -- See exploration for a discussion of exploitation vs. exploration. Primary Source: March, James G. (1991), Exploration and Exploitation in Organizational Learning, Organizational Science, Vol. 2, No. 1, February 1991
explorationExploration refers to learning and knowledge development intended to increase organizational performance through the exploration of new possibilities. Exploration can be though of as the invention or discovery of a new technology. ""The essence of exploration is experimentation and new alternatives. Its returns are uncertain, distant, and often negative.""(March, 1991, p. 85) Exploration vs. exploitation -- Organizations that engage in exploration to the exclusion of exploitation are likely to find that they suffer the costs of experimentation without gaining any of its benefits. They exhibit too many undeveloped new ideas and too little distinctive competence. Conversely, organizations that engage in exploitation to the exclusion of exploration are likely to find themselves trapped in suboptimal equilibria. As a result, maintaining an appropriate balance between exploration and exploitation is a primary factor in system survival and prosperity. Both exploration and exploitation are essential for organizations. They both compete for scarce resources. Therefore organizations must choose effectively between them. Organizations make explicit and implicit choices between exploration and exploitation. Investment return factors for exploration and exploitation -- The returns each vary by -- their expected values their variability their timing their distribution within the organization and beyond the organization Exploration is characterized by terms such as search, variation, risk taking, experimentation, play, flexibility, discovery, and innovation. Exploitation is characterized by terms such as refinement, choice, production, efficiency, selection, implementation, and execution. Contextual implications -- What is good in the long run is not always good in the short run What is good at a particular historical moment is not always good at another time What is good for one part of an organization is not always good for another part What is good for an organization is not always good for a larger system of which it is part Exploitation bias - the potentially self-destructive tendency -- The reduced proximate expected value, the uncertainty, the longer lead-time, and the potential to disrupt or need to transform the existing organization or value chain produces a tendency to readily accept exploitive investments and pass up exploration. The immediate return to exploitation is nearly always greater, less risky, and less costly than the pursuit of exploration activities. Compared to returns from exploitation, returns from exploration are - systematically less certain, more remote in time, and organizationally more distant from the locus of action and adaptation. The certainty, speed, proximity, and clarity of feedback ties exploitation to its consequences more quickly and more precisely than is the case with exploration. Basic research has less certain outcomes, longer time horizons, and more diffuse effects than product development. The search for new ideas, markets, or relations has -- less certain outcomes, longer time horizons, and more diffuse effects -- than does further development of existing ones. Exploitation is more tangible and measurable - the effects of exploitation vs. exploration are Temporally more proximate Spatially more proximate More precise More interconnected with the organization and the members of the existing value system Reason inhibits foolishness. Learning (single loop learning) and imitation inhibit experimentation (double loop learning with curiosity). Primary Source: March, James G. (1991), Exploration and Exploitation in Organizational Learning, Organizational Science, Vol. 2, No. 1, February 1991 Multiple Dimensions of Exploration and Exploitation -- Primary Source: Sidhu, 2007 Search strategies and context are intertwined. Variations in the combination of context and search patterns bring about different results, with some searches being more productive than others depending on the context. Searches can be considered to be both exploratory, being non-local or outside the organization, or exploitative, being local or inside the organization. Both are required for firm survival, with exploitation providing for current competitive advantage while exploration seeks to lay the foundation for future competitive advantage. definitionsnew of exploration and exploitation -- Exploitation includes such things such as ""refinement, choice, production, efficiency, selection, implementation, and execution"" (March 1991, p. 71). Exploration, includes - ""things captured by terms such as search, variation, risk taking, experimentation, play, flexibility, discover, innovation"" (March 1991, p. 71). ""innovation, basic research, invention, risk taking, building new capabilities, and investments in the firm's absorptive capacity. ""pursuit of new knowledge, of things that might come to be known"" (Rothaermel, 2001, p. 689) Exploration-exploitation and Search -- Evolutionary economics provides a more precise approach to describing exploration-exploitation based on the notion of search. The operationalization of exploration-exploitation is specifically in terms of nonlocal and local information- or knowledge-search behavior to discover fresh approaches to technologies, products, and businesses; pursue new knowledge; and experiment with new alternatives. Exploitive search - searches that are exploitive or local imply that search efforts are relatively closely restricted around the domain of extant (existing) knowledge and competencies, or local search. Explorative search - searches that are explorative or nonlocal extend into adjoining domains - it may cover technologies used in the industry but not within the organization, it may envelop rivals' marketing strategies, or it may span developments in the whole geographic market in which the firm is active Search types -- searches can be classified as three types, with those types revealing differences in search fruitfulness and effectiveness based on context of the technological surroundings - supply-side search - firms are likely to search in the vicinity of current technological capabilities, a supply-side aspect vital to a firm's ability to create new offerings. demand-side (market) search - this search is often motivated by the potential discovery of innovation opportunities through such things as brand extension, product repositioning, and targeting of new customer groups based on an improved understanding of the customer need being served, market preferences, and product use and substitution patterns. spatial (geographic) search - this is the search for opportunities in different geographic regions. Even if a firm does not actually expand geographically, is may still engage in boundary-spanning search to gain access to external production and marketing knowledge. Exploration-Exploitation and Innovation -- Innovation is an outcome of exploration. Exploration increases organizational variety and generates new knowledge -- the precursors of innovation. See innovation. Strategic Implications - Environment Moderates the Exploration-Exploitation and Innovation Relation -- Firm's do not search in a vacuum. They search within the context of a specific technological phase that carries implications with regard not only to the level of environmental dynamism, but also to innovative opportunities and the kind of new knowledge that can help firms take advantage of those opportunities. Greater nonlocal supply-side search is positively associated with innovativeness under more-dynamic conditions characteristic of the entrepreneurial regime phase and is negatively associated with innovativeness in less-dynamic environments typical of the routinized regime phase. The opposite is true for nonlocal demand-side searches. Spatial search has a positive effect on innovativeness regardless of dynamism levels. Effective management of search is vital to an organizations existence. Search choices influence innovativeness and hence the ability to adapt. The management of search goes beyond finding the right balance of exploitation to appropriate returns from yesterday's explorations and exploration to create tomorrow's revenue flows. Three types of search, supply-side, demand-side, and spatial need to be addressed. The effectiveness of these three search types varies by the dynamic context of the firm. Firm's that understand the dynamics of these relationships have a competitive advantage. More-dynamic environments -- where basic product and process technologies are in a state of ferment and there are plenty of unexploited opportunities (Dosi 1998, Sahal 1985). This is the case in the early dynamic stages of a technological paradigm. This is sometimes called the entrepreneurial regime phase. In this context - supply-side search -- more nonlocal supply-side search promotes innovativeness searching in external technological, production, and other supply-side domains can provide new knowledge elements that foster product and process innovation by increasing variation in the problem-solving repertoire and raising chances of finding valuable new combinations. when a large number of product variants coexist, firms experiment with many different unfamiliar technologies in a bid to synthesize these into creative new successful designs. demand-side search -- greater amounts of non-local demand-side search have a negative impact on innovativeness. greater demand-side search should be of less value to successful innovation, and may indeed harm it. Typically, at higher dynamism levels uncertainty exists about technological possibilities and the path of further technological evolution, the market is ill defined, and customers do not have well crystallized needs and preferences. Under these conditions, the demand-side is unlikely to be the best source of innovative insights. while boundary-spanning demand-side search can be expected to absorb resources in a changing context, it is unlikely to endow firms with new knowledge elements that result in successful innovations. Indeed, in an environment of technical change, Christensen and Bower's (1996) analysis ascribes the failure of previously successful firms to an excessive demand-side orientation, which - because managers believe in the continued demand for products that meet needs their customers can specify in the context of current technical possibilities - induces investments in projects emphasizing traditional technical approaches. spatial search -- greater geographic search should have a positive effect on innovativeness at higher as well as lower levels of dynamism. Boundary-spanning spatial search can contribute useful new knowledge elements both when the environment is technologically stable, or when it is changing. In dynamic contexts specifically, greater nonlocal spatial search can expand the knowledge set by exposing organizations to innovative efforts, technical insights, and problem solving procedures that are new to the firm and may, hence, provide a competitive advantage relative to competitors whose search efforts are more localized. Less-dynamic environments -- where basic product and process technologies in use have survived the onset of a technology paradigm. This is the case in the later dynamic stages of a technological paradigm. This is sometimes called the routinized regime phase. In this context - supply-side search -- a great deal of nonlocal supply-side search may affect innovativeness negatively. the odds of a promising innovation through external knowledge are now reduced, because what has potentially could be discovered through nonlocal search has probably been discovered in the initial search period when technology went through the first more-dynamic evolutionary stages. While further boundary-spanning supply-side search may not deliver useful new knowledge, it would certainly entail knowledge acquisition and integration costs. Because knowledge integration problems are more complex if knowledge scope is wider, extensive supply-side search can harm the ability to develop successful new products because the knowledge-acquisition and integration difficulties and costs outstrip the benefits from nonlocal supply-side knowledge. local search gains in importance due to experience effects derived from applying more proximate or familiar knowledge to attain successful incremental modifications and refinements that build on established competencies. demand-side search -- greater amounts of non-local demand-side search have a positive impact on innovativeness. demand-side search that spans market niches occupied by rivals, changes in customer preferences, new sets of potential customers, other ways to satisfy customer needs, value-chain activities of customers, and so on is likely to sharpen awareness and knowledge about the needs and preferences of current as well as potential customers, provide insight into customer product-use and substitution patterns, and give exposure to new-to-the-firm, customer-driven solutions to issues associated with the product offering. In less-dynamic environments this should engender innovativeness b improving ability to refine, adjust, or recombine product offerings in ways that enable provision of greater value to customers by meeting their needs better or by being able to satisfy new customer segments. spatial search -- greater geographic search should have a positive effect on innovativeness at higher as well as lower levels of dynamism. Boundary-spanning spatial search can contribute useful new knowledge elements both when the environment is technologically stable, or when it is changing. Comprehensive search in the firm's own and foreign geographic regions, cross-border sales experimentation, maintaining a presence in multiple regions, and so on as vehicles of spatial search - can foster innovativeness in less-dynamic contexts as well as dynamic contexts.
extensive boundarySee boundary.
externalityAn externality exists when a person's actions affect others' welfare and the first party does not have an incentive to recognize this impact in decision-making, to that he or she does not account for all the costs and benefits in selecting actions. Because of this, externalities lead to inefficiencies. (Roberts, 2004, p 80)
feedback loopFeedback loops describe the cause and effect relationships between the parts of a system. Feedback loops are fundamental to systems. Without feedback loops, there is no system, no matter how many parts there are. A group of parts without cause and effect relationships between them is simply a ""heap of parts."" Basic types of feedback loop --Source: O'Connor, 1997 Reinforcing feedback -- is when changes in elements of the system are fed back and result in an amplification of the change. The effect reinforces the cause. Reinforcing feedback causes the system to accelerate faster from its initial starting condition. A system will not accelerate faster indefinitely. Ultimately, balancing feedback will occur. Balancing feedback -- is when changes in elements of the system are fed back opposing the original change result in a dampening effect. The effect opposes the cause. Balancing feedback causes the system to stabilize around its initial starting condition. Reinforcing and balancing are the only two types of feedback loops systems have. Feedforward -- is a special case of feedback that comes from our ability to anticipate the future. Fundamentally, it describes the effect of people's anticipations about the future creating the future they anticipate. The result of this effect is commonly called self-fulfilling prophecies. Management implications of feedforward -- An organization, being a complex adaptive system, responds to feedback. Feedforward, a special case of feedback, is just as powerful as any other feedback. The organization will have a powerful tendency to create the future it anticipates. ""Thus the future reaches backwards to affect the present"" (O'Connor, 1997). Therefore, the vision, mission, and strategy set forth and clearly communicated by organization leaders becomes a critical factor in the future the organization makes for itself.
feedback-based adaptive technologiesFeedback-based adaptation technologies (March, 2007) -- These technologies less structured and not as explicitly defined and implemented, but no less common than rational technologies in use in business enterprises. Contemporary theories that emphasize feedback include theories of: experiential learning learning from others (diffusion, imitation) variation/selection These theories of feedback-based change over time posit that procedures or attributes associated with successes are more likely to survive or replicate at a more rapid rate than procedures or attributes associated with failures. The central requirements of adaptive processes are: a reproductive process that replicates successes where the attributes associated with survival are reproduced more reliably than the attributes that are not. that it generate variety that offer opportunities to experiment with new possibilities In order to meet these two requirements, adaptive processes engage in activities associated with exploitation - the refinement and implementation of what is known - and exploration - the pursuit of what might come to be known. The character of adaptation is local, contributing to the firm's survival in the short-run but rarely in the long-run. Feedback-based adaptation favors exploitation over exploration, biasing it against risky alternatives. A bias against risk is a bias against exploration.
feedforwardSee feedback loop.
feelingsFeelings and communicative actions in the medium of feelings are always part of any human interaction. (Stacey, 2001, pp 118) Communication is a bodily activity. The systems of the body -- the mind, vascular, endocrine, digestive -- are all engaged in rhythms of bodily energy. These temporal bodily dynamics mesh into a symphony of rhythms having particular time contours marked by beat, duration, and variations constituting what Stern(1985, 1995) calls vitality affects, and Damasio (1994, 1999) calls background feelings. In other words, feelings are rhythmic variations of the body, its spatial and temporal dynamics. While all humans share these physiological characteristics in general, each individual seems to have their own unique pattern of bodily time contours. These unique time contours constitute a person's feelings as unique experiences of self, or identity. A bodily sense of self, an identity, is actualized through the way in which others respond to that person's unique bodily time contours and the way in which such responses are experienced. Stacey, 2001, pp 102-103
fifth disciplineThe term fifth discipline comes from Peter Senge's book The Fifth Discipline, (1990), where he describes the five disciplines of a learning organization. The five disciplines are (Senge, 1990, pp 6-10) -- building shared vision -- a picture, figuratively, of a desirable future identity, that fosters genuine commitment and enrollment when it is ""unearthed"" and built by group members, rather than being given to a group to comply with mental models -- an individual's view of reality stored in their mind, often deeply ingrained assumptions and generalizations, often at the subconscious level team learning -- effective team learning comes about when there is effective dialogue between the members, ultimately resulting in the intelligence of the team exceeding the intelligence of the individuals and individual development personal mastery -- the discipline of continually clarifying and deepening our personal vision, of focusing our energies, of developing patience, and of seeing reality objectively systems thinking -- the discipline, the fifth one, that pulls the other three together to produce a learning organization. Systems thinking is a conceptual framework, a body of knowledge and tools to make patterns clearer, and to help us see how to change them effectively (pp 7)
figure-ground'Figure-ground' refers to the ability to separate elements of a scene or picture based on contrast. In the case where one object's color or shade is considered the foreground, it is difficult to see the other shade as anything but background. A paradoxical image of two contrasting shades fit together into one image demonstrates how difficult it can be to perceive both images simultaneously. This can be a demonstration of the difficulty of dealing with paradox. A figure is a unitary percept having structure and coherence that is the object of attention and that stands out against a ground. ""The individual perceives the environment as a total unit; he/she responds to the whole of what is seen and this whole is composed of the stimuli of which the person is aware or to which he/she attends, the ""spontaneous concentration"" of contact (the figure) and those of which the person is not aware or does not attend (the ground). The figure/ground process is perceptual and changes momentarily. For example, the classic Gestalt perceptual picture of the old and young woman, two persons can be perceived, an old woman and a young woman. When the old woman is figural all the rest of the picture is ground; when the young woman is figural the old woman disappears into the ground."" See Figure & Ground
final causeThe end or purpose for which a thing is done or produced. This is the ultimate cause -- the source of change, or becoming -- of Aristotle's four causes: final, material, formal, and efficient. The other three causes are subordinate to the final cause.
firmA firm is ""the system of specialized relationships which comes into existence when the direction of resources is dependent on an entrepreneur"" rather than on the price mechanism (Coase, 1937, p 393).
firm theory ofCoase's theory of the firm (Coase, 1937) -- Coase examined the question of why business organizations exist in a specialized exchange economy in which the distribution of resources is ""organized"" by the price mechanism He theorized that the reasons business organizations form, as opposed to a network of freelance contractors, is to minimize transaction costs. A firm consists of a system of relationships where the direction of resources is dependent upon an entrepreneur. Outside the firm production is coordinated through a series of exchange transactions in the market. Inside the firm, these complicated market transactions are eliminated, and instead the entrepreneur-coordinator directs production. The firm eliminates at least two costs it would have using the price mechanism to ""organize"" production: (1) discovering what relevant prices are, and (2) the costs of negotiating and concluding a separate contract for each exchange transaction At the margin, the costs of organizing within the firm will be equal either to the costs of organizing in another firm or to the costs involved in leaving the transaction to be ""organized"" by the price mechanism. Penrose's definition of the firm -- Economic function and definition of the firm (Penrose, 1995, xi) -- The economic function of the firm was assumed simply to be that of acquiring and organizing human and other resources in order to profitably supply goods and services to the market. A collection of resources bound together in an administrative framework, the boundaries of which are determined by the 'area of administrative coordination' and 'authoritative' communication. Environment of the firm (Penrose, 1995, xiii) -- The relevant environment is the set of opportunities for investment and growth that the entrepreneurs and managers perceive is different for every firm and depends on its specific collection of human and other resources. Moreover, the environment is not something 'out there', fixed and immutable, but can itself be manipulated by the firm to serve its own purposes. Growth of the firm (Penrose, 1995, xii-xiii) -- Managerial resources with experience within the firm are necessary for the efficient absorption of managers from outside the firm. The availability of 'inherited managers' with such experience limits the amount of expansion that can be planned or undertaken in any period of time. Once expansion is completed, managerial resources are freed up for further expansion. The factor of managerial resources may limit the growth rate, but do not limit the theoretical overall size of the firm. There is no reason why a firm should see its prospects of growth, its productive opportunities, in terms of its existing products only, while there are many reasons why it should see them in terms of its productive resources and its knowledge and should search for opportunities for using its resources and knowledge more efficiently. This process will drive the diversification of the firm as it searches for growth. Evolution of the firm (Penrose, 1995, xiii-xiv) -- One of the primary assumptions of the theory of growth of firms is that 'history matters'; growth is essentially an evolutionary process and based on the cumulative growth of collective knowledge, in the context of a purposive firm. The administrative structure of the firm provides an equilibrium structure of theory and policy within which individual knowledge can evolve without threatening organizational coherence; but that equilibrium itself is the consequence of an evolutionary process during which managers learn to operate effectively together within a particular environment. It is the evolutionary process which generates the growth of managerial services, or reduces governance costs, shaping the content and scope of those services. Evolution and the theory for a firm (Penrose, 1995, xiii-xiv) -- Knowledge grows within a framework consisting of a managerial administrative 'theory and policy' acting as a sort of research programme, itself representing a kind of temporary evolutionary equilibrium of the firm having little to do with the equilibrium of the economy as whole. Rumelt's strategic theory of the firm (Rumelt, 1981) ""By viewing strategy as entrepreneurship that both depends upon and creates interfirm heterogeneity, I have generated a number of propositions concerning the behavior of populations of firms. I have also drawn implications for normative theory."" (Rummelt, 1981, 570) Rumelt has a Schumpeterian view of business economics. He empirically identifies those aspects of general management that have material effects on the survival and success of business enterprises based on field studies of business firms and the historical analysis of the evolution of business enterprises. With his theory of uncertain imitability and causal ambiguity, he finds entrepreneurship generates firm heterogeneity as an outcome rather than as a given. There are several implications of this. One is related to the size of the firm, as entrepreneurs seek to enter and create new markets, rather than diversifying to reduce the risk of bankruptcy. (Korn - firms that play to win win-out over firms that play to not lose).
firm valuationSee enterprise value.
first order learningSee single loop learning.
first principlesIn philosophy, first principles are a set of basic, foundational propositions or assumptions that cannot be deduced from any other proposition or assumption. In a formal logical system, that is, a set of propositions that are consistent with one another, it is probable that some of the statements can be deduced from one another. For example, in the syllogism, ""All men are mortal; Socrates is a man; Socrates is mortal"" the last claim can be deduced from the former two. A first principle is one that cannot be deduced from any other. The classic example is that of Euclid's (see Euclid's Elements) geometry; its hundreds of propositions can be deduced from a set of definitionsnew, postulates, and common notions: all three of which constitute ""First Principles"". Wikipedia contributors, ""First principles,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=First_principles&oldid=96613862 (accessed January 31, 2007).
fit and positionMichael Porter's description for what is at the core of a successful strategy, where strategy is creating fit among company activities. Elements of fit and position -- Strategic positions should have a horizon of a decade or more Continuity fosters improvements in individual activities and fit across activities... ...this allows an organization to build unique capabilities and skills tailored to its strategy Continuity reinforces identity Source: Porter, 1996
formSee organizational forms for the organizational demographics perspective on form. ""Forms"" and ""architectures""-- clarifying the terminology (Carroll & Hannan, 2000, 64-65) -- The organizational demographics perspective used to define organizational populations for study defines form in a very specific way. It is important to distinguish this usage from other terms which may be, but should not, be used as synonyms for the term ""form."" M-form, etc. -- the selection-favored perspective referring to a conglomerate of features, such as the M-form (multidivisional) that is a successful form of organization. Most discussions about new forms of organization imply a certain degree of organizational fitness. organizational architecture -- the organizational architecture perspective. Architectures and forms in Carroll & Hannan's sense are quite different. Forms, or organizational forms, are related to organizational identity, where identity is defined in terms of social codes (comprised of sets of social rules and signals) that specify the features that an organization can legitimately possess. Architectures rarely matter decisively for identity in two senses. First, architectures vary considerably with forms. For instance, M-form organizations can be found in many populations of differing forms (i.e. identities). Second, organizations routinely change their architectures without changing their identities. It is imperative to distinguish architecture and form. inertia theory -- a third usage of form differentiates between possible local adaptation steps and deep structural changes. According to inertia theory changing a core feature exposes the an organization to great risk of mortality, but change in peripheral features does not increase mortality chances and might indeed reduce them. According to this theory, the core features are those that regulate membership in a form. Gravity of organizational change -- The form concept helps to explain why changing form is more difficult and precarious than other kinds of organizational changes.
formal causeSource: Wikipedia contributors, ""Formal Cause,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Formal_Cause&oldid=80613532 (accessed November 27, 2006). The Formal Cause is a concept used by Aristotle, and originates from the idea of the form by Plato and Socrates. The formal cause according to which a statue is made is the idea existing in the first place as exemplar in the mind of the sculptor, and in the second place as intrinsic, determining cause, embodied in the matter. Formal cause could only refer to the essential quality of causation. A deeper contemplation reveals a formal cause as the ever existing truth of capacity. Thus, the capacity of the human genome to accompany the existence of a human being presumes that the capacity to be a human being pre-exists the human being. That pre-existence consists of the essential capacity of the specific genome to co-exist with the human in a very significant and specific way. The dog genome does not cause a human though elements of dog genome may coexist with the human genome. A more simple example of the formal cause is the blueprint or plan that one has before making or causing a human made object to exist. Plato would say that a perfect circle exists, or the form of a perfect circle exists and that all other circles are an imperfect copy of the formal cause.
formative causalitySee causality.
frame-breaking approachIn order to achieve 'dynamic capabilities' an organization must go beyond routines. The notion of innovation routines, based on the nature of routines, by definition are a capability trap. Something besides a routine must be employed to detect the type of events, surprises and discontinuities, which if not responded to threaten the existence of the organization.
frame-breaking routine'Frame-breaking routine' is an oxymoron. See routine and frame-breaking approach.
frameworkMental constructs, conceptual frameworks, etc. are a necessary tool....scaffolding for us to build our understanding and gain new knowledge. For example, Descartes' separation of body and mind still haunts the science of Man, and questions whether such as science is possible. Darwin's theory of evolution makes human beings an integral part of the natural world and suggests a way of resolving the Cartesian conundrum: the human mind is as much a part of the natural world as is the human body. (Malik, 2000, pp 27). Introduction to Frameworks -- Frameworks shape our thinking. A perception, emotion, belief, or action may seem natural, not because it is rooted in our biology, but because we live in a particular epistemological framework that fashions our very way of thinking and we cannot imagine it to be otherwise. We should be wary of mistaking an epistemological framework (which shows how we know things) for an ontological framework (which determines how things are). (Malik, 2000, pp 45). Epistemology is the branch of philosophy that studies the nature of knowledge and belief, its presuppositions and foundations, and its extent and validity. Ontology is part of the metaphysics branch of philosophy that deals with the nature of being. Within metaphysics, ontology is the investigation into what categories of things are in the world and what relations these things bear to one another, a systematic account of Existence. An explicit formal specification of how to represent the objects, concepts and other entities that are assumed to exist in some area of interest and the relationships that holds among them. The hierarchical structuring of knowledge about things by subcategorising them according to their essential (or at least relevant and/or cognitive) qualities. Pervasiveness of frameworks - Human observers do not simply perceive the world as it is but impose an intuitive structure. For example, the human observer imposes concepts of time and space on things, though time and space are not intrinsic properties of the world but were created in the mind of the human observer. Kant's view is that phenomena are interpretations of things as they are perceived by humans observers, as opposed to their true existence. Empirical knowledge both conveys information that shapes perceptions and the perceptions shape the understanding of the information received to understand the phenomenon. Human reason -- is the source of the intuitive structures imposed on the world. Frameworks, a two edged sword -- frameworks are essential to building up knowledge in a field of study. Without the themes, patterns, and structure of a framework, data would overwhelm us and would not be organized into usable information. At the same time, frameworks serve as a filter to exclude some information while shaping the interpretation of other information. Thus is a framework is wrong, evidence in conflict with the framework is either not perceived or is bent to fit, however uncomfortably, into the wrong framework. Therefore it is important to understand the framework one is applying, in order to know its effect as a lens upon your interpretation of phenomena. Also, one must be on their guard to either update or replace their framework when it no longer effectively serves their purpose or no longer can be viewed as reflecting reality. Management implications -- Frameworks have varying scopes and purposes, thus implications. For example, the worldview framework has a very broad scope and a profound influence on frameworks within its scope, whether those frameworks are scientific, spiritual, or management oriented. Management programs are often based on suspect frameworks. For example, the notion of command and control as a management program base on the belief system, or framework, that the best way to manage an organization is to have the many align their behaviors to the few. Knowledge management has its basis in the belief in mental models from cognitive psychology, which are not proven to exist, and have evidence that they do not exist, yet this belief brings management to commit millions upon millions of dollars to managing knowledge.   Criteria for Effective Frameworks -- Frameworks are essential to building up knowledge in a field of study. Without the themes, patterns, and structure of a framework, data would overwhelm us and would not be organized into usable information. At the same time, frameworks serve as a filter to exclude some information while shaping the interpretation of other information. Thus is a framework is wrong, evidence in conflict with the framework is either not perceived or is bent to fit, however uncomfortably, into the wrong framework. Therefore it is important to understand the framework one is applying, in order to know its effect as a lens upon your interpretation of phenomena. Also, one must be on their guard to either update or replace their framework when it no longer effectively serves their purpose or no longer can be viewed as reflecting reality. Frameworks identify the relevant variables and the questions which the user must answer in order to develop conclusions tailored to a particular industry and company. In this sense, frameworks can be seen almost as expert systems. The theory embodied in frameworks is contained in the choice of included variables, the way variables are organized, the interactions among the variables, and the way in which alternative patterns of variables and company choices affect outcomes. A worthy framework is ultimately a beneficial technology - the effective application of human knowledge to work. Does the framework advance knowledge --knowledge applied to work -- work performance, and enable the production of greater value? First, there is the test of integrity and honesty. Is the framework logically complete, logically sound, and intellectually honest? Does it fully encompass the phenomena at hand? Is it both logical and complete enough to eliminate the professorial ""hand waving"" when explaining how the parts relate to one another or any aspect of the framework to the real world? Second, the test of the worthiness of this new framework is - does it take our understanding of the phenomena dramatically forward? Does it serve as a catalyst to divining new possibilities in regard to the phenomena? Is it cool? Does it attract attention? Is it salable on this basis. Picture a person newly introduced to the framework explaining to an uninitiated colleague - what does this scene look like? Does it help people to make sense of what they already know? Can you reframe, classify, or help make sense of ideas, authors, dominant discourse, etc. with the framework? Use familiar terminology wherever possible to in order to provide familiar mental links. If possible, avoid developing a new set of terminology. It is hard for people to learn a new ""language"" and to be continually translating it to terms and ideas they understand already. Only develop/introduce new terminology when absolutely necessary? Does the framework put everything in a box. Make it clear what is inside and outside the framework. Make sure it stands on its own. Don't have ambiguous linkages or require the understanding of assumptions from outside the framework. Does it inspire? Besides being cool, easily grasped, complete, worthy, etc., does it cause the receiver of the framework want to learn more about it and begin applying it in their pursuits? Finally, is it pragmatic? Does one who applies the framework find it makes them better at what they do? Can they go farther, faster, etc.? Can it be practicably applied, such as to produce higher value economic offerings. If the new framework does all these things, it makes the exercise of ""terminology adjustment"" worthwhile. A framework that meets these criteria a beneficial technology. Comparative application of theory, frameworks, and practice in strategy (generalized from Burgelman, 2002, p 7-8) --Frameworks, or conceptual frameworks, help to bridge the gap between pure theory and pure practice. It is difficult to apply pure theory, such as theory of strategy making, to the practice of strategy making directly - that is where frameworks come in which are consistent with the theories but lend themselves to practice. theory -- theories are general, abstract, nonexperiential, and represented by mathematical & statistical models frameworks -- frameworks are specific, substantive, suggestive, and represented by boxes-and-arrows charts practice -- practice is particular, concrete, experiential, and reflected in narratives The boxes-and-arrow charts of conceptual frameworks serve as a middleground between the mathematical and statistical models of theory and the narratives of practice. Conceptual frameworks provide organizing concepts in a body of knowledge and provide a capability to zoom down into that body of knowledge with successive levels and dimensions of organization and information. Frameworks provide a template for understanding, diagnosis, and design. A framework is not a model, but a lens. Models are inevitably a simplified subset or simplification of the phenomena they are modeling - whereas conceptual frameworks can be all encompassing of the phenomena, providing a full overview, and frameworks within the framework that reveal further depth and detail of the phenomena, providing for a more detailed understanding, diagnosis, and design.   Frameworks vs. models (Heracleous, 2003, p 33-34) -- Models -- Models test relationships between a limited set of variables; their findings are sensitive to the models' assumptions and different models may be difficult if not impossible to integrate in a general framework. Models are useful in teasing out interrelationships between a limited set of variables, but they downplay the complexity of actual situations and thus their potential usefulness for practice can be seriously compromised. Frameworks -- Frameworks incorporate several key variables within a particular organization or pattern, and portray their potential interactions, based on both theory and practice. The use of models and frameworks is not necessarily contradictory: ""Models should challenge the variables included in frameworks and assertions about their link to outcomes. Frameworks, in turn, should challenge models by highlighting omitted variables, the diversity of competitive situations, the range of actual strategic choices, and the extent to which important parameters are not fixed but continually in flux"" (Porter, Michael E., (1991), Towards a Dynamic Theory of Strategy, Strategic Management Journal, 12: 95-117, p98).   Models and frameworks - Approaches to strategy theory building (Porter, 1991) -- There is a fundamental question about the approach to theory building that will most advance knowledge and practice -- either the ""model"" approach or the ""frameworks"" approach. Model approach -- The model approach takes on the task of developing a theory of strategy be creating a wide range of situation-specific but rigorous (mathematical) models of limited complexity. Each model abstracts the complexity of competition to isolate a few key variables whose interactions are examined in depth. The normative significance of each model depends on the fit between its assumptions and reality. No one model embodies or even approaches embodying all the variables of interest, and hence the applicability of any model's findings are almost inevitably restricted to a small subgroup of firms or industries whose characteristics fit the model's assumptions. Models provide clear conclusions, but it is well known that they are highly sensitive to the assumptions underlying them and to the concept of equilibrium that is employed. Another problem with this approach is that it is hard to integrate many models into a general framework for approaching any situation, or even making the findings of the various models consistent. While few economists (researchers) would assert that this body of research in and of itself provides detailed advice for companies, these models, at their best, provide insights into complex situations that are hard to understand without them, which can inform the analysis of a particular company's situation. Framework approach -- Given the goal of informing practice, the style of research in the strategy field, including Porter's, has involved a very different approach (than model building). To make progress, it was necessary to go beyond the broad principles i the early work and provide more structured and precise tools for understanding a firm's competitive environment and its relative position. Instead of models, the approach was to build frameworks. A framework, such as the competitive forces approach to analyzing industry structure, encompasses many variables and seeks to capture much of the complexity of actual competition. Frameworks identify the relevant variables and the questions which the user must answer in order to develop conclusions tailored to a particular industry and company. In this sense, frameworks can be seen almost as expert systems. The theory embodied in frameworks is contained in the choice of included variables, the way variables are organized, the interacitons among the variables, and the way in which alternative patterns of variables and company choices affect outcomes. In frameworks, the equilibrium concept is imprecise. Porter's frameworks, for example, embody the notion of optimization, but no equilibrium in the normal sense of the word. Instead there is a continually evolving environment in which a perpetual competitive interaction between rivals takes place. In addition, all the interactions among the many variables in the frameworks cannot be rigorously drawn. The frameworks, however, seek to help the analyst to better think through the problem by understanding the firm and its environment and defining and selecting among the strategic alternatives available, no matter what the industry and starting position. Complementary approaches -- These two approaches to theory building are not mutually exclusive. Indeed, they should create a constructive tension with each other. Models are particularly valuable in ensuring logical consistency and exploring the subtle interactions involving a limited number of variables. Models should challenge the variables included in frameworks and assertions about their link to outcomes. Frameworks, in turn, should challenge models by highlighting omitted variables, the diversity of competitive situations, the range of actual strategy choices, and the extent to which the important parameters are not fixed but continually in flux. The need to inform practice has demanded that strategy researchers pursue the building of frameworks rather than restrict research to only theories that can be formally modeled. As long as the building of frameworks is based on in-depth empirical research, it has the potential to not only inform practice but to push the development of more rigorous theory.
framework compendiumThis is just a collection of frameworks: A list of ALL ENTERPRISE FRAMEWORKS (and Modeling Tools)… http://www.linkedin.com/groupItem?view=&srchtype=discussedNews&gid=3021229&item=203769751&type=member&trk=eml-anet_dig-b_pd-ttl-hdp&ut=33RbppKXCt6RE1 http://valuebasedmanagement.net/ My favorite enterprise framework is the Bolman/Deal Four Frame Model of an enterprise http://www.leebolman.com/index.htmlA good framework for leadership is James Scouller's Three Levels of Leadership: http://www.three-levels-of-leadership.com/Another kind of framework, for team interaction, is Roger Schwartz's Mutual Learning approach http://www.schwarzassociates.com/what-is-the-mutual-learning-approach/Yet another kind of framework, for project management, is Earned Value Mangement http://en.wikipedia.org/wiki/Earned_value_management Kevin (INTJ) Smith • Thanks to those who have posted in this and other Discussion groups.FYI, this is the list I currently have of 153 “frameworks”, so please check to see if a framework is already here before you post….* AAF, AF-EAF, AGATE, AGILE, Altus EA Framework, AM, ARCHI, ARCON, AUSDAF, BCA, BEAM, BEAM, BMM, Bolman/Deal Four Frame Model , BPEAM, BSIMM, CEA, CEAF, CIAF, CLEAR, CMMI , CMU , COBIT, CORBA, CSC Catalyst, DAD, DNDAF, DoDAF, DRAGON1, DYA, E2AF, EA3 Cube Framework, EAAF, EAB, EABOK, EAM-PC, EEAF, EIF, EIF European Interoperability Framework, EPCAF, ESAAF, ESSAF, eTOM, EVM, EXAF, FCAPS, FDIC, FDIC Sogeti Framework, FEA, FEAF, FFLV+GODS, FMLS-ADF, Fragile to Agile, FSAM, FURP, GA, GAME, GEA, GEAF, GERAM, GOD, GOPP, HEAF, IADS, IAF, IBM SDS, ICODE, IDABC, IDEAS, IFEAD, IFW, IFW, Integration Framework, ISO 20000, ISO 25010, ISO 27000, ISO 42010, IT-CMF, ITIL, Krutchen 4+1 Model View, LEAN, LFA, LMO , MACCIS, McKinsey 7S, MEGAF, MIKE2.0 , MODAF, Model-driven architecture (MDA) , MoP, MoR, MoV, MSP, Mutual Learning approach, NAF, NCOIC, NCR Enterprise Architecture Framework , NIF, NIST-EAM, NORA, OBASHI, OEAF, OIO Framework, OOPP, OSGi, P3O, PEAF, PERA, Porters 5 Forces, PPOOA, Pragmatic Marketing, Praxeme , PRINCE2, PRISM, PROMIS Framework , Queensland Government Enterprise Architecture, RAS, RASDS, RM-ODP, RWSSA, S4V, SABSA, SAGA, SAM, SAPEAF, SASSY, ScIAM, SCOR, SDLC, SEI, SGCAF, SID, Six Markets, Snow man stack, SOA, SOMA, SPIRIT Platform Blueprint Issue 3.0, SPRING, SSM, STRUTS, Systems Dynamics, TAM, TEAF, Three Levels of Leadership, TOGAF, TRAK, UADF, UDS, VALUIT, VSM, xAF, ZF,Please also note that I am also aware of all frameworks listed athttp://valuebasedmanagement.net/ B.B. Klaversteijn • There is a framework need for the Early Stage of Innovation. This stage is also called The Fuzzy Front End”, “Front End Innovation”, “Stage One Innovation”, “Stage Zero Innovation” or “The Beginning of the Pipeline”. As soon as such a frame work is found, which is doubtfull, it will be brought to this group's attention!. If I am not mistaken the Project Management Institute uses the word Body of Knowledge (BoK) instead of framework.
freedomSee choice.
freedom""Freedom is what you have when you do the right things."" -- Alex Korn
functionFunction from an organization science perspective -- various solutions to a particular complex of problems that a system can adopt in order to survive (Burrell & Morgan, 1979, 54, attributed to Parsons) Function, in the context of the business organization -- 'Function' refers to a group of similar skills and a part of an organization that provides a distinct skill set to the rest of the organization. Members of the organization with common skills are often grouped together, such as into departments, to coordinate the application of those skills throughout the organization and for career development of the people with a particular skill set. Common functions include accounting, marketing, and engineering. Function as a system variable -- Function also refers one of the variables of a social system. The functions of a system include its outputs into its environment in order to fulfill its purpose. The function for a business organization is described by the function aspect and the function architecture.
function architectureFunction architecture encompasses all the business model elements associated with the function aspect of the business organization. Function encompasses offerings, outputs, ends, and effect (see function aspect). Function elements include -- all offering types - commodities, goods, services, experiences, and transformations fulfillment and support - what the business does to market its offerings, reach, service, and support customers information and insight - information exchanged between the customer and the business relationship dynamics - the nature of the interactions between the customer and the organization pricing structure - pricing related to the offerings and their value to the customer value proposition - the value proposition to the customer typically has multiple dimensions, including customer sacrifice customers - even the customers themselves have a pattern to be understood in terms of its architecture and implications for the business organization All of these elements have architectural aspects to be considered as part of the business design. How modular vs. integrated these elements are will drive their costs, effectiveness, modifiability, extendibility, and customizability. See modularity and configuration. The degree of alignment of each element and the purpose of the business determines overall value in the customer's eyes and in the fulfillment of purpose. The designs of these elements are constrained by and place demands on the processes. Degree of compatibility between the function, process, and structure architectures determines the effectiveness of the business.
function aspectFunction is one of the four primary aspects of the business organization - purpose, function, process, and structure. See business organization aspects for an explanation of their derivation. The four aspects are the framework for the inquiry process that is performed to understand and design business organizations. Function aspect introduction -- Function pertains to the outcomes or results produced based on the organization's function, or role, in its environment. It is what an organization does to fulfill its purpose. Function is the complement of structure -- entailing the notion of effect, the change in the environment due to the function, as in cause and effect. Function is the ends, the sake for which the function is performed, as in means and ends. Function encompasses the notion of output, both as something supplied by the system and as a place where offerings and information leave the system. See structure aspect and process aspect.
function inquiryThe function inquiry focuses on the business organization's function in fulfilling its purpose in its environment. It inquires on the business organization from the perspective of function, as defined by the function aspect and seeks to define the business model elements as defined by the function architecture. The definition of the business model elements is not limited to those of the function architecture, as all the elements of the business model should have some relationship to its function. Therefore, more than the function architecture elements will be defined as a result of this inquiry. Creativity exercises spawn discussion and creative ideas in developing answers to the function aspect questions.
functional analysisIn the context of organization science, functional analysis consists of establishing a classification of the problems which every system must resolve in order to exist and keep itself going (Burrell & Morgan, 1979, 50)
game theoryGame theory is the study of how people choose actions in an attempt to maximize their payoffs in the presence of other people doing the same thing. The player interaction, where they are in essence all playing the same ""game"", makes game theory a subset of decision theory.
garbage can decision processSee March, 1994, pp 198 - 296. The ""garbage cans"" in the garbage can model are choice opportunities such as meetings, committees, and any decision forum. Choice opportunities collect three elements: decision makers, problems, and solutions. From this basis, the characteristics of the three elements and process of decision making is described. Synopsis from Weick (Weick, 1979, 21-22) -- Organizations are characterized as garbage cans into which are dumped problems, people, choice situations, and solutions (See organizations for the resulting definition of organization. A crucial variable in this model is timing. It is assumed that there is a continual stream of people, solutions, choices and problems that flow in an organization. Every now and then some clusters of these elements coincide, and a decision is produced. In other words, problems may attach themselves first to one choice situation then to another, and the same holds true for people and solutions. Two major decision strategies in a garbage can organization are the strategies of oversight and flight. The strategy of oversight involves making quick choices. You make a choice whenever important problems are attached to some other choice and before they can drift to the choice you're making. Having made the choice you solve nothing, since the problems are still attached to other choices. Likewise, the decision style of flight involves delaying a choice until the problems wander away and attach themselves to other choices. Once the problems have left, then you make the choice. Again the choice solves no problems, since none are attached to it. In the computer simulation of this process, most decisions involve flight and oversight. This suggests why organizations can keep making decisions yet never solve any of their problems. Decision styles (From Cohen, March, and Olsen, 1972, pp 8) -- Within the kind of organization postulated, decisions are made in three different ways. By resolution. Some choices resolve problems after some period of working on them. The length of time may vary, depending on the number of problems. This is the familiar case that is implicit in most discussions of choice within organizations. By oversight. If a choice is activated when problems are attached to other choices and if there is energy available to make the new choice quickly, it will be made without any attention to existing problems and with a minimum of time and energy. By flight. In some cases choices are associated with problems (unsuccessfully) for some time until a choice more attractive to the problems comes along. The problems leave the choice, and thus it is now possible to make the decision. The decision resolves no problems; they having now attached themselves to a new choice. Some choices involve both flight and resolution-some problems leave, the remainder are solved. These have been defined as resolution, thus slightly exaggerating the importance of that style. As a result of that convention, the three styles are mutually exclusive and exhaustive with respect to any one choice. The same organization, however, may use any one of them in different choices. Thus, the decision style of any particular variation of the model can be described by specifying the proportion of completed choices which are made in each of these three ways.
GaussianA theoretical frequency distribution of variable data, usually represented by a bell-shaped curve symmetrical about the mean -- a normal distribution. A Gaussian distribution is a subset of stochastic distributions.
general managementManagement itself may be defined as leadership in the informed, efficient, planned, and purposeful conduct of complex organized activity. General management is, in its simplest form, the management of a total enterprise of an autonomous subunit. Its diverse forms in all kinds of businesses always include the integration of the work of functional managers or specialists. (Andrews, 1987, pp 1).
general systems theoryGeneral systems theory (GST) was outlined by Ludwig von Bertalanffy (1968). Its premise is that complex systems share organizing principles which can be discovered and modeled mathematically. The term came to relate to finding a general theory to explain all systems in all fields of science. To quote Bertalanffy, ""...there exist models, principles, and laws that apply to generalized systems or their subclasses, irrespective of their particular kind, the nature of their component elements, and the relations or ""forces"" between them. It seems legitimate to ask for a theory, not of systems of a more or less special kind, but of universal principles applying to systems in general."" (Bertalanffy, 1968, pp 32). More than a scientific theory -- Bertalanffy was proposing a new way of doing science. What he was proposing with his general systems theory goes beyond the meanings of 'theory' and 'science'. Bertalanffy's GST refers more to an organized body of knowledge - any systematically presented set of concepts, whether empirical, axiomatic, or philosophical. Being more than a theory, it is a new paradigm for conducting inquiry. Systems science description (from Bertalanffy, 1968) -- The scientific exploration and theory of systems [in the various sciences] and general systems theory as doctrine of principles applying to all systems (or defined subclasses of systems). an understanding of not only elements but their interrelationships is required (e.g. the structure and dynamics of social systems). there are general aspects, correspondences and isormophisms (similarities in form or appearance in different systems) common to ""systems""... Systems technology (from Bertalanffy, 1968) -- The ""hardware"" of computers, automation, self-regulating machinery, etc. and the ""software"" of new theoretical developments and disciplines. previous ""technology"" could not handle the complexity related to systems. ""systems"" problems are problems of interrelations of a great number of ""variables"". concepts involved - information, feedback, control, stability, circuit theory, ... Systems philosophy (from Bertalanffy, 1968) -- The reorientation of thought and worldview as a result of introducing ""system"" as a new scientific paradigm - as contrasted with the ""blind laws of nature"" of the mechanistic worldview. There are three parts of systems philosophy -- systems ontology -- What is the ""nature of the beast"", what is meant by system. What is defined and described as ""system"" is not a question with an obvious trivial answer. (ontology - nature of existence and being). systems epistemology -- The underlying principles or theories that form the basis of the field of knowledge of systems. (epistemology - the origin, nature, methods, and limits of human knowledge. How much can one know about reality and how does one obtain that knowledge?). values -- The relations of man and world. If reality is a hierarchy of organized wholes, the image of man will be different from what is in a world of physical particles governed by chance events as ultimate and only ""true"" reality. Systems, and models, as guiding ideas (from Bertalanffy, 1968, p 24) -- ""Models in ordinary language therefore have their place in systems theory. The system idea retains its value even where it cannot be formulated mathematically, or remains a ""guiding idea"" rather than being a mathematical construct."" Necessity of a systems approach (from Bertalanffy, 1968, p 11) -- ""...the necessity and feasibility of a systems approach became apparent only recently. Its necessity resulted from the fact that the mechanistic scheme of isolable (isolatable) causal trains and meristic (segmental division) treatment had proved insufficient to deal with theoretical problems, especially in the biosocial sciences, and with the practical problems posed by modern technology. Its feasibility resulted from various new developments - theoretical, epistemological, mathematical, etc. - which, although still in their beginnings, made it progressively realizable.""
generate wisdomSee strategic management activities for explainations of the four stages of strategic management activities -- generate wisdom - understand why the organization is the way it is an its trajectory create art -- unleash the imagination apply science -- design the future wage war -- execute Activities involved in the generate wisdom stage assessment of the current business model comprehensive inquiry identify models - political, mental, business, operational strategic focus inquiry culture inquiry competitive advantage factor assessment conflict identification problem definition assessment of the hypotheses' tests research experiments prototypes initiatives operational performance insight development new perspectives new principles - creative destruction, pluralism, evolutionary algorithm, evolutionary economics, etc. probing questions patterns - profit models - profit incongruity identification opportunity identification skills development systems thinking complexity inquiry
generative learningSee double loop learning. See learning levels of for a framework of types of learning.
genius of marketsRecognizing the superiority of free markets' ability to create leads to the understanding, which is deeply counterintuitive, that disorganization is superior to organization. The genius of markets is that they are not dependent on the genius of an individual. (Kay, 2004, pp 19, emphasis added)
gesture-responseGesture-response is a model of communication defined by Mead (1934). It is a social behaviorist model of complex responsive processes, or simply, responsive processes. See communication for an explanation of gesture-response and a comparison to the cognitive cybernetic sender-receiver model.
good-to-greatJim Collins defined what it takes to be a great company, vs. a merely good company. His overall prescription for ""good to great"" is an effective approach to strategic management. The good-to-great approach -- disciplined people -- Level 5 leadership focusing first on 'who', not 'what' -- The right people, following the right disciplines, will make an organization great. These are the people who will develop and execute the plans to achieve greatness. Strategy development does not precede getting the right people to carry it out. The right people develop, own, and achieve the right strategy. This is the principle of ""first who, not what"". The rigor and discipline of getting and keeping the right people requires not compromising, acting to insure the people are the right ones, insuring the best people get the biggest opportunities, not the biggest problems. disciplined thought -- confronting the brutal facts - insuring that facts rule over emotions, traditions, notions, etc. There is what Collins call the Stockdale Paradox in confronting facts -- Retain faith that you will prevail in the end, regardless of the difficulties AND at the same time confront the most brutal facts of your current reality, whatever they might be. Create a climate where the truth is heard -- Lead with questions, not answers Engage in dialog and debate, not coercion Conduct autopsies without blame Build ""red flag"" mechanisms - to turn information that is critical to competitive advantage into information that cannot be ignored. the Hedgehog concept -- continually focusing on defining, refining, and acting within the intersection of what you are passionate about, what you can make money at, and what you can be best in the world at disciplined action -- culture of discipline technology accelerators - technology follows from everything else, it is an enabler, an accelerator of momentum. Pioneered technology must be pioneered with the Hedgehog Concept. flywheel concept - the three disciplines listed above are exercised through continually cycling through the process of asking questions, dialogue and debate, executing decisions, and performing autopsies and analysis, in pursuit of and refining the Hedgehog concept and its application to the business enterprise. This process is conducted by ""The Council"" - made up of the lead executive, five to twelve people with mutual respect, deep business knowledge, an ongoing commitment to the process and meeting as often as weekly but at least quarterly. Momentum builds from the ongoing cycle of steps forward that are consistent with the Hedgehog Concept, accumulation of visible results, and people energized by visible results, which builds momentum to take the next steps forward. being right -- Collins frames up the notion that business leaders can in fact learn to ""be right"", that by being right they can create a ""great"" organization as opposed to a merely ""good"" organization, and that being ""great"" is no more difficult than being good, and in fact, may be easier. A deconstruction of being right looks something like -- ""If you have Level 5 leaders who get the right people on the bus, if you confront the brutal facts of reality, if you create a climate where the truth is heard, and work within the three circles of the Hedgehog Concept, if you frame all decisions in the context of a crystalline Hedgehog Concept, if you act from understanding, not bravado - if you have a Council with a cyclical management process involving the key strategic thinkers in the business that asks questions, dialogues & debates, provide executive decisions, and performs autopsies and analysis in order to define the strategic focus and stick to the strategic focus if you act from understanding, not bravado if you stop doing the wrong things if you do all these things, then you are likely to be right on the big decisions."" Definition of a good-to-great company -- 15 years of cumulative total stock returns 3x the general market beating market returns (actual was 6.9x for the 11 Fortune 500 companies that met this criteria) after a transition point. The transition point had to be preceded by a cumulative stock return of no better than 1.25x the market for the 15 years preceding the transition point. This pattern must hold true when comparing the company vs. its industry as well as vs. the general market. Latest transition point, 1985. Several other considerations made to insure a bona fide transition from ""Good"" to ""Great"" performance. 11 companies met this criteria from the Fortune 500 from 1965 - 1995 The good-to-great companies -- Abbott - 1974 Circuit City - 1982 Fannie Mae - 1984 Gillette - 1980 Kimberly-Clark - 1972 Kroger - 1973 Nucor - 1975 Philip Morris - 1964 Pitney Bowes - 1973 Walgreens - 1975 Wells Fargo - 1983 Source: Jim Collins, Good To Great, Harper Business, 2001 and www.jimcollins.com
goodsGoods are a type of economic offering. They are made from commodities, embody services, tangible, sold to a customer and exist outside of the buyer.
growthGrowth is to increase in size or number. This is in contrast to development, which is an objective of strategy and learning.
Hedgehog ConceptJim Collin's term for a strategic focus that winning organizations develop to guide their decision making, strategy execution, competency development, etc. Three intersecting elements of the Hedgehog Concept -- What you are deeply passionate about -- Passion refers to what you get excited about doing. The goal is not to stimulate passion but to discover what makes you passionate. What you can be the best in the world at -- What you can be best at is analogous to ""genetic capability"". This is a capability that if properly channeled, guided, and focused upon can make you the best in the world. The corollary is that this same ""genetic capability"" also tells you what you cannot be best at. You may not be capitalizing on what you can be best at when you come to an understanding of what that is. What drives your economic engine -- Building a sound economic engine requires profound insight into the economics of the organization. This insight should be expressed in terms of the one economic denominator that is most critical to the organization. Ideally, this metric is expressed in the form of a single ""economic denominator"" that ties to the strategy and will be formulated to measure strategic progress and success. In a business, this is expressed as ""profit per __"". The search for this denominator forces a deeper understanding of the key drivers of the economic engine. Finding your Hedgehog Concept -- Finding your strategic focus requires a severe standard of excellence Understanding what your organization truly has the potential to be the very best at ...sticking with it ...while building on strength and competence Focusing solely on what you can potentially do better than any other organization is the only path to greatness Allocating resources based on the above understanding Avoiding distractions Hedgehogs simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything. This reduces a complex world, with all of its challenges and dilemmas to simple ideas. Anything that does not relate to the hedgehog idea holds no relevance. This approach keeps the organization focused on what it can best do to achieve greatness, a sustainable competitive advantage. Motto, see what is essential, and ignore the rest. A Hedgehog Concept is not a goal to be the best, a strategy to be the best, an intention to be the best, or a plan to be the best. It is an understanding of what you can be the best at. Focusing solely on what you can potentially do better than any other organization is the only path to greatness. Source: Collins, 2001. See: jimcollins.com
heijunkaSee cadence.
hierarchy of statements Mission - Why we exist Values - What we believe in and how we behave Vision - What we want to be Strategy - What our competitive game plan will be; its ends, domain, and means. Strategy Deployment - what the strategy means across the businesses, functions, and levels of the enterprise
higher level learningSee learning levels of.
higher order solutionIn line with the systems behavioral principle of multidimentionality -- solutions are formed which resolve dichotomies into non-compromising solutions where the conflicting tendencies are jointly resolved into a 'higher order solution' vs. the compromise of an 'either or' solution. See development.
history of causalityA brief history of causality and philosophy - philosophical views of causality -- This historical overview of causality not only provides a perspective on the origination of the primary causalities of concern to management -- efficient, rationalist, formative, and transformative -- but it also explains the origination of systems thinking in Kant's philosophy dealing with rationalist and formative causality. Aristotle (300s BC) -- Aristotle introduced a theory of causality, for the first time in human thought, which brought together elements of various thinkers of his time. He reaffirmed ""becoming"", arguing that change is not an illusion but that humans actually experience nature as change. Reality is not some external given, but an experience one perceives. Humans can trust their experience; indeed, this is the only way of making sense of reality. (Stacey, 2000, pp 195). In the Aristotelian world, physics was modeled on biology, not biology on physics. For Aristotle, just as the behavior of humans (and other animals) is motivated by specific purposes, so the behavior of any physical object could be explained by understanding its purpose. For Aristotle, an object could only be understood in relation to its purpose or function. Aristotle's four causes are each a different way of explaining why a thing is as it is. The four causes are four aspects of the purpose of a thing. All four causes together bring a complete view of the object under consideration. To understand an object, one must understand -- its formal cause - the form received by a thing, a form taken by the movement or development material cause -- the matter underlying that form, a material efficient cause -- the agency that brings about the change, something to act upon it, an if - then sequence of causality, cause based on what went on before the current state the final cause -- the purpose or goal served by the change As an example, the Aristotelian answer to the question of why the statue of David is as it is, is answered as such - Because it was made by Michelangelo (efficient cause) out of marble (material cause) with the shape of David (formal cause) to glorify the Medici family (final cause). For Aristotle, the final cause is final because it is pre-eminent in explaining why a thing is as it is. See Aristotle's causality for more information. Bacon, Galileo, and Hobbes (early 1600s) -- The purposive bent of Aristotle's philosophy often lent it an anthropomorphic (suggesting human characteristics for animals or inanimate things) or animistic (the belief that natural objects, natural phenomena, and the universe itself possess souls) character. It was this, as well as Aristotle's stress on final cause that caused gravest offence to the new breed of philosophers such as Bacon and Galileo. Thomas Hobbes ridiculed the Aristotelian notion that 'stones and metal had a desire, or could discern he place they would be at, as man does.' (Malik, 2000, pp 32) As the new philosophy came to dominate the scientific worldview, the teleological view of nature was banished. The functional approach to understanding both nature and human nature that underlay Aristotelianism remained of crucial importance, particularly in explanations of biological phenomena. For example, it is key to Darwinian theory and to many contemporary accounts of human nature. During the 1500 and 1600s the Aristotelian framework was replaced by one that modeled nature on the characteristics of a machine - mechanical philosophy. The mechanical philosophy rejected Aristotelian teleology in favor of an empirical approach: observation, experiment, and the search for mathematical regularities. The Aristotelian universe, full of purpose and desire, gave way to an inert universe composed of purposeless particles each pursuing its course mindless of others. The only concern of mechanical philosophers was with matter and motion. The mechanical philosophy did not simply transform attitudes to nature. It also transformed the kinds of questions that one could ask about nature. Nature no longer had to be treated as an organic whole. Like a clock, or any other machine, it could be broken up into its component parts and each part studied in isolation. The properties of complex phenomena could be resolved into the properties of simple phenomena, and through understanding simple phenomena one could begin to build a picture of more complex phenomena. Here lie the origins of the modern notion of 'reductionism.' The notion of design , as in nature being designed and being able to be understood as a machine, is what Charles Darwin's theory of evolution sought to refute. Descartes (mid 1600s) -- Descartes, like Bacon, sought to find a way through the scepticism of Renaissance scholarship to establish a new basis on which to found objective knowledge. Descartes method is based on four precepts - to accept nothing as true which I clearly did not recognize to be so to divide up each of the difficulties which I examined into as many parts as possible to carry on my reflections in due order, commencing with the objects that were most simple and easy to understand, in order to rise, little by little, or by degrees, to knowledge of the most complex to make enumerations so complete and reviews so general that I should be certain of having omitted nothing In an age in which reason meant solely arguing from ancient texts, Descartes' approach was indeed revolutionary. His commitment to arguing from first principles came to be called rationalism. However, Descartes did not believe that everything could be understood as a mechanism. He separated the thinking and rational substance - which constitute the soul - from the bodily substance and suggested that only the latter could be understood in mechanistic terms. Descartes belief in the duality of body and soul has profoundly shaped the modern imagination. Descartes' dualism, is emblematic in the modern world that embraces ""objective"" natural science but is wedded to ""subjective"" consciousness, where it is impossible to have a naturalistic theory of the mind. This dualism seems emblematic of the tension between a materialist universe and a humanist vision.
holismHolism is the philosophical approach to understanding complexity that recognizes that ""The whole is more than the sum of its parts."" (Aristotle). The attributes of the whole, resulting from the interrelationships of the parts, is indecipherable through reductionistic or analytic techniques. Holism is the philosophy behind synthesis and systems thinking. The whole being more than the sum of the parts is not an algebraic expression referring to numbers. As the biologist Paul A. Weiss said, ""However, a living cell certainly does not have more content, mass or volume than is constituted by the aggregate mass of molecules which it comprises....the ""more"" (than the sum of the parts) in the above tenet does not at all refer to any measurable quantity in the observed systems themselves; it refers totally to the necessity for the observer to supplement the sum of statements that can be made about the separate parts by any such additional statements as will be needed to describe the collective behavior of the parts, when in an organized group."" Source: Weiss, P. A., (1969), The living system: Determinism stratified. In Koestler, A., and Smythies, J. R. (eds.) (1969) , Beyond Reductionism: New Perspectives in the Life Sciences, Hutchinson, London. Holism and reductionism are complementary philosophies for use by business management.
holistic inquirySee holistic thinking.
holistic thinkingHolistic thinking is the inquiry of a complex whole. In the case of business organizations, holistic thinking takes into account its purpose, values, function in its environment, process, and structure. It is the basis for the development of the business design construct, systems thinking, and strategy formation.
humanismThe concept of humanism has changed over the centuries. Aristotelian philosophy dominated Christian European view of humanism up through the Renaissance, referring to a particular way of cultivating the mind. The enlightenment brought about a different view, expressing the belief that truth should be founded not on revelation, tradition, or authority, but on observation and reason. Later forms of humanism came to be associated with both science and with a rejection of divine authority. Common to all forms of humanism -- All stripes of humanism have in common is a desire to place human beings at the center of philosophical debate, to glorify human abilities, and to view human reason as a tool through which to understand nature. Despite the enormous differences between these worldviews, all held that human beings, while an inherent part of nature and subject to its laws, nevertheless had an exceptional status in nature because of their unique ability to reason. All held to the idea of humans as conscious agents, who realize themselves only through projects to transform themselves and the world they inhabit. At the heart of humanism, therefore, is a belief in emancipation - the faith that humankind could achieve freedom, both from the constraints of nature and the tyranny of Man, through the agency of its own efforts. (Malik, 2000, pp 2, 6) Contemporary theories of humanness tend to regard a human being less as a subject capable of acting upon the world, than as an object through whom nature acts. ...once you view humans as objects, then the normal restraints of humanity become loosened. (Malik, 2000, pp 25).
hypothesisA hypothesis is a proposed explanation made on the basis of evidence from a phenomenon examined. It provides the starting point for further investigation. Decisions are made and actions taken to test the hypothesis. These tests will either reinforce the hypothesis, help to refine it, or call for it to be discarded altogether. Management can take a lesson from the world of science regarding hypotheses. Science does not actually prove anything once and for all. Scientific knowledge is built upon a series of constantly updated working hypotheses. In the ever evolving world of business, the knowledge and hypotheses must evolve as well.
ideaAn idea is a concept developed by the mind. If it is a concept of what ought to be, it is called an ideal. See idealism.
idea managementManagement processes which serve to encourge, create, develop, and nurture ideas for the innovation of the business organization.
idea of pure reasonKantianism -- any of the three undemonstrable entities (a personal soul, a cosmos, and a supreme being) implicit in the fact of a subject and an object of knowledge, and in the need for some principle uniting them. idea of pure reason. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/idea of pure reason (accessed: February 18, 2007).
idealAn ideal is a conception something that is perfect; a standard of perfection or excellence. It is related to purpose. Purpose seeks the achievement of an ideal, but because an ideal by definition is unachievable, it is the pursuit of the ideal that becomes the central unifying and motivating force of an organization. See the Stacey section of values.
ideal of pure reasonKantianism -- God, seen as an idea of pure reason unifying the personal soul with the cosmos.
idealismThere are two definitionsnew of idealism relevant to strategic management. The first is the Kantian notion and the other is the more conventional current usage. Kant's idealism -- Kant developed transcendental idealism as an alternative to realism, on the one hand, and skepticism on the other. This notion of idealism resolved the contradiction between realism (of the realist) and relative knowledge (of the skeptic) by taking aspects of each argument and holding them together in the 'both...and' way of dualism. This resolved the conflict between those who say reality is knowable, thus knowledge is 'truth', vs. those who say reality is unknowable thus all knowledge is unreliable and relative, by proposing that knowledge of appearances was real and reliable while knowledge of reality itself was indeed impossible. Conventional idealism applied to strategy formation -- In the context of strategic management, idealism is the practice of forming and pursuing ideals. Ideals meet one's conception of what is perfect or optimally suitable. Idealism is often looked down upon as unrealistic. On the other hand, it is ideals coupled with passion and purpose that have the power to inspire, motivate, and prime the creativity of an organization in a productive and valuable direction. Idealism is part of producing a vision and the related BHAG's and strategic intent. These notions coupled with pluralism bring about the creativity and novelty needed for the innovation needed to close the gap between the current reality and the ideal. Russell L. Ackoff on idealism (Ackoff, 1972, pp 237, 241) The pursuit of an outcome that is known to be unattainable. People draw satisfaction from approaching states hat cannot be reached. The approach is called progress and the end-state is called an ideal. Wise people have observed that there is more satisfaction in pursuing an end than in attaining it. Sometimes the objective in solving one problem is to create more challenging and important problems to work on. The continuous pursuit of more desirable ends is an end in itself, and hence attainment of a specific end can be conceptualized as a means to such a pursuit. A pervasive objective of man and the social systems of which he is part, is the successful pursuit of increasingly desirable objectives. IF this is so, then it is reasonable for man and the social systems of which he is part to formulate objectives that can be pursued without end but convert the attainment of every goal into a means for the attainment of a new and more desirable goal. The ultimate objective in such a sequence cannot be obtainable; otherwise its attainment would put an end to the process. An end that satisfies these conditions is an ideal. Ideal pursuit can provide cohesiveness and continuity to extended and unpredictable processes, to life and history. Thus, the formulation and pursuit of ideals is a means by which man puts meaning and significance into his life and into the history of which he is part. It also provides the possibility of deriving satisfaction from a life that must end but that can contribute to a history that may not. An ideal is to an objective what an objective is to a goal. An ideal is an objective that cannot be obtained in any time period but can be approached without limit. Implications for business design -- The implication for a system design process is to cycle through stages of idealism and realism, the idealistic stages unleash creativity and unbounded designs, while the realistic stages capture the new design and wrestle it to the ground to make it implementable, i.e. make it practical.
idealistThe idealist is a restless fellow who sees evil in complacency; he regards the realist as a hypocrite at times because his realism is unrealistic. The realist, on the other hand, accuses the idealist of being impractical, because his insistence on destroying the value of the present way of life precludes positive action. -- C. West Churchman, The Design of Inquiring Systems, Basic Books, Inc., 1971, pp 199 See idealism.
IdealistsIdealists describes a category of philosophers including Kant, Hegel, and Heidegger. Idealists believed that the world of empirical sense was but part of the truth. Mind or spirit in some way defined and constituted reality. The Idealists stressed the subjective aspect of human life, the importance of humans as creators of their world, not just passive observers of it. (Malik, 2000, pp 345)
idealized designIdealized design answers the question, ""Ideally, what do we want the business organization to be right now?"" An idealized design is neither utopian or perfect. It is idealized because the design is the best that its designers can conceive of at a given point in time. Strategy development and idealized design -- The business design produced in the creating art stage of the strategic management process is an idealized design. It is called idealized because it is unencumbered by the current culture, trajectory, and specific solutions to put the design in place, not because it is unrealistic. This design must be technologically feasible and operationally viable in the business's environment. There are multiple alternatives of the idealized design produced in reaching the final design. Versions are produced to explore different business models in the existing environment and opportunities for the business in new environments. The exploration of new environments is especially important if the current environment is toxic and cannot be changed. The business design approach is systems thinking based, utilizing iterative inquiry of the aspects of the business model to define the business elements and their interrelationships. This approach exercises both innovation and strategic thinking development. The final design from this stage, whose implementation is planned in the next stage, is a complete integrated design containing the new theory of business whose hypotheses will be tested with the deployment of the strategy. Idealized design and technical feasibility -- The idealized design is to be technologically feasible. This does not mean that all the technology and capability to achieve the business model must be ready to go and on-the-shelf. It must be reasonably anticipated to be attainable. For example, it would be difficult to justify a theory of business on the anticipated development of anti-gravity, time machines, or free energy. But it is essential to anticipate advances in microprocessor speeds, advances in nanotechnology, and advances in management techniques. Technology is not just hard science oriented. Technology is the application of human knowledge to work. New technology is the new application of knowledge to human work. Lean and six-sigma are new technologies of the past quarter century just as much as the internet and biotechnology. Innovation is the tool of entrepreneurs. With the entrepreneurial activity driving the change in the business world, this change must be anticipated. Anticipating ongoing advances in the yield of resources and the value obtained by consumers from resources does not mean precisely predicting the future. That is foolhardy. But it does mean being savvy enough to understand which way the wind is blowing and insure the organization has sufficient adaptive learning capability to capture and capitalize on these dynamic forces of change, to the benefit of the organization. The idealized design is also inspiring. It embodies the understanding of the industry, the economic shifts, the technological trends and the business savvy of the designers. Thus it embodies what Hamel calls the strategic intent of the business organization. The goal of strategic intent is to fold the future back into the present. The ends of what is possible are made clear, but the means are flexible, and may not even be definable, especially in total, at the time the idealized design is developed. Strategic intent specifically creates an extreme misfit between resources and ambitions, whose gap can only be closed by innovation, the building of new advantages. Pursuit of the strategic intent, the idealized design, guides and motivates the development of new capabilities. An idealized design is subject to three constraints -- technical feasibility operational viability continuous improvement from within and without Bounded and unbounded design -- a bounded design assumes the environment of the business organization remains the same while the business organization design is unconstrained an unbounded design permits the designers to change elements of the environment that can improve the performance of the business organization Why bounded and unbounded designs? -- In whatever environment the organization chooses to compete, there are two versions of the design produced. One version accepts the environmental constraints. The other is unconstrained by the environment. The constrained design should be prepared first. It focuses the design on the organization itself, not on its environment. With their focus on the ""inside"", the obstructions within the system, which stand between an organization and where its designers would most like it to be, are discovered. Often, most or all of the obstructions are found to be internal to the system. The unbounded design then reveals how little of what is ""out there"" needs to be changed in order to achieve an idealized design. The unconstrained design directs creativity toward what might be changed in the environment to the benefit of the business. Businesses can and often do change their environments, sometimes by changing the rules of the game, acquisitions, partnerships, lobbying lawmakers, influencing regulatory agencies, or legal tactics. Of course the environment is not under the business's direct control, is much harder to manage, and has less predictable outcomes. Because of this, the strategy should make a sincere attempt to not depend upon a business design unconstrained by the current state of the organization's environment. On the other hand, it is certainly prudent to explore the opportunities that exist in environmental constraint removal and be proactive about identifying and removing them. See Russell L. Ackoff, Re-Creating the Corporation, Oxford, 1999, pp 87-105
ideatumEpistemology - the object of knowledge as known by the mind, in contrast to datum. Source: ideatum. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/ideatum (accessed: February 18, 2007).
identityIdentity is the fundamental characteristics of the organization and its members -- those characteristics members most strongly value and form the basis for how they identify themselves. Identity goes hand in hand with values, authenticity, purposeful, and responsible living. Stacey on identity Identity defined (Stacey, 2007, pp 240, 435) -- Ralph Stacey puts identity in the context of his responsive processes view of strategy - strategy is the evolving narrative pattern of organizational identity. Strategy is the evolving pattern of what an organization is, its identity. Identity is human meaning. Human identity has two inseparably interwoven aspects, namely, individual and collective, that which Elias called 'I' and 'we' identities. From a complex responsive process perspective, an organization is evolving identity. In talking about organizations, the normal practice is to focus almost exclusively on collective 'we' identities. The complex responsive process perspective, however, encourages not to lose sight of the fact that 'I' identities are inseparable from 'we' identities. People undertake joint action pursuing organizational strategies. Actors cause patterns of movement in this activity called organizational dynamics. How actors are engaged in and thinking about this movement gets into who people think they are and what they think they are doing together - who they want to be, what they want to do together, and what they desire to achieve. Put in these words, strategies are fundamentally about the identities of people. Identity is the answer we give to the question, 'who are you and what are you doing?' The answer to this question entails some description of the organization we belong to and what kind of work we do in them. At strategy 'away-days', groups of managers talk about what kind of business they are in and how they might want to change it; what kind of image their organization has, how they might wish it to change and sometimes how they are thinking about all of this. In doing this, they are talking about identity; their own identities. From a complex responsive process perspective, then, strategy content is dynamic patterns of emerging continuity and potential transformation of collective identities which are inseparable from individual identities. Put like this, the distinction between content and process dissolves. Identity as a sense of self -- Feelings are rhythmic variations of the body -- its spatial and temporal dynamics. Each individual has their own unique pattern of bodily time contours. Temporal dynamics, located in parts of the body, mesh into a symphony of rhythms having particular time contours marked by beat, duration, and variations in intensity, constituting what Stern (1985, 1995) calls vital effects, and Damasio (1994, 1999) calls background feelings. Identity --unique bodily time contours constitute a person's feelings as unique experiences of self, or identity. A bodily sense of self is actualized Identity formation -- A bodily sense of self, an identity, is actualized through the way in which others respond to that person's unique bodily time contour and the way in which such responses are experienced. Identity co-emergence --The bodily sense of self emerges in a social process, one in which self is co-created. Identities of individual persons and the collective identities of their groups, organizations, and societies emerge in complex responsive processes Knowledge artifacts, symbolizing identities past, may be used as tools in local communicative interaction in the living present Categorization in identity formation -- see categorization. Identity and difference -- Identity refers to one side of the paradox of 'identity - difference' - the sameness of identity and difference of changes in that identity - in transformative causality. This variation, difference, is due to micro-diversity. There are several paradigms, or ways of thinking of organization, why and how organizations become what they become. Identity is a key element of identity-difference thinking. Complex Responsive Processes of theme and identity formation -- For a discussion of the complex responsive processes view of theme and identity formation see this topic in theme. Identity is destiny (Ackerman, 2000) -- Identity is a powerful source of energy for innovation and producing value in pursuit of a mission. The organizational identity is reinforced by the wealth that feeds back into the business. Strategic and operational philosophies should be based on the organizational identity. Identity is a ""governing force"" that completely shapes an organization and determines the relationship it enjoys with stakeholders. It can be managed to become a positive governing force. Laurence D. Ackerman identifies the laws of identity and their applications -- Law of being -- The organization exhibits the distinct capacities of the individuals who make up that organization. Being is defined by the value it creates in the members of the organization, the marketplace, society, and the business itself. Law of individuality -- The organization's human capacities fuse into a unique discernable identity. Live according to who you are. Live authentically. Law of constancy -- Identity is fixed. How the identity is manifested needs to constantly change. Make change in concert with the identity of the organization. Law of will -- Every organization is compelled by the need to create value in accordance with its identity. Drives people to be the best at whatever they do. Law of possibility -- Identity foreshadows potential. The richest avenues with the greatest potential for growth lie in understanding the natural drive of the organization. Law of relationship -- Organizations are inherently relational, and those relationships are only as strong as the natural alignment between the identities of the participants. Leaders must manage relationships with stakeholders as a whole system, not as a portfolio of separate distinct relationships. Value circle in motion builds relationship momentum that stands the test of time. Law of comprehension -- The individual capacities of the organization are only as valuable as the perceived value of the whole of that organization. We must know who we are before we can build potent relationships with others. (Be authentic). Law of the cycle -- Identity governs value, which produces wealth, which fuels identity. Companies will receive in direct accordance with what they give. Margaret Wheatley's View of Identity -- Source: Wheatley, 2005, pp 37-39 Identity is the sense-making capacity of the organization. It is the organization's sense of self, the touch point for all decisions and the collective organization knowledge of who it is. This sense of self, i.e. identity, includes vision, mission, values, and plus factors related to the path the organization is on. This worldview includes interpretations of its history, present decisions and activities, and its sense of the future. Once identity is set in motion, it becomes the sense-making process of the organization. In deciding what to do, a system will refer back to its sense of self. We interpret events and data according to who we think we are. We never simply ""know"" the world; we create worlds based on the meaning we invest in the information we choose to notice. Everything we know is determined by who we think we are. Identity is reinforced and further discovered by the decisions made and actions taken consistent with the identity. As the organization responds to new information and new relationships, its identity becomes clearer at the same time that it changes. Other aspects of identity -- Identity and authenticity -- See authenticity -- Elements of authenticity. Identity and incitement -- Most organization efforts don't begin with a commitment to creating a coherent sense of identity. Yet it is this clarity that frees people to contribute in creative and diverse ways. Clear alignment around principles and purposes allows for maximum autonomy. People use their shared sense of identity to organize their unique contributions. Organizations lose an enormous organizing advantage when they fail to create clear and coherent identity. In a chaotic world, organizational identity needs to be the most stable aspect of the endeavor. Structures and programs come and go, but an organization with a coherent center is able to sustain itself through turbulence because of its clarity about who it is. Stable and clear clarity of identity sustains the confidence of the organization members as the organization morphs in response to the changing environment. Related concepts - Identity and worldview are proximate concepts. See worldview and path dependence.
identity-difference thinkingIdentity-difference thinking is complex responsive processes thinking, complexity thinking, from a transformative causality perspective. Identity and difference refer to the paradoxical nature of simultaneous stability and change in organization, with identity referring to the stability or continuity of the perpetual recreation of the same identity and simultaneously the difference in that identity from changes brought about by the complex responsive processes. From the complex responsive process view, rather than the systemic perspective, an organization, as a whole, is never complete, it is under perpetual construction. The absent whole is in the parts and emerges from the parts. Identity emerges from the parts. In the case of human organizations, a person's identity arises and co-develops with the collective identity of the organization. Identity is continuously evolving and changing -- there is both the possibility of sameness, or continuity, and the potential for transformation at the same time. For more discussion of identity-difference thinking and transformative causality, see organization.
ideologyJim Collins' view of ideology -- The organization's ideology and envisioned future make up the fundamental purpose of the organization. An organization's ideology is made up of its values and the fundamental reason for being pursued in line with those values. It is the foundation for the culture, identity, and strategies of the organization. The ideology is reflected in the decisions made. It is an invisible hand governing the organization. Ideology is identity, thus the destiny of the organization. The ideology is what fulfills the need of people to be part of something good and positive that is bigger than themselves. Ideology is the unchanging element of purpose. Everything else in the organization is subject to change based on the needs of the organization to change its behavior in order to achieve and sustain a competitive advantage. Even the envisioned future changes as the organization makes progress towards the ambitious goals and achieving the vision. With everything else in the business model subject to change, the ideology is the one point of stability, the creator of identity, thus the glue that holds the members of the organization together and the reminder that the business has an overriding idealistic purpose to be pursued indefinitely. See Jim Collins, 1996 for an in depth discussion. Stacey's view of ideology as part of responsive processes (Stacey, 2007, pp 347-348) -- Norms and values together form ideology -- In complex responsive processes terms, values are themes organizing the experience of being together in a voluntary compelling, ethical manner, while norms are themes of being together in an obligatory, restrictive way. Furthermore, in complex responsive process terms, norms and values constitute a paradox. When humans interact, they enable and constrain each other at the same time. It is the actions of human bodies that enable and constrain. However, in their ongoing negotiation of these enabling-constraining actions, all are taking the attitude of others, specifically and in a generalised/idealised way. In other words, they are continually negotiating the evaluations of their actions. The criteria for evaluation are at the same time both obligatory restrictions, taking the form of what they ought and ought not to do (norms), and voluntary compulsions, taking the form of what they are judging it good to do (values). The evaluative themes forming and being formed by human interaction are norms and values at the same time, together constituting ideology. Ideological spectrum, fascism to anarchy -- Ideology can be thought of as an imaginative 'whole' that is simultaneously the obligatory restriction of the norm and the voluntary compulsion of value, constituting the evaluative criteria for the choice of actions. As such it is largely habitual and so unconscious processes of self and social at the same time. If people in a group rigidly apply the ideological 'whole' to their interactions in all specific, contingent situations they co-create fascist power relations and cults which can easily be taken over by collective ecstasies. The result is to alienate people from their ordinary everyday experience and so create a false consciousness. Alternatively, if the ideological `whole' is so fragmented that there is little generalised/idealised tendency to act, then people will be interacting in ways that are almost entirely contingent on the situation, resulting in anarchy. Usually, however, people particularise/functionalise some ideological wholes in contingent situations and this is essentially a conflicts process of negating the 'whole', which always involves critical reflection. 'Anything goes' is impossible -- From a complex responsive processes perspective, there are no universals outside of human interaction, but this does not mean that norms and values are purely relative in an 'anything goes' kind of way because generalisations and idealisations can only be found in their particularisation in specific interactive situations. This always involves negotiation of conflict; power relating, in which 'anything goes' is impossible. Norms and values as aspects of ideological themes -- From a complex responsive processes perspective, desires, values and norms are all understood to be particular narrative and propositional themes emerging in interaction and at the same time patterning that interaction. Norms are constraining aspects of themes, providing criteria for judging desires and actions. Emotions, such as shame and fear of punishment or exclusion, provide the main constraining force. Values, on the other hand, are highly motivating aspects of themes that arise in particularly intense collective and individual experience, involving imagination and idealization, serving as the basis for evaluating and justifying desires and actions as well as the norms constraining them. Emotions such as altruism, gratitude, humility self-worth, guilt and outrage provide the attractive, compelling force of value experiences. For each person, these intense value experiences are particularly linked to interactions over a life history with important others, such as parents, who are a perceived to enact values ascribed to them. These important others cannot unilaterally prescribe such values because they emerge in the relationship. Ideology, basis for action choices -- However, while the separation of values and norms is an aid to understanding, it is an abstraction from lived, practical experience in which norms and values are inseparable aspects of the evaluative themes, the ideologies, which are the basis of our choices of actions. Ideology's role in organization membership and preserving power differentials -- See communicative interaction for ideology's role in organization membership and preserving power differentials.
implicit choiceImplicit choices are buried in many features of organizational forms, procedures, rules, norms, and customs. For example, in organizational procedures for accumulating and reducing slack, in search rules and practices, in the ways in which targets are set and changed, and in incentive systems. The factors entering into the decision are implied and not directly expressed. This leaves room for confusion, doubt, or misunderstanding as to what the basis for the choice and how the choice was arrived at, since implicit understandings need to be made explicit in order to be reconciled or tested for agreement.
implicit knowledgeImplicit knowledge is where the elements making up the knowledge are implied or not directly revealed. This knowledge is expressed as hunches, intuition, insights, and experience. This knowledge is associated with the artistic and intuitive right side of the brain.
indeterministicThe philosophical doctrine that unpredictability is possible. Events can occur, especially human actions and decisions, which have no cause. Thus freedom and spontaneity is possible.
individualThe notion of individual, or the individual, vs. the social, is a Kantian systems and cognitive psychology construct. In this view, the individual, a single human, is an autonomous self. This autonomous self has different attributes than multiple humans interacting, i.e. the social. In the case of the Hegelian and relationship psychology view of thinking and communication there is no distinction between the individual and the social. There is no autonomous self. The individual is the singular of interdependent people while the social is the plural. Communication and thought are the same pattern of gesture-response whether between two bodies or role playing between 'I' and 'me' in a body's mind. (Stacey, 2007, pp 271 - 277). See communication for a discussion of these two views related to communication.
individual identitySee identity.
indubitabilityWithout doubt. Descartes philosophy of Man centers around the notion of 'indubitability' - I am certain of nothing but the contents of my mind. (Malik, 2000, pp 342)
induced strategy processThe induced strategy process carries out the strategic intent of the firm, seeks to reduce variation, produce stability, produce continuity, perpetuate the company's identity, and exploit. The induced strategy process resembles the traditional top-driven view of strategic management, but differs in five important ways as described in its four interrelated variables and its result (Burgelman, 2002) -- Concept of corporate strategy -- The concept of strategy -- the official corporate strategy -- is the theory that top management has about the basis for its past and future successes. It provides a shared frame of reference for managers at operational and middle levels in the company, and expresses top management's strategic intent. It reflects organizational learning about the company's distinctive competencies (what it is good at), product-market domain (where it can win), core values (what it stands for), and objectives (what it strives to achieve). Induced strategic action -- Induced strategic action involves initiatives on the part of operational and middle-level managers that fit with the concept of corporate strategy and leverage the organizational learning that it embodies. Induced strategic action is oriented toward gaining and maintaining leadership in the company's core business. Structural context -- As a company grows beyond being a small company, the link between strategic action and the concept of corporate strategy is not as readily maintained. Strategy-making becomes increasingly distributed over differentiated groups and multiple levels of management, all of which take strategic action simultaneously. This provides an important source of internal variation, as individuals who possess data, ideas, motivation, and resources all strive to undertake specialized initiatives. But it also implies that unless a company is able to establish mechanisms to maintain a level of coherence, the corporate strategy will eventually be unrealized. Structural context comprises the administrative and cultural mechanisms that top management can use to maintain the link between strategic action and the existing corporate strategy. Structural context encompasses organizational structure, planning and control systems, resource allocation rules, measurement and reward systems, among other administrative arrangements, as well as cultural aspects such as recruitment and socialization processes and more or less explicit principles of behavior. Structural context is a key part of the internal selection environment that operates on strategic action. Familiar external environment -- The induced-strategy process takes place in the company's familiar external environment (as opposed to the unfamiliar and emerging environments that may impact the company). Ideally, through this process top management can proactively influence the external environment to the company's advantage. More frequently perhaps, that causal arrow goes from the environment to the strategy process, forcing companies to respond to strategic change. Top management's role is to be alert to opportunities and threats that arise from environmental change, and to adjust the induced strategy process accordingly. Creating alignment -- the induced strategy process aims to align strategy and action. Through this process a company's strategic actions are joined over time. Distinct patterns of company level strategy are realized. The organization's character is maintained. The company successfully reproduces itself over time in its familiar environment. The genetic metaphor for this process is genotype, the genetic makeup of the organization being passed along through the evolution of the organization, in contrast to the autonomous strategy process metaphor of mutation, which changes the genetics of the successive generations of the organization. Contextual application -- see strategic dynamics for the contextual application of the induced and autonomous strategy process.
inductionInduction, or inductive reasoning, is the primary way people process information. It is a reasoning process which takes us from premises to conclusions supported by the premises without deduction, in which something beyond the content of the premises is inferred as probable or supported by them. Induction is reasoning by pattern recognition. Humans excel at both relating new experiences to old patterns (e.g. analogy making, metaphor making) and completing incomplete patterns. Stories are so appealing because they give us material to find patterns in. Characteristics -- Induction is usually right, fast, and flexible. Possible pitfall -- Our ability and tendency to induce may result in making-up stories about patterns we think we see in events that are random. Strategy development implications -- See reasoning.
industrial organizationThe industrial organization branch of economics focuses on markets, industries, and the position, or possible positions, of organizations within the industries. This branch of economics has been represented in mainstream approaches to strategy since the 1960s, being reflected in Harvard's Business Policy teachings, BCG's experience curve, growth share matrix, deterministic approach to strategic planning, and the works of Porter and Treacy & Weirsema. Its emphasis is on what is outside the organization and how the organization should position itself to best take advantage of that. Industrial organization contrasts with organizational economics, with its focus on the firm and the resource-based view of strategy.
industryOrganization classifications -- organizations can be classified many ways. Industry is the economist's classification of firms. This method groups firms serving the same demand or function in the same classification. See populations of organizations for the organizational ecologist's view.
inertia theorySee form.
inference Inference is the act or process of deriving a conclusion based solely on what one already knows. Inference is studied within several different fields. Human inference (i.e. how humans draw conclusions) is traditionally studied within the field of cognitive psychology. Logic studies the laws of valid inference. Statisticians have developed formal rules for inference from quantitative data. Artificial intelligence researchers develop automated inference systems. Inductive and deductive inference -- The conclusion inferred from multiple observations is made by the process of inductive reasoning. The conclusion may be correct or incorrect, and may be tested by additional observations. In contrast, the conclusion of a valid deductive inference is true if the premises are true. The conclusion is inferred using the process of deductive reasoning. A valid deductive inference is never false. This is because the validity of a deductive inference is formal. The inferred conclusion of a valid deductive inference is necessarily true if the premises it is based on are true. Wikipedia contributors, ""Inference,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Inference&oldid=102603785 (accessed January 31, 2007). See induction and deduction.
informationInformation consists of processed data, the processing directed at increasing its usefulness. Like data, information represents the properties of objects and events, but it does so more compactly and usefully than data. The difference between data and information is functional, not structural. Information is contained in descriptions, in answers to questions that begin with such words as who, what, where, when, and how many. It is usable in deciding what to do, not how to do it. Answers to how-to questions constitute knowledge. -- definition from Russell L. Ackoff's works Information as difference (Source: Bateson, G. (2000), Steps to an Ecology of Mind, Chicago: University of Chicago Press, as shown at http://plato.acadiau.ca/courses/educ/reid/papers/PME25-WS4/SEM.html (accessed September 8, 2007)) -- Organism plus environment What sort of a thing is this, which we call ""organism plus environment""? Let us go back to the original statement for which Korzybski is most famous - the statement that the map is not the territory... It all starts, I suppose, with the Pythagoreans versus their predecessors, and the argument took the shape of ""Do you ask what it's made of - earth, fire, water etc?"" Or do you ask, ""What is its pattern?"" (p.455) ""What is it in the territory that gets onto the map?"" We know the territory does not get onto the map. That is the central point about which we here are all agreed. Now, if the territory were uniform, nothing would get onto the map except its boundaries, which are the points at which it ceases to be uniform against some larger matrix. What gets onto the map, in fact, is difference, be it a difference in altitude, a difference in vegetation, a difference in population structure, difference in surface, or whatever. Differences are the things that get onto a map. A difference is a very peculiar and obscure concept. It is certainly not a thing or an event. This piece of paper is different than the wood of this lectern. There are many differences between them - of colour, texture, shape, etc... Of this infinitude, we select a very limited number which become information. In fact, what we mean by information - the elementary unit of information - is a difference which makes a difference (pp.457-459).
information asymmetryAsymmetry of information is when one party has greater knowledge, or ability to gain or shield information, from another party (Roberts, 2004, p 82). Examples of information asymmetry are as follows -- In the context of an offering, such as a used car, the seller has far greater knowledge of the car than the buyer. Unless the seller is fully trusted to reveal all he knows about the car, the seller will offer less for the car than it may actually be worth, because they are allowing for undisclosed defects and shortcomings. In the context of a contractual agreement, there are limitations on the ability to observe the actions of others, thus limiting the nature and degree of agreements that ma be reached.
information technology Information technology has been a key factor in the increasing complexity of social systems. See complexity.
inherent complexitySee complexity.
innate ideasRealists believe that perception reflects reality, without explaining how this is known. Descartes and Leibniz dealt with the problem by arguing that the mind contains innate ideas through which it recognizes clear, distinct truths about the real external world. In other words, there is nothing problematic about knowing: external reality exists and we directly know it because we are born with minds having the capacity, innate ideas, for knowing reality.. Locke took a more skeptical position and argued that the mind had no innate ideas of reality but was initially a blank tablet waiting for experience to write upon it in the form of sensory impressions that represent external, material objects. The question then became how we could know that mental representations correspond to reality. In Kant's thinking, innate ideas impose order on experience, the phenomenal, so that knowledge and truth are not simply relative. In this way he agreed with the radical skeptics in holding that we could not know reality directly but also agreed with the scientific realists in holding that there were innate ideas that imposed order on experience so that knowledge and truth were not simply relative. Source: Stacey, 2003, pp 19-21
innovationDefinition -- "" 'Innovation', then is an economic or social rather than a technical term. It can be defined the way Jean Baptiste Say defined entrepreneurship, as changing the yield of resources. Or, as a modern economist would tend to do, it can be defined in demand terms rather than supply terms, that is, changing the value and satisfaction obtained from resources by the consumer."" -- Peter F. Drucker, Innovation and Entrepreneurship, 1985, Harper Perennial, p 33 Definition -- Innovation is putting invention to work in the business. definitionsnew (Pontin, 2008) -- Innovation is not invention, and still less is it scientific discovery. An innovation must be valuable, which means it must exist in a market or some more general social context of supply and demand. . Innovation encompasses ""new products, business processes, and organic changes that create wealth or social welfare."" - Economist. Innovation is ""fresh thinking that creates value."" - Richard Lyons, the chief learning officer of Goldman Sachs. Innovation is disruptive -- For me (Pontin, 2008), neither definition (above) captures the discomforting novelty of true innovations. Innovation disrupts our existing way of doing business or creates entirely new ways of doing things. Always, innovations are embraced by those who find them valuable, are hyperbolized by the companies and organizations that benefit from their adoption, but are resisted by incumbent companies and organizations and conservative customers and users. When an innovation is sufficiently accepted by enough people, however, resistance to that innovation becomes feckless and fruitless--it amounts to an attempt to pretend that reality is other than how it is. Context of innovation -- Every episode of innovation is always specific to a social system (such as a business-organization) and to one or more particular domains that are relevant to this social system (see technology). (Gupta, 2007, 886). Process and outcome -- The term ""innovation"" refers not just to an outcome (novelty incorporated into the business), but also a process (how novelty comes about and is incorporated into the business). Innovation as a strategic management competency -- See Hamel (2002, pp 281 - 323) for a model of innovation as a capability, which is essential to a strategic management competency. Innovation as a discipline -- Innovation is not a luxury, a program, or something to be done 'on the side'. Business organizations must have innovation as a core competency in order to survive. This is due to the evolving, and thus dynamic nature, of the economy. Innovation is at the core of an overall strategic management competency. Following is a perspective on innovation - what drives it, related concepts, processes and constructs to facilitate it, and producing ideas to feed it -- Creative destruction -- Evolutionary economics describes a dynamic economy where the primary force is creative destruction. An evolutionary algorithm is continually in motion. Business organizations must innovate, transforming themselves, in order to survive and thrive. Facilitating constructs -- The business organization is the object of strategy. The model hierarchy provides insight into the make up of a business organization. The political model, mental model, business model, and operational model all serve as guiding lights for inquiries necessary to understand, design, and innovate the business organization. Business design -- Design of the business organization is at the heart of innovation, as business model innovation is one of the strongest, if not the strongest, forms of innovation. The business model provides the construct to guide business organization inquiry -- including the comprehensive inquiry for assessment and design. Competitive advantage factors provide for explicit inquiry to innovate the business model to produce competitive advantage. The business organization transformation completes the innovation by putting the invention into practice in the business. Management innovation -- Management innovation brings about revolutionary new ways to manage business organizations - providing for previously unimagined capabilities from business organizations. New management techniques are being developed to produce business organizations better suited to a dynamic economy. Insight -- Innovative ideas come from insight. Though there is not a specific process to create innovative ideas, there are processes that create the precursors for innovative ideas, like insight. Pluralism -- Innovation comes from the exercise of the evolutionary algorithm within an organization.. For this algorithm to produce its greatest benefits, it requires a diversity of ideas. Diversity of ideas come from diversity in thinking and experiences. Thus innovation thrives on diversity of participants and methods to effectively encourage, capture, and nurture their ideas. That is where pluralism factors in. Explicitly putting pluralism to work for business organization innovation is disciplined pluralism."" Idea management -- Idea management -- idea development, stimulation, nurturing, etc. - is the foundation for innovation. It is the process which ""causes serendipity to occur"" to produce innovative ideas. Along with the insights produced, various forms of creative exercises can be employed to stimulate further idea development. Pursuit of ideals -- Cycles of idealism and realism prompt the innovation of the business organization -- the idealistic stages unleash creativity and unbounded designs, while the realistic stages capture the new design and wrestle it to the ground to make it implementable, i.e. make it practical. Innovation mechanisms -- Innovation as a product of culture and methodology -- The culture of innovation tolerates failure and smiles upon creativity. But such a culture is not enough in itself: successful innovation also pitilessly rejects bad ideas when their promise has been exhausted and efficiently executes the development and commercialization of the best ideas. Wherever I go, innovators seem to instinctually recognize these paired demands of culture and methodology--and, more important, they burn with a passion for innovation itself. -- Pontin, 2008. Exploration, Variation, Knowledge, and Innovation -- Innovation is an outcome of exploration. Exploration brings variety. Exploration is the ""pursuit of new knowledge, of things that might come to be known"" (Rothaermel, 2001, p. 689). Increases in internal variety entail new information and knowledge, which promotes innovation because organizations can improve on what they know and solve problems in new ways (Burns and Stalker 1961, March 1991, Utterback 1994, von Hippel 1988). By expanding the knowledge pool, a greater exploration orientation increases the odds of finding commercially valuable new knowledge combinations (Katila 2002, Katila and Ahuja 2002, Nelson and Winter 1982). Source: Sidhu, 2007 Innovation, Adaptation, and Survival -- Organization survival depends on the ability to adapt to a changing environment (Schumpeter, 1950). In particular, greater exploration orientation is said to lie at the heart of a firm's adaptive ability because it generates requisite internal variety, allowing the firm to adapt to shifts in markets, technologies, and competition through innovation (March 1991, McGrath 2001). Source: Sidhu, 2007 Schumpeter - knowledge creation and innovation in evolutionary economics (Fonseca, 2002, pp 14 - 16) -- A very different way of thinking about innovation is to be found in what has come to be called evolutionary economics, most notably in the work of Schumpeter (1934). He was interested in explaining why economic growth occurs, rather than simply ascribing it to an unexplained residual; his main contribution was to place innovation inside the economic system rather than considering it as an exogenous shock to which economic systems reacted. He argued that an economy could not be understood as an entity independent of society as a whole and that economic growth had to be explained in terms of the dynamics of scientific and technological innovation and the roles of entrepreneurs in organizations. For him, innovation was to be understood in terms of both social/organizational dynamics and individual psychology. Schumpeter distinguished between the entrepreneur who performed a role, and innovation, which was the outcome of entrepreneurial activity in organizations that possessed characteristics making it possible for individuals to take the role of entrepreneur. For him, the ""entrepreneur"" played a central role in the process of economic development. Several people could take this role and none would play it all the time. He therefore thought about economic growth in terms of dynamic processes, rather than in terms of the mechanisms that featured in neoclassical economics. Furthermore, Schumpeter addressed the issue of innovation within a systemic framework. An innovation could thus be a new output that the organization placed in its environment, a new input it received from the environment, or a new way of arranging its internal relations, including the psychological attributes of individuals. Schumpeter was also the first to address the issue of knowledge creation, knowledge transfer and knowledge use, as underlying the process of innovation. In fact this is a central tenet of his views, making of the process of knowledge creation, particularly when embodied into some technological artifact, an endogenous phenomenon of economic realities. Even though he understood innovation as a linear path from basic science to a commercial application of scientific knowledge, he did not restrict innovation to purely scientific ventures. His definition of innovation comprised all ways of doing things differently. Leadership and Innovation (Source: Barsh, Capozzi, Davidson, Leadership and Innovation, The McKinsey Quarterly, 2008, 1) -- McKinsey provides recommendations to close the gap between leadership's desire for innovation and the typical less than desired result. Building an innovative organization is very frustrating for most executives. Sustaining innovation to create real value at scale -- the only kind of innovation that has a significant financial impact -- is even harder. Three people management fundamentals may produce the building blocks of an innovative organization. Step one: Formally integrate innovation into the strategic-management agenda for senior leaders. Innovation is then not only encouraged, but managed, tracked, and measured as a core element in a company's aspirations. Practical steps in this arena -- Define the kind of innovation that drives helps meet strategic objectives. Direction towards objectives provides motivation. Add innovation t the formal agenda at regular leadership meetings. Set performance metrics and targets for innovation. Step two: Make better use of existing talent for innovation, without implementing disruptive change programs, by creating the conditions that allow dynamic innovation networks to emerge and flourish. Leadership behavior that sends the right signals: innovation is inherently associated with change and takes attention and resources away from efforts to achieve short-term performance goals. More than initiatives for any other purpose, innovation may therefore require leaders to encourage employees in order to win over their hearts and minds. The top two motivators of behavior to promote innovation are strong leaders who encourage and protect it and top executives who spend their time actively managing and driving it. Difference in creativity and intelligence matter far less for innovation than connections and networks. Ideas seem to spur more ideas. Networks generate a cycle of innovation. Effective networks allow people with different kinds of knowledge and ways of tackling problems to cross-fertilize ideas. By focusing on getting the most from innovation networks, leaders can therefore capture more value from existing resources, without launching a large-scale change-management program. Shaping social networks is both an art and science. Any network is unpredictable, and, in the end, impossible to control. An innovative social network does not replace hierarchy, but the network of information and knowledge is more distributed and employees participate actively in innovation. Designing an innovation network follows the four critical steps: Connect -- Seek out right-brains, left-brains, idea generators, researchers, experts, and producers. Include multiple levels of seniority, skills, and performance. Define one network or include subnetworks devoted to specific areas. Set boundaries and engage -- Define role of network in meeting strategic goals, establish network goals and objectives, define clear expectations, establish time frame and commitment required. Plan how to establish trust among network members and engage them quickly. Support and govern -- Define network's sponsorship and leadership. Determine technology support required for network members. Determine role of face-to-face meetings. Define additional support as necessary. Define key knowledge and information inputs -- both internal and external to the network. Manage and track -- Define how mebers will be recognized for their contributions. Establish performance-management criteria based on both individual and grout successes. Establish tracking criteria. Define timing for assessment, review, and modification of the network, and determine who will have these responsibilities. Decide how new members enter network and current members leave. Plan process to facilitate network and its impact. There are several archetypes of individuals required for an effective innovation network: Idea generators -- prefer to come up with ideas, believe that asking the right questions is more important than having the right answers, and are willing to take risks on high-profile experiments. Researchers -- mine data to find patterns, which they use as a source for new ideas and insights. Experts -- value proficiency in a single domain and relish opportunities to get things done. Producers -- orchestrate the activities of the network. Others come to them for new ideas or to get things done. Producers are the most likely members of the network to be making connections across teams or groups. Step three: Take explicit steps to foster an innovation culture based on trust among employees. In such a culture, employees understand that their ideas are valued, trust that it is safe to express those ideas, and oversee risk collectively, together with their managers. Executive trust and engagement were the mind-sets most closely correlated with a strong performance on innovation. People engage with those they trust more than those regarded as experts. Cultural attributes that inhibit innovation: bureaucracy, hierarchy, and a fearful environment. Executives must focus on the risks of innovation as much as on its opportunities. Demonstrating active learning from innovation failures is essential. Leadership skills include coaching subordinates and facilitating collaboration across silos. When top management reinforces leadership role-modeling and formal organizational mechanisms to promote innovation with commitment and energy to build capabilities for specific tasks, the combination can yield impressive results. Top leadership teams build more innovative cultures in several ways: Embrace innovation as a top team -- making it a core part of the strategy and model and reinforce this with their behavior. Turn selected mangers into innovation leaders -- making networks more productive. Create opportunities for managed experimentation and quick success. The goal is not go get it right the first time but to move quickly to give as many influential employees as possible a positive experience of innovation. Types of innovation -- Research -- Research is mentioned here to emphasize what innovation is. Since innovation is putting invention to work in the business, research per se is not innovation. It can be a precursor to innovation due to the inventions and knowledge it can develop. Thus the inventions created or the insights gained from research can be applied to the business, resulting in innovation. Basic physical technology -- may be invention put to work within the processes of the business to further develop organizational capabilities. Process - Process innovation includes minor process improvements, reengineered processes, those modified or developed by kaizen events, up to those processes forming the competitive value system of the business like Dell's supply chain, Wal-Mart's distribution system, or Lexus's customer service system. Offering - Offering innovation brings new value to the commodities, goods, services, experiences, or transformations provided by the business organization to its environment. From a systems perspective, offering innovation improves how the business organization fulfills it function within its environment. Business - Business innovation refers to business, business organization, business concept, business model, and business design innovation which produces a competitive advantage based on how the business is defined, designed, and carried out by the organization.. Prior to the arrival of the internet, several business models were not possible. After its arrival, new businesses formed and existing businesses transformed to take advantage of what this new technology enabled in business models. Management - Management is a social technology. Its innovation has brought about some of the most profound and lasting innovations in all of business. Management innovation can be defined as a marked departure from traditional management principles, processes, and practices -- a departure from customary organizational forms that significantly alters the way the work of management is performed. See management innovation.
innovation routineFrom Schreyögg, 2007, 923: Innovation routines are higher-order search routines to bring about regular modifications of established lower-order"" routines. Such routines, somewhat similar to the Japanese system of continuous improvement, are expected to produce revisions, even radical changes, in a systematic and predictable fashion (Nelson and Winter, 1982: 17). This approach also includes the explanation of the genesis of routines. Both operating and innovation routines (`dynamic capabilities') arise from learning and are conceived as condensed results of former trial-and-error behavior in terms of collective learning acts. Zollo and Winter therefore suggest establishing separate 'learning mechanisms' to develop a firm's routines. These learning mechanisms are specified as stages in a recursive cycle of 'experience accumulation,' `knowledge articulation,' and 'knowledge codification' -- a specification which comes close to Non- aka' s knowledge spiral (Nonaka, 1994).
innovation trajectoryAn organization's innovation trajectory is the direction the recent and current innovation is headed. In a stable environment this is often a suitable trajectory. In the case of a rapidly changing environment, or in the case of discontinuous change in the environment, the firm's innovation trajectory is often not the competitive response the firm needs.
innovatorFrom Pontin, 2006, Attributes of successful innovators -- Successful innovators are famously untroubled by the prospect of failure. More profoundly, many innovators appreciate failure. Innovators commonly recognize that ""problems and questions are the limiting resource in innovation,"" says Ed Boyden, a Stanford University neurobiologist. He means that difficult questions are thrilling: ""If we take a really hard question, like 'What is consciousness?' or 'How do we store memories?', it's not even clear how we should even approach the problem."" Innovators find inspiration in disparate disciplines. Innovation flourishes when organizations allow third-party experimentation with their products. Fragility is the enemy of innovation: systems should boast broad applications and be unbreakable. Real innovators delight in giving us what we want: solutions to our difficulties and expansive alternatives to our established ways. Innovators are sometimes perplexed by our ignorance of our own needs. Successful innovators do not depend on what economists call ""network externalities"" (where a system, like a fax machine, has little use to its first user, but becomes increasingly valuable as more people use it): ""Ideally, the system should be useful for user number one,"" says Schachter. Hence, innovators can divine needs by applying a utilitarian imperative: they ask, Would the innovation help someone now? Many innovators become technologists because they want to better the world.
inquiring systemSee organizational learning.
inquiryInquiry, or enquiry, is an act of asking for information. For inquiry to be successful, it must be carefully thought through in order to be applicable to the particular situation or subject being inquired upon. This requires an initial judgment to launch the inquiry. Russell L. Ackoff (1999, p 293) describes inquiry as ""A procedure for (a) answering questions, (b) solving problems, and (c) developing more efficient procedures for answering questions and solving problems."" Establishing a valid basis for business organization inquiry is essential to strategy development and the accompanying business design. Need for a preconceived notion of the whole -- Effective inquiry requires a preconceived notion of the whole in order to sort out relevant patterns from what otherwise would appear as chaos as well as to dispel false mental constructs which make up patterns where none actually exist. Jamshid Gharajedaghi (2006, p 109) called this foreknowledge an ""enabling light"". The American philosopher E.A. Singer (1959, p 109). described the need for this foreknowledge -- ""It would be idle to set out on a search not knowing what one was looking for; it would be equally idle to seek the answer to a question of whose meaning one knew nothing. But one could have caught nothing of the meaning of the question, did he not know one thing about the answer; namely the form this answer must take."" In the case of business design, i.e. business organization design, the preconceived notion comes in the form of a social system as defined by systems science. This provides a construct applicable to a legitimate understanding of business organizations. General inquiry construct -- The general structure of an inquiry -- Inquiry The guiding light - a way of viewing the object of the inquiry -- multiple perspectives of the whole. inquiry of each aspect inquiry of aspect integration Form of the answer elements of the whole structure of the elements element interrelationships Inquiry application -- The basic inquiry process works with any multi-variable complex system. It is the object of the inquiry that makes one inquiry different from another. Any complex system can be inquired upon in an iterative manner to produce an understanding or design. Inquiry principles -- The inquiry process is consistent with systems, complexity, and systems thinking. Inquiry for strategy development and business design -- For the specific method of inquiry used both to develop an understanding and design of a business organization, see iterative inquiry and business organization inquiry. Management considerations -- The first thing to note about inquiry is that how the inquiry is conducted makes all the difference in the world as to what the result of the inquiry will be. The objective of a management inquiry should of course be to find the ""truth of the matter"". That is easier said than done. Becoming familiar with social systems and iterative inquiry provides the basis for effective business organization inquiry.
insightInsight is the capacity to gain an accurate and deep understanding of a subject. It is this deep understanding that leads to intuition, the abilty to understand immediately without reasoning. ""Insight is not a light bulb that goes off inside our heads. It is a flickering candle that can easily be snuffed out."" (Gladwell, 2005) Strategy development implication -- Insight and intuition are where the initial seeds of creative strategy come from. Questions to ask to build insights (Hamel, 2000, pp 117 - 135) Where and in what ways is change creating the potential for new rules and new space? What is the potential for revolution inherent in the things that are changing right now, or have already changed? What are the discontinuities we could exploit? What aspect of what's changing can we come to understand better than anyone else in the industry? What's the deep dynamic that will make our new business concept oh-so-relevant right now? Get addicted to looking for change. Keep asking yourself, what's changing? What's the opportunity this presents? If necessary, bring in an industry outsider who comes from a different context -- one that allows them to see new possibilities. Search data for previously unrecognized patterns. This is an art that requires conceptual ability. Keep a list of things that strike you as new or different. Everyone once in a while, scan that list and search for broad themes. The world is a system. Something changes here, and it will affect something over there. Sometimes creating proprietary foresight is just a matter of slogging through more data. Know what isn't changing or what's not going to change. People's basic nature does not change. What changes is how we address our wants and needs. Change gives us better tools. Opportunities come when we can imagine how to use our new tools to address our deepest desires. You can't understand a discontinuity merely by reading about it, you can understand that only by living it. To be fully grounded in what is changing, you must move from the analytical to the experiential. People don't embrace an opportunity because they see it, they embrace it because they feel it. And to feel it, they have to experience it. Develop a routine, which will help you to bring about new ways of seeing the world, seeing new opportunities, and seeing new problems to solve. For example, how often you pick up a magazine you've never read before? How often do you go to an industry convention for an industry, you know little about? How often you hang out with people who are very different from you? How do you know, if you're on the edge or in the hinterlands? You have any friends in venture capital who can tell you what's happening out on the fringe? Do you know, what kind of startups are calling on the VP for business development in your company? Have you been tracking all the IPOs your broad competitive domain? Insights come out of new conversations. All too often, strategy conversations in large companies have the same 10 people talking to the same 10 people for a fifth year in a row. They can finish each other's sentences. You're not meant to learn anything new in this setting. Travel is still the fastest way to start a bunch of new conversations. It has the added benefit of turning the background into the foreground. Travel makes you a stranger. It put to it odds. It robs you of your prejudices. Long-term thinking is not the challenge. It is unconventional thinking, which is the challenge. Therefore, the challenge is not the present versus the future; it is the conventional versus the unconventional. Pattern recognition -- Seeing the relevant trends and seeing patterns changing and new patterns being established are all essential to developing an understanding of the environment in which the business operates. These trends and patterns reveal current dangers and opportunities. The more practiced management becomes at reading patterns and understanding trends relevant to their business, markets, industry, and business in general, the greater their understanding will be of the world they live in. The deeper their understanding of the relevant trends and patterns, the stronger their insights and intuitions will become. See Slywotsky's 'profit patterns' and 'profit models'.
institutionsFrom an ecological perspective of organizations, institutions are a cultural factor in organization that constrain and support social structures and processes. These institutions consist of rules, norms, and beliefs. Rules -- rules are a regulative institution, a system of rules or governance system. The major source of regulatory rules originate with governmental organizations. Norms - in this case institutions serve as normative systems, structures providing a moral framework for the conduct of social life. Unlike external rules, norms are internalized by participants; behavior is guided by a sense of what is appropriate, by one's social obligations to others, by a commitment to common values. Beliefs -- in this case institutions serve as cultural-cognitive systems; common symbolic systems and shared meanings. Common cognitive frameworks and understandings support collective action. Institutional patterns co-evolve with organizational forms. Source: Scott & Davis, 2007, pp 258-260, 277
integrative thinkingFrom Robert Morris's review of The Opposable Mind: How Successful Leaders Win Through Integrative Thinking by Roger L. Martin, 2007, Harvard Business School Press -- As I began to read this brilliant book, I was reminded of what Doris Kearns reveals about Abraham Lincoln in Team of Rivals. Specifically, that following his election as President in 1860, Lincoln assembled a cabinet whose members included several of his strongest political opponents: Edwin M. Stanton as Secretary of War (who had called Lincoln a ""long armed Ape""), William H. Seward as Secretary of State (who was preparing his acceptance speech when Lincoln was nominated), Salmon P. Chase as Secretary of the Treasury (who considered Lincoln in all respects his inferior), and Edward Bates as Attorney General who viewed Lincoln as a well-meaning but incompetent administrator but later described him as ""very near being a perfect man."" Presumably Roger Martin agrees with me that Lincoln possessed what Martin views as ""the predisposition and the capacity to hold two [or more] diametrically opposed ideas"" in his head and then ""without panicking or simply settling for one alternative or the other,"" was able to ""produce a synthesis that is superior to either opposing idea."" Throughout his presidency, Lincoln frequently demonstrated integrative thinking, a ""discipline of consideration and synthesis [that] is the hallmark of exceptional businesses [as well as of democratic governments] and those who lead them."" The great leaders whom Martin discusses (e.g. Martha Graham, George F. Kennan, Isadore Sharp, A.G. Lafley, Lee-Chin, and Bob Young) developed a capacity to consider what Thomas C. Chamberlain characterizes as ""multiple working hypotheses"" when required to make especially complicated decisions. Like Lincoln, they did not merely tolerate contradictory points of view, they encouraged them. Only in this way could they and their associates ""face constructively the tension of opposing ideas and, instead of choosing one at the expense of the other, generate a creative resolution of the tension [whatever its causes may be] in the form of a new idea that contains elements of the opposing ideas but is superior to each."" This process of consideration is based on a quite different model than the more commonly employed scientific method based on, as Martin explains, the working hypothesis that is used ""to test the validity of a single explanatory concept through trial and error and experimentation."" He rigorously examines the process of integrative thinking in terms of four constituent parts: salience, causality, architecture, and resolution. He devotes a separate chapter to each, citing dozens of real-world examples, and then (in Chapter 5), he introduces a framework within which his reader can also develop integrative thinking capacity. Thinking tools -- ""...how integrative thinkers ""connect the dots."" He cites Taddy Blecher (co-founder of CIDA City Campus, an innovative South African university) as one example. I think the details are best revealed within their context. Suffice to say now that for Blecher, ""existing models are to his mind just models, each with something useful to offer."" However, his objective was to find a better model of post-secondary education and Martin examines Blecher's use of ""two of the three most powerful tools at the disposal of integrative thinkers,"" generative reasoning and causal modeling, to achieve that objective. He also discusses a third tool, assertive inquiry, and offers aspiring integrative thinkers a few lessons along the way. Mastery and originality -- Martin suggests that ""mastery without originality becomes rote"" whereas ""originality without mastery is flaky if not entirely random."" Successful leaders integrate both while strengthening their skills and nurturing their imagination. They realize that existing models can be informative but are imperfect. They leverage opposing models, convinced that better models exist and can be found. And they ""wade into complexity,"" allowing themselves time to be creative as they expand and nourish their personal knowledge systems. Throughout their own process of discovery, readers will be guided and informed by what Roger Martin so generously and eloquently shares in this brilliant book.
intellectual honesty""Intellectual rigour is an important part, though not the whole, of intellectual honesty - which means keeping one's convictions in proportion to one's valid evidence.[2] For the latter, one should be questioning one's own assumptions, not merely applying them relentlessly if precisely. It is possible to doubt whether complete intellectual honesty exists - on the grounds that no one can entirely master his or her own presuppositions - without doubting that certain kinds of intellectual rigour are potentially available."" -- Source: Wikipedia contributors, ""Rigour,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Rigour&oldid=200236301 (accessed March 30, 2008). Justice Harlan and Plessy -- Source: Rivkin, Dave B and Lee A. Casey, Mr. Constitution, The Wall Street Journal, March 22, 2008, A25, an interview with Clarence Thomas ""The perfect example is Brown v. Board of Education (1954), where the Supreme Court overruled the racist ""separate but equal"" rule of Plessy v. Ferguson (1896), which permitted legally enforced segregation and had been settled precedent for nearly 60 years. It is the Plessy dissent of Justice John Marshall Harlan to which Mr. Thomas points for an example of a Justice putting his personal predilections aside to keep faith with the Constitution. Harlan was a Kentucky aristocrat and former slaveowner, although he was also a Unionist who fought for the North during the Civil War. A man of his time, he believed in white superiority, if not supremacy, and wrote in Plessy that the ""white race"" would continue to be dominant in the United States ""in prestige, in achievements, in education, in wealth and in power . . . for all time, if it remains true to its great heritage and holds fast to the principles of constitutional liberty."" ""But,"" Harlan continued, ""in view of the Constitution, in the eye of the law, there is in this country no superior, dominant, ruling class of citizens. There is no caste here. Our Constitution is color-blind, and neither knows nor tolerates classes among its citizens."" That, for Mr. Thomas, is the ""great 'But,'"" where Harlan's intellectual honesty trumped his personal prejudice, causing Mr. Thomas to describe Harlan as his favorite justice and even a role model. For both of them, justice is truly blind to everything but the law."" Being blind to everything but the law can open your eyes to new insights, possibilities, and truths.
intellectual rigorAn attempted short definition of intellectual rigour might be that no suspicion of double standard be allowed: uniform principles should be applied. ""The rigour of the game"" is a quotation from Charles Lamb about whist. It implies that the demands of thinking accurately and to the point over a card game can serve also as entertainment or leisure. Intellectual rigour can therefore be sometimes seen as the exercise of a skill. It can also degenerate into pedantry, which is intellectual rigour applied to no particular end, except perhaps self-importance. Scholarship can be defined as intellectual rigour applied to the quality control of information, which implies an appropriate standard of accuracy, and scepticism applied to accepting anything on trust. Wikipedia contributors, ""Rigour,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Rigour&oldid=200236301 (accessed March 30, 2008)
intelligenceCriteria for intelligence -- a development history, landmarks for learning and mastery a relevant symbol system, a lingua franka, a set of symbols that capture the meaningful information needed to operate in that domain Source: Goleman, Daniel, (2006), Business Intelligence, in Business the Ultimate Resource, Basic Books, xlv - xlix See intelligence hierarchy and business intelligence.
intelligence cultureSee police culture for a contrast between intelligence and police culture.
intelligence hierarchyIntelligence can be categorized in levels that are useful to understanding its formation and application. Russell L. Ackoff defined the levels of intelligence as data, information, knowledge, understanding, and wisdom. The construct presented here adds one level, a level devoid of intelligence, noise. Progression of levels of intelligence: noise data information knowledge understanding wisdom Effective strategic management requires an awareness of the levels of intelligence and their role in business organization management. For example, knowledge, or know-how, is needed to do work. Understanding, knowing why work is done, is needed to make work more efficient. Wisdom is needed to make effective decisions, especially strategic decisions. There is also a correlation between the progression of economic value and the Progression of Valuable Intelligence (see below). More intelligence is required to produce progressively more valuable offerings. Note: In Pine & Gilmore (1999, pp. 188-189) they speak of both echelons (hierarchy) of valuable intelligence and echelons of economic value -- aligning the levels of economic offerings of the Progression of Economic Value with levels of intelligence called the Progression of Valuable Intelligence. The levels of valuable intelligence presented here include one more level than the Pine & Gilmore construct.
intensive boundarySee boundary.
intuitionIntuition is the ability to understand something immediately without reasoning, an immediate awareness of the truth or understanding what to do. It is associated with the right brain. Intuition is not accessible to the senses or calculation. Intuition is related to insight as being a product or result of insight as in the ability or capacity to gain a deep intuitive understanding. Strategy development implication -- Insight and intuition are where the initial seeds of creative strategy come from.
inventionA new combination of components, ideas, or processes. Something produced or created as a product of their ingenuity, experience, or contrivance. Invention is not innovation.
is-ought problemIn meta-ethics, the is-ought problem was raised by David Hume (Scottish philosopher and historian, 1711-1776), who noted that many writers make claims about what ought to be on the basis of statements about what is. But there seems to be a big difference between descriptive statements (about what is) and prescriptive statements (about what ought to be). ""Hume discusses the problem in book III, part I, section I of his A Treatise of Human Nature: ""In every system of morality, which I have hitherto met with, I have always remark'd, that the author proceeds for some time in the ordinary ways of reasoning, and establishes the being of a God, or makes observations concerning human affairs; when all of a sudden I am surpriz'd to find, that instead of the usual copulations of propositions, is, and is not, I meet with no proposition that is not connected with an ought, or an ought not. This change is imperceptible; but is however, of the last consequence. For as this ought, or ought not, expresses some new relation or affirmation, 'tis necessary that it shou'd be observ'd and explain'd; and at the same time that a reason should be given; for what seems altogether inconceivable, how this new relation can be a deduction from others, which are entirely different from it."" Hume then calls for writers to be on their guard against such inferences, if they cannot give an explanation of how the ought-statements are supposed to follow from the is-statements. But how exactly can you derive an ""ought"" from an ""is""? In other words, given our knowledge of the way the world is, how can we know the way the world ought to be? That question, prompted by Hume's small paragraph, has become one of the central questions of ethical theory, and Hume is usually assigned the position that such a derivation is impossible. This complete severing of ""is"" from ""ought"" has been given the graphic designation of ""Hume's Guillotine"". Wikipedia contributors, ""Is-ought problem,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Is-ought_problem&oldid=99717401 (accessed January 31, 2007).
ISO 9000See quality.
iterative inquiryIterative inquiry is a form of synthesis. This inquiry process synthesizes an understanding of the whole by querying the whole from multiple aspects and querying the interrelationships between those aspects. This approach to inquiry iterates from aspect to aspect and the aspect interrelationships as an understanding of the whole are synthesized. This process results in an understanding of the behavior of the whole and how the interrelationships of the parts create the attributes of the whole.The process -- The aspects and the related elements to be inquired upon are defined along with their interrelationships. The inquiry iteratively focuses on understanding each aspect and integrating all of the aspects of the inquiry. The iteration continues until the understanding, design, and/or participation needs are met. A possible iteration scenario is as follows -- Iteration one -- define the assumptions and properties of each aspect and their interrelationships Iteration two -- Identify issues, alternatives, perform validations, and develop issue resolutions Iteration three -- Refine the resolution, further develop understanding, seek a common understanding and consensus Iteration three plus -- Continue iterations as needed to further refine or validate the resolutions and/or foster further participation The inquiry is over when the understanding is clear and has not shifted significantly from the previous iteration. Thus the inquiry is complete when the objective of the inquiry is achieved, not necessarily in a fixed number of sessions or cycles. The iteration process produces its most valuable results when iteration results be asymptotically approaching one ""value"" . It requires a great deal of discipline to take the iterations to this degree of completeness. One or two iterations typically produce such dramatic results that the perceived value of performing a third or fourth iteration is negligible. The value is only visible after the fact - making for difficulty in motivating the team to approach the next iteration with passion and integrity. The consolation to this dilemma is knowing that one iteration is better than none, two is better than one, ... even if an asymptotical approached solution is not visible.Note: Iterative inquiry and the aspects of purpose, function, process, and structure are attributed to Jamshid Gharajedaghi, Systems Thinking: Managing Chaos and Complexity: A Platform for Designing Business Architecture, (Boston: Butterworth Heinemann, 2nd Edition, 2006) p 108-113, 133-135.This definition compiled by Kim C. Korn, Create Advantage, Inc., www.createadvantage.com
judgmentThe ability to judge, make a decision, or form an opinion objectively, authoritatively, and wisely, esp. in matters affecting action; good sense; discretion (judgment. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/judgment (accessed: September 30, 2007). Source: Tichy, Noel M. (2007), Warren G. Bennis, Making Judgment Calls, Harvard Business Review, October, 2007, pp 94 - 102 A leader's most important role in any organization is making good judgments -- well-informed, wise decisions that produce the desired outcomes. Judgement domains -- Leaders most important calls reside in one of three domains: people judgments -- getting the right people on your team and developing up-and-comers who themselves demonstrate good judgment strategy judgments -- judgment behind the critical decisions with large and long-lasting implications crisis judgments -- judgments made under duress Judgment is a process -- Leaders who regularly demonstrate good judgment are not having a series of terrific (or lucky) ""aha"" moments. They make their calls, decisions, in the middle of a process that unfolds over three pahses. Phases of the judgment process -- Preparation -- during which leaders sense and frame the issue that will demand a judgment call, and align their team members so that everyone understands why the call is important. the Call itself -- the moment of decision. Execution -- making it happen while learning and adjusting along the way. Leaders may not be able to change their calls, but they can almost always change course during execution if they are open to feedback and committed to follow-through. REDO loops -- technically not a stage, but an adjustment made by retracing earlier steps when new information comes available indicating judgment can be improved. Good leaders' steps through the phases of the judgment process -- Preparation phase Sense and Identify Picks up on signals in the environment Is energized about the future Frame and Name Cuts through complexity to get to the essence of an issue Sets clear parameters Provides a context and establishes a shared language Mobilize and Align Identifies important stakeholders Engages and energized stakeholders Taps best ideas from anywhere REDO - goes back to Frame and Name if warranted Call phase Call Makes a clear yes/no call Thoroughly explains the call REDO - goes back to Mobilize and Align if warranted Execution phase Make It Happen Stays involved during execution Supports others who are involved Sets clear milestones Learn and adjust Asks for continuous feedback Listens to feedback Makes adjustments REDO - goes back to Make It Happen if warranted Poor leaders' steps through the phases of the judgment process -- Preparation phase Sense and Identify Cannot read the environment Fails to acknowledge reality Does not follow gut instincts Frame and Name Incorrectly frames the issue Does not define the ultimate goal Remains stuck in an old paradigm Mobilize and Align Does not set clear expectations Brings the wrong people on board Does not correct previous mistakes Call phase Call Dillydallies when it is time to make a call Fails to understand how issues intersect and how the call will play out Execution phase Make It Happen Walks away once the call is made Does not gather important information Does not understand what good execution requires Learn and adjust Does not measure outcomes Does not respond to resistance in the organization Lacks operating mechanisms to make necessary changes Traditional view vs. process view of judgment -- The distinction between leadership judgment viewed traditionally and judgment viewed as a process is apparent across various characteristics -- Time Traditional view - Single moment, static Process view - Dynamic process that unfolds Thought process Traditional view - Rational, analytic Process view - Rational and analytic but also emotional and full of human drama Variables Traditional view - Knowable, quantifiable Process view - Often outside of a leader's domain; may relate to the call indirectly Focus Traditional view - Individual: A heroic leader makes a tough call Process view - Organizational: The leader guides a process but is influenced by many actors and subsequent judgement Success criteria Traditional view - Making the best decision on the basis of known data Process view - Acting and reacting through a judgment process that guides others to a successful outcome Actors Traditional view - Top-down: The leader makes the key decisions Process view - Top-down-up: Execution influences how judgments are reshaped Transparency Traditional view - Closed system in which decision makers hold information and do not explain their rationale Process view - Open process in which mistakes are shared and learning is used to make adjustments Capability building Traditional view - Unconsciously happens through experience or luck; reserved for top leadership Process view - Deliberately encouraged at all levels Types of knowledge guide judgments -- Most judgment calls arise in the domains of people, strategy, and crisis with the added dimensions of self, social network, organizational, and contextual wisdom. This multidimensional wisdom forms a ""complete"" set of wisdom that allows a leader to choose the best path forward. Good judgment is grounded-in all three domains and throughout the process-in four types of knowledge: self, social network, organizational, and contextual. Following are the four dimensions of wisdom defined by domain -- Self wisdom -- How do you learn? Do you face reality? Do you watch and listen? Are you willing to improve? People domain -- Personal judgments about your ambitions, role, and capabilities. Strategy domain -- Personal judgments regarding your career and life strategy. Crisis domain -- Personal judgments made during times of crisis and introspections Social network wisdom -- Do you know how to build a strong team? How do you learn from team members? How do you teach them to make better judgments? People domain -- Judgments about who is on and off the team. Strategy domain -- Judgments about how your team evolves to meet business demands. Crisis domain -- Judgments about how and with whom your team operates during a crisis. Organizational wisdom -- Do you know how to draw on the strengths of others throughout the organization? Can you create broad-scale processes by teaching people to make smart judgments? People domain -- Judgments about organizational systems for ensuring quality and capability of people in the organization. Strategy domain -- Judgments about how to engage and align all organizational levels in strategy execution. Crisis domain -- Judgments about how to work with the organization through times of crisis. Contextual wisdom -- Do you know how to create smart interactions among myriad stakeholders, such as customers, suppliers, government, stockholders, competitors, and interest groups? People domain -- Judgments about which stakeholders are important and how to engage them. Strategy domain -- Judgments about engaging stakeholders to frame, define, and execute strategy. Crisis domain -- Judgments about how stakeholders both inside and outside the organization connect to resolve crises
Kantian systems philosophy
knowledgeAt its core, knowledge is truth, meaning that it conforms with reality. Though this may appear straight forward, there are widely divergent philosophical views of 'knowledge' and 'reality.' ""Knowledge is information combined with experience, context, interpretation, and reflection. It is a high-value form of information that is ready to apply to decisions and actions."" -- Davenport, 1998 Philosophical views of knowledge -- (Stacey, 2003, pp 18-21) Descartes -- Descartes suggested that human minds are 'thinking things' and all we can be sure of is our own individual capacity to doubt. Everything is to be subjected to doubt and it is in this rational process of doubting that humans can come to know themselves and their world. This rational process, with its foundation, or starting point anchored in 'truth', is foundational to the scientific method which is most associated with Newton and is running strong to this day. Scientific method -- Central to the scientific method is the individual scientist who objectively observes nature, formulates hypotheses about the laws governing it and then tests these laws against quantified data, so progressively moving towards a fuller and more accurate understanding of the laws. These laws were understood to take the form of universal, timeless, deterministic, linear `if-then' causal links. For example, if twice as much force is applied to an object in a vacuum then it will move twice as far. Leibniz -- The consequence of this Scientific Revolution, extending over more than a century, was that people in the West had come to experience themselves as autonomous individuals with a non-corporeal mind inside them, taking the form of internal worlds consisting of representations of the external world. This view of how people experienced themselves was concisely formulated in the philosophy of Leibniz. He saw individuals as windowless monads who internally represented external worlds, perceived both consciously and unconsciously, and related to each other across an existential gulf. Truth of reality problem -- However, this way of thinking posed fundamental questions. First, the question arose as to how reasoning individuals were able to formulate hypotheses, involving the categorisation of phenomena in nature and the identification of relationships between them. For the realists, the answer lay in the nature of reality. There was no problem about knowing because our bodies simply perceived reality as it was through the senses. For others, however, there was a problem about knowing that needed explanation. Descartes and Leibniz dealt with the problem by arguing that the mind contained innate ideas through which it recognised clear, distinct truths about the real external world. In other words, there is nothing problematic about knowing: external reality exists and we directly know it because we are born with minds having the capacity for knowing reality. Locke's skepticism -- However, Locke took a more skeptical position and argued that the mind had no innate ideas of reality but was initially a blank tablet waiting for experience to write upon it in the form of sensory impressions that represent external, material objects. The question then became how we could know that mental representations correspond to reality. Hume's radical skepticism -- Writing around the middle of the eighteenth century, Hume took a radically skeptical position and said that the mind imposes an order of its own on the sensations coming from the external real world but this order is simply an association of ideas, a habit of human imagination through which it assumes causal connections. There is nothing innate about knowing and the causal connections we postulate are simply the accidents of repeated connections in the mind. Ideas result from connections in experience, not from an independent reality, and intelligibility reflects habits of mind, not the nature of reality. Hume claimed that there was no necessary order to our ideas other than the ways they were combined in our minds according to habit and the laws of association. With this radically skeptical argument, Hume threw into doubt the Enlightenment idea that reason could unaided discover the order of the real world. As a result the philosophy of Descartes, Leibniz and Locke no longer seemed to provide a firm foundation for science. Skepticism, with its conclusion about the relativity and unreliability of knowledge, threatened the very basis of science. This debate between the dogmatic rationalists, or realist scientists, and the radical skeptics about the nature of human knowledge is much the same as the much more recent debate between modernist science and postmodernism. In both cases science posits the existence of a unitary reality that can be reliably observed as truth, while radical skepticism/postmodernism points to the constructed, relative and plural nature of accounts of the world in which there is no truth, only many different 'stories' with none necessarily better than any other. Another fundamental question posed by the Scientific Revolution had to do with human freedom and choice. Since humans were part of nature they had to be subject to its deterministic laws but if they were, then it followed that they could not be free. Kant's origination of systems thinking -- These two questions, one to do with the nature of human knowing and the other to do with the possibility of human choice, were taken up by the philosopher Kant. Systems thinking can be said to have originated in Kant's answers to these questions. Kant's dualistic answer to the first question -- Kant's answer as to how reasoning individuals were able to formulate hypotheses, involving the categorisation of phenomena in nature and the identification of relationships between them -- Kant was greatly impressed by the advances in human knowledge brought about by the scientific method but he also recognised that it was not sufficient to simply dogmatically postulate that we know reality directly. He accepted that we know what we know through sensations coming from the real world and that the mind imposes some kind of order on this sense data so that we cannot know reality in a direct manner. He therefore postulated a dualism. On the one hand there was reality, which he called noumenal, and on the other hand, there was the appearance of reality to us in the form of sensations, which he called phenomenal. He argued that we could never know reality in itself, the noumenal, but only the appearance of reality as sensation, the phenomenal. This bears some similarity to the position of the radical skeptics but Kant departed from them when he held that our inability to know reality itself does not mean that all our knowledge is purely relative, simply the result of habits of association. Instead, the mind consists of innate categories which impose order on the phenomenal. In this way he agreed with the radical skeptics in holding that we could not know reality directly but also agreed with the scientific realists in holding that there were innate ideas that imposed order on experience so that knowledge and truth were not simply relative. Examples of the innate categories of mind are time, space, causal links and what Kant called 'regulative ideas'. Regulative ideas are to be distinguished from constitutive ideas. A constitutive idea, or hypothesis, is a statement of what actually happens in reality. For example if we say that an organisation actually is a system operating to fulfill some real purpose, then we are putting forward a constitutive idea. We are saying that the organisation really exists and it is really fulfilling some real purpose. However, if we put forward an hypothesis in which we are thinking about an organisation 'as if' it were a system operating 'as if' it had a purpose, then we are thinking in terms of regulative ideas. Obviously Kant would not talk about constitutive ideas because he held that we could never know reality in itself. The activity of the scientist then becomes clear in Kant's scheme of things. The scientist has a mind consisting of categories of time, space, causal links and the capacity for forming 'as if' hypotheses, which enable him or her to formulate hypotheses about the appearances of reality and then test them. Kant's dualistic thinking satisfies Aristotelian logic -- Scientists, such as Newton and Leibniz, had understood nature in mechanistic terms and Kant was able to explain why this understanding was neither purely relative nor directly revealing of the reality of nature. He resolved the contradiction between realist and relative knowledge by taking aspects from each argument and holding them together in the 'both . . . and' way of a dualism. Knowledge of appearances was real and reliable while knowledge of reality itself was indeed impossible. In a sense both the scientific realists and the radical skeptics had a point and the contradictions between them could be eliminated by locating their conflicting explanations in different realms. This is typical of Kant's dualistic thinking in which paradoxes are eliminated so satisfying the rule of Aristotelian logic according to which paradox, the simultaneous existence of two contradictory ideas, is a sign of faulty thinking. I want to stress this key aspect of Kantian thinking because it has become very widespread in the West. The ideas of figure and ground, of different lenses through which to understand the world, and different levels of existence, are examples of this. Kant's answer to the second question -- Kant's answer to the supposition that humans could not be free because they are part of nature is resolved by removing people from nature and classifying humans as autonomous, able to choose the goals of their actions and they can choose the actions required to realise them. See Kantian systems philosophy for further information. (Stacey, 2003, pp 23) Kant's justification of the scientific method -- Kant, then, developed transcendental idealism as an alternative to realism, on the one hand, and skepticism, on the other. His thinking can be labeled as idealism because he held that we know reality through the capacities of the mind and it is transcendental because the categories through which we know are given outside our direct experience. In this way, Kant provided a sophisticated justification for the scientific method. Kantian knowledge -- (Malik, 2000, pp 72) In Kantianism, knowledge is not absolute, as in absolute knowledge of the world, because knowledge is in part created by the mind. One can never know the world as it is. Empirical knowledge conveys information, not about things as they really are but only as they were perceived as phenomena by the human observer, who impose their intuitive structures, such as time and space, which are not elements of reality. Reason, in Kant's case is transcendental or universal, common to all humans, though made manifest through activity of individuals. This reason comes from the creator of the world. Hence, human intuition could form the basis of true, objective knowledge. Knowledge vs. ethics -- Kant distinguished between knowledge and ethics. See ethics. Subject and object of knowledge -- Kantianism - Kant's idea of pure reason holds that any of the three undemonstrable entities (a personal soul, a cosmos, and a supreme being) implicit in the fact of a subject and an object of knowledge, and in the need for some principle uniting them. The subject is the agent doing the examination of an object. The object is the thing in question, the situation, the phenomenon being examined. Alone amongst terrestrial matter humans are both subject and object. See phenomenon, noumenon, and reason. Knowledge and Intelligence -- Generally, knowledge is defined as the skills, facts, and information acquired through experience and education. It includes both the theoretical and practical understanding of the subject. Depending on the context and the author, the term knowledge is defined various ways. One is to describe all types of accumulated learning and multiple levels of intelligence. The other is to describe learning that results in ""know-how"", whereas the term understanding refers to a higher level of intelligence, the learning that results in answering ""why"" questions. Systems theorists tend to favor the later definition. In this case, knowledge is associated with analysis. Analysis yields knowledge.
knowledge and economic growthKnowledge is the basis for development of technology. Technology development is the basis for economic growth. Therefore, knowledge is the source of energy for economic growth. The greater the base of human knowledge, the greater the payoff of the next discovery. Unlike other assets, knowledge has increasing (vs. diminishing) returns - the more there is the greater the payoff. Romer (1990) described the ""virtuous cycle of knowledge"" as -- the more that is available to invest... the more the investment in technology over time... the richer society gets... the greater the payoff from technology... the greater the incentive to invest in new technology... to to step one...
knowledge creation
knowledge management""Effective knowledge use implicitly means changing the way people think about knowledge, which almost always means changing the language they use."" -- Davenport, 1998, p 53. Knowledge management deals with attempting to do something useful with knowledge, to accomplish organizational objectives through the structuring of people, technology, and knowledge content. -- Davenport, 1998. Knowledge management consists of such efforts as making knowledge repositories (encyclopedic), improve access to knowledge (yellow pages), enhance knowledge environment (establish an environment conducive to more effective knowledge creation, transfer, and use -- this type of effort can address issues from information technology to culture), and manage knowledge as an asset (extract it from the heads of employees and make it an asset owned by the corporation) Knowledge and culture -- knowledge friendly cultures have a positive orientation to knowledge is one that highly values learning on and off the job and one in which experience, expertise, and rapid innovation supersede hierarchy. There are few barriers to sharing knowledge. Cultures that don't have these characteristics have difficulty leveraging the collective knowledge of the organization. For example, if failure is punished, that knowledge is not likely to be recorded. If employment of each employee is not secure, they are unlikely to share their knowledge. If knowledge sharing changes the power structure in the organization, the power structure must be addressed before seeking to share knowledge. Source for what follows: Alton Y.K. Chua, The Curse of Success, Knowledge-management projects often look good in the beginning. But then problems arise., Wall Street Journal, April 28, 2007, pp R8. In the effort to improve corporate performance by sharing key knowledge among employees across an organization -- a practice known as knowledge management -- glowing reports of success far outnumber tales of disappointment. This article seeks to cast a spotlight on the curses of successful KM projects. Three case studies are presented in which a KM system attained a high level of success before exhibiting one or more dysfunctional outcomes: a bank that designed a fully integrated database to assist agents at its customer-service call center; a telecommunications company that supplied engineers at its support centers with a ""digital repository"" of solutions for technical problems; and a college that built an online forum to facilitate broad faculty participation in developing e-learning programs. The bank case - replicating a success in a call center THE DOWNFALL integrating the KM databases with the applications of the other departments was monstrously complex. Across all of the departments, there were more than 50 back-end and legacy systems with which the KM systems had to be integrated. Each integration was unique, and demanded huge amount of resources and time, exceeding budgets and schedules. Tools found helpful at the call center were not nearly as useful elsewhere. For example, the KM search engine was intended for full-text and keyword searches -- like call-center agents needed. But the marketing and business-intelligence departments, for example, wanted a different tool: concept search, which is the ability to make connections between patterns of words. Adding to the chaos, most of the other departments were never certain what they wanted out of their KM systems. ... with a team from the IT department driving the project, there was a lack of individual responsibility for results. The extended systems did not attract sustained usage in any organized fashion outside the call center. The culture of sharing and exchanging ideas that existed among the call-center agents, and which kept the contents of the database fresh, proved to be more an exception than the norm. The poorly conceived replication effort not only failed to deliver the purported benefits of KM, it also misdirected resources and damped staff morale. Subsequent bankwide initiatives promoted as bringing about better organizational performance and operational efficiency were perceived with much skepticism. THE TRAP: Although one senior manager blamed the problems on the IT team assigned to the implementation, extensive research and interviews at the bank produced a more complex picture. The trap here was one experienced by many organizations: a tendency to rely on only one or a few proven approaches to deal with all of the challenges of the future. Flush with initial success, some organizations unconsciously discount new experiences and become incapable of coping with the demands of new environments as they move forward. THE LESSON: Managers must resist the temptation of using a cookie-cutter approach after a successful pilot project. The focus should be on not only how the pilot was implemented but also on what mistakes and lessons the earlier experience uncovered. Managers also must be able to distinguish where factors of success were unique to a pilot and where generic principles of success can be applied on a broader scale. The telecom company -- When a European-based provider of telecom equipment and mobile services devised a KM system for its 1,200 engineers at support centers around the world, there was initial excitement -- and subsequent lethargy. These support centers, located in some 140 countries, help individual and business customers with a host of technical issues. The engineers have strict deadlines for solving problems, anywhere from three days for high-priority clients to 20 days for others. Every month, the company computes the average time that each center takes to solve a problem, and then posts the global average as a benchmark for all units. In a bid to shorten turnaround times, the company developed for its engineers a Web-based digital repository of technical solutions contributed by their fellow engineers. Inspired in part by Eureka, the knowledge-sharing system developed for field-service agents at Xerox Corp., the stand-alone system was designed to break down a problem into parts, such as what the customer was trying to achieve, facts about the client's technical platform, and likely causes and fixes for numerous problems. When a user entered a description of a problem, the system searched its database for comparable problems resolved, and produced a best-matched solution. Incentives were created to encourage engineers to contribute their knowledge to the database. Part of an engineers' annual salary increase was linked to the quantity and quality of his or her postings as benchmarked against the organization-wide annual average. Quality for each posting was determined by parameters such as the significance of the problem and the number of times the solution had been endorsed by other users. In the beginning, the system attracted a stream of postings mostly from the highly experienced engineers. Then, units began to compete as the prospect of earning more money drew regular contributions from more engineers. Turnaround times improved dramatically as word about the system's usefulness spread and usage rates increased. After the first year, the average time-to-solution for high-priority problems was reduced to four hours from two days. Two years later, solutions for about 70% of problems encountered daily could be easily and quickly found among the 150,000 entries in the system. DOWNFALL -- Chiefly, engineers developed a dependency on the database, fueled by its usefulness and by the constant pressure to maintain fast turnarounds. When problems were received, expediency drove most engineers to locate and apply solutions directly from the system without first giving the problem some thought. Moreover, an analysis of the contribution pattern found that 90% of the solutions were created by 15% of the engineers. As the system became more saturated with contributions, the possibility of contributing unique solutions narrowed. Coupled with the fact that the pressure to turn problems around remained unabated, most engineers chose the easy way out by simply relying on the system to solve problems. Thus, what appeared to be a successful KM initiative actually diminished problem-solving abilities among the majority of the company's engineers. Management of the telecom company disputed that the engineers experienced any loss of skills, citing data showing the reductions in turnaround time as evidence. But in many interviews, engineers said they didn't know what to do when faced with problems that had no solution in the database. Such problems went unsolved and were passed along to research and development for further study. THE TRAP: The company offered rewards for both contributing and using solutions. But it took a lot more time to devise a solution than to find one in the system. Thus, even though the cash reward was greater for contributing solutions, there was more incentive for most engineers -- in the form of job pressure -- to solve problems quickly. Thus, they became more adept at searching for solutions at hand, and less so at problem-solving. Another pitfall of digital repositories: Once management enshrines a particular solution as a so-called ""best practice"" by placing it in the database, often there is little or no motivation to improve or refine the solution, especially in a fast-paced operational environment. THE LESSON: For KM projects in which similar workers create and re-use knowledge in a database, and in which the contributions require a great deal more effort, managers must either design the system so that the reward and effort for each are more in balance, or they must change the way the organization's best practices are conceived and communicated. Any best practice must be subjected to regular inquiry and validation. Additionally, when documenting a given practice, the assumptions and rationale that underpin the solution should also be included. This allows re-users of the information to retain the sharpness of their problem-solving skills, as they have the opportunity to assess the extent to which the original solution is appropriate and to decide whether any further adaptation is required. the college -- What began as a collaborative effort to develop online courses at a college in Malaysia eventually stalled as the team leaders refused to consider ideas that came from outside the core group. This project began by taking some 25 faculty members from the government-funded school's 500 teachers and seven academic departments, and putting them through an intensive three-month instructional-design training program. Afterward, the 25 were to play an active role in supporting colleagues throughout the school in designing effective e-learning courseware. A few of the initial members set up an online system for a so-called community of practice, or CoP -- a forum consisting of persons with a common interest or shared field of study who exchange ideas and information, debate with and learn from one another, and so achieve goals and find solutions that might have eluded each of them individually. Seven members of the original group volunteered to help lead the CoP. The college's management praised and approved the idea as a bottom-up initiative to augment the e-learning focus. Invitations to join the CoP Web site online were periodically emailed to all faculty. Those who registered could post comments in online discussions and gain access to e-learning courseware developed by the core group and other e-learning materials. Members also were invited to quarterly lunch-and-learn forums on such themes as virtual collaboration and online assessment. Within three months, membership reached 125, greatly exceeding expectations. The CoP successfully produced a Web-based reference guide to help faculty present teaching materials effectively on the college's e-learning platform. The guide drew praise from management and faculty alike. Thus encouraged, the CoP began to develop a broader suite of e-learning methodologies and practices, such as a step-by-step guide on how synchronous discussion with students could be conducted, for example, and design templates for presenting Web-based learning materials. Gradually the CoP was recognized as the college's authoritative voice on e-learning. DOWNFALL: The CoP also developed two serious problems: a tendency by its core members to promote their own ideas for practices and tools as the only acceptable form of e-learning; and social alienation. Although membership reached 300, only an inner circle of about 15 were actively engaged in CoP activities. These core members jealously guarded the group's established canons. Always believing that its work was best-in-class, the core group was unwilling to make any changes to the set of e-learning methodologies and practices it had developed. Newer CoP members were kept out of the inner circle and had little opportunity to contribute fresh ideas or challenge existing ones. Intentionally or not, it appears that the CoP became alienated from the rest of the faculty whom it was intended to serve. THE TRAP: In a properly functioning CoP, different perspectives on shared problems and issues are constantly exchanged, given shape, refined, and eventually approved or adopted as a solution or best practice, making a CoP possibly the ideal structure for developing, sharing and stewarding knowledge. The danger, as in this case, is that a CoP can also mutate into a structure which monopolizes the creation and transfer of knowledge. The dysfunctional development of the college's CoP could be traced to the core group's unwillingness to consider ideas other than its own; the lack of a leadership-renewal process; and a lack of criteria that outsiders could use to judge the quality of the CoP's work. THE LESSON: Managers who intend to build a CoP must nurture the sense of identity among members and ensure timely cycles of leadership renewal. Outside contacts must also be encouraged with sources of expertise such as professional bodies and trade associations. This helps ensure that ideas which are sparked internally do not stagnate but are constantly challenged and renewed. Judging criteria must be set as well for outsiders to challenge the quality and appropriateness of the CoP's offerings.
knowledge workerKnowledge worker is a term coined by Peter F. Drucker in 1954 (Drucker, 1954). A knowledge worker is someone who knows more about his or her job than anyone else in the organization.
law of parsimonySee Occam*s razor.
leadershipLeadership is the ultimate advantage. Without leadership, all other factors of competitive advantage fail to produce results. To bring about changes needed to develop and sustain competitive advantage requires leadership. See management profession for Peter F. Drucker's comments on the manager's profession and leadership as paraphrased from Alfred P. Sloan. James MacGregor Burns' assertion -- Burns presents a taxonomy of leadership, distinguishing, for example, intellectual leadership from executive leadership. He developed the concept of transformational leadership which stands in contrast to transactional leadership -- the two basic styles of leadership. leadership -- ""I define leadership as leaders inducing followers to act for certain goals that represent the values and the motivations -- the wants and needs, the aspirations and expectations -- of both leaders and followers."" (Burns, 1978, pp 19). transactional leadership -- ""Such leadership occurs when one person takes the initiative in making contact with others for the purpose of an exchange of valued things."" (Burns, 1978, pp 19). transformational leadership -- ""Such leadership occurs when one or more persons engage with others in a way that leaders and followers raise one another to higher levels of motivation and morality."" (Burns, 1978, pp 20) Burns sees transactional leadership as an exchange relationship between leader and follower whereby compliance is agreed, explicitly or implicitly, through reciprocal exchange. Transformational leadership is a more uplifting process with higher goals. Here the leader looks for potential motives in followers, seeks to satisfy higher order needs so that through a process of mutual stimulation they 'unite in the pursuit of higher goals, the realization of which is tested by the achievement of significant change' (Burns, 1978, pp 425. Thus to Burns leadership is a mobilization process by persons with motives and values, various 'resources in a context of competition and conflict, in order to realize goals independently or mutually held by leaders and followers' (Burns, 1978, pp 425). From Pettigrew, 1987, pp 652. Bennis and Nanus on Leadership Source: Bennis and Nanus, 1985 -- The authors identify four leadership strategies, each with their own themes, areas of competency, and human handling skills (p 25-72): attention through vision -- the creation of focus with compelling visions that pull people toward them. meaning through communication -- the capacity to relate a compelling image of a desired state of affairs -- the kind of image that induces enthusiasm and commitment in others trust through positioning -- trust is based on predictability of people who make themselves known and make their positions clear. Positioning is the set of actions necessary to implement the vision of the leader. the deployment of self through -- positive self-regard -- the creative and healthy use of one's self. 1- recognize strengths and compensate for weaknesses; 2 - nurture skills with discipline, having a capacity to develop and improve, being a self-evolver; 3 - the capacity to discern the fit of one's skills with what the job requires. Positive self-regard is related to emotional wisdom. the Wallenda factor -- learning requires trying which involves failure, something from which one can continue to learn. To continue to try in the face of the potential for failure requires a fusion between positive self-regard and optimism about a desired outcome. Bennis and Nanus emphasize key points that they feel get at the essence of leadership in their introduction to the second edition. Leadership is about character To keep organizations competitive, leaders must be instrumental in creating a social architecture (i.e. culture) capable of generating intellectual capital (engaging people's interest and desires in achieving the objective of the leader or purpose of the organization). A strong determination to achieve a goal or realize a vision -- a conviction, even a passion... defining reality... purpose and direction. The capacity to generate and sustain trust is the central ingredient in leadership. True leaders have an uncanny way of enrolling people in their vision through their optimism -- sometimes unwarranted optimism. Leaders have an action towards bias toward action the results in success -- translating vision and purpose into reality. Contrast the leadership criteria above with the oft used criteria organizations use to evaluate their executives: technical competence people skills conceptual skills track record taste judgment and character What is most important to leadership cannot be quantified. Pettigrew (1987, p 655) leveled charges at Bennis and Nanus's work which is worthy of consideration by the student of management. ""As yet the absence of sustained empirical inquiry into the activities of corporate leaders suggests an over confident and over simple view of their role in organizational transformation. Part of the difficulty here is a rush into prescriptive writing before description and analysis (Bennis and Nanus, 1985), but more important are the analytical deficiencies underlying much of the research on leadership behaviour in the firm. These analytical difficulties include a concentration on leadership episodes rather than long-term leadership processes, a tendency to explore leader-follower relations without reference to the antecedent conditions which may influence their expression, and more significantly, the limited attempts to place leader behaviour in the context of political and cultural forces within the organization, and the wider economic and competitive forces with which the firm must operate."" John Robert's Leadership Source: Roberts, 2004, pp 62-66 -- Roberts homes in on the elements of leadership necessary to bring about strategic change -- strategic recognition -- recognizing the need or opportunity for change. vision -- vision is an ability to see other better patterns, at least in broad outlines. communication -- communication is essential to bringing about change, explaining the new way, what its general features are, and how to get there. Persuasion is part of communication, convincing people of the need for change and the gains that is will yield. courage -- courage emboldens a leader to both act and stay the course when trying for distant or difficult transitions and dealing with the inevitable hardships and challenges along the way. Collins's Level 5 Leadership Source: Collins, 2001 -- Level 5 leadership is a combination of humility and fierce resolve. Jim Collins (2001) identifies three primary factors for being a great company: disciplined people, disciplined thought, and disciplined action. Disciplined people results from a leader who strives for level 5 leadership and gets the right people on the bus. Putting these two aspects of leadership first recognizes that without effective leadership all other efforts to achieve advantage are futile. See Level 5 leadership. John Kotter's Leadership Source: Kotter, 1996, 1990, p 26 -- Kotter defines leadership as follows -- Establishing direction -- developing a vision of the future - often the distant future - and strategies for producing the changes needed to achieve that vision. Aligning people -- communicating direction in words and deeds to all those whose cooperation may be needed so as to influence the creation of teams and coalitions that understand the vision and strategies and that accept their validity. Motivating and inspiring -- energizing people to overcome major political, bureaucratic, and resource barriers to change by satisfying basic, but often unfulfilled, human needs. Expected result -- Produces change, often to a dramatic degree, and has the potential to produce extremely useful change (e.g. new products that customers want, new approaches to labor relations that help make a firm more competitive. Bill George on Authentic leadership Source: George, Bill, True North, Discover Your Authentic Leadership, Jossey-Bass, 2007 -- George defines leadership as -- The authentic leader brings people together around a shared purpose and empowers them to step up and lead authentically in order to create value for all stakeholders. He lists five dimensions that make up an authentic leader -- pursuing purpose with passion -- Without a real sense of purpose, leaders are at the mercy of their egos and narcissistic vulnerabilities. practicing solid values -- Leaders are defined by their values, and values are personal - they cannot be determined by anyone else. leading with heart -- Authentic leaders lead with their hearts as well as their heads. establishing enduring relationships -- The ability to develop enduring relationships is an essential mark of authentic leaders. demonstrating self-discipline -- Authentic leaders know competing successfully takes a consistently high level of self-discipline in order to produce results. Mourkogiannis's View of Leadership Source: Mourkogiannis, 2005, pp 149 - 172 -- Categorizing leaders -- Leader as superhero - Example, Bossidy, who when he leaves Honeywell it goes in the tank and he is called back. This type of leader is generally bad for the business organization in the long run. 'Leadership' is not built into the capability of the organization. Leader as adopter of fads - Those leaders who adopt programs like six-sigma, ""...because it worked for GE"" - as opposed to truly understanding their business and organization in order to build its unique capabilities. Presiding leader - Those leaders that view themselves as outside of the business organization. The preside over the business, outsourcing leadership - to their direct reports, to strategy consulting firms, and so forth. They set targets and objectives. Those who meet them get promoted. Those who don't get fired. Disciplined purposeful leader -- This type of leader requires great skill but not superhuman powers. This type of leadership recognizes the need for a leadership team - as expecting a CEO to be a superhero is both unrealistic and ultimately bad for the organization. In this case, the CEO manages the leadership team towards fulfilling a purpose. See the components of this type of leadership below. Components of disciplined purposeful leadership -- The four preparations that always have to be made for any collective action. These components are stages of iteration - seeking the harmony of cooperation, support, systems to carry on, and direction. Think: Devise a direction or outline plan -- Thinking requires time to think - time to read, reflect, explore - time to let new ideas percolate and rise to the top. Without thinking, a leader cannot possibly discover an organization's purpose, choose a strategic position, and align the two. See purpose -- discovery of purpose. Inspire: Generate collective support for this direction and the kind of action that will be required -- Inspire means to breath into. Inspiration is an act of transmission , generating ideas and passion and commitment from the community around us. Identity stories (Mourkogiannis, 2005, pp 165) are used to create group identities by telling stories about the past. In this way, identity is not only uncovered, but created. The most powerful stories contain a purpose and aspiration, as opposed to just history. In these cases, the purpose defines the purpose of the group. A true leader can go beyond expressing the firm's purpose. He can also awaken that purpose - acting as kind of a moral coach. In doing so he connects the follower to his own goals. Mobilize: Make sure that all the relevant individuals agree to cooperate and to accept specific roles -- This is a negotiation, not a command and control approach. The intent of the negotiations is not only to achieve buy in but also to lead parties to develop a better solution than either party had envisioned. Empower: Set up the systems to maintain momentum -- This is where delegation takes place, plus insuring that the organization members have the tools to reach their objectives - the resources, people, and systems. These components of leadership are abstract but also form a basis for assessment. Leadership vs. Management -- For a comparison of management vs. leadership see management.
leanSee quality.
learningLearning is a process. Single loop learning is a circular four step process - 1) learning is making decisions, 2) acting on those decisions, 3) assessing the experience and results of those actions, and 4) changing future decisions and actions based on those results. Double loop learning incorporates a second loop to allow for the potential to update mental models or worldviews used in single loop learning. Learning is evidenced by the improvement in actions of an organization through better knowledge and understanding. Learning is encoded into the routines, procedures, methods, culture, and structure of the organization. These guide behavior, develop insights, knowledge, assessment of action effectiveness in the past, present, and future. Learning involves understanding or reasons why beyond immediate events and is context dependent. See: James F. Courtney, David T. Croasdell, and David B. Paradice, Inquiring Organizations, Australian Journal of Information Systems Sept 14, 1998 and March, James G. (1991), Exploration and Exploitation in Organizational Learning, Organizational Science, Vol. 2, No. 1, February 1991 Chris Argyris theories of action and learning -- Theory of action -- Argyris and Schön (1974) initially looked to three elements: Governing variables: those dimensions that people are trying to keep within acceptable limits. Any action is likely to impact upon a number of such variables - thus any situation can trigger a trade-off among governing variables. Action strategies: the moves and plans used by people to keep their governing values within the acceptable range. Consequences: what happens as a result of an action. These can be both intended - those actor believe will result - and unintended. In addition those consequences can be for the self, and/or for others. (Anderson 1997) Single-loop learning -- For Argyris and Schön (1978: 2) learning involves the detection and correction of error. Where something goes wrong, it is suggested, an initial port of call for many people is to look for another strategy that will address and work within the governing variables. In other words, given or chosen goals, values, plans and rules are operationalized rather than questioned. According to Argyris and Schön (1974), this is single-loop learning. Double-loop learning -- An alternative response is to question to governing variables themselves, to subject them to critical scrutiny. This they describe as double-loop learning. Such learning may then lead to an alteration in the governing variables and, thus, a shift in the way in which strategies and consequences are framed. Organizational learning -- This is how Argyris and Schön (1978: 2-3) described the process in the context of organizational learning: (Source: http://www.infed.org/thinkers/argyris.htm, March 22, 2007). When the error detected and corrected permits the organization to carry on its present policies or achieve its presents objectives, then that error-and-correction process is single-loop learning. Single-loop learning is like a thermostat that learns when it is too hot or too cold and turns the heat on or off. The thermostat can perform this task because it can receive information (the temperature of the room) and take corrective action. Double-loop learning occurs when error is detected and corrected in ways that involve the modification of an organization's underlying norms, policies and objectives. Individual learning -- In cognitive psychology terms applied to the individual, double-loop learning revises an individual's mental model to better deal with reality. Intention and outcome -- Where the consequences of the strategy used are what the person wanted, then the theory-in-use is confirmed. This is because there is a match between intention and outcome. There may be a mismatch between intention and outcome. In other words, the consequences may be unintended. They may also not match, or work against, the person's governing values. Argyris and Schön suggest two responses to this mismatch, and these are can be seen in the notion of single and double-loop learning. Management application -- Single-loop learning can be characterized as geared towards ""doing things right."" Double-loop learning can be characterized as geared towards ""doing the right things."" Double loop learning leads to the development of new insights which lead to the development of new strategies. It specifically allows for the challenging of existing assumptions and learning for the sake of learning, which is the breeding ground for innovative ideas. Double loop learning leads to the identification and testing of assumptions. It prompts searches for new perspectives from which to view a situation, or system. New meaning is sought in old observations. New uses are investigated for existing tools. Learning as a cybernetic system -- The learning process described here is fundamentally a cybernetic process. Learning only occurs when there is a mismatch between intention and outcome. When there is a mismatch, two corrective action processes can take place. If the single loop process is determined to be ineffectual, the double loop is engaged to revise the assumptions, mental models, or world-views in order to achieve the intended results.
learning and control
learning by doingWhen an organization's focus is on learning prior to execution, and then leaps ahead to learn again for planning the next execution, the power of learning is greatly diminished. Doing is the strongest form of learning, when control and learning are integrated into the doing. This may sound elementary, but time and again businesses do not appear to remember the theories and hypotheses their decisions to act were testing. Sometimes they don't even appear to recall these things as the projects or mergers are failing and steps are being taken to scrap the development and divest the acquisition. As mentioned earlier, it can rightfully be said that learning without doing is not learning at all. Learning is of little good if not acted upon. Second, when learning is acted upon, there is the potential for producing a wealth of knowledge and understanding. Learning by doing, or from doing, requires forethought as to what theories and hypotheses are being tested and rigorous controls. When actual outcomes meet the plans prior learning is validated. As the assumptions are becoming invalid, early warning is provided that a change of course is likely warranted. The detection and correction of mistakes builds learning. The learning from debriefing needs to be immediately incorporated into the decision makers, whether planning or doing, to be of value. To lead in innovation, a business must develop its own theories of business. Theories abound about how to compete and provide unique value. Tested theories, with proven results are far fewer. Even tested theories requires constant retesting to detect when they are no longer valid. The half-life of a theory of business is decreasing as the business environment becomes more dynamic. A theory tested and proven valid by a competitor is often of very limited value since its time has past, it is tailored to that particular business organization, and the competitor's lead is hard to overcome. There is a synergy between learning, doing, and business development. The frequent the cycles of learning, the faster development occurs, and the lower the risk of false steps in the development efforts. Learning-to-learn better improves the learning process itself, further building the learning-doing momentum of the organization. More learning cycles and opportunities also allow for more participation, building stronger learning and development skills across the organization.
learning levels ofLevels, or types, of learning inform us as to the process of learning that may, or needs to, be taking place in particular instances or situations. For example, single loop learning is equated with strategic planning while double loop learning is equated with strategic thinking, which is an integral part of strategy formation. To help make sense of the various terms and ideas about learning, several types of learning are organized into a levels-of-learning construct below. Levels of learning Source: Heracleous, 2003, 42-46. -- Batson (Bateson, G., 1972. Steps to an Ecology of Mind, London: Intertext: 293), applying Bertrand Russell's theory of logical types to the concept of learning, differentiated between five types of learning: Zero learning -- specificity of response is not subject to correction. Learning I -- change in specificity of response by correction of errors of choice within a set of alternatives. This is essentially single-loop learning (Argyris, 1977), lower-level learning (Fiol and Lyles, 1985), or adaptive learning (Senge, 1990). Learning II -- a corrective change in the set of alternatives form which choice is made or a change in the punctuation of experience. This is essentially double-loop learning (Argyris, 1977), higher-level learning (Fiol and Lyles, 1985), or generative learning (Senge, 1990). Learning III -- A corrective change in the system of sets of alternatives from which choice is made. [Korn's note: this may be escaping the grip of systems thinking and employing a wholly now construct such as responsive processes.] Learning IV -- Change in the process of learning III, but probably does not occur in any living organism on earth. Learning I & II -- While there are differences in terminology in all these authors, the central concept common to them all involves on the one hand thinking and acting within a certain set of assumptions and potential action alternatives or on the other hand challenging existing assumptions and action alternatives, potentially leading to new and more appropriate ones.
learning organizationA learning organization is one that prompts its own evolution in order to adapt to its ecosystem. Learning organizations do not wait around for the marketplace to eventually do them in. Peters and Waterman, 1982, p 110 Learning organization is a systemic theory of strategy. As a systemic theory, compared to strategic choice, it also takes account of positive as well as negative feedback. From the systems dynamics perspective the dynamic is that o f non-equilibrium in which unexpected outcomes appear. However, this theory holds that when managers understand the positive and negative feedback structure of the whole system they will be able to identify leverage points through which they can control it. This theory does not explore the implications of radical unpredictability. Here, too, the cause and effect take nonlinear forms in which the connections might be distant over time and space. Again, little attention is paid to micro-diversity and successful interaction is still assumed to be harmonious, although this theory does recognize obstacles to the achievement of such harmony. For a view of four theories of strategy, see strategy. For a view of the psychology involved with each one see psychology. Senge's view of a learning organization -- A learning organization is built to continually adapt and learn in order to evolve, responding to changes in its environment, and grow. It is a model for what an organization should be in order to survive and thrive in a dynamic economy. In Peter Senge's (1990) view it is built from a combination of five disciplines: building shared vision, mental models, team learning, personal mastery, and systems thinking. See discipline for its definition and fifth discipline for an explanation of the five disciplines of a learning organization.
learning typesSee learning and learning levels of.
Level 5 leadershipLevel 5 leadership is Jim Collins' term for the leadership demonstrated by leaders of what he defines as ""great"" companies, those that have gone from ""good"" to ""great."" The previously good companies had to be led to greatness, they were not just born into greatness. See good-to-great for more information. Level 5 leadership -- consists of the duality, some would consider to be paradoxical, of professional will and personal humility Professional will -- Creates superb results, a clear catalyst in the transition from good to great. Demonstrates an unwavering resolve to do whatever must be done to produce the best long-term results, no matter how difficult. Sets the standard of building an enduring great company; will settle for nothing less. Looks in the mirror, not out the window, to apportion responsibility for poor results, never blaming other people, external factors, or bad luck. Personal humility -- Demonstrates a compelling modesty, shunning public adulation; never boastful. Acts with quiet, calm determination; relies principally on inspired standards, not inspiring charisma, to motivate. Channels ambition into the company, not the self; sets up successors for even greater success in the next generation. Looks out the window, not in the mirror, to apportion credit for the success of the company-to other people, external factors, and good luck. The five levels of leadership -- There are five levels of leadership, with five being the highest level. These levels of skills and performance are not necessarily developed in sequence, but a Level 5 leaders embody all five levels of the hierarchy. Level 5 Executive -- builds enduring greatness through a paradoxical blend of personal humility and professional will Effective Leader -- catalyzes commitment to and vigorous pursuit of a clear and compelling vision, stimulating higher performance standards. Competent Manager -- organizes people and resources toward the effective and efficient pursuit of predetermined objectives. Contributing Team Member -- contributes individual capabilities to the achievement of group objectives and works effectively with others in a group setting. Highly Capable Individual -- Makes productive contributions through talent, knowledge, skills, and good work habits. Source: Collins, 2001. See: jimcollins.com
levels of understandingThe levels of understanding framework is linked in with the systems thinking mindset that focuses on how things work. Learning and levels of understanding -- For example, this framework provides further insight into the single and double loop learning processes. Levels of perspectives and actions are organized by the leverage they have to shape the future. The higher level perspectives and actions, which have a greater influence on the future, are associated with double loop learning and the lower ones single loop learning. Leverage and actions in light of levels of understanding -- This framework also provides insight into the idea of where, or at what level, the most leverage can be gained to deal with events. There is not level better than the other, but choices to be made are framed by the levels of understanding. Some events must be reacted to. The event level of understanding is needed for that action. If the patterns of events are to be changed, the systemic structure causing the events must be changed. For greater change beyond that, to eliminate the events, the systemic system is replaced. Levels of perspective and action from highest to lowest level -- Vision and Generative actions -- Vision is a desired future. A vision provides the impetus to go through the pain of questioning mental models and worldviews. Actions at this level are generative, bringing something into existence that did not exist before. Mental Models and Reflective actions - Mental models reflect worldviews, the ideas and beliefs we use to guide our actions. We use them to explain cause and effect as we see them, and to give meaning to our experience. These ideas and beliefs form the assumptions upon which the design of the systemic structures are based. Reflective actions require the ability to surface, suspend, and question our own assumptions about how the world works and what is most important. They require a worldview shift. Systemic Structures and Creative actions - Systemic structures are the ways in which the parts of a system are organized. These structures produce patterns and events. Actions at this level create new systemic structures, based on the mental model, which produce new patterns and events. Patterns and Adaptive actions - Patterns form when a series of events are viewed over time, revealing trends and relationships between variables. Adaptive actions make the best use of the current system by adapting to the patterns. Events and Reactive actions - Events are things that happen. Actions are reactive to the events as they occur, without recognition of the patterns. Relation to strategy -- Strategy is about establishing and setting out to achieve a vision. The vision is compelling and inspiring. The achievement of well thought out visions require the development of new organizational capabilities, which require challenging and refining or redeveloping mental models. Short of this, simply recognizing and adapting to patterns is not strategy per se, but operating the existing business.
limited rationalitySee bounded rationality.
living presentThe living present describes a much more dynamic present than the conventional view of the present as a point in time. In the living present, the past an the future are not separate from the present. It is in the present that we are continuously constructing the future on the basis of the enabling constraints developed over time as our past (see path dependence). In other words, because humans have a unique capacity to call forth in themselves the attitudes of others they can know what they are doing. Knowing what one is doing immediately incorporates anticipation and expectation into the action of the present and it also immediately incorporates reconstruction of actions past, or memory, all as the basis of acting in the present. Anticipations and expectations affect what we remember at any point and what we remember at any point affects expectation and anticipation. One acts back on the other, forming the basis of action in the present. In this way, the movement of the living present is experience, having a circular time structure that arises simply because humans have the capacity for knowing what they are doing. There is nothing mysterious about any of this but it is made difficult to understand by the prejudice and the ""blinding"" power of our habit of excluding the future and past form our understanding of the present. (Griffin, 2002, pp 184) This view of the present is consistent with the complex responsive processes view of human interaction, knowledge creation, and social behavioral psychology, where there is no split between psychology and sociology, the individual and the group. From the complex responsive process perspective, human interaction is circular, successive gesture-responses, reflexive (responsive), self-referential (referring to self) causality in which it forms and is formed by the interaction itself. From this perspective, meaning emerges in the present (knowledge creation), knowledge emerges from the social act of gesture-response in a process of communicative interaction. Complex responsive processes, in the living present, are temporal processes of interaction between human bodies in the medium of symbols patterning themselves as themes in communicative action. These themes, with all their multiple aspects, are continuously reproducing and potentially transforming themselves in the process of bodily interaction itself. These themes are emergent enabling constraints within which individual and collective identity and difference are perpetually constructed as continuity and potential transformation. The living present, instead of being a point that separates the past from the future, has a time structure. The present is opened up in two ways... the present has the temporal structure of communicative interaction (see communicative interaction) a process in which people negotiate and account for their immediate actions to each other in ordinary conversation with its turn-taking/turn-making, gesture-response structure this temporal structure takes the form of gesture-response between living bodies in the medium of symbols in which meaning arises in the social act, not just in the gesture on its own ...involving turn-taking/turn-making process the communicative interaction process patterns itself as narrative and propositional themes, forming while being formed by bodily interactive communication at the same time, leaving behind the traces of history the present has the temporal structure of communicative action patterns -- a simultaneous process of sustaining and shifting ordinary everyday power relations official ideological themes, sustain power relations, thereby giving rise to the dynamics of inclusion/exclusion, which are associated with the evolution of unofficial ideologies that challenge the official ideology with shifting power relations, which form new official ideologies... Stacey's view of the living present derives from other's views of communicative interaction and their views of the present -- (Mead, 1938) ""specious present"" - the forming present, the time structure of forming while being formed at the same time as the inclusion of the past and the future in the experience of the present (Husserl, 1960) -- ""living present"" as ongoing potential and ""life world"" as the context (Wittgenstein, 1980) ""the hurly burly"" of everyday life (Shotter, 1993) emphasis on ordinary everyday conversation Construction of the future -- It is in the living present that the future is perpetually being constructed. The constructive role of ordinary everyday communicative interaction between people is at the center of how organizations evolve. Emergence of meaning -- Meaning is not simply located in the past (gesture) or the future (response) but in the circular interaction between the two in the living present. Meaning is emerging in the action of the living present in which the immediate future (response) acts back on the past (gesture) to change its meaning. Source: (Stacey, 2001, fig 8.1, 171 -174)
localized problem solvingIf one assumes that organizations' decision making actors have limited rationality (see bounded rationality), then it follows that decisions will be made in terms of localized disturbances to which abbreviated analyzes will be applied, with short-term recommendations as the result. A search for more stable solutions (i.e., those that will solve the problem once and for all) is unlikely; consequences are not given much attention, and apparently logical solutions may prove faulty as their consequences ramify. Furthermore, since the consequences of a decision often occur much later than the decision itself, it is difficult for the members to trace backward from these disruptive consequences to determine precisely what caused them. The members cannot make such an analysis, simply because there are too many competing explanations. Thus, the only thing members can do when a new problem arises is to engage in more localized problem solving. Weick, 1979, pp 20-21.
logicLogic, from Classical Greek λόγος logos (the word), is the study of patterns found in reasoning. The task of the logician is to set down rules for distinguishing between valid and fallacious inference, between rational and flawed arguments. Traditionally, logic is studied as a branch of philosophy, one part of the classical trivium, which consisted of grammar, logic, and rhetoric. Since the mid-nineteenth century logic has also been commonly studied in mathematics. More recently logic has been applied to computer science. The parts that make up a computer chip are often called ""logic gates."" As a formal science, logic investigates and classifies the structure of statements and arguments, both through the study of formal systems of inference and through the study of arguments in natural language. The scope of logic is therefore large, ranging from core topics such as the study of fallacies and paradoxes, to specialized analyses of reasoning using probability and to arguments involving causality. Wikipedia contributors, ""Logic,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Logic&oldid=104417422 (accessed January 31, 2007). See reason, inference, and causality.
loose couplingSee modularity.
lower level learningSee learning levels of.
luck...where preparation and opportunity meet...
M-formThe multidivisional form of organization that evolved out of the early 1900s, classic examples being AT&T and General Motors. This organizational structure, processes and decision-making mechanisms are well examined in the models proposed by Chandler (1962), Bower (1970) and Cyert and March (1963). At MIT, business historian Alfred Chandler had become fascinated by the rapid spread of the new strategies and the organizations needed to manage them, and was tracing the trend to its roots in the pre-War period. His carefully documented research provided a richly textured interpretation of the new multidivisional organization that was beginning to dominate corporate structures in the United States and abroad (Chandler, 1962). At Carnegie Mellon, another extraordinary research effort was building on the foundations laid by Herbert Simon and James March in modeling human behavior to better understand how decisions were made in the complex new emerging corporations. The resulting behavioral theory of the firm was consolidated and formalized in the work of Cyert and March (1963). Several years later, at Harvard Business School, Joseph Bower's research into business planning and investment decision making led to a model of the strategic processes in multidivisional organizations, thereby creating a bridge between the new corporate structure described by Chandler and the theory of decision-making proposed by Cyert and March (Bower, 1970). (Source: Bartlett & Ghoshal, 1993). In the M-form, the renewal process is clearly driven by highly effective leaders at the company's top level. In this specific attribute. This is in contrast to the Cyert and March model which is fundamentally different from Chandler's conceptualization of the classic M-form organization, which was premised on a strong leadership role of the top management. Alfred Sloan's towering presence in General Motors is perhaps the best known illustration of this role, as reflected in Chandler's (1962) description of him as the architect of GM's strategy, the builder of its structure, and the designer of its systems. Even since Sloan and his pioneering contemporaries discovered how the then emerging strategy of diversification was facilitated by the divisional structure and how that structure could be supported by some tightly designed planning and control systems, this strategy-structure-systems link has become an article of faith that has shaped top management roles in most large M-form organizations. (Bartlett, 1993).
macroIn organizational theory, the term 'macro' refers to global or population-wide levels of existence or study, in contrast to 'micro' that refers to local levels of existence or study. These terms reflect the systems thinking construct that distinguishes parts from wholes and the separation of the individual and the group, whether the group is an organization or society. (Stacey, 2007, pp 5)
macroeconomicsSee economics.
managementThe directing the affairs of a business organization -- guiding, leading, envisioning, regulating its course, controlling, administering, perpetuating, developing capability, getting things done, effecting organizational and business performance, etc. The science and art of getting things done. See management profession for Peter F. Drucker's comments on the managers' profession as paraphrased from Alfred P. Sloan. Management functions -- The functions of management include the planning, organization, directing, and controlling to achieve an organization's objectives. Planning has many levels -- from establishing the organization-wide objectives and goals to tactics to daily activities. Organization deals with aligning resources and objectives in order to achieve the plans - again at all levels. Directing involves the assignment of people to work to accomplish the goals. This includes the motivation and guidance of the workers. Controlling involves assessment of activities and the correction of those activities not achieving the desired results. Control is initiated with the establishment of performance standards, communicating those standards, and measuring performance against those standards. Defining these factors of management beg the question - what is leadership? Management vs. Leadership -- ""Management is doing things right; leadership is doing the right things."" - Peter F. Drucker ""Managers are people who do things right and leaders are people who do the right thing"" (Bennis, W. and Nanus, B., (1985), Leaders: The Strategies for Taking Charge, Harper and Row, pp 21). This is a direct appeal to the vanity of corporate leaders, but it gets worse. While managers may be fixated by a concern with moving the organization along historical tracts, the transformational leader is ""causative... can invent and create institutions... can choose purposes and visions... can create the social architecture that supports them... can move followers to higher degrees of consciousness, such as liberty, freedom, justice, and self-actualization"" (Bennis, 1985, pp 218). From Pettigrew, 1987, pp 653). Management - directing others in the pursuit of ends using means, both of which have been selected by the manager. Leadership - guiding, encouraging, and facilitating the pursuit by others of ends using means, both of which they have personally selected or the selection of which they approve. Following the leader is voluntary, with enthusiasm and dedication. Source: Russell L. Ackoff, Ackoff's Best, 1981, 1999 p283 John Kotter's Management vs. Leadership -- Kotter, 1996, 1990, pp26 Management -- Planning and budgeting -- establishing detailed steps and timetables for achieving needed results, then allocating the resources necessary to make it happen. Organizing and staffing -- establishing some structure for accomplishing plan requirements, staffing that structure with individuals, delegating responsibility and authority for carrying out the plan, providing policies and procedures to guide people, and creating methods or systems to monitor implementation. Controlling and problem solving -- monitoring results, identifying deviations from plan, then planning and organizing to solve these problems. Expected result -- Produces a degree of predictability and order and has the potential to consistently produce short-term results expected by various stakeholders (e.g. customers, always being on time; for stockholders, being on budget). Leadership -- Establishing direction -- developing a vision of the future - often the distant future - and strategies for producing the changes needed to achieve that vision. Aligning people -- communicating direction in words and deeds to all those whose cooperation may be needed so as to influence the creation of teams and coalitions that understand the vision and strategies and that accept their validity. Motivating and inspiring -- energizing people to overcome major political, bureaucratic, and resource barriers to change by satisfying basic, but often unfulfilled, human needs.. Expected result -- Produces change, often to a dramatic degree, and has the potential to produce extremely useful change (e.g. new products that customers want, new approaches to labor relations that help make a firm more competitive. Essence of Management - Jack & Suzy Welch -- Source: That's Management!, Business Week, FEBRUARY 19, 2007 Question: Since there is such a bias in the markets for short-term results, how can you prepare for the long term? - Wayne Abernathy, Washington, D.C. Answer: In a word, that's management. Balancing the demand for quarterly results with the pressure for a profitable future is what good managers do for a living. Sorry if we sound exasperated, but every time we hear this question, we wonder: What do you think you were hired for? You were hired to wrestle a paradox-and pin it to the mat. And not just once, but over and over again. Look, anyone can manage for the short term. Just keep squeezing the lemon, wringing out costs until there's nothing left but the pulp. And anyone can manage for the long term. Just keep telling people: ""Be patient. Our strategy will pay off in time."" The mark of a leader is someone who has the rigor, vision, and courage to do both simultaneously. Take the example of managing people, a true short-long balancing act. Of course you want to motivate your team to deliver immediate results. You can do that with incentives and rewards, clear goals, and a passionate attitude about winning-the more passionate the better. But you can never stop thinking about developing your people, too. That means sending them to internal training programs or outside courses, giving them different experiences and stretch assignments, and encouraging them to take risks. Those activities may not deliver instant results, but they're an investment in the future that you must make. It's the same story with managing r&d. Obviously, you need to fund projects that will improve and expand your existing products. That's usually money well spent, with relatively quick and certain returns. But some portion of your budget also needs to be earmarked for the kind of research that will deliver results in several years. Now, how much should go to each investment bucket? Your call, boss. Perhaps the most common managerial balancing act has to do with marketing. With one phone call, you can take the easy way out and cut your advertising budget 20% to 50%. That will drop the savings right to the bottom line, with no sales impact for a quarter or two and no blood spilled in terms of programs or people. But what about the long-term hit to market share and brand? That's the judgment call, and you're the judge. Work requires dozens of decisions a day, but yours is the über-question of them all. As a manager, you'll spend your career answering it. Toyota Management (Source: Jim Womack, 4/42007 email to www.lean.org subscribers) -- And at every level Toyota needs to teach its managers to utilize these concepts by going to the gemba. There, they need to lead by asking questions about - the true business problem, the current condition causing the problem, a better condition (that is, a better process) that could address the problem, who must do what when to achieve this new condition (the future state), and what evidence will show that the problem has been addressed. This means managing the organization's value-creating processes (value streams) by asking highly informed questions rather than managing results at the end of the reporting period. (The latter is simply another form of end-of-the-line quality inspection.) And it means avoiding a resort to orders on what to do next when matters seem to be getting out of hand. Issuing crisp orders is the natural instinct of any boss. Indeed, most bosses seem to think that by virtue of their experience and authority, they should be able to solve any problem lower in the organization. But orders from the boss rather than informed questions take away the lower-level managers' responsibility for solving problems. They start a vicious circle in which lower-level managers wait to be told what to do by higher-level managers who are much further from the gemba where value is created and who inherently have less - not more - knowledge of the best thing to do.
management fadsWhat makes a management technique a fad is not the technique itself. The techniques typically are developed, refined, and successfully employed by organizations prior to becoming popular. What makes them a fad is that business leaders adopt them as panaceas without truly understanding the technique and the context of their situation - and calling what they are doing strategy or leadership. The management techniques cited as fads are not bad techniques per se - they are just not substitutes for leadership. They also cause more harm than good when misapplied. When the organization is rallied to pursue technique after technique without achieving promised results - it becomes very conscious of the wasted time, money, and energy - becoming cynical as a result. Fads since the late 1980s -- Total quality Kaizen Lean Benchmarking Best practices Flexible manufacturing Value creation Strategic intent Continuous improvement Cross-functional teams Revitalization Restructuring Reengineering Organizational transformation Six-sigma Business process redesign Organizations as orchestras The new organization The self designing organization The hybrid organization The post-entrepreneurial organization The post-industrial organization Knowledge workers Empowerment Diversity Entrepreneurs Intrapreneurs Innovation itself is even becoming a fad.
management innovationManagement is a social technology. Its innovation has brought about some of the most profound and lasting innovations in all of business. Management innovation can be defined as a marked departure from traditional management principles, processes, and practices -- a departure from customary organizational forms that significantly alters the way the work of management is performed. See Hamel, 2006 for a definition and examples of management innovation. Criteria for long lasting value creating management innovation -- The innovation is based on a novel principle that challenges management orthodoxy it is systemic, encompassing a range of processes and methods it is part of an ongoing program of invention, where progress compounds over time Analogies from atypical organizations that redefine what's possible Elements of management innovation -- Commitment to a big management problem Novel principles that illuminate new approaches A deconstruction of management orthodoxies Analogies from atypical organizations that redefine what's possible Hamel's list of significant management innovations (Hamel, 2006) -- These management innovations meet the following criteria: 1) they were radically new at the time, 2) a marked departure from previous management practices, 3) conferred a competitive advantage on the pioneering company, and 4) are lasting, being found in some form in organizations today. Management innovations that shaped modern management -- Scientific Management (time and motion studies), Frederick W. Taylor's Principles of Scientific Management, 1911 Cost accounting and variance analysis Industrial Research Labs: Bringing management discipline to the chaotic process of scientific discovery. (Innovator, GE, early 1900s). Commercial research laboratories - the industrialization of science. ROI Analysis and Capital Budgeting Techniques: (Pioneer, DuPont, 1903) Brand Management: Creating value out of intangible assets. (Innovator, Proctor & Gamble, early 1930s) Large Scale Project Management (WWII) Divisionalization (GM) Leadership Development (GE) Industry Consortia, multi-company collaborative structures (new technology collaboration, industry standards, etc.) Radical decentralization (self-organizing) (Gore, Visa, AA, Cisco ) Formalized strategic analysis Employee-driven problem solving (Toyota) Others -- Skunk works Account management Business process reengineering Employee stock ownership plans Too early to tell -- Open Source Development: Organizing volunteers world-wide to create and continually improve an operating system. (Innovator, Linux) Knowledge Management Internal Markets Other management innovations -- Chaordic Organization: A near virtual self-organizing organization based on principles to marry cooperation with competition. Combination of multi-company collaboration and self-organization. See chaordic organization. (Innovator, Visa, early 1970s) Risk Management Where to look for emerging management innovations -- Semco - The most extreme example of meeting chaos with chaos is probably Semco, the celebrated Brazilian outfit where there are virtually no job titles, a few executives trade the CEO role every six months, and workers set their own hours and choose their managers by vote. Gore - decentralization and an anti-control ethos seem to characterize a growing number of successful businesses. No one at W.L. Gore has a job title. Whole Foods Market - Any employee of Whole Foods Market can look up anyone else's salary, which sounds like a recipe for internal war. Conventional wisdom says such policies will massively distract an organization, yet in a fast-changing world they seem to have the opposite effect. Google - Mistakes are expected. Googley. Chaos trumps comfy. Figure things out as you go. Structured chaos. BMW - (see article: Management Innovation - BMW) Cemex -- Radical engagement of all members in innovation, ideas, experiments. Reinventing the cement industry. Virgin -- Apple -- ?? Management innovation process -- See Hamel, 2006.
management professionPeter F. Drucker, paraphrased the key points that he felt Alfred P. Sloan was making in My Years with General Motors in regard to the profession of the manager, in contrast to Drucker's early writings on the discipline of management. Management is a profession and the manager is -- or should be -- a professional. The professional manager has a ""client"" -- as do lawyers and doctors. It is duty to the client that characterizes the ""professional."" Professionals do not make decisions according to their preferences. They make them according to the facts. The job of a professional is not to like people. It is not to change people. It is to put their strengths to work. And whether one approves of people or the way they do their work, their performance is the only thing that counts, and indeed the only thing that the professional manager is permitted to pay attention to. But performance is more than ""bottom line."" It is also setting an example. And this requires integrity. Limited only to these twin boundaries, business performance and performance as example and mentor, there should be absolute tolerance and indeed the greatest diversity. Dissent, even conflict, are necessary, are indeed desirable. Without dissent and conflict there is no understanding. And without understanding, there are only wrong decisions. Leadership is not ""charisma."" It is not ""Public Relations."" It is not showmanship. It is performance, consistent behavior, trustworthiness. Finally -- and perhaps the most important lesson -- the professional manager is a servant. Rank does not confer privilege. It does not give power. It imposes responsibility.
management science""The management scientist's mandate is to use rational, systematic, science-based techniques to inform and improve decisions of all kinds."" Source: management science. Reference.com. Wikipedia, the free encyclopedia. http://www.reference.com/browse/wiki/Management_science (accessed: November 28, 2006). Management science encompasses the functional, cross-functional and multiple disciplines involved in the management of an organization. Beyond general management and organization leadership, aspects of management science include strategy, accounting, finance, information systems, manufacturing, distribution, marketing, research, development, supply chain management, decision analysis, organization performance, modeling, simulation, design, game theory, etc. Management science is concerned with developing and applying models and concepts in order to illuminate management issues, improve business decision making, and solve managerial problems. The models used can often be represented mathematically, but sometimes computer-based, visual or verbal representations are used. Management science is about using models to solve real problems, helping management deal with the complexities experienced in organizations. Management science has a practical, rather than an academic, bent.
managerial theory of the firmAccording to Bartlett and Ghoshal (1993), a ""managerial theory of the firm"" would be more attuned to the premises of the key actors within the firm so as to be able to illuminate the corporate world as seen by managers and encompass the issues that they perceive to be important. The form of the firm resulting from this managerial theory is a radical departure from the dominant M-form of the firm. Contrast to the M-form -- Leadership in the M-form is fundamentally based on the view of companies as economic entities: managers in ABB and in most of the other companies we studied have premised their role on the recognition that large corporations are also complex social institutions. To capture the energy, commitment and creativity of their people, these managers are replacing the hard-edged strategy-structure-systems paradigm of the M-form with a softer, more organic model built around purpose, process and people. The renewal process we have described challenges the behavioral theory of the firm by the very existence of the leadership role; but it equally challenges Chandler's model of the M-form because of this basic change in the content of that role. Chandler's study of the adoption of the multidivisional organization structure by fifty of the largest companies in the United States, and his detailed examination of four of the pioneers of that revolutionary structural form, led him to develop his highly influential strategy/structure thesis. His central conclusion was that companies being driven by market growth and technological change to develop greater diversity in their products and markets, were able to manage their new strategies efficiently only if they adopted a multidivisional organizational structure - the so-called M-form. The reason this structural form proved so powerful was because it defined a new set of management roles and relationships that emphasised the decentralization of responsibility to operating divisions whose activities were planned, coordinated and controlled by a strong corporate management - the general office in Chandler's terms - which also made the company's ""entrepreneurial decisions"" about resource allocation. He showed how the management process created by this organization allowed companies to apply their resources more efficiently to opportunities created by changing markets and developing technologies. Entrepreneurial Process: Aligning and Supporting Initiatives -- For example, (from Bartlett and Ghoshal, 1993), This entrepreneurial process, framed and institutionalized by ABB's new organization structure and management philosophy, is embedded in a redefined set of management roles and relationships. Front-line managers - the heads of the 1300 little companies - have evolved from their traditional role of implementers of top-down decisions to become the primary initiators of entrepreneurial action, creating and pursuing new opportunities for the company. Middle-level managers like Baker and Gundemark are no longer preoccupied with their historic control role, but instead have become a key resource to the front-line managers, coaching and supporting them in their activities. And top management, having radically decentralized the resources and backed them with strong delegated responsibility, focus much more on driving the entrepreneurial process by developing a broad set of objectives and by establishing stretched performance standards that the front-line initiatives must meet. Integrating Resources and Capabilities -- Bower's intensive study of business planning and investment decision making in four divisions of a large diversified company he identified as ""National Products"" led him to develop a process model of the firm that enriched Chandler's work by challenging and expanding on several of its descriptions and conclusions. He presented a less heroic view of top management than Chandler's description of corporate entrepreneurs determining strategy through their control over resources. Instead, Bower described a process in which the shaping of new strategic initiatives and the investment proposals to support them (""definition"" in his terminology) were initiated by front-line managers. Furthermore, in his view, it was the middle-level managers who typically made the resource commitments, since projects reaching the executive committee level with their support (Bower used the term ""impetus"") were ""almost never rejected"" (1970:57). Thus, the major source of top management's power in Bower's model lay in its control over what he termed the ""structural context"" - ""the set of organizational forces that influenced the processes of definition and impetus"" (1970:71) The Integration Process: Linking and Leveraging Capabilities -- In ABB, the middle managers' pivotal horizontal linkage role is supported by a top management that creates a value-based context to support and reward collaborative behavior, and by a front-line management that exploits the personal networks such horizontal relationships facilitate. It is a very different process than the vertical planning and resource allocation process at the core of Bower's model, but a vital one for a company competing in an increasingly knowledge- based economy. Contrast with Cyert and March's Views on Embedding Purpose and Challenge -- Using clinical field data, experimental studies and computer simulations, Cyert and March formulated a behavior-based theory of the firm that challenged many of the economists' classic assumptions. By viewing organizations as coalitions of participants with disparate demands, they developed a notion of goal formation in firms that was based on an internal process of bargaining among coalition members. The objectives developed through this process were given stability by internal control mechanisms, particularly by standard operating procedures, yet were adaptable to changes in the external environment and to internal changes in the coalition. To explain decision making behavior, Cyert and March developed four key concepts about the way in which firms set objectives, manage expectations, and make choices. In their model, behavior was driven by the quasi-resolution of conflict, uncertainty avoidance, problemistic search, and organizational learning. The Renewal Process: Creating Purpose and Challenge -- In sum, ABB has created a much more rational macro framework for goal setting and learning, capturing them both in a third core organizational process we describe as the renewal process. Like the entrepreneurial and integration processes, it is defined by a set of top, middle and front-line management roles that not only drive the process but also embed it in the organization's ongoing activities. But, while the front-line managers are the key drivers of the entrepreneurial process and middle management provides the anchor for the integration process, it is the top management of the company that takes the lead in inspiring and energizing the renewal process. This process of purposeful corporate renewal is very different from the individually based, negotiation driven process by which Cyert and March assumed that companies established their goals and aspiration levels. In fact, many of Barnevik's earliest actions were designed to break the coalitions and redefine the policies that had made ABB's precedent companies operate in such a politically negotiated manner. By reassigning managers, stripping out organization layers, redefining SOPs, and shifting the locus of power towards the operating companies, he reshaped coalition membership and redefined the relationships among them. Rather than waiting for the new organization to develop and institutionalize new objectives and behavioral norms through what Cyert and March described as ""accidents of organizational genealogy"" (1963:34), he intervened strongly to define a new common purpose and ambition to shape those objectives and standards. In doing so, Barnevik seems to reject Cyert and March's assertion that ""people have goals, collectives of people do not"" (1963:26) as well as their complementary belief that the organizational aspiration level is determined by the attainable goals aspired to by individual coalition members according to their perceptions of the past. Instead, he has focused ABB on a very streched, future oriented sense of corporate mission that is defined with sufficient conviction and communicated with sufficient intensity that it can result in a simultaneous raising and convergence of individual aspiration levels within the company. It is an activity to which he has devoted an enormous amount of time, firstly in developing a clearly articulated sense of purpose, and then in overlaying it with a more dynamic sense of challenge. While many companies have aspired to the voguish objective of ""creating a shared vision"", Barnevik seems to have moved well beyond the rhetoric towards making this an operating reality at ABB. He has done so through several means. The company's mission statement is designed to engage organization members worldwide and to align their interests with ABB's broadly defined corporate purpose ""to contribute to environmentally sound sustainable growth and make improved living standards a reality for all nations around the world"" (P6). With such a statement, Barnevik has created the sense of ""public interest"" and ""social welfare"" that Cyert and March saw as providing the common goal of political institutions (1963:28). However the mission statement then expands that unifying altruistic purpose into a more managerial objective: ""to increase the value of our products based on continuous technological innovation and on the competence and motivation of our employees... becoming a global leader - the most competitive, competent, technologically advanced and quality minded electrical engineering company in our fields of activity"" (P6). This translation of the broad mission to a strategic objective lends it a sense of organizational reality and legitimacy, and gives it more managerial power and relevance. Barnevik has further operationalized the broad vision by expressing the goals in financial performance terms - ""10% operating profit and 25% return on capital employed by the mid 1990s"". Such statements have not only provided a common aspiration level, they have also moved the mission statement beyond the ""ambiguous goals"" and ""vague objectives"" that led Cyert and March to conclude that such solutions to the goal setting problem were ""misdirected"" (1963:28). Beyond creating a shared purpose, Barnevik has taken on a major role in providing the organization with a sense of ambition that, on the one hand, legitimizes the company's stretch targets and, on the other hand, creates sufficient strategic turmoil to stimulate organizational learning. For example, recognizing that ABB was too dependent on a stagnant European market, Barnevik set an objective of expanding its North American sales to represent 25% of the company's total. To initiate change, he acquired Combustion Engineering and Westinghouse's power transmission and distribution business in the United States, grafting these operations on to ABB's existing BAs. Not only did such a move boost the North American share of ABB's sales from 12% to 18%, it also exposed the Europe dominated business to North American technical developments (such as process control automation) and management practices (such as time based management) that were previously neither well understood nor effectively practiced in the ABB system. The dual impact of a clearly defined anchor of corporate purpose juxtaposed against a slightly dissonant corporate ambition is felt particularly strongly in the front-line units. It is here that managers confront the gap between current performance and the aspiration level defined by the visionary purpose statement and the stretching ambition. If this process is to remain in balance, however, this tension created in the front-line units must be resolved. And without a high level of credibility and trust, such resolution can easily degenerate into horse trading or grand compromises. Creating and maintaining credibility and trust in the system, therefore, is a key requirement and these tasks define the main responsibilities of middle management in the renewal process. One important means for executing these responsibilities lies in their stewardship of the various horizontal coordination mechanisms we have described. In contrast to Cyert and March's assumption that ""firms do not resolve potential conflict... by a procedure of explicit mediation"" (1963:27), managers like Ulf Gundemark create and manage a portfolio of boards, committees and project teams that serve not only as channels for the communication and transfer of knowledge, but are also explicitly designated as forums where managers can negotiate differences and resolve conflicts in an open and legitimate manner. Middle managers also ensure the legitimacy and credibility of this tension-filled process by creating a decision making context which is both participative and transparent. To ensure the credibility of top management's ambitious objectives, for example, Ulf Gundemark formed a Relays Vision 2000 Task Force of nine operating managers from various front-line companies, and charged them with the task of translating Barnevik's broad vision of ABB's place in the global power equipment industry into specific strategies for the relays business. After six months of intensive effort this task force developed a set of self-funding proposals that ranged from strategic investments to expand into new products (like metering) and new markets (like telecommunications), to plans for increasing employee motivation and organizational effectiveness. With a legitimacy and credibility that came from being defined by peers rather than being imposed by the top management, the strategy was accepted by front line managers like Jans who began trying to meet the ambitious challenges by expanding beyond their existing business boundaries into the new products and markets legitimized by Vision 2000. The behavioral theory of the firm is, in essence, premised on the absence of leadership, while ABB's renewal process is clearly driven by highly effective leaders at the company's top level. In this specific attribute, the Cyert and March model is fundamentally different from Chandler's conceptualization of the classic M-form organization, which was premised on a strong leadership role of the top management. Alfred Sloan's towering presence in General Motors is perhaps the best known illustration of this role, as reflected in Chandler's (1962) description of him as the architect of GM's strategy, the builder of its structure, and the designer of its systems. Even since Sloan and his pioneering contemporaries discovered how the then emerging strategy of diversification was facilitated by the divisional structure and how that structure could be supported by some tightly designed planning and control systems, this strategy-structure-systems link has become an article of faith that has shaped top management roles in most large M-form organizations. While it is clear that the role played by Barnevik and other top managers at ABB is not well captured by Cyert and March's model, it is important to understand how it also has diverged from the top management role described by Chandler. Given their starting point in the midst of a fusion between two large worldwide companies, Barnevik and his colleagues in ABB's group executive management initially focused on these tasks of formulating the merged company's strategy, structure and systems. Over time, however, their roles have evolved to be significantly different from these classic responsibilities of leadership in M-form organizations. From being formulators of corporate strategy, they have become the shapers of an instititutional purpose with which all employees can identify and to which they can commit. Instead of being the architects of formal structure, they have come to see themselves as the developers of organizational processes that can capture individual initiative and create supporting relationships. And, rather than being the designers of systems, they have refocused on the individual as the primary unit of analysis in the leadership task and have become the moulders of people. Leadership in the M-form is fundamentally based on the view of companies as economic entities: managers in ABB and in most of the other companies we studied have premised their role on the recognition that large corporations are also complex social institutions. To capture the energy, commitment and creativity of their people, these managers are replacing the hard-edged strategy-structure-systems paradigm of the M-form with a softer, more organic model built around purpose, process and people. The renewal process we have described challenges the behavioral theory of the firm by the very existence of the leadership role; but it equally challenges Chandler's model of the M-form because of this basic change in the content of that role. Framing the Model: Toward a Managerial Theory of the Firm --
marketA market is the group of existing or potential buyers of an offering. Source: Roth, Alvin E., (2007), The Art of Designing Markets, Harvard Business Review, October, 2007, p 118-126 Traditional economics views markets as simply the confluence of supply and demand. A new field of economics, known as ""market design,"" recognizes that well-functioning markets depend on detailed rules. To function properly, markets need to do at least three things. They need to provide thickness -- that is, to bring together a large enough proportion of potential buyers and sellers to produce satisfactory outcomes for both sides of a transaction. They need to make it safe for those who have been brought together to reveal or act on confidential information they may hold. When a good market outcome depends on such disclosure, as it often does, the market must offer participants incentives to reveal some of what they know. They need to overcome the congestion that thickness can bring, by giving market participants enough time-or the means to conduct transactions fast enough-to make satisfactory choices when faced with a variety of alternatives. A primary motive for market design is the need to address market failures. Two developments in economics came together to form the field of market design. One was game theory-the study of the ""rules of the game"" and the strategic behavior that they elicit. By the 1990s it had matured to the point where it could offer practical guidance. In this it was helped by another new methodology, experimental economics, which provided tools both for testing the reliability of game theory's predictions and for testing market designs before introducing them into operating markets.
market economyCompetitive advantage lessons from the market economy (from Kay, 2004) -- The market economy exists within a social, political, and cultural context. The success of the creative capability of the market economy, over other types of economies, offers lessons for sustaining competitive advantage. The market economy coevolves with the social, political, and cultural institutions it coexists with. Here are some of the attributes associated with a market economy. The rule of law counters unrestrained individualism. Conventions and rules which are clear, explicit, and broadly accepted make for efficient exchange. Trust fosters effective and efficient economic exchange. An economy conjoined with a culture, whose individuals care about business as an activity for its own sake, rather than self-interested materialism, is more successful. Homogeneity in critical foundational aspects enable more complex structures and regulations for the benefit of the economy. Societies that thrive have a broad consensus on the legitimacy of the distribution of wealth and income. Economies with mechanisms to ensure plurality, such as through anti-trust laws, are robust. Centralization of power inevitably leads to destruction of creation capability of institutions - Ford Motor by 1940s nearly destroyed by Henry Ford, Khrushchev's failed economic reforms for the Soviet Union, Mao with reforming China, Jack Welch towards the end of his tenure, and GE's central planning prior to Jack Welch dismantling it - whereas decentralization of power brings with it the limitation of risk of decisions and spurs the institution's ability to create.
marketing myopiaA phrase popularized by Theodore Levitt in a 1960 Harvard Business Review article, in which managements become preoccupied by their current offerings to the extent that they miss the transitions in the market that move their customers onto newer and higher value offerings, often initially denying the threat that is posed by this shift.
material causeSource: Wikipedia contributors, ""Material Cause,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Material_Cause&oldid=82680261 (accessed November 27, 2006). Material Cause is a philosophical concept proposed by Aristotle which describes the material out of which something is composed. Thus the material cause of a table is wood, and the material cause of a car is rubber and steel. Material cause is one of four ""causes"" suggested by Aristotle. Each of these ""causes"" was a different sense of the Greek word aition, which Aristotle thought was ambiguous and needed to be clarified. Unfortunately, cause in English is not unclear like aition in Greek is, and thus the use of cause can be confusing. Only one of the four ""causes"" (the efficient cause) approximates the concept expressed by the English word cause. It has been suggested that an English word of parallel ambiguity is the verb ""make"". Thus the Greek ""x is the aition of y"" can be rendered in English ""x makes a y"". In the case of material cause, we could say ""wood makes up a table"" or in the case of a car, we could say ""steel and rubber make up a car""
materialism The philosophical theory that physical matter and its motions is the only reality and that everything constituting the universe, and all phenomena, including thought, feeling, mind, and will, can be explained in terms of matter and physical phenomena.
meaningMeaning is viewed in the context of the communication process. Models of communication view meaning differently. Sender-receiver model - pre-established meaning -- In this model, meaning lies in the word, that is, in the vocal gesture of the one making the gesture; the part played by the receiver is simply one of translation until the same meaning is received as was transmitted. (Stacey, 2007, pp 271) Gesture-response model - emergence of meaning -- In this model, meaning emerges from human interaction, complex responsive processes, in the living present. Meaning is not simply located in the past (gesture) or the future (response) but in the circular interaction between the two in the living present. Meaning is emerging in the action of the living present in which the immediate future (response) acts back on the past (gesture) to change its meaning. This (Stacey, 2001, fig 8.1, 171 -174) See communication, the living present, communicative interaction, and complex responsive processes for related information.
measurementTo measure refers to ascertaining the characteristics of something. There are at least two significant dimensions to effective measurement. One is accuracy, measuring the right thing. The other is precision, measuring to a level of detail sufficient to achieve the measurement's objective.
mechanisms of variationTechnologies of foolishness (March, 2007) -- Technologies of foolishness are an answer to the need to deliberately induce greater variation in order to supplement exploration beyond what the technologies of rationality and adaptive feedback can provide. These technologies include foolishness, brainstorming, identity-based avoidance of the strictures of consequences, devil's advocacy, conflict, and weak memories.
mechanisticMechanistic refers to a type of thinking based on the Newtonian view of nature and nature's organization. It is also referred to as part-whole or analytical thinking. It is based on the natural or efficient causality of natural systems. See organization for a description of this type of thinking and other types.
mediaIn addition to their being mechanisms for accomplishing a great variety of objectives and, perhaps as a necessary consequence, the source of many of our current difficulties, organizations have yet another important effect on our collective lives. This effect is more subtle and less widely recognized, but it may be the most profound in its implications. It is perhaps best introduced by an analogy: ""The medium is the message."" This twentieth-century aphorism was coined by Marshall McLuhan to focus attention on the characteristics of the mass media themselves-print, radio, movies, television-in contrast to the content transmitted by these media. McLuhan defines media very broadly as ""any extension of ourselves""; elaborating his thesis, he notes, ""The message of any medium is the change in scale or pace or pattern that it introduces into human affairs"" (1964: 23, 24). McLuhan's thesis appears to be more clearly applicable to our subject organizations-than to any specific media of communication. First, like media, organizations represent extensions of ourselves. Organizations can achieve goals that are quite beyond the reach of any individual-from building skyscrapers and dams to putting a person on the moon. But to focus on what organizations do may conceal from us the more basic and far-reaching effects that occur because organizations are the mechanisms-the media-by which those goals are pursued. Organizations are not only contexts influencing the activities of individuals-they are actors in their own right. As collective actors, they can take actions, use resources, enter into contracts, and own property. The social structure of the modern society can no longer be described accurately as consisting only of relations among natural persons; our understanding must be stretched to include as well those relations between natural and collective actors, and between two or more collective actors. In short, we must come to ""the recognition that the society has changed over the past few centuries in the very structural elements of which it is composed"" (Coleman, 1974: 13). Source: Scott & Davis, 2007, p 5-7
mental modelMental models are images, representations, or schemes of how we perceive and understand the world around us. Like all models, mental models are abstractions of reality. The model is less complex than the real world. No matter how well constructed, all models are wrong in some context or time. As the economy evolves, the mental models that were once successful become outdated. Therefore, refreshing the mental model of organization leaders is a chief requirement of a strategic management competency. See the related term schema. "The ideas and beliefs we use to guide our actions. We use them to explain cause and effect as we see them, and to give meaning to our experience" (O'Connor, 1997). Mental models encompass all the beliefs that individuals hold about what drives success in their industry. It is the prevailing dogmas or orthodoxies about what customers to serve, what those customers want, how to price, how to organize, which distribution channels to use and so on (Hamel, 2002). Importance of explicitly identifying mental models -- The danger of mental models is that if they go undefined they go unrecognized. A mental model unrecognized is a mental trap, a trap that prevents further learning. For example, if mental models of organization structure had not been challenged over time, all businesses today might resemble the strict hierarchy of Henry Ford from the early 1900s. It was Alfred Sloan's questioning of that model that led to GMs divisional model. Many other variations on organizations have continued to evolve over time. The lack of mental models is just as much a problem as having the wrong mental model. The lack of mental model makes all stimuli a priori equal. The decision maker without mental models to apply is overwhelmed. Mental models vs. business models (Hamel, 2000, pp 136) -- To redesign business models, the mental models must first be exposed and challenged. Mental models form from and reinforce the current business model. "A business model is a "thing". The mental model is a set of beliefs about the "thing". The mental model reflects the "central tendency" of beliefs around the key business concept design variables -- What is our business mission? What is our product/market scope? What is the basis for differentiation? What core competencies are important? What strategic assets, do we need to own? What core processes are critical? How can we best configure our resources? How do we go to market? What kind of information we need to serve customers? What is the kind of relationship we want with our customers? How do we price our products and services? What is the particular benefit bundle we deliver? How do we integrate with suppliers and partners? What profit boosters can we exploit?""   Foster & Kaplan on Mental Models (Foster & Kaplan, 2001, p 63-76) -- The originator of the concept of the mental model was Kenneth Craik, a Scottish psychologist who in 1943 proposed that mental models are the manipulation of a vast variety of internal representations of the external world: If the organism carries a ""small-scale model"" of external reality and of its own possible actions within its head, it is able to try out various alternatives, conclude which is the best of them, react to future situations before they arise, utilize the knowledge of the past events in dealing with the present and future, and in every way to react in a much fuller, safer, and more competent manner to the emergencies which face it. We form mental models of just about everything-cars, airplanes, corporations, ballet, opera, markets and their evolution, competition, operations, customer loyalty, consumer marketing, innovation, operational excellence, knowledge development and management, and so on. Forecasting, in particular, is an exercise in applied mental modeling. Some of these models may be static, while others-frequently the most useful ones-are dynamic. Some are quite real; many are symbolic. Some may be visionary. Some may have multiple legitimate interpretations, which depend on the perspective and context of the viewer. Few business strategies are elaborated today without recourse to mental models, which depict the corporation and its role in the market, the economy, the competitive landscape, and the world as a whole. More often they are implicit and inarticulate, and often hidden or invisible. But they are there nonetheless. We cannot function without them. They are essential to reasoning. Anton Pavlovich Chekhov, the Russian playwright and poet who wrote hauntingly about the inability of people to communicate with one another, maintained that one must ""snatch at small details, grouping them in such a manner that after reading them one can obtain the picture on closing one's eyes."" Mental models are the mechanism by which we ""snatch the small details"" and group them. As Albert Einstein observed, ""Man seeks for himself a simplified and lucid image of the world."" Philip N. Johnson-Laird, a cognitive psychologist at Princeton University, notes, ""Small scale models of reality need neither be wholly accurate nor correspond completely with what they model in order to be useful."" In other words, there is some give and take. The painter, the poet, the speculative philosopher, and the natural scientist, each in his own way, make mental models of the world they intend to represent to others. So, too, with great investors or great managers, like Charlie Munger. John Akers, we could safely say, needed to apply more effort to the creation and use of mental models. There are many examples of how models simplify the world without ignoring useful information. In the physical world, the science of data compression is focused precisely on this task. Data compression is an essential art in the computer and telecommunication industries. The mechanism for the compression is the removal of all nonessential data. What is nonessential information? Nonessential information is defined as all the information between two points that does not change-the white spaces on a page, for example. If all the white spaces-the areas where there is no information-are removed, while an accurate, but short, note is made of which white spaces were excised, where they began and where they terminated, one would have a shorter but accurate ""model"" of the page. In this way, the message is simplified without losing its exact character. This is essentially the way mental models work. Virginia Woolf once said, ""If there is one gift more essential to a novelist than another, it is the ability to develop single vision."" The concept of ""vision"" is clearly a mental model of the future order of things. In business, visions are simplified representations of what the corporation stands for, where it is going, and which actions are acceptable and unacceptable. Members of the organization need to understand management's vision in order to assess whether their rewards are sufficient to justify their participation in it. Of course, corporations have more than one mental model. There are, indeed, many mental models within a corporation. The mental model at a traditional manufacturing company, for example, may be built on the image of the company as a manufacturing process, with billing, receivables, and payables. A computer company may see itself as a network of interconnected nodes. Whatever the specific representation, the mental models formed at the highest levels of the organization filter down to the divisional level. Lower- level models may be smaller versions of the corporation's larger mental model, or they may be different. But in either case, they must fit compatibly with the overarching model of the corporation if the corporation is to function smoothly.   THE POWER OF MENTAL MODELS Craik would agree with Charlie Munger that mental models help investors and managers better understand the world, since they simplify an incomprehensibly complicated world. The need to simplify arises from our limited cognitive capacities. Our mental capacities, cognitive psychologists tell us, are quite limited compared to the complexities of life. We have limitations in our attention span, memory, recall, and information processing. The human mind's solution to the overwhelming complexity of today's world is to form mental models. Johnson-Laird elaborated on the usefulness of this in his 1983 book Mental Models: Mental models play a central and unifying role in representing objects, states of affairs, sequences of events, the way the world is, and the social and psychological actions of daily life. They enable individuals to make inferences and predictions, to understand phenomena, to decide what action to take and to control its execution, and above all, to experience events by proxy; they allow language to be used to create representations comparable to those deriving from direct acquaintance with the world; and they relate words to the world by way of conception and perception. Mental models are useful to the extent that they edit the world around us down to what we perceive as the essentials. ""A tight analogy or model permits us to know more about the world with less work,"" notes Dean Keith Simonton, cognitive psychologist, historiographer, and noted researcher on the process of creativity at the University of California- Davis. As such, mental models can facilitate success or, if inaccurately shaped, bring failure. They help us determine how to take advantage of opportunities and how to hedge risks. They help us spot problems and work out solutions. Mental models and the rules of conduct generated from them-whether explicit or implicit-are at the core of most man- agers' reasoning processes. Mental models aid managers in problem solving, as well, particularly the complex problems that corporate decision makers face. Without recourse to mental models, our cognitive systems would be too overloaded with data to function successfully. The great virtue of mental models is their ability to simplify complex situations and distribute decision making so that thousands of people in a company can make decisions day in and day out without having to coordinate each of them with everyone else in the organization. However, there is great risk as well, since inaccurate mental modeling can leverage a myriad of decisions. Mental models also facilitate dialogue and discussion. They allow us to interpret the language and acts of others. Language is essential to the construction of mental models. As James March, a professor of political science and sociology at Stanford University, noted, ""Language is used to create new meaning out of old, to make metaphorical leaps, to discover what a person might come to understand."" John Akers had a mental model of IBM, but it was wrong. Bill Gates, too, had a mental model, which was right for a while, until he recognized it had to be changed. George Soros, Warren Buffet, and Charlie Munger all had mental models that worked very well for a while and now are under stress. As Brian Arthur, a professor at the Santa Fe Institute and, in the eyes of many the ""chief economist"" of the New Economy, has noted, competition is competition within an "ecology of mental models." THE LIMITS OF MENTAL MODELS As useful as mental models are for a while, they clearly have a dark side, as John Akers discovered. When faced with discontinuous conditions, the mental factors that people generally favor, based on experience, expertise, knowledge, and learning, become liabilities. The very mental models that are at the heart of managerial strength are also at the heart of managerial weakness in an age of discontinuity. This is precisely the environment that has been increasingly prevalent in today's market, one that will become even more common in the future. When accurate, of course, mental models can help predict the future, and offer a distinct competitive advantage. But as appealing as they are, managers must remain vigilant, because mental models can be fraught with uncertainty, ambiguity, and errors. Inaccurate mental models can propagate errors in judgment and system design, result in errors of action, and, finally, result in poor performance. Shifting mental models requires real work. Because so many of our mental models lie hidden beneath the fabric of corporate life, shifting course can be difficult. There are four general problems associated with mental models and their use: First, they can be wrong because they are limited by the simplifications that made them useful. Second, they can be improperly used. Third, they can lead to wrong answers if fed by incorrect information. And fourth, their effectiveness is rarely assessed. We will cover each of these points in turn. They Can Be Wrong -- The effectiveness of mental models can be limited by the very simplifications that underlie them. Oversimplification can lead to systematic errors of judgment, logic, and forecasting. For example, an online marketer who assumes that consumers are going to continue to provide data about their habits, practices, and desires for free is making an assumption that could easily turn out to be incorrect. Already, some marketers are beginning to see that for relatively small fees they can circumvent major potential privacy liability. Professor Kurt Godel (1906-1978) of the Institute for Advanced Study at Princeton proved in the 1930s that no system can be both complete and consistent and that the errors inherent in mental models are inevitable. That is why those using mental models must be aware of their potential limitations and find ways to reduce the consequences of those limitations. They Can Be Improperly Used -- When the environment becomes truly complex, decision makers fail to respond appropriately by constructing new mental models. Instead they seem to revert to older, simpler models, as John Sterman suggested. Sterman observed that decision makers, for example, often forecast by averaging past values and extrapolating past trends rather than rethinking the forces at work in the industry and imaging how they might play out. Yet such complex relationships are increasingly common in the wired world of the Internet. To the extent that mental models are inaccurate, they lead directly to risk (although it is often hidden risk, since the model does not alert the modeler to it). For example, in the last chapter we discussed the disastrous collapse of semiconductor returns in the early '80s. The surprise in this was that no one anticipated it, even though it was well known that the Japanese were building new semiconductor plants at a large enough scale to swamp the industry with chips and cause prices to collapse. This is exactly what happened. But the mental models American semiconductor companies used led them to believe that prices could not decline as much as they did. The collapse took several companies with it, including Mostek, one of the leading players at the time. Mostek completely missed the impending collapse-and paid for that flawed mental model with its corporate life. Require Correct and Timely Information -- Mental models are only as strong as the information they are based on. That information can be wrong, late, incomplete, distorted through emotion, ambiguous, or irrelevant, or it can be the result of inept measurement due to selection or other cognitive biases. Such imperfect information will inevitably misrepresent reality. If one does not have accurate and timely input, one will never get an accurate or timely output. Require Assessment -- The construction and use of mental models, as Piaget pointed out, is often a process generally hidden from view, rather than a managerial process that is open to debate and challenge. Yet, as we've seen, the fact that mental models exist does not mean they are correct. Rarely are ""quality control"" processes used to check and test the validity of a mental model before it is put into use, or when it is in use to see if it is still accurate. Among the testing used to verify the effectiveness of other products, such as pharmaceuticals, are the use of ""double-blind"" procedures to ensure that the absence of negative effects is not confused with the confirmation of a positive effect; actively seeking contradictory evidence, rather than seeking only evidence that confirms effectiveness; and searching for and considering alternatives to help ensure that the best alternative is selected rather than simply selecting an alternative that works. Without such quality control, the modeling process is open to error. Yet rarely are any of these procedures used, or even considered. The need for new mental models can be obscured by contradictory data and incremental fixes to existing models. Changes in context should trigger reexamination of one's mental model, but often they do not. Since the mental models decision makers use specify the information they require, decision makers frequently reject information that challenges the relevance of the model itself. As the context changes, there is a strong preference for a leader to retain the existing model-for example, as the case of John Akers's insistence on relying on ""big iron."" Loyalty to a flawed model can be costly. If a mental model becomes outmoded-in the sense that it no longer provides an accurate simplification or rendering of reality-then any conclusions or predictions derived from it will be distorted as well. There is a reluctance on the part of managers to change models because there is no guarantee that the new models will be more effective than the ones they are replacing. Consequently, if the existing models seem to be working, managers are reluctant to abandon them. Moreover, the leaders who created the existing mental models often have a vested interest in protecting them. They are unlikely to abandon them unless a change in leadership of the organization ushers in a new, more appropriate mental model. Studies show that decision makers seek data that confirms existing mental models, rather than data that contradicts such models. There is a natural human bias toward confirmation. James March offers a telling illustration of the difficulties in changing mental models in his report about the accidental discovery of the hole in the Antarctic ozone layer: The NASA scientists' belief that low ozone readings must be erroneous (because they knew the ozone layer existed) led them to design a measurement system that made it impossible to detect low readings that might have invalidated their models. Fortunately, NASA had saved the original, unfiltered data and later confirmed that total ozone had indeed been falling since the launch of Nimbus 7. Because NASA created a measurement system immune to disconfirmation, the discovery of the ozone hole and the resulting global agreements to cease CFC production were delayed by as much as seven years. Richard Foster had a similar experience in 1987 in China, while visiting a preeminent hospital there. When he asked the head of the hospital's diagnostics lab about the incidence of AIDS in China, the hospital administrator replied, ""We have no AIDS in China."" Amazed, Foster pressed further. ""In all your blood testing in China, you have never found a single case of AIDS?"" he asked. ""Oh, no,"" the administrator replied, ""we know we don't have AIDS in China, so we don't test for it."" As James March observed, ""Experience is edited to remove contradictions."" Dean Keith Simonton offers a possible reason for this potentially dysfunctional cognitive behavior: To give up one's intellectual framework willy-nilly simply to accommodate the confusion of random events is to risk expanding psychological disorder, with a corresponding loss in behavioral adaptiveness. The ability to dismiss disconfirming data is an ancient art. One way that people do it is through ""issue avoidance,"" by simply avoiding threatening or negative data. Chris Argyris, the James Bryant Conant Professor of Education and Organizational Behavior at Harvard, calls this form of avoidance a ""defensive routine."" Defensive routines may result in avoiding alternatives, or denial. ""You're wrong. We are innovating, changing, and keeping up with the markets, perhaps now more than ever,"" an executive might argue when, in fact, all the innovation is incremental. In a more contemporary example, when former McDonald's chairman Mike Quinlan was asked by Business Week whether, in view of McDonald's flagging performance, they needed to change their approach, Quinlan replied, ""Do we have to change? No, we don't have to change. We have the most successful brand in the world."" His admission was apparently so starkly wrongheaded in the eyes of the company's board that they fired Quinlan and found a new CEO. The evidence is overwhelming that mental models, built to assist in decision making, once constructed often become the single most important barrier to change. We believe this problem will become increasingly pervasive as discontinuous shifts occur in industry after industry. The move to the Internet is just the first in a long series of what are likely to be confusing changes in context that will face most business leaders. In this era of rapid change and increasing complexity, mental models represent a tool of tremendous promise-but also of tremendous risk. To the extent they are built on the assumption of continuity, they are more of a liability to the user than a benefit. We cannot avoid using mental models, however. It is the way we are wired. Our only choice lies in deciding which one to use, and how to use it. This means recognizing the need to change mental models, and finding a way to change them that is less costly than holding on to mental models that do not work. The executives at Mostek could compellingly discuss the costs of remaining with an inaccurate mental model.   CREATING AND CHANGING MENTAL MODELS -- Piaget's research showed that we unconsciously create mental models from our earliest days. As we age we learn, from both formal and informal processes. Learning is one way of characterizing the process of changing mental models. ""The most powerful learning comes from direct experience,"" says Peter Senge, author of The Fifth Discipline. We use our experience to change our mental models. Jay Forrester, well-known inventor of magnetic-core memory storage, a precursor to today's RANI technology, and father of ""system dynamics,"" a systematic method of modeling complex structures, commented in 1971 on the simplicity of the mechanisms for changing our mental models: A mental model changes with time and even during the flow of a single conversation. The human mind assembles a few relationships to fit the context of a discussion. As the subject shifts so does the model. Each participant in a conversation employs a different mental model to interpret the subject. Fundamental assumptions differ but are never brought into the open. James March agrees. Mental models are often changed through the extended and informal process of corporate dialogue. This happens through ""myths, symbols, rituals, and stories. They are the ligaments of social life, establishing links among individuals and groups across generations and geographic distances."" March says elsewhere: ""They give context for understanding history and for locating oneself in it."" During the dialogue process, mental models are adjusted to reflect local context. These adjustments are then fed back into the mental models of top management. In this way, the mental models change. As March noted about ""visions""-mental models in the process of formation ""cannot be established in an organization by edict, or by the exercise of power or coercion. It is more an act of persuasion, of creating an enthusiastic and dedicated commitment . . . because it is right for the times, right for the organization, and right for the people who are working in it. By focusing attention on a vision [mental model], the leader operates on the emotional and spiritual resources of the organization, on its values, commitment, and aspirations."" Sterman also attests to the power of informal processes to change mental models: Active modeling occurs well before sensory information reaches the areas of the brain responsible for conscious thought. Powerful evolutionary pressures are responsible: our survival depends so completely on the ability to rapidly interpret reality that we long ago evolved structures to build these models automatically. Forrester's, March's, and Sterman's comments on the importance of conversation as a tool for aligning different mental models offer an important insight into how corporations can change mental models in a visible way, which we will explore in more detail in Chapter 11. But more than conversation and dialogue is required to change a company's mental models. ""The constructive process is guided by contextual cues and implicit inferences based on general knowledge,"" says Johnson- Laird. Contextual clues provide the puzzle edges that let us know where we are going-but only if we can interpret them (i.e., the context) correctly. Often the culture of the organization sets the context. Language, visual imagery, beliefs and behavior are the primary carriers of the culture and thus set the context. Johnson & Johnson's response to the Tylenol crisis in the mid-'80s provides an example of the power of context for establishing new mental models, in this case a mental model of the right approach for dealing with the crisis. The crisis presented a complex problem for J&J because the causes were not clear, the consequences of not dealing with it were enormous (seven people in the Chicago area died after taking the pills), and the cost of stopping and fixing the problem was very large-large enough to jeopardize the market value of the corporation. But one of the beliefs underlying Johnson & Johnson is its Credo, crafted by Robert Wood Johnson, which is still used as a guide to decision making and behavior today. The Credo establishes the hierarchy of values at J&J: mothers first, employees second, community third, and investors fourth (the assumption is that if the first three are done well, the fourth will follow). The clarity of the Credo, and the dedication of the management and staff of J&J to the Credo, allowed Jim Burke to easily and rapidly decide what to do and how to act. His immediate decision was to recall Tylenol from drugstore shelves across the nation when there was a threat that the widely used pills were tainted. The incident cost J&J a reported $100 million that year, but the decision was made in hours when the threat to consumers became clear. In other corporations, recalls are not handled as quickly, and perhaps not as effectively, as they are at J&J because they do not have J&J's Credo. The Credo is a key element of J&J's culture, which plays a strong role in establishing the company's mental models when it faces a new situation, or in deciding when old ones are in need of repair. Rarely do companies say they are ""setting out to build a new mental model."" But they do say they will ""develop a strategy to capitalize on the new opportunities in electronic commerce,"" or that they will ""reexamine the principles on which our organizational structure is based to compete more effectively in the future."" These are examples of statements of intent to create new mental models. Once built, mental models are enormously powerful in determining how the corporation responds to opportunities and challenges.   HOW MENTAL MODELS AFFECT CORPORATE BEHAVIOR -- Mental models have an impact on four primary areas of conventional ""corporate architecture"": information systems, decision-making processes, executional capabilities, and control systems. INFORMATION SYSTEMS The amount, type, quality, form, and frequency of data are effectively determined by senior management's mental model, whether that model is explicit or implicit. For example, many corporations believe that their performance is more dependent on sales margins than on capital employed. In these companies, the monthly profit-and-loss statements therefore capture information on sales and cost of goods sold (so that margins can be calculated), but do not reflect the capital employed in the business at all, despite the fact that investors are very much concerned with how much capital a corporation will need in the future. DECISION-MAKING PROCESSES The major decision-making processes of the corporation-planning systems, calendar management, agenda setting, decision criteria, and all the rest-are designed to be compatible with the mental models of the corporation. Needless to say, these decision-making systems are fed by, and therefore have to be compatible with, the information systems of the corporation. If the corporation feels that it is driven by the product- development cycle, as semiconductor manufacturers like Intel and Texas Instruments are, then this cycle drives the key decision-making processes (e.g., the decision to start the design of a new chip, or the decision to begin considering construction of a new plant, or the decision to switch suppliers for the next product offering), the executive calendar, the agendas of the major management meetings, and the strategic planning process. For a consumer retailer like Saks Fifth Avenue or the Gap, the calendar is driven by the major seasonal merchandising decisions, as well as very close monitoring-often day by day-of store sales to determine when a holiday sale (that is, selling their merchandising at lower prices to reduce inventories of already purchased products) should be started, stopped, or have its terms changed. EXECUTIONAL CAPABILITY Third, the mental model must be compatible with the executional capability of the organization. The human resources processes, staffing, evaluation procedures, and so on are determined within the context of the mental models of the corporation. For chemical companies like DuPont, international experience may be seen as key, since they see themselves very much as global players; indirect experience of, say, the business practices in China will not be sufficient. Direct line experience is preferred. For air-line companies such as AMR, the parent of American Airlines, customer experience may be considered key, and those who have had frontline experience are seen as the most valuable. CONTROL PROCESSES Last, the control processes-whether they be the operational control processes, the compensation systems, or the capital allocation processes of the corporation-all are determined by the mental models of the corporation. A company that has slim margins, such as an electric utility like Con Edison, will value those people most who know how to control costs on a day-to-day basis. A pharmaceutical company like Merck, Pfizer or Johnson & Johnson, which values the transformational innovation required for the discovery of new drugs, will not look at cost control as the most important control process, but will focus much more on finding the right scientists and giving them the freedom of time and resources necessary to maximize the chances that they will discover the new chemical entities that will be the key to more effective treatment of disease. These four elements, as well as the mental models that determine how they interact, constitute what we call the architecture of the corporation. We call this corporate architecture ""MIDAS""-Models, Information, Decisions, Actions, and Systems of Control-to make it easier to remember. The elements of the corporate architecture change as the corporation matures and the mental models change. And it is the evolution of corporate architecture—with the mental models steering the direction—that determines the competitiveness of the corporation. Thus the process of building mental models—whether these processes are explicit and examined or implicit and unexamined—is the core managerial process of the corporation.
meta-ethicsSee ethics.
metaphysicsThe branch of philosophy concerned with explaining the nature of the world. It is the study of being or reality. It addresses questions such as: What is the nature of reality? Is there a God? What is man's place in the universe? In short, metaphysics is the study of ultimate reality. A central branch of metaphysics is ontology, the investigation into what categories of things are in the world and what relations these things bear to one another. The metaphysician also attempts to clarify the notions by which people understand the world, including existence, objecthood, property, space, time, causality, and possibility. Another branch of metaphysics is cosmology, the study of the structure, origin, and design of the universe. More recently, the term ""metaphysics"" has also been used to refer to ""subjects which are beyond the physical world"". Metaphysics, natural philosophy, and science -- Before the development of modern science, scientific questions were addressed in metaphysics under the natural philosophy branch. This practice continued until up to the time of Isaac Newton (who was a natural philosopher himself) straight through the 18th century (the term ""science"" simply meant knowledge prior to the 19th century). However from the 19th century onwards natural philosophy became science, thus changing the definition of metaphysics to mainly include subjects beyond the physical world. Wikipedia contributors, ""Metaphysics,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Metaphysics&oldid=104326482 (accessed January 31, 2007).
methodologyA methodology is a set of methods, principles, and rules for engaging in an inquiry -- such as the inquiry of understanding and designing a strategic management process for a business organization. A methodology comes with its own discipline - knowledge, axioms, principles, understanding, and constructs - and an approach for applying that discipline to a given situation - like a business organization's strategic management competency development.
microIn organizational theory, the term 'micro' refers to local levels of existence or study, in contrast to 'macro' that refers to global or population-wide levels of existence or study. These terms reflect the systems thinking construct that distinguishes parts from wholes and the separation of the individual and the group, whether the group is an organization or society. (Stacey, 2007, pp 5)
micro-diversityMicro-diversity of interaction results in variation having the potential to result in transformation, i.e. novelty - essential to the evolution of the business organization. In human organizations, micro-diversity and the resulting variation, is a result of human interaction in the living present. The engine of transformative causality is micro-diversity, where micro-interpretations, result in variation, which results in novelty, and ultimately in a global transformation. The iterative interactive process sustains continuity with potential transformation at the same time. Variation arises in micro-diversity of interaction, resulting in transformation. In iteration, the continuity of identity is always open to change. Self-organization is then a process of interaction characterized in an essential way by paradox and the emergence of the truly unknowable. What is being so organized is identity. Micro-diversity of interaction is a process that produces novelty, the creatively new that has never existed before. Micro-diversity of interaction is a form of pluralism.
microeconomicsSee economics.
mindMind is related to consciousness, an awareness of one's own existence. In a conscious being, it is the element, part, substance, or process that reasons, thinks, feels, perceives, judges, etc. From a psychological point of view it is the totality of mental processes and activities, whether conscious or unconscious. Theories of the mind -- Cartesian dualism popularized the notion of the mind being separate from the body and brain, as in being non-material. On the other hand, materialism, being a form of monism, considers the mind to be material in origin and substance. See phenomenon for a historical perspective on the mind.
missionSee purpose and mission statement. Mission is part of policy in the policy-strategy-resource troika framework.
mission statementMission statement characteristics ( Ackoff, 1999a, pp 125-127) -- It should contain a formulation of the firm's objectives that enables progress toward them to be measured. To state objectives that cannot be used to evaluate performance is hypocrisy. A mission statement either guides the behavior of the firm or it is of no value. A company's mission statement should differentiate it from other companies. It establishes individuality, ideally uniqueness. A mission statement should define the business that the company wants to be in, not necessarily what it is in. Regardless of how diverse it is, the business should find a unifying concept that enlarges its view of itself (expands and challenges management to think in terms of possibilities) and simultaneously bring it into focus. A mission statement should be relevant to all the firm's stakeholders. The mission should state how the company intends to serve each of them. Especially look for it to motivate non-managerial employees. A mission statement should be exciting and inspiring. It should motivate all those whose participation in the pursuit is sought. A mission does not have to appear to be feasible, only desirable.
modelA model is an abstraction of reality. No matter how well constructed, models are always wrong. Traditional thinking focuses on seeking to prove models to be true by validating them with historical data. March on models (March, 2007, 208) -- Rationalist technologies depend on abstract models of reality that reduce the complexity of any particular context to what are believed to be its essential components and relations. The models depend on strong assumptions about the extent to which present knowledge encompasses the causal structure of the world and the preference structures of human actors. Within such abstractions, the forecasts of rational calculation compound so that small errors or oversights multiply into large ones and multiply at an increasing rate as complexity increases. These errors are often costly, even deadly, in their consequences. See rationalist technologies for a description of rational technologies of which models are an essential element. Systems thinking recognizes that models are useful in guiding decision making, but in some way, or in some context, are wrong. Therefore systems thinking seeks to become aware of where the model ceases to be useful. Systems models -- (Stacey, 2000, pp 81) The past is idealized in the sense that it consists of elements selected from a very complex context to form a certain pattern. The same is true for the scenario of the future. Here, systemic modeling provides insights based on resolving the paradox of time in the living present by talking about ""both"" the past ""and"" the future. This is valid and helpful when it is a question of choosing the optimum alternative from a set that is already known. Relation to strategic management -- For a view of and relationship between theory, frameworks, and practice as it relates to strategy see framework.
model hierarchyFrom Hamel, 2002, pp 153-154 -- All business organizations have four models. Theoretically, if the models are perfectly aligned, the business organization should be highly successful. And that would be true if the world was not changing. In an evolving world, business models do not last forever. In order for the organization to innovate, the top three models must be misaligned. This makes an organization theoretically less efficient in the immediate present, but the misalignment also is the source of innovation. With misalignment, ideas can surface and produce innovations which challenge existing power structure and current orthodoxies. When the models are aligned, new ideas get quashed by either the orthodoxy or the politics. political model -- the way power is distributed throughout the organization and, in particular, the distribution of power to enforce mental models mental model -- all the beliefs that individuals hold about what drives success in their industry. It is the prevailing dogmas or orthodoxies about what customers to serve, what those customers want, how to price, how to organize, which distribution channels to use and so on. business model -- the choices, conscious and unconscious, the company has made about the various components of its business concept operating model -- what people actually do on a day-to-day basis - how they are organized, what activities they perform, how they interact with customers and what processes they run.
modularityModularity is a key aspect of business architecture. The more a product or system is broken down into subsystem or modules with compatible joining rules the more flexibility there is to produce unique configurations of the system or reconfigure an existing system. Highly modular designs are more quickly and easily reconfigured to produce new functionality. Modularity enables flexibility. Modularity enables a cost effective increase in both complexity and variety - as in the case of mass customization. Modular design (Baldwin, 1997) -- Modularity is a strategy for organizing complex products and processes efficiently. A modular system is composed of units (or modules) that are designed independently but still function as a whole. Designers achieve modularity by partitioning information into visible design rules and hidden design parameters. Modularity is beneficial only if the partition is precise, unambiguous, and complete. Visible design rules, also called visible information, are decisions that affect subsequent design decisions. They fall into three categories: An architecture, which specifies what modules will be part of the system and what their functions will be. Interfaces that describe in detail how the modules will interact, including how they will fit together, connect, and communicate. Standards for testing a module's conformity to design rules (can the module function in the system) and for measuring one module's performance relative to another. Hidden design parameters (hidden information), are decisions that do not affect the design beyond the local module. Defining a modular architecture (Gilmore, 2000, Introduction) -- Characteristics of modules to be addressed when defining a modular architecture and interfaces: An Connectivity, define all the modules that can precede, follow or operate in parallel with each module Dependency define all the modules that must precede, follow, or operate in parallel with each module Technical Linkage define how each module can be linked to preceding, following, and parallel modules (whether via human handling, expert system, configurator, communication technology, or other methods) Performer define which individuals can perform activities in each module Place define where activities in each module can be performed (for both physical and virtual space) Communication mode defining how the status of the module is communicated during the linkage process (proactively, exception-based, look-up, etc.) Ownership define who has responsibility for managing the activities within each module Spectrum of modularity -- Modularity actually refers to the degree of 'tightness - looseness' by which components of a system are coupled. A system technically is not modular or not modular, but has degrees of high or low modularity. A system of low modularity, with 'tightly coupled' components, is referred to as an integrated system. On the other end of the spectrum, a highly modular system with 'loosely coupled' components is simply referred to as modular. The characteristics of the systems on either end of the spectrum are as follows -- Integrated system - 'tightly coupled' components -- the design is at one level, the system level the system is non-decomposable the innovation cost is high the transformation cost is high innovation is unconstrained there is one configuration of components an integrated product is not upgradeable Modular system - 'loosely coupled' components -- the design is at two levels - the architecture (platform) level and the individual system level the system is decomposable the innovation cost, within the architecture, is low the transformation cost is low innovation is constrained by the architecture there are multiple configurations of components the system is easily upgraded
monadsPhilosophy -- An indivisible, impenetrable unit of substance viewed as the basic constituent element of physical reality in the metaphysics of Leibnitz. Source: monads. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/monads (accessed: February 18, 2007).
monismPhilosophy, in metaphysics, any of various theories holding that there is only one basic substance or principle as the ground of reality, or that reality consists of a single element. In epistemology, a theory that the object and datum of cognition are identical. Monism is in contrast to dualism and pluralism. Source: monism. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/monism (accessed: February 18, 2007).
moral wisdomSee wisdom.
morale""The state of the spirits of a person or group as exhibited by confidence, cheerfulness, discipline, and willingness to perform assigned tasks."" Source: morale. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition, Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/morale (accessed: November 10, 2006) Morale of the organization members is essential for an organization to endure, especially in the face of challenges and adversity. Many studies find that morale and performance are strongly correlated. If morale is highly dependent upon a moral purpose, then performance and purpose go hand-in-hand as well. Mourkogiannis' four main building blocks to morale -- Source: Mourkogiannis, 2005, pp 113 - 126 extrinsic rewards such as bonuses and praise enjoyment of the task itself membership in a community purpose, as the underlying moral idea being pursued, is what most people want to work for and is beyond money and status in its drawing power for members to participate.
morphologyThe study of the whole form or structure of anything.
motivationFirms, like other economic organizations, serve to coordinate the actions of groups of people and to motivate them to carry out needed activities. The problem of motivating people in organizations comes from the fact that their own self-interest may not automatically lead them to act in the ways that the organization would want. This divergence of interests arises because the individual members of the organization typically do not bear all the costs and benefits of the actions they take and the decisions they make with the organization. Consequently, when they make decisions -- about how to spend their time, how hard to work and on what, what risks to take -- the choices that appear best from their personal point of view may not maximize the total value generated for the organization. From an organization design perspective, the motivation problem is to shape the organization -- the people, the architecture, the routines and processes, and the culture -- to bring a closer alignment to interests between the organization and its members and thereby increase the efficiency of the choices they make. The source and nature of motivation problems -- In general, motivation or incentive problems arise when individuals' organizational decisions and actions affect others in ways that the individual does not fully take into account -- when there are externalities. There are basically two ways a disparity can arise between the costs and benefits that an individual bears versus those that accrue to the organization as a whole. Perhaps most often, individuals in organizations receive only a small fraction of the benefits that result from their taking various actions, but bear a disproportionate part of the costs that are involved. In this case, their decisions are likely to involve too little activity for organization efficiency. The other possibility is that the fraction of the benefits that they get exceeds the share of costs that they bear. Then they are likely to choose too much of the activity in question. Understanding why there are systematic divergences between the costs and benefits that accrue to the organization and those its decision makers face is the first step towards a solution. Contracts and reputations guide behavior in situations where interests differ and where the actions of one party have an impact on the well-being of others. (Roberts, 2004, pp 118-122) If interests of the two parties are widely divergent to start with, contracts and reputations will very likely not serve to generate the proper motivation. Factors to consider preceding contracts and reputations is whether the values of the agent and principal align, as well as interests in a common purpose.
multidimensionalityMultidimensionality is a complex system characteristic. See complex adaptive system.
multidivisional organizationSee M-form.
narrative themeWhat is organizing itself in the ongoing gesture-response of complex responsive processes is the patterning of communicative interaction between people as narrative and propositional themes, in which variations arise when those interacting are diverse. See variation and organization. Narrative themes -- the narrative-like themes form, and are formed by, the process of communicative interaction at the same time. Communicative interaction patterns itself in a self-organizing way in which patterns emerge from patterns, constituting the history of interaction. Narrative in the making vs. narrative told -- The experience of the living present, and the past, are structured in narrative-like ways. Narrative is a story or account of events, experiences, or the like, whether true or fictitious, with a beginning, an end, a plot that moves the reader/listener from beginning to end in a more or less linearly sequence. narrative in the making Narrative-in-the-making emerges in the living present Intrinsically non-linear Narrative like themes that normally have no single narrator's perspectives Beginnings and endings are rather arbitrary Many plots emerge simultaneously narrative told is retrospective linear The result of this narrative formation is experience patterned in a linear way. Personal identity, self, is then an autobiographical narrative that is continually retold, with variations. Identity is then simultaneously stable with the potential for transformation. Nature of narrative -- The interactive communication between people forms narrative-like sequences. It is not just that people tell each other stories but that their very experience together is organized in story-like patterns that emerge in their turn-taking going on together -- the sequential order of narrative provides structure, or plot, that gives the narrative its meaning in order to make sense of the constituent parts of he narrative, one must grasp the overall plot narratives display sensitivity to what is ordinary and what is exceptional in human interaction narrative mediates between the norms of culture and unique individual beliefs, desires, and hopes it renders the exceptional comprehensible it provides a means of constructing a world and identifying it flow as well as regulating the affects of people
natural philosophyNatural philosophy was the term whose usage preceded our current term science in the sense that prior to the replacement of the term natural philosophy with the term science, the term science was used exclusively as a synonym for knowledge or study and when the subject of that knowledge or study was 'the workings of nature', then the term natural philosophy would be used. Natural philosophy became science (scientia in Latin, which means ""knowledge"") when knowledge acquisition through experiments (special experiences) regulated by the scientific method became its own specialized branch over and above the analysis and synthesis of experiences of which philosophy partakes. In what is thought to be one of Plato's earliest dialogues, Charmides, the distinction is drawn between sciences or bodies of knowledge which produce a physical result, and those which do not. Natural philosophy has been categorized as a theoretical rather than a practical branch of philosophy (like ethics). In René Descartes' metaphysical system of dualism, there are two kinds of substance: matter and mind. According to this system, everything which is ""matter"" is deterministic and natural-and so belongs to natural philosophy-and everything which is ""mind"" is volitional and non-natural, and falls outside the domain of philosophy of nature. Major branches of natural philosophy include astronomy and cosmology, the study of nature on the grand scale; etiology, the study of (intrinsic) causes; the study of chance, probability and randomness; the study of elements; the study of the infinite and the unlimited (virtual or actual); the study of matter; mechanics, the study of translation of motion and change; the study of nature or the various sources of actions; the study of natural qualities; the study of physical quantities; the study of relations between physical entities; and the philosophy of space and time. (Adler, 1993) Source: Wikipedia contributors, ""Natural philosophy,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Natural_philosophy&oldid=104427688 (accessed January 31, 2007).
naturalismThe view of the world that takes account only of natural elements and forces, excluding the supernatural or spiritual. The belief that all phenomena are covered by laws of science and that all teleological explanations are therefore without value. -- naturalism. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/naturalism (accessed: February 02, 2007). Naturalism fits with objectivity and science. This is in contrast to humanism and subjectivity (subjective). See teleology.
necessary cause""If x is a necessary cause of y; then the presence of y necessarily implies that x preceded it. The presence of x, however, does not imply that y will occur."" Wikipedia contributors, ""Causality,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Causality&oldid=88995105 (accessed November 27, 2006).
neoclassical economicsSee classical economics for an explanation of neoclassical economics. Classical or neoclassical economics both take a systemic view of economics where the system tends towards equilibrium. Changes to the system come from outside the system. The system readjusts to a new equilibrium resulting from the change. The dynamic of economic growth is considered a move toward equilibrium. Evolutionary and complexity economics makes the radical departure from classical and neoclassical economics in that the dynamic of growth is a continuous disequilibrating process where innovations continually disturb equilibrium states. This requires organizations to adapt or evolve in order to survive.
noiseSignals that do not contain meaningful data or other information.
non-linear systemsA highly complex system that lacks linearity between two qualities, especially input and output. A chaotic system.
normativeNormative and prescriptive in relation to strategy refers to the ""rules"" of strategy formation, or the prescription of such rules, as in ""what should be."" Normative is in contrast to positive, which is a statement about ""what is."" Strategy research consists of a balance between normative and positive. Positive and Normative, Robert Schenk -- Economists make a distinction between positive and normative that closely parallels Popper's line of demarcation, but which is far older. David Hume explained it well in 1739, and Machiavelli used it two centuries earlier, in 1515. A positive statement is a statement about what is and that contains no indication of approval or disapproval. Notice that a positive statement can be wrong. ""The moon is made of green cheese"" is incorrect, but it is a positive statement because it is a statement about what exists. A normative statement expresses a judgment about whether a situation is desirable or undesirable. ""The world would be a better place if the moon were made of green cheese"" is a normative statement because it expresses a judgment about what ought to be. Notice that there is no way of disproving this statement. If you disagree with it, you have no sure way of convincing someone who believes the statement that he is wrong. Economists have found the positive-normative distinction useful because it helps people with very different views about what is desirable to communicate with each other. Libertarians and socialists, Christians and atheists may have very different ideas about what is desirable. When they disagree, they can try to learn whether their disagreement stems from different normative views or from different positive views. If their disagreement is on normative grounds, they know that their disagreement lies outside the realm of economics, so economic theory and evidence will not bring them together. However, if their disagreement is on positive grounds, then further discussion, study, and testing may bring them closer together. Economists can confine themselves to positive statements, but few are willing to do so because such confinement limits what they can say about issues of government policy. Both positive and normative statements must be combined to make a policy statement. One must make a judgment about what goals are desirable (the normative part), and decide on a way of attaining those goals (the positive part). Economists often see cases in which people propose courses of action that will never get them to their intended results. If economists limit themselves to evaluating whether or not proposed actions will achieve intended results, they confine themselves to positive analysis. (You should realize that although economists can speak with special authority on positive issues, even the best can be wrong.) However, virtually all economists prefer a wider role in policy analysis, and include normative judgments as well. On normative issues economists cannot speak with special expertise. Put somewhat differently, addressing most normative issues ultimately depends on how one answers the following question: ""What is the meaning of life?"" One does not study economics to answer this question. Most statements are not easily categorized as purely positive or purely normative. Rather, they are like tips of an iceberg, with many invisible assumptions hiding below the surface. Suppose, for example, someone says, ""The minimum wage is a bad law."" Behind that simple statement are assumptions about how to judge whether a law is good or bad (or normative statements) and also beliefs about what the actual effects of the minimum wage law are (or positive statements). Source: Robert Schenk, http://ingrimayne.com/econ/Introduction/Normativ.html, accessed April 19, 2007
normative ethicsNormative ethics is comprised of ethical theory and applied ethics. See ethics.
normsNorms and values make up ideology which governs and guides behavior. ""Only in the rarest of circumstances, I would argue, do humans simply act on bodily impulse - there is almost always some kind of discrimination arising in a history of social interaction, although that discrimination could quite easily have become unconscious. This discrimination inevitably implicates norms and values. So what are they and how do they arise?"" (Stacey, 2007, pp 345) Norms are: evaluative in that they provide criteria for judging desires and actions; obligatory and constraining. They therefore restrict opportunities for action. We experience them as compelling in a restrictive sense; intimately connected with morals in that they provide criteria for what ought to be done, what is right Norms, then, provide a basis for evaluating and choosing between desires and actions. Elias ([1939] 2000) was particularly concerned with how norms emerge and evolve as people in a society become more and more interdependent and as the use of violence is monopolised by the state. He explained how desires are taken more and more behind the scenes of daily life as more detailed norms emerge about what can and cannot be done in public. These norms become part of individual personality structures and adherence to such norms is sustained by the social process of shame. Norms, therefore, are constraints arising in social evolution that act to restrain the actions and even desires of interdependent individuals, so much so that the constraints become thematic patterns of individual identities. See identity. In complex responsive process terms, norms are themes organising experience in a constraining way. However, norms are inseparable although different from values. See values. (Stacey, 2007, pp 345)
noumenaSee noumenon.
noumenalReality, as opposed to the phenomenal, the appearance of reality to people in the form of sensations. Kant argued that people can never know reality in itself, the noumenal, but only the appearance of reality as sensation, the phenomenal. (Stacey, 2003, pp 20).
noumenonnoumenon (singular), noumena (plural) Related to Kantianism, things as they really exist, as opposed to how they are perceived by the human observer. For example, the human observer imposes concepts of time and space on things, though time and space are not intrinsic properties of the world but were created in the mind of the human observer. Source: Malik, 2000, pp 72 See phenomenon.
noveltyNovelty refers to the creatively new, that which has never existed before. Organizations evolve. Some successfully, some unsuccessfully. At the crux of organizational evolution is the creation of meaning, learning, knowledge creation -- the production of novelty. Finding effective prescriptions for strategy and organizational evolution starts with identifying the descriptive theories of organizations, humans, and how novelty is created. Novelty means coherent pattern that has never existed before, not some hidden form that already exists but has not yet been revealed. (Stacey, 2000, 155). Novelty is a precursor to innovation that is essential to organization evolution. The mechanisms to produce novelty are listed below -- self-organization - organizing new identity, exhibiting self-organizing behavior, moving from one attractor to another entirely due to the internal dynamics of the organization, see self-organization. pattern emergence - spontaneous emergence of new forms variation - there must be a source for variation or difference, like chance or micro-diversity. diversity - true diversity requires the paradox of conflict and order, diversity in human action arises in human freedom and autonomy. power relations - power is constraint; conflicting constraints translate in human terms to power relations. Creativity is intertwined with destruction. This insight is concealed when harmony and sharing are placed at the center of the rules for engagement between organization members. micro-diversity -- variation arising from micro-diversity of interaction, has the potential to result in transformation, i.e. novelty - essential to organization evolution. Novelty and Organization Evolution -- Novelty includes the notions of the creation of meaning, learning, and knowledge creation Novelty is essential to organization evolution. It is from the novelty that new technologies arise and are put in place. Novelty is the seminal source of innovation. Without novelty, the best an organization can hope to do is optimize what is has, unfolding the form that is already enfolded in the organization as it currently exists. Since the objective of strategy is evolving an organization to a state of competitive advantage, and continuing this evolution to new states of advantage, the object of strategy is the organization. Therefore, finding effective prescriptions for strategy and organizational evolution includes theories of organization, organizations, humans, and how they create novelty. This perspective gives as much or more importance to the organizational dynamics as it does to prescriptions for management behavior to strategically guide an organization. If you don't effectively and explicitly identify the dynamics of human organizations, the legitimacy of the prescriptions to evolve these organizations is questionable. Traditional approaches ignore organizational dynamics -- Traditional approaches to strategy, implicitly or explicitly, focus attention on what managers are supposed to do to improve the performance of an organization. The immediate concern is then with the scope of an organization's activities, its future direction, and how it secures competitive advantage. This view of strategic management is generally rational, formal, and orderly.
objectThe thing in question, the situation, the phenomenon being examined. See objective, subject, and subjective.
objectifyTo present a phenomenon as an object, making it objective, externalizing it. To present or regard someone or thing as an object makes it impersonal, something to be regarded as other than a self-conscious rational being, a self. An object is external, such that some force or agent can manipulate, change, design, create, or destroy the object.
objectiveObjective and subjective are ontological classifications. It is not by any means a given that those things epistemically subjective can be understood using the methods for those thing that are objective. A statement is objective if it can be known to be true or false independently of feelings, attitudes and prejudices of people. It is subjective if its truth depends essentially on the attitudes or prejudices of observers. Things that have an objective existence do not require a subject to experience them. The Eiffel Tower is an object. That is in contrast to the perceived beauty of the tower, which is subjective, therefore requiring a subject. Source: Malik, 2000, pp 338. See object, subject, and subjective. Objective perception (Source: Bateson, G., 1978, 'Afterword', in J. Brockman (Ed.) About Bateson, London: Wildwood House pp. 244-245 , as shown at http://plato.acadiau.ca/courses/educ/reid/papers/PME25-WS4/SEM.html (accessed September 8, 2007)) -- Finally, let me try to give you an idea of what it felt like, or what sort of difference it made, for me to view the world in terms of the epistemology that I have described to you, instead of viewing it as I used to and as I believe most people always do. First of all, let me stress what happens when one becomes aware that there is much that is our own contribution to our own perception. Of course I am no more aware of the processes of my own perception than anybody else is. But I am aware that there are such processes, and this awareness means that when I look out through my eyes and see the redwoods or the yellow flowering acacia of California roadsides, I know that I am doing all sorts of things to my percept in order to make sense of that percept. Of course I always did this, and everybody does it. We work hard to make sense, according to our epistemology, of the world which we think we see. Whoever creates an image of an object does so in depth, using various cues for that creation. But most people are not aware that they do this, and as you become aware that you are doing it, you become in a curious way much closer to the world around you. The word ""objective"" becomes, of course, quite quietly obsolete; and at the same time the word ""subjective"", which normally confines ""you"" within your skin, disappears as well. It is, I think, the debunking of the objective that is the important change. The world is no longer ""out there"" in quite the same way that it used to seem to be. Without being fully conscious or thinking about it all the time, I still know all the time that my images - especially the visual, but also auditory, gustatory, pain, and fatigue - I know the images are "" mine"" and that I am responsible for these images in a quite peculiar way. It is as if they are all in some degree hallucinated, as indeed they partly are. The shower of impulses coming in over the optic nerve surely contains no picture. The picture is to be developed, to be created, by the intertwining of all these neural messages. And the brain that can do this must be pretty smart. It's my brain. But everybody's brain - any mammalian brain - can do it, I guess. I have the use of the information that that which I see, the images, or that which I feel as pain, the prick of a pin, or the ache of a tired muscle - for these, too, are images created in their respective modes - that all this is neither objective truth nor is it all hallucination. There is a combining or marriage between an objectivity that is passive to the outside world and a creative subjectivity, neither pure solipsism nor its opposite. Consider for a moment the phrase, the opposite of solipsism. In solipsism, you are ultimately isolated and alone, isolated by the premise ""I make it all up."" But at the other extreme, the opposite of solipsism, you would cease to exist, becoming nothing but a metaphoric feather blown by the winds of external ""reality"". (But in that region there are no metaphors!) Somewhere between these two is a region where you are partly blown by the winds of reality and partly an artist creating a composite out of the inner and outer events.
objective position'Objective position' refers to the notion that a manager in an organization, or strategist, can be an objective observer sometimes and participant at other times within an organization. This is consistent with the systemic view of organizations. It is incompatible with the responsive processes view of organizations and human interaction, which takes a reflexive position.
Occam*s razorOccam's razor (sometimes spelled Ockham's razor) is a principle attributed to the 14th-century English logician and Franciscan friar William of Ockham. The principle states that the explanation of any phenomenon should make as few assumptions as possible, eliminating those that make no difference in the observable predictions of the explanatory hypothesis or theory. The principle is often expressed in Latin as the lex parsimoniae (""law of parsimony"" or ""law of succinctness""): ""entia non sunt multiplicanda praeter necessitatem"", or ""entities should not be multiplied beyond necessity"". This is often paraphrased as ""All other things being equal, the simplest solution is the best."" In other words, when multiple competing theories are equal in other respects, the principle recommends selecting the theory that introduces the fewest assumptions and postulates the fewest entities. It is in this sense that Occam's razor is usually understood. Originally a tenet of the reductionist philosophy of nominalism, it is more often taken today as a heuristic maxim (rule of thumb) that advises economy, parsimony, or simplicity, often or especially in scientific theories. Anti-razors have also been created by Gottfried Wilhelm Leibniz (1646-1716), Immanuel Kant (1724-1804), and Karl Menger (1902-1985). Leibniz's version took the form of a principle of plenitude, as Arthur Lovejoy has called it, the idea being that God created the most varied and populous of possible worlds. Kant felt a need to moderate the effects of Occam's Razor and thus created his own counter-razor: ""The variety of beings should not rashly be diminished."" Source: Wikipedia contributors, ""Occam's razor,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Occam%27s_razor&oldid=186914085 (accessed January 28, 2008). ""A rule in science and philosophy stating that entities should not be multiplied needlessly. This rule is interpreted to mean that the simplest of two or more competing theories is preferable and that an explanation for unknown phenomena should first be attempted in terms of what is already known. Also called law of parsimony. "" (occam's razor. Dictionary.com. The American Heritage® Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company, 2004. http://dictionary.reference.com/browse/occam's razor (accessed: January 28, 2008). ""the maxim that assumptions introduced to explain a thing must not be multiplied beyond necessity"" (occam's razor. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/occam's razor (accessed: January 28, 2008).
offeringOfferings provide value to the environment of a business organization. The organization fulfills its purpose and mission in its environment with its offerings, thus they are associated with the function aspect of the business. From the perspective of the environment, the offering is why the environment permits the organization to exist -- because of the function it fulfills to the benefit of the environment -- because of the value proposition of the offering. Offering types -- Offerings, or economic offerings, can be classified as five types with increasing value and distinctive buyers: (Pine, 1999) commodities - the seller is a trader; the buyer is a market goods - the seller is a manufacturer; the buyer is a customer services - the seller is a provider; the buyer is a client experiences - the seller is a stager; the buyer is a guest transformations - the seller is an elicitor; the buyer is an aspirant For more information on the nature and classification of offerings see The Experience Economy (Pine & Gilmore, 1999) and Strategic Horizons.
offering typeSee offering.
ontologyThe study of the existence of being. The subject of ontology is the study of the categories of things that exist or may exist in some domain. The product of such a study, called an ontology, is a catalog of the types of things that are assumed to exist in a domain of interest D from the perspective of a person who uses a language L for the purpose of talking about D. - Sowa, John F., Ontology, (2005), Retrieved January 2, 2007 at http://www.jfsowa.com/ontology/index.htm, Last Modified: 06/07/2003 20:57:07 Other definitionsnew -- a systematic account of existence. An explicit formal specification of how to represent the objects, concepts and other entities that are assumed to exist in some area of interest and the relationships that hold among them. The hierarchical structuring of knowledge about things by subcategorising them according to their essential (or at least relevant and/or cognitive) qualities. Source: ontology. Dictionary.com. The Free On-line Dictionary of Computing. Denis Howe. http://dictionary.reference.com/browse/ontology (accessed: December 29, 2006). Discusson -- Ontology is the study of being or existence. It seeks to describe or posit the basic categories and relationships of being or existence to define entities and types of entities within its framework. Ontology can be said to study conceptions of reality. Some philosophers, notably of the Platonic school, contend that all nouns refer to entities. Other philosophers contend that some nouns do not name entities but provide a kind of shorthand way of referring to a collection (of either objects or events). In this latter view, mind, instead of referring to an entity, refers to a collection of mental events experienced by a person; society refers to a collection of persons with some shared characteristics, and geometry refers to a collection of a specific kind of intellectual activity. Any ontology must give an account of which words refer to entities, which do not, why, and what categories result. When one applies this process to nouns such as electrons, energy, contract, happiness, time, truth, causality, and God, ontology becomes fundamental to many branches of philosophy. Ontology's fundamnental question -- Ontology has one basic question: ""What is there?"" Different philosophers provide different answers to this question. Approach to ontology -- One common approach is to divide the extant entities into groups called ""categories"". However, these lists of categories are also quite different from one another. It is in this latter sense that ontology is applied to such fields as theology, information science and artificial intelligence. Ontological questions -- Further examples of ontological questions include: What is existence? Is existence a property? Why does something exist rather than nothing? What constitutes the identity of an object? What is a physical object? What features are the essential, as opposed to merely accidental, attributes of a given object? Can one give an account of what it means to say that a physical object exists? What are an object's properties or relations and how are they related to the object itself? When does an object go out of existence, as opposed to merely changing? Do souls exist? -- Wikipedia contributors, ""Ontology,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Ontology&oldid=96948799 (accessed January 1, 2007).
open innovationA distributed model of innovation where the enterprise reaches out beyond its own boundaries to access and integrate technology developed by others. The ability to integrate knowledge from external sources is an 'architectural competence.'
operating modelSee model hierarchy.
operating routine
operationalOperational pertains to the ongoing activities of the business to produce and deliver its offerings. 'Operational' stands in contrast to 'strategic', which refers to the activities that deal with defining how the business organization will compete. See strategic for a comparison of 'operational' and 'strategic'.
operational thinkingThe definition of operational thinking as defined here comes from the systems school of thinking. Though related, operational thinking should not be confused with the terms operations, operational, or business operations, which pertain to the ongoing activities of the business to produce and deliver its offerings. Operational thinking is generally referred to as a type of systems thinking, but it can also be thought of as core to the systems thinking mindset with its focus on how how things work. From this perspective, systems thinking can be described as an operational mindset, focusing on the interrelationships of things as being responsible for how things operate, as opposed to other mindsets. Operational thinking contrasts with other types of thinking. For example, there are relational or correlational mindsets, looking for relationships but not necessarily seeking to understand cause and effect. There is the reductionistic analytical mindset which focuses on how things are made up from other things and linear cause and effect, but not necessarily on why the whole behaves the way it does or how it will behave over time.
organismsOrganizations and organisms -- organizations are often compared to organisms. Though this analogy can provide some insights, it can also be very misleading. Here are Carroll and Hannan's (2000, p 40) eight differences: 1. The greater variety of types of events that define organizational births and deaths. 2. The potential immortality of formal organizations. 3. The lack of clear parentage for organizations. 4. The absence of genetic transmission of information in the organizational world. 5. The multilayered, partly decomposable structure of formal organizations. 6. The great heterogeneity found within organizational populations. 7. The ability of organizations to transform themselves and change populations. 8. The potentially high levels of endogeneity in the environments of organizations (that is, an organization's capacity to shape its own environments) It is important to keep these differences in mind as one studies the works of organizational ecologists, with their populations of organizations, evolutionary economics, and organization evolution -- which gain resonance from the analogy to biological evolution, the evolution of organisms vs. organizations.
organization'Organization' refers to something made up of elements, or members, with varied functions and characteristics, organized into a whole with a collective function, purpose, and causality. It is a group of elements that is both complex and organized, structured in some meaningful manner. Organization is a phenomenon. Note: Look over the definitionsnew of organization, organizations, organize, organizing, organization design, etc. to capture a more robust picture of ""things organized"". John Roberts' (2004, pp 16-17) definition -- The organization is the means through which the activities of the strategy are to be carries out and the strategy is to be implemented. Any firm's organization is multifaceted, and the range of organization variables is mind-boggling. See organization design for an organization taxonomy that identifies its variables. Change and stability in organizations -- Organization of any kind, whether in nature or in human action, can be thought of as the interplay of stability and change. In the case of business organizations, the basic concerns are with continuity and innovation. This dynamic interplay can be described as paradoxical, being between -- stability and change replication and novelty continuity and transformation decay and generation sameness of identity and difference of changes in that identity exploitation and exploration Given this dynamic interplay, the fundamental question about organization then follows - what are the sources of both the stability and change, the continuity and novelty, the decay and generation, of both the identity and the difference? This is a question that has to do with causality -- why organizations become what they become. There has been a centuries old debate about stability and change - one side emphasizes the stability and the predictable nature of change, the other side emphasizes change and its unpredictable nature. See causality, teleology, and history of causality for notions about the cause of change and stability in organizations and the classification of these causes. (Stacey, 2000, 12 - 13) Organization vs. organizations -- Contrast organization with organizations. See organizational theory for the different natural science views of organization. Organization vs. system -- Also, contrast organization with system. A system is an abstraction used to explain organization. As such, system is a perspective of organization that seeks to explain that organization. A particular organization -- with its characteristics, behaviors, and functions -- may or may not fit a system perspective. Complexity science offers alternative perspectives of organization than those of systems science. See science for explanations of science, sciences, and branches of science. Causality - ways of thinking about organization (Stacey, 2000, 2001, 2003, 2007) -- Causality refers to the relationship between cause and effect. In the context of organization, causality refers to how organization comes about and how an organization becomes what it becomes. Organization causality and ways of thinking about organization are two sides of the same coin. When one is explicitly examined it sheds light on the other and bringing them both to the forefront of management thinking enables better judgment in application of management techniques. Below are three causal perspectives of organization that dominate management discourse, rationalist, efficient, formative, and a fourth, transformative, that answers the question of causality radically differently from the other three. Though not yet a significant part of the dominant management discourse, transformative causality is included not just because of its sound philosophical, psychological, and complexity science basis, but also because it is consistent with the self-organization found in all complex organizations, offering an insightful explanation for organization evolution -- how 'things get done anyway' without command and control, following predefined processes, and executive decisions -- rationalist causality, rational choice thinking -- this type of thinking originates with Kant's explanations of human autonomy and freedom to choose regulated by universal ethics. This type of thinking does not pertain to organization itself, as in a causality within the organization itself, but it pertains to the outside objective observer designer who determines what the organization will be, makes decisions, and takes actions to form, or transform, an organization. With rationalist causality, the nature of organization movement is towards rationally chosen goals for the future in order to realize a designed, desired state. The cause of the movement is human reason. (Stacey 2007, pp 246). Novelty, and thus innovation, is possible, because human freedom means the never-existing-before can be chosen. Thus novel forms of organizations can be chosen by those empowered to do so. This type of thinking is strongly embedded in the consciousness of all members of business organizations, where all members look to management to define a better and more competitive future for the organization. The intuition of the managers to predict the future, to one degree or another, and then design the organization to thrive in that future, is central to this type of thinking. This type of thinking of organization rarely reaches the level of consciousness, being regarded as a universal truth. Complementary causalities -- The next two organization causalities, efficient causality with its part-whole thinking and formative causality with its system-environment thinking, do not have the capability, on their own, to generate novelty and transform an existing organization into a new form. In those two cases, the managers of the organization are the rational autonomous thinkers who must choose the new forms and guide the organization transformation to the new form. efficient causality, part-whole thinking -- this is mechanistic thinking associated with Newton's explanations of organization in nature as being like a machine. Understanding of the whole comes from understanding the nature of the parts added together. Part-whole thinking is more commonly referred to as analytical thinking and is often contrasted with systems thinking. Efficient causality refers to universal linear cause and effect links, an ""if-then"" type of causality. The nature of movement is a corrective repetition of the past in order to realize an optimal future state. The cause of this movement is universal timeless laws of an 'if-then' kind. (Stacey 2007, pp 246). This kind of organization is deterministic; stability and change are both of an entirely predictable kind. Organization, or form, is equated with continuity and repetition without the possibility of novelty. Fredric Taylor's time and motion studies, to find and repeat the one best way, the optimal way, for every task is characteristic of this type of thinking. Henry Ford put this thinking to good work in producing the Model T. formative causality, system-environment thinking -- is also referred to as systems thinking, systemic process, or systemic thinking. Understanding of the whole comes from understanding the interrelationships of the parts. Parts relate to each other in different ways to produce the end state, with variations possible in the path toward the end state but only in pre-given limits. The parts are functional, the relationship between them functions to perform the whole, which is a final, mature form. The nature of movement into the future is the unfolding of an enfolded mature form in order to realize that form on the future. The cause of this movement is self-organizing systemic process of unfolding in developmental stages (see self-organization). (Stacey 2007, pp 246). Organization is continuity of form with small variations, all enfolded so that genuine novelty is not possible. The systems view of organization is deterministic as well. The notion of organization as a system originated with Kant's causal explanation of organisms, i.e. living things. Kant made it clear that this causality does not apply to humans and human organizations, which is where rationalist causality applies. Kant also stressed that organisms could be viewed 'as if' they were systems, not as though they truly 'are' systems. Nevertheless, systems thinkers, starting in the mid-1900s, applied systems thinking to explanations humans and human organizations, crossing the 'as if'-'are' line as well. Management tools and approaches such as planning and budgeting, management by objectives, learning organizations, knowledge management, strategic planning, values based management, cultural approaches, etc. are all systemic thinking based. The causality in this case is 'formative' -- the system's movement into the future is an unfolding of an enfolded form. This implies a final state, a mature state, can be known in advance. transformative causality, identity-difference thinking -- is also referred to as responsive processes or complex responsive processes thinking The philosophical basis for this type of thinking comes from Hegel's notion of paradoxical thinking and human interaction. In this view of organization there is no distinguishing between parts and wholes, there is no concept of a system, there is no distinguishing between individuals and groups. With identity-difference thinking, organizations are population-wide patterns of responsive processes that form a collective identity. Organizational identity co-evolves with individual identity, emerging from continually iterated responsive processes that are essentially local in nature and occurring in the living present. The nature of movement into the future is iterated interaction perpetually constructing the future in the present in order to express continuity and potential for transformation in identity at the same time. The cause of this movement is responsive processes of local interaction between entities in the present. (Stacey 2007, pp 246). Organizations are thus conceptualized as ongoing patterning in the interactions between people and denies that it constitutes a system or even that it is useful to think of the organization 'as if' it were a system. The causality associated with this type of thinking is 'transformative', where self-organization results in true novelty. The engine of transformative causality is micro-diversity, where micro-interpretations, result in variation, which results in novelty, and ultimately in a global transformation. The iterative interactive process sustains continuity with potential transformation at the same time. Variation arises in micro-diversity of interaction, resulting in transformation. In iteration, the continuity of identity is always open to change. Self-organization is transformative; the organization's movement is towards an unknown future, a future under perpetual construction by the movement itself. There is no mature or final state, only perpetual iteration of identity and difference. Identity is continuously evolving and changing -- there is both the possibility of sameness, or continuity, and the potential for transformation at the same time -- ongoing gesture-response iterations result in self-organization of either continuity or transform perpetual iteration of identity and difference, resulting in continuity with the potential for transformation individuals expressing identity with continuity and difference at the same time variation arises in microdiversity in iterative interactions, generating novelty, variations that have never been before processes of micro interactions in the living present forming and being formed by themselves. The iterative process sustains continuity with potential transformation at the same time both freedom and constraint arise in spontaneity and diversity of micro interactions as conflicting constraints This mode of thinking about organization is not prevalent in management discourse at the current time. On the other hand, this perspective fits with the notion of how work gets done, in spite of the formal systems, processes, and procedures. It can also explain the creation of novelty, which none of the other ways of thinking can. It appears to be a power self-organizing force that has heretofore not been explicitly identified and considered, but probable taken advantage of for years in successfully evolving organizations that rely upon diversity in thinking and dynamic internal discussion and debate to clarify issues, set direction, and make decisions. Reflections on the four causalities -- Rational choice requires an organizational object, with either efficient or formative causality, about which to make choices, and those two types of organization, mechanistic, or systemic, need the rational chooser to bring about novelty. The only causality that is complete, in and of itself, accounting for both continuity and the potential for transformation, is the identity-difference thinking. If the identity-difference thinking with its transformative causality is closer to the truth of how human organizations really organize, or have the potential to organize, or self-organize, the role of the rational choosing manager requires serious rethinking. One possibility is to free the organization leadership from having to predict and unpredictable future, placing bets with the organization, to unleashing an organization's inherent self-organizing capabilities to drive the evolution of the organization to new forms. End notes -- More on causality -- See causality, teleology, history of causality, organizational theory, and management science for notions about the cause of change and stability in organizations and the classification of these causes. Strategy and organization evolution -- Organization evolution is at the heart of strategy. Organization advantage comes as a result of an organization's evolutionary capability. Guiding organizational development requires understanding organizational dynamics, how the organization moves into the future. Natural science -- Natural science provides explanations of organization. These natural science perspectives of organization serve as source domains for the social sciences, with natural and social science serving as a source domain for management science and organizational theory. Management understanding and behavior often has its roots in the natural science views of organization, whether consciously or unknowingly. 'Organization' refers to something made up of elements, or members, with varied functions and characteristics, organized into a whole with a collective function, purpose, and causality. It is a group of elements that is both complex and organized, structured in some meaningful manner. Organization is a phenomenon.
organization architectureSee organizational architecture.
organization designJohn Roberts (2004, pp 16-18) defines the organization variables that make up an organization design as follows -- people -- a collection of -- people - a collection of talents skills tastes beliefs objectives how hard they work the ends they work for sorts of risks they accept sorts of rewards they value connected to the firm as owners, employees, contractors, etc. architecture -- see organization architecture routines -- managerial processes policies procedures official and unofficial formal and informal routines shape information gathering, transmission, decisions, how decisions are made, how resources are allocated, how performance is monitored, how activities controlled, and how activities are rewarded. processes of how work gets done mechanisms of how routines are altered explicit contracts implicit contracts ""understandings"" of how things get done culture -- fundamental shared values (see culture) BAi business organization model -- The BAi business organization model accounts for Roberts' organization design variables in the resources & structure, purpose & environment, and process aspects of the business model. These variables overlap with the variables defining the business, thus the complete model is a 'business-organization' model.
organization evolutionOrganizations must evolve in order to survive. Those that evolve the most successfully will have a competitive advantage. Without evolution, the organization will succumb to the wave of creative destruction of the economy. Organization evolution and strategy -- Strategy is about insuring that organization evolution happens. A strategically competent organization is one that continually evolves an advantage over other organizations. Views of organizations and their change -- Understanding of organization evolution must account for both the stability the organization requires to thrive and the novelty the organization needs to transform itself in order to avoid what would otherwise be certain destruction. systemic - traditional view -- organizational change, on its own accord, is formative change, change within a predetermined form. Novel change is only due to autonomous agents imposing change. See organization, systemic process, and causality for more regarding this perspective. systemic - neo-Darwinian view -- organizational change is due to chance occurrences. This view depends on an environment as selection criteria for selection of chance occurrences to favorable and stable locations in the environment. See causality for more on this view. responsive process view -- organizational stability and transformation are both due to the nature of complex systems, with their complex responsive processes, and their innate self-organization characteristics organizing process -- see organizing process for Weick's view on how humans organize. The systemic view is not an explanation of novel change, transformation, at all, but begs the question of where or how novelty arises by passing off change to the agents imposing change. The neo-Darwinian view (see causality) is an adaptive view of evolution, where the organization seeks stability in adapting to its environment. In other words, the organization is always behind the curve, so to speak, of environmental change, which once it reaches stability it ""sits idle"" until the next environmental change forces it to adapt. This view, of course, soon disintegrates into illogical suppositions and an inability to account for advantage. The responsive process view of organizations accounts for both stability and transformation, and is the focus of what follows. Aspects of organization evolution (Stacey, 2001) -- Organization evolution comes about from responsive processes made up of the following types of activities -- Organizational change is change... ...in power relations ...in the conflicting constraints of relating ...in communicative interaction ...in communicative themes patterning the experience of being together Communicative interaction is a self-organizing process -- when unconstrained and including diverse participants -- organizing stability and transformation -- at the edge of chaos, away from destructive chaos and atrophying stability organizing social structures, cultures, bureaucratic procedures, and hierarchical arrangements -- referred to as emergent patching or clustering Fundamental characteristics of human action-- human action is directional -- movement of human action is toward an unknown future that is under perpetual construction, by the movement of human action itself human action has a reason -- reason for the movement of human action is to express individual and collective identity and difference, at the same time... human action is paradoxical human interaction is circular -- successive gesture-responses, reflexive (responsive), self-referential (referring to self) causality in which it forms and is formed by the interaction itself the outcome of this action is two-fold -- continuity -- sustaining identity (the known, difference, discontinuity) transformation -- creating novelty, variations that have never been before (the unknown, difference, discontinuity) what emerges from complex responsive processes of relating -- joint action identities of individuals identities of groups, organizations, and societies Human joint action and tools complex responsive processes of relating are the basis of all forms of human joint action using tools, no matter how sophisticated those tools might be The process of human action... perpetually reproduces identity has the potential for transformation, enabling the emergence of... individual selves/minds/identities collective identities, required for human collaboration Human organizations, build up from human actions, therefore... ...have no optimal state ...have no mature state ...are perpetually under construction of the known and unknown, at the same time ...has an unknowable future, but yet recognizable Responsive processes view of organization evolution -- Conversation, the dynamics of the process of communicative interaction in the living present required for the emergent unstable-stability in the perpetual construction of novel futures in the living present. (Stacey, 2001, 181-183) Conversational processes can be placed in three classifications, one of which results in organization evolution (see conversational processes for more detail). There are processes displaying the -- dynamics of stability dynamics of instability dynamics of the ""edge of chaos"" - resulting in evolution Organizational change, the learning and creation of knowledge in organizations, are transformations in the thematic patterning of its communicative interaction, particularly its conversational life. Diversity essential to change -- Interaction with the potential for transformation requires diverse participants, participants sufficiently different to each other in the way they think and in their identity. With this diversity, communicative interaction, essentially social complex responsive processes, results in difference, novelty, change, thus transformation. conversation among diverse participants may amplify small differences into major discontinuous changes in understanding (i.e. cross-functional or cross-discipline conversations stimulate new insights) it is in struggling to understand each other in fluid, spontaneous conversational exchanges that people create new knowledge such conversations are characterized by ambiguity and equivocality (Weick, 1979) tension between inquiry and advocacy, positivity and negativity, focus on self and focus on other (Losada, 1998) this communicative process with diversity entails misunderstanding which causes frustration, distress, stimulation, and excitement avoidance of frustration and distress can shut down knowledge creation insight -- knowledge creation originates from misunderstanding has transformative potential and by its very nature threatens the continuity of identity conversations with the potential for transformation threaten identity conversations with transformative potential inevitably arouse anxiety at s deep existential level anxiety triggers defenses of denial, repression, splitting, etc., which can trigger themes that counter themes with transformational potential, shutting down further exploratory conversation conversation with transformative potential inevitably threatens current power relations, which are an important aspect of organizational identity as issues emerge in an evolving organization, people find themselves clustering around particular issues some will cluster in ways patterned by themes forming unofficial ideologies, which may threaten the official ideology conversations patterned by informal-conscious/unconscious-shadow themes are interspersed within and around conversations patterned by institutional themes conversations that threaten current power relations raise the fear of exclusion, amplified inclusion, undermining of existing power relations -- all of which tend to provoke moves to shut down these types of conversations Knowledge emergence -- Outcome of the communicative interaction process is meaning, thus knowledge emerges from the process knowledge cannot be stored reified symbols can be stored as artifacts , ""abstracted"" themes describing past interactions and the qualities that emerged in those interactions such knowledge artifacts, symbolizing past identities, may be used as tools in local communicative interaction in the living present Tools -- Human joint action and tools work together in the process, but tools do not change the formula, however sophisticated they may be. complex responsive processes of relating are the basis of all forms of human joint action using tools, no matter how sophisticated those tools might be. what emerges from complex responsive processes of relating -- joint action identities of individuals identities of groups, organizations, and societies Synopsis -- the conversational life of an organization is a potentially transformative, knowledge creating process, when through the diversity of participation it has the dynamics of fluid spontaneity, liveliness and excitement, inevitably accompanied by misunderstanding, anxiety-provoking threats to identity and challenges to official ideology and current power relations. Strategic management implications -- Contrary to the traditional view of command and control, coupled with strategy by design, the most powerful force to be unleashed to spur the evolution of an organization is the force of self-organization, communicative interaction with conversational processes at the ""edge of chaos."" This is the only force that makes an organization self-evolving. The potential exists in all organizations as a natural process of complex organization. The ""process"" is the complex responsive process -- agents and networks of agents, organization members, interacting with each other in order to express their identities and in doing so, delineating their differences, creating variation, producing novelty, resulting in transformation. What the organization becomes emerges from the relationships of its members rather than being determined by the choices of the organizational leaders.
organization member capabilitiesThe activities of strategic management require capable individuals. The activities serve both to produce the competitive advantage for the business as well as develop the skills in the members of the organization. It is a virtuous cycle of the strategic management process - the more disciplined the approach to the activities of the process, the greater the skill of the members, and the more effective the organization at producing a competitive advantage. Categories of capabilities -- The strategic management discipline capabilities are grouped into three levels - those required to lead and manage, those required to innovate, and those required for business design -- leadership and management -- think of Collins' (2001) Level 5 Leadership that builds enduring greatness through a paradoxical combination of personal humility plus professional will. In this category are the basics - leading with courage, managing with discipline and rigor, proactively developing insight and intuition, learning, development, transforming the business organization, recognizing existing and new patterns, thinking in diverse ways - e.g. analytically, systematically, holistically, and strategically. See leadership and management. innovation -- applying creativity and invention in the business -- developing and applying creativity, integrating entrepreneurial behavior into the organization, developing stronger and new capabilities, innovation of management processes, the business concept, offerings, throughput processes, and technology. See innovation. business design -- incorporating elements into the business design that reduce the workload on the management processes and make the organization more adaptable and responsive. These elements include - a guiding purpose to energize and inspire organization members, principles to guide behavior, enabling responsiveness in dynamic environments, modularity for ease of configuring new business solutions, and adaptability built into the organization, unleashing the self-organizing forces of complex systems. See business design.
organization theorySee organizational theory.
organization typesPut Mintzberg's types here. X-ref to M-form, managerial theory of the firm, firm theory of.
organization variablesSee organization design.
organizational actionThe field of study of organizational action, how and why organizations act the way they do. Organizational action is at the heart of strategy, in that organizations are continuously choosing their strategic course of action. A brief overview of organizational action theory (March, 1996) -- Autonomous consequential action (from the seventeenth and eighteenth centuries) -- Organization action attributed to a theory of autonomous consequential choice. Choice stemmed from two guesses about the future: (1) a guess about the consequences that would stem from a particular choice, thus about expectations, and (2) a guess about the subjective value that would be associated with those consequences when they were realized, thus about preferences. Autonomous consequential action elaborations (first part of the twentieth century) -- First, a probabilistic perspective was added to the utilitarian structure to create (statistical) decision theory. Second, an axiomatics was established that derived cardinal utility functions form collections of consistent choices among lotteries. These two elaborations became the basic canon of twentieth-century theories of consequential thought. The two basic guesses of consequential action are problematic though -- First, alternatives and their consequences are not given but have to be discovered and estimated. Identifying alternatives and anticipating their consequences requires information, calculative capabilities, and attention, all of which are scarce resources. As a result, theories of choice become intertwined with theories of search, and the field of behavioral decision theory grew very substantially. Second, human preferences are systematically different from the preferences anticipated by classical theories of choice. Instead of being consistent, stable, and exogenous, they are often inconsistent, unstable, and exogenous. Adding search and behavioral biases (late twentieth century) -- Modern theories significantly reconstruct the theories of autonomous consequential choice. These theories are better described as theories of heuristics, attention, search, and learning than of comprehensive calculative rationality. They fold into a broad decision-making frame [of] ideas about the updating of expectations, behavioral biases, sequential attention to targets, search, the temporal sorting of problems and solutions, adaptive aspirations, variable risk preferences, and costs and benefits of information. Adding identity and context -- Ideas of autonomous consequential choice developed in parallel to a second set of ideas, where an autonomous system, an individual or collective, follows a logic of appropriateness rather than a logic of consequences. Action is seen as resulting from matching rules to situations. The problematics of choice are seen as lying in the definition of the salient identity and the classification of the situation. Theories of choice became theories of situation recognition, socialization, institutionalization, and imitation and developed stronger links with theories of cognitive processes, artificial intelligence, and diffusion theories of calculation. They also became theories of evolution, for if standard operating procedures and other institutionalized features can be imagined to endure, provide reliability, and to have the capability of transferring form one organization to another, they could be imagined to be the ""genes"" of an evolutionary theory of organizational action. Ecologies of action -- Whether action is treated as stemming from expectations and preferences using a logic of consequences or from the application of rules to situation using a logic of appropriateness, it must be fit into an ecological context. An organization reacts to the actions of others that are reacting to it. Much of what happens is attributable to those interactions and thus is not easily explicable as the consequence of autonomous action. This led to the inclusion of game theory. AS the analysis of games became a well-developed art form, it cast new light on the importance of repetitive encounters, time horizons, reputations, and trust in encounters among rational actors and led to new insights into the complications of communication, control, and cooperation in the face of conflict of interest. Imitation -- The components of action are linked in ecological networks of imitation. All of these processes of imitation make theories of organizational action attentive to the network structures through which diffusion takes place and to the dynamics of their change. Action, ambiguity, and interpretation -- The bases of action are not necessarily based on reality but on a perception of reality. Many factors, including identity and experience, shapes our perceptions. Preferences, expectations, identities, and definitionsnew of situations are seen as arising from interactions with a social system. thus the theory of action has come to emphasize theories of politics and technology of numbers and the social construction of accounting. Other ideas -- Action is pictured as an instrument in the development of interpretation, rather than the other way around. Decision-making processes are seen as signals and symbols of legitimacy, and thus valuable in their own right, regardless of consequences for decision outcomes. The basic technology of an organization is described as a technology of narrative, as well as a technology of production.
organizational architectureSee form for an explanation distinguishing 'form' or 'organizational form' from terms like M-form, organizational architecture, and inertial theory changes to the organization. John Roberts definition -- John Roberts (2004, p 17) defines organization architecture as one of the variables making up an organization design. It consists of -- organization chart -- the boundaries of the firm, both vertical and horizontal the assembly of tasks, jobs, departments, business units, and divisions reporting and authority relationships financing ownership governance personal networks formal informal internal external BAi business organization model -- The BAi business organization model accounts for Roberts' business architecture variables in the 'resources & structure' aspect of the business model.
organizational behaviorWeick's commentary (Weick, 1979) -- The phrase organizational behavior is troublesome because one is never certain whether it means behavior that occurs in a specific place behavior with reference to a certain place behavior controlled by an organization behavior that creates an organization or yet something else Because events inside an organization resemble events outside organizations; sensitivities of the worker inside are continuous with sensitivities of the worker outside. Since people have as much desire to integrate various portions of their lives as to compartmentalize them, what happens inside affects what happens outside, and vice versa (e.g., Salamon 1971). The argument that organizational behavior is continuous with behavior in other settings can be made from a different perspective. There are several investigators who argue that action involves sequences of acts that unfold intact once they are triggered (e.g., Mandler 1964; Roby 1966). This assumption can be coupled with the further one that people notice stimuli that enable response sequences to be unfolded. Specificity in defining organizational behavior -- (See behavior for a lead-in regarding response repertoires). If an observer gains an understanding of response repertoires, and the conditions under which attention is controlled by the content of these repertoires, then a more substantial theory about organizations and behaviors can be built. The theory would concentrate on attention as well as on action. It would essentially ask the question, ""How are the processes and contents of attention influenced by the conditions of task-based interdependency found in those settings we conventionally designate as organizations?"" Rendered in this form the question is complex, but it is also much more specific than the question, ""What is organizational behavior and what affects it?"" Defining organizational behavior in terms of processes of attention directs the investigator toward specific processes and properties within an organization that might ordinarily be overlooked. The investigator is sensitized to a specific set of events and behaviors in a way that is impossible given a more general definition of organizational behavior. (Weick, 1979, 32-33). Organizational behavior incorporating both individual behavior and organizational properties -- Nord (1976) notes, first, that the term serves as a useful reminder that problems within organizations must be approached at both the psychological and sociological level. Attention to both individual behavior and formal organizational properties are essential in this field, and the attractiveness of the phrase organizational behavior is that it is composed of a word from each of the two foundation disciplines. Thus the term is a useful reminder that interdisciplinary approaches should be directed at any inquiry into organizations, and a further reminder that organizations need to be examined as sites for both collective and individual behavior. Elements of organizational behavior -- Nord's second point is that behavior may have continuity, but some determinants are more important in organizational settings than in other ones. He notes that formal authority has more important consequences for behavior inside organizations than outside. Other possibilities that Nord might have cited in this line of argument are that power is more important in organizational settings, and physical attraction is less so. The term organizational behavior also directs attention to a place, a hierarchy, circumscribed hours, input, output, transformation processes, accountability, effort expenditure, controls, finance, and competition. Individuals act; organizations are -- The reification of the concept of organization can be misleading. Organizations are often referred to as ""acting."" An organization acting actually refers to the conjunction of two statements, each one of which describes a double interact between two or more human beings, on of whom can even be imagined. Any assertion that an organization acts can be decomposed into some set of interacts among individuals such that if these people had not generated and meshed a specific set of their actions, and if these actions had not been generated by and meshed among any other people, the organization would not have performed the act attributed to it. Organizaitonal behavior as patterns of behavior -- The important point made by the attribution of actions to organizations are that organizational activities are social rather than solitary, and that these activities are specified sufficiently that a variety of people can contribute the necessary components that allow the patterns to persist. The pattern can withstand a turnover of personnel as well as some variation in the actual behaviors people contribute. It is the persistence of the pattern through contributions made by interchangeable people, that distinguishes organizations from other collectivities such as mobs, families, or patient-therapist dyads where changes in ""personnel"" produce fundamental changes in the process and the outcome. Organization forms outlast their originators (Weick and Gilfillan 1971) and are relatively impervious to personal redefinition (Berkowitz 1956). People move into and out of these forms; surprising constancy is maintained in the outcomes (Warwick 1975). The fact that forms transcend specific individuals means that it is reasonable to say that an organization acts, because it is the persisting form that coordinates actions of transient personnel and that produces the outcomes. When we say that an organization acts we mean to emphasize that double interacts, not solitary acts, are the raw materials that are assembled into processes. We also mean to emphasize that it is the assemblage, the pattern of interacts, that determines the outcomes-not the personal qualities of single individuals. When we assert that an organization acts, it will also be true that that shorthand phrase can be decomposed into a set of interlocked behaviors between two or more persons and a set of assembly rules by which those behaviors were assembled and sequenced to produce an outcome. The phrase organizational behavior does have the valuable effect of reminding researchers that in the final analysis, organizational theorizing comes down to predictions of behavior. While this particular book may not result in many of those predictions, it remains true that eventually all such formulations have to deal in one way or another with behavioral-dependent variables. Organizational behavior is a symbol around which diverse researchers can rally, and since those researchers are good company, I see no reason to destroy their pretext for gathering together. Source of above: Weick, 1979, 32-35
organizational capability
organizational capitalIn The Think Factory, productivity improvement specialist Susan D. Conway describes how successful companies become more valuable by raising the value of their organizational capital - an intangible asset whose primary component is the flow and use of information. In other words, Conway writes, the ""secret sauce"" of market super-performers ""is directly related to how information flows and is productively assimilated by their information workers [I-workers]."" JohnWiley & Sons © 2007
organizational changeWheatley, Kotter, and Mourkogiannis all present systemic views of organizational change as described below. For a responsive processes view of change, based on the complexity sciences, see organization evolution for Stacey's explanation of organizational change. Managing change in self-organizing complex systems Based on Wheatley (2005) -- Recognizing that organizations are not machines, but complex self-organizing systems, the principles and methods for effective change do not reflect the top down command and control so prevalent in organizations. Assuming organizations are inherently self-organizing and it is essential for organization members to have their freedom to be themselves, principles for change are as follows - Participation of the organization members in rethinking, redesigning, and restructuring the organization is required. People involved in creating their future will make it work. People only support what they create. People react to directives, they do not comply with them. The message receiver's reactions will be as diverse as the people receiving the message. Accepting this as a principle changes the expectations of what can be accomplished with communication. Partnering with people -- dealing with their reactions -- builds stronger relationships and commitment from them. People need to include themselves in how a procedure is done. Compliance without this inclusion and understanding results in procedural failures and foregoes gaining the loyalty, intelligence, and responsiveness management is seeking from the person in the first place. People see the world through the lens of their worldview. Ultimately, each person's worldview is different to some degree. This leads to diverse interpretations of things and activities around us. Sharing these diverse perceptions brings about learning. Conversations, not debates or oratory, bring diverse views to light. This diversity of knowledge produces a more complete understanding from which decisions are made.. A systems health improves the more interconnections there are between the parts of the system. This is true between part of an organization or between the organization and other organizations. Interconnectedness brings about cooperation to improve. This approach to improving the health of a system takes advantage of double loop learning, the ability of a system to improve itself. The leader's role is to connect the parts to bring about the health of the organization. A leader's role in this approach to change is much different than command and control. See self-organization. A note on values: Wheatley (2005, pg 92) said that people can agree to productively go forward without having ""identical values"". I agree with that as stated. But common values - beliefs of what is true held in common -- are at the core of aligning to achieve a mission. Ideas can be discussed, debated, and modified. Differences in beliefs of what is true and right are difficult if not impossible to overcome to align people towards a common purpose. They must at least share the belief in the mission. John Kotter's eight stage community building and change process Kotter, (1996) -- 1 - establishing a sense of urgency 2 - creating a guiding coalition 3 - developing a vision and strategy 4 - communicating the change vision 5 - empowering employees for broad based action 6 - generate short-term wins 7 - consolidating gains and producing more change 8 - anchoring new approaches in culture Nikos Mourkogiannis' view on community, change, and purpose -- Mourkogiannis (2005, pp161 - 162) Mourkogiannis asks apropos questions regarding change - ""Why should anyone care about 'the vision' the CEO or the top team produces? Why should people commit to sacrifices to achieve that vision? How is it that people can come to believe in the aims of the company so strongly that it actually influences what they do day to day and gives them the energy to perform?"" More is required than having people understand the vision - far more than communicate, communicate, communicate. People are not spontaneously motivated by the prospective success of the organization. They do not see organization success as their own success. And the CEO generated vision will not carry them through the sacrifices they will need to make to achieve the vision. But an organization with a meaningful purpose forms a community of purpose - a community of people drawn to the purpose. Purpose motivates people - they will make sacrifices in pursuit of a purpose they identify with. Purpose is decided upon. This decision comes from a process of discovery. There are two constraints to what is discovered - 1) the purpose must fit the moral ideas of those the team hopes will join the community of purpose, and 2)support an achievable strategic position that will generate wealth.
organizational codesSee organizational forms.
organizational demographicsCarroll & Hannan (2000) view of organizational demography -- Demography has an institutionalized set of methodological procedures. These methods are not ends in and of themselves. They serve as tools for producing reliable empirical facts that inform a particular way of looking at research questions and developing theory. When used properly, demography yields unique and deep insights into social phenomena. (2000, p 17) Organizing Principles of Demographics (Carroll & Hannan, 2000, p 25) -- Demography adopts a population perspective. As opposed to analyzing individual firms, demography seeks to explain properties of populations such as their composition (e.g. age distribution) or they dynamics (e.g. growth rates). Demography and Population Studies (Carroll & Hannan, 2000, p 27-28) -- See organizational populations.
organizational dynamicsOrganizational dynamics refers to the patterns of movement over time in the interactions between the people who are the organization, the community of practice. Such patters could be described, for example, as regular patterns of dependence and conformity, or as irregular patterns of aggression and noncompliance. (Stacey, 2007, pp 3) Strategy vs. dynamics -- Organizational dynamics is contrasted with organizational strategy or, simply, strategy. Organizational dynamics is about patterns of movement in the activity in the joint activity people undertake, organizational strategies, and its purposes over time and how actors involved are engaged in, and think about, this movement. This addresses people's identity, who people think they are, etc.. (Stacey, 2007, pp 240) Traditional view of disciplines -- Organizational dynamics is often treated as a separate discipline from the understanding of individuals or strategic management, calling it organizational behavior. In a similar manner, strategic management is often distinguished from operational management. Doing away with artificial distinctions -- Organizations are made up of people, people's behavior makes up organizational behavior, managers are people, strategies address the organization, and strategies require operational execution. For the purpose of understanding how to strategically manage an organization, these are not separable disciplines which can be addressed separately. They are interwoven into one discipline - herein titled strategic management.
organizational economicsOrganizational economics focuses on the firm itself, rather than the markets and industries. Theories of the firm look to explain why firms exist in the first place, such as agency theory and transaction cost related theories. This branch of economics is associated with the resource-based theory of strategy, that views the primary cause of advantage and sustained advantage to be the resources of the firm, not its position in an industry or market. This approach includes neo-classical microeconomics and evolutionary economics. Organizational economics contrasts with industrial organization economics, which aligns with the positional view of strategy.
organizational formsSee form for an explanation distinguishing 'form' or 'organizational form' from terms like M-form, organizational architecture, and inertial theory changes to the organization. ""Forms"" play a role on explaining structure in organizational theory. Organizational form schools of thought include both trait-based and boundary-based approaches (Carroll & Hannan, 2000, p 60). The most popular social scientific approach to organizational forms regards them as clusters of features. Carroll & Hannan's proposal combines elements of three approaches to population definition (pp 62-65): feature-based -- e.g. clusters of features, such as Weber's (1968) specification of the form of rational-legal bureaucracy. Like feature-based, it begins by specifying potential identities in terms of constraints over features. network-based -- based on patterns of network ties related to resource flows. Like network-based, it emphasizes the importance of the judgments made by outsiders in transforming potential identities into real identities and, under certain conditions, into forms. boundary-based approaches to defining organizational forms based on the identification of distinct boundaries. Processes that create and reproduce boundaries - social network ties, closed flows of personnel among the set of organizations, technological discontinuities, social movements articulating the interests of a set of organizations - are the keys to understanding forms. And like boundary-based, it allows identities to be defined relationally. In corporate demography, forms - define organizational populations for study form refers to a selection-favored conglomerate of features such as those implying a degree of environmental fitness. differentiates between possible local adaptation steps and deep structural changes Organizational codes -- explicitly defining form (Carroll & Hannan, 2000, 60-61) -- We propose a new definition of form as a recognizable pattern that takes on rule-like standing. We want to use a term whose denotation and connotation include both cognitive recognition and imperative standing. In early drafts, we phrased the theory in terms of social and cultural ""rules."" We reasoned that rules both specify the objects to which they apply and offer prescriptions about the objects and their behavior. However, the connotation of articulated regulation appears to be so strong that the cognitive dimension gets slighted. So we have chosen to speak of codes. ""Code"" refers both to (1) a set of signals, as in the ""genetic code"" and (2) a set of rules of conduct, as in the ""penal code."" We intend that our use of the term code reflect both meanings. Identity, forms, codes, and features -- We define identity in terms of social codes (comprised of sets of social rules and signals) that specify the features that an organization can legitimately possess. These codes can be enforced by members of the organization (insiders) or by external actors on which the organization depends for resources and support (outsiders). We claim that one knows that a social code of this kind exists when one observes that departures from the rules (after periods of conformity) cause a devaluation of the organization by relevant outsiders. What provides the basis of identity? A natural answer says that identity inheres in the constancy of some set of features. Yet, in the case of organizations, at least some changes do not disrupt identity. So, defining identities in terms of permanent features does not work. We conclude that neither the actual values of the features nor the features themselves can be the carriers of identity. So what do organizations preserve when they maintain their identities? We claim that an identity constrains what an organization would/could do and what is expected and not expected of it. On the formal side, this idea can be expressed as follows: organizations are described in terms of features and constraints over features. Some identities impose restrictions on features that go beyond the technological and legal constraints. We refer to these restrictions as identity-restricted alternatives. If an identity allows only one value for a particular feature, then an organization cannot change the value of this feature without giving up its identity. These features might be called indispensable properties. Some restrictions that support identity have a conditional nature. An organization can, of course, claim several identities simultaneously. Social identities, including organizational identities, are often nested. The lowest level distinguishable identity is the clearest indication of form. Definition of social identity -- (Carroll & Hannan, 2000, 71) We need some principle for distinguishing actual (socially meaningful) identities from potential identities. Our proposal builds on the idea that real identities come to have a code-like status in the sense that they consist of sets of rules whose violations have observable consequences (Meyer and Rowan 1977; Jepperson 1991). The rules contained in these codes are often implicit -- sometimes even tacit -- yet they might be fully articulated and explicit. Definition of organizational forms & form vs. identity -- (Carroll & Hannan, 2000, 73-74) We define an organizational form as a special kind of identity. Whereas identities meaningfully apply to single organizations, forms applies to classes of organizations. Moreover, whereas identities might be established primarily or even exclusively by evaluations of insiders (think of a secret society whose structure has avoided notice by outsiders), forms are cultural objects. So, in our view, an identity is a form in a period if and only if the following conditions are met: the identity applied to and was satisfied by a form-specific constant number of organizations at the beginning of the interval; and violation of applicable identity causes the outsider evaluation functions to drop sharply. According to this definition, a form is an abstract, code-like specification of organizational identities. The next step ties forms to organizations. An organization is classified by default as having an organizational form if the codes specifying the form apply to the organization by default (i.e., as a code). Our definition of faun implies that if an organization violates the set of identities that specify a form of which it is a ""member,"" then the valuation of the organization by outsiders drops sharply.
organizational identitySee organizational forms and identity.
organizational inertiaOrganizational inertia is the tendency of a mature organization to continue on its current trajectory. This inertia can be described as being made up of two elements -- resource rigidity and routine rigidity. Resource rigidity stems from an unwillingness to invest, while routine rigidity stems from an inability to change the patterns and logic that underlie those investments. Resource rigidity relates to the motivation to respond, routine rigidity to the structure of that response. In the face of rapid or discontinuous external change, it is the organizational inertia that must be overcome if a firm is to survive. In a competitive situation where new players are entering the industry, it is the incumbents that are particularly susceptible to the downside of this inertia. In this case it is often referred to as incumbent inertia. Overcoming organizational inertia -- Threat perception in organizations experiencing discontinuous change is often thought to be the impetus necessary to prompt organizational change, a change in inertia, by decreasing the current inertia through changes in resources and routines. While threat perception is a response catalyst, it has been found to decrease inertia in some cases, a good thing, but increase inertia in other cases. Organizational inertia and threat perception implications and management -- Gilbert's 2005 study concluded the following propositions regarding threat perception and resource rigidity -- The perception of an imminent threat in the face of discontinuous change enables managers to overcome sources of resource rigidity that stem from resource dependence (see resource rigidity). The perception of an imminent threat in the face of discontinuous change enables managers to overcome source of resourced rigidity that stem from incumbent position reinvestment incentives. Gilbert's 2005 study concluded the following propositions regarding threat perception and routine rigidity -- Perception of an imminent threat leads to a contraction of authority that amplifies routine rigidity. Perception of an imminent threat leads to a reduced level of experimentation that amplifies routing rigidity. Perception of an imminent threat leads to a focus on existing resources that amplifies routine rigidity. The preceding propositions leads to three propositions regarding the organizational response to threat perception -- Involving outside influence when deciding how to respond to discontinuous change will increase the likelihood that mangers will structurally differentiate a new venture from its parent organization. One reason for creating a differentiated structure is to decouple the motivation at the parent from the motivation at the venture. Being separate, the employees of the differentiated unit own the opportunity in a way they never would as part of the traditional business. The parent organization can remain focused on th threat to the core business while the differentiated unit(s) can fully focus on new opportunities. Structural differentiation can help decouple threat perception in a parent from an opportunity perception in a new venture. Outside influence, structural differentiation, and opportunity framing combine to relax routine rigidity in a new venture. Outside influence and structural differentiation both serve to frame opportunities in a more beneficial manner for the new venture, decoupling the motivations and getting the venture focused on innovation of the new venture rather than on the parent company. The relaxed routine rigidity is a key element in fostering innovation in a yet to be defined area. The structural autonomy lowers the tendency for a parent organization to assert authority over a new venture. Structural autonomy expanded the ability of venture management to run local experiments that would not have been possible in a world of business model and product templates. Outside influence also helped expand the alternatives considered in the new ventures. Gilbert, 2005, 741-743
organizational knowledge
organizational learningPrimary source: James F. Courtney, David T. Croasdell, and David B. Paradice,Inquiring Organizations, Australian Journal of Information Systems Sept 14, 1998 Learning is purposeful, facilitating behavior change that leads to improved performance. Properties associated with learning -- Learning styles -- Learning styles address the various aspects of learning. Adaptive learning refers to adjusting behavior and performance to a given situation. Generative learning attempts to create new capabilities, while its cousin double loop learning attempts to resolve incompatible norms by finding a higher order objective and solution to meet the objective for the previously incompatible norms. Both generative and double loop learning are sometimes equated as being the same. They both are required to develop new capabilities and to make transformational changes. Behavioral development seeks new response and actions. Cognitive development seeks deeper understanding. Single loop learning is adaptive within the constraints of the existing mental model. While these styles of learning point out different aspects of learning, they are not mutually exclusive. Learning mechanisms -- Learning mechanisms include - simple error detection and correction; consensus building through the reduction of multiple conflicting interpretations about the organizational situation, with agreement establishing new direction, agreement, and organizational knowledge; scanning the internal and external environments for new knowledge, since knowledge varies with time, a form of generative learning; recursively create new knowledge from existing knowledge; comparing new incoming knowledge to the organizational code, organizational memory, in order to consider means to create and incorporate new knowledge. This process establishes new mental models, new worldviews, thus is generative learning. use of the dialectic to resolve opposing viewpoints, models, into a new worldview, which resolves the opposing models into higher order win/win solution. This is definitely generative learning which can change the strategic direction of an organization; trial and error; agreement and partition. Learning level -- Low level learning is a result of repetition and routines. Low-level learning is restricted to simple error detection and correction. Low-level learning is associated with single loop learning which maintains its set of rules, or mental model, throughout the learning process. High-level learning is more consistent with double loop learning, with the objective of adjusting the mental model to better fit the realities of the situation. High level learning develops an understanding of causation. Multi-level learning occurs when frequently used procedures and specific rules are continually improved to develop competency and understanding. This is the type of learning which produces the increasing returns to knowledge and experience associated with exploitation. This type of learning establishes a type ofpath dependency for an organization which can make is susceptible a competency trap, where the increasing returns on its current competency lead it to ignore superior methods and technologies. Learning framework -- The learning framework is essentially the context for learning, the level being addressed within the organization -- the process level dealing with continuous incremental improvement, the architectural level which addresses how the elements of the organization fit together, and the strategic level, which addresses the nature, purpose, and function of the business. Learning source -- The learning source refers to the basic types of knowledge contributing to the learning - syntactic knowledge, pragmatic knowledge, or semantic knowledge (see knowledge Developmental orientation -- The developmental orientation refers to the individual being developed and their level of knowledge, or relevant intelligence. An apprentice develops know-how and applies basic concepts. With the addition of analysis the apprentice can develop into a specialist capable of doing independent work. The specialist who develops understanding and integrates knowledge becomes a generalist. The generalist then can move towards the renowned, where learning becomes synthesis and the development of new knowledge, a wise systems thinker. Inquiry process or systems of inquiry -- Inquiry is a process, thus it is a system. The models of inquiry, being systems, have inputs, processes, and outputs. The output of an inquiring system is ""true"" knowledge, or at least knowledge that is believed not to be false. One of the most distinctive features of inquiring systems design is the inclusion of elaborate mechanisms for ""guaranteeing"" that only ""valid"" knowledge is produced. The ""guarantor"" of effective inquiry is the method of inquiry. The method of inquiry is developed to ensure outputs consistent with the underlying philosophy, so that knowledge generated may be considered ""valid"". Singerian inquiry -- There are various philosophical bases for inquiry. E. A. Singer (1959) defined an inquiring organization as one whose purpose is the creation of knowledge for choosing the right means for one's ends. In Singer's view, knowledge must be connected to measurable improvements. Measures of performance judged by both organizational and societal standards. An organization must know the kind of value it intends to provide. Singer's inquiring system -- Input - units and standards; a system of measures specifies the steps to be followed in resolving disagreements among members; the measure of performance is the degree to which differences among group members can be resolved by the measuring system Given -- system of measurement Process -- strategy of agreement, with the encouragement of disagreement in order to sweep-in new knowledge to improve world views; sweeping-in new variables and laws to provide guidance and overcome inconsistencies when explanatory models fail to explain a phenomenon; the system of measures is chosen to build knowledge and create insight Output -- new standard; exoteric (common) knowledge; simplistic optimism drives the community towards continuous improvement of the measures Guarantor -- replicability; Hegelian over-observer (objective observer) Singer's inquiry system philosophy and characteristics -- The Churchman (1971) defined systems of inquiry based on various philosophies - those of Leibniz, Locke, Kant, Hegel, and Singer. The characteristics of an inquiry system based on E.A. Singer (1959), an American philosopher, is as follows: System - open Learning style -- generative, double loop Learning mechanism -- trial and error, agreement and partition Learning level -- multi-level Learning framework -- procedural, strategic Learning source -- syntactic, pragmatic, and semantic (see knowledge Learning orientation -- developmental Developmental orientation -- renowned Obstacles -- complacency, incorrect standards, lack of oversight
organizational populationsOrganizational populations -- (Carroll & Hannan, 2000, 74-75) We define populations as bounded sets of organizations with a common form. Populations are bounded by some kind of social-system boundary (chosen to reflect the barriers to the operations of relevant social processes such as the flow of information, competition, and regulation). A crucial part of defining a population is getting this part of the specification right. The population defined by a given form in a particular system is the set of organizations in that system that are members of the form minus the set of organizations in that system that are classified by default into any of the proper subidentities of the identity. Demography and Population Studies (Carroll & Hannan, 2000, p 27-28) -- Formal demography is ""concerned with size, distribution, structure, and changes of populations."" (Shryock and Siegel (1971, 2 as cited in Carroll & Hannan, 2000, p 26). This means that formal demographic analysis addresses the flows of vital events in time and develops population-level implications of the flows. Population studies examine variables such as births, deaths, locations, life spans, earnings as well as relationships between population changes and other variables such as social, economic, political, biological, genetic, geographical, and the like. Population studies encompass a far broader range of issues and types of research than formal demography. Hauser and Duncan (1959), equate the field with the study of ""determinants and consequences of population trends.""
organizational processesOrganizational processes - these are the processes of organization itself, which manage the resources of the firm. These processes enable the throughput and creation of future potential processes. measurement -- generate truth; the generation and dissemination of information, understanding, and knowledge decision -- making choices; creating power-to-do; development and duplication of power, authority, and responsibility; provide governance membership -- create commitment; provide meaningfulness and excitement of what is done conflict management -- formation and institutionalization of values for regulation of behaviors and decisions See business process and process architecture.
organizational purposeTerm applied to a type of strategic focus -- Jamshid Gharajedaghi's term for what is at the core of a successful strategy, where defining purpose is the most important task in defining a business architecture Four basic concepts for understanding purpose -- Definition of the business Know-how or technology which is transformed into offerings delivered to customers Systems architecture defines the relationship between technology, offering, and market Strategic Intent - formulated as a core competency - an attribute of the organization as a whole Measures of success Core values Source: Gharajedaghi, 1999
organizational strategy'Organizational strategy' is contrasted with organizational dynamics. Organizational strategies are about what kind of joint action people are undertaking, about what purpose it is meant to achieve, and what actors desire it to be. (Stacey, 2007, pp 240) All strategy is 'organizational strategy', as strategy is about competitive advantage of an organization and the organization evolution necessary to achieve and sustain an advantage.
organizational structureOrganizational structure refers to the elements of the organization that serve to give it its form -- structure (formal lines of reporting), processes (managerial) and decision-making mechanisms. The classic form that has come to dominate large business organizations is the multidivisional organization, often referred to as the M-form (See M-form). The structure of the organization is reflective of the theory of the firm (see firm theory of). Bartlett and Ghoshal propose a need for a new theory of the firm, a ""managerial theory of the firm"" that is more attuned to the premises of the key actors within the firm so as to be able to illuminate the corporate world as seen by managers and encompass the issues that they perceive to be important. See managerial theory of the firm. (Bartlett, 1993). Intertwined with organizational structure is organizational theory, organization design, and organization types.
organizational theoryOrganizational theory is the study of organizations -- seeking to understand their nature and behavior. See environment for the interpretive perspective of the organization and its strategic management implications. See organizational action for March's synopsis of the history of theories of why organizations act the way they do. See evolutionary organization theory for Burgelman's strategy making and evolutionary organization theory. The theory of organization is reflected in its structure. See organizational structure and organization types. See managerial theory of the firm for an overview and historical perspective of dominant theories of business organizations and a significant departure from those theories. See firm theory of for Coase's and Penrose's theory of the firm. See firm theory of for Rumelt's empirical observations of firms, establishing the criteria of strategic interests related to a firm in its real, i.e. Schumpeterian, environment, vs. the neoclassical economic treatments of firms. See creative destruction. See strategy theory criteria for Porter's criteria for a theory of why firm's choose and successfully implement strategy. W. Richard Scott's Evolution of Understanding Organizations (Peters and Waterman, 1982, pp 89-103) -- Scott identified for stages of organization and management theories in the 1900s. These stages can be described in a 2X2 matrix, with one axis being organizations as Closed Systems or Open Systems and the other axis as Rational Actor or Social Actor. Closed systems are characterized as mechanistic thinking and no regard for what is external to the organization. Open systems are characterizes as Gestalt (holistic) thinking and the internal organizational dynamics shaped by external events. Rational Actor assumes that clear purposes and objectives for organizations exist and that the determination of purpose is straightforward. Social Actor assumes there is a messiness of determining purposes and determination of purposes is not straightforward or deductive. The four evolutionary phases management theories and the prominent researchers associated with each are as follows: Phase One, 1900-1930 -- The ""actor"" is rational, able to make rational choices. The ""system"" is insulated from the outside world. Weber - order by rule; bureaucracy is how to solve the problem of managing a large group of people. Identify a finite body of rules and techniques to learn and master. Define a breakdown of the work, maximum spans of control, and match authority and responsibility. Taylor - time and motion studies, manage people as machines. Phase Two, 1930-1960 -- The ""actor"" is a complex social actor, a human with strengths, weaknesses, limitations, contradictions, and irrationalities. The ""system"" is insulated from the outside world. Mayo - Hawthorne experiments, positive attention to people raises productivity, (industrial social psychology) McGregor - Theory X, Theory Y. ""The assumptions of Theory Y do not deny the appropriateness of authority, but they do deny that it is appropriate for all purposes under all circumstances (human relations movement) Barnard - comprehensive theory of cooperative behavior in formal organizations. CEO as shaper of values, formulating purpose, communicating, securing essential efforts. A conception of the whole. Selznik - ""distinctive competence,"" ""organizational character,"" infusion of value to produce a distinct identity, social integration. CEO is a joiner of means and ends - setting the mission and creating the social organization capable of fulfilling that mission. Phase Three, 1960-1970 -- The ""actor"" is rational, able to make rational choices. The ""system"" buffeted by a fast-paced, ever-changing array of external forces. Chandler, Lawrence, Lorsch -- Organizational structures of great companies are shaped by changing pressures in the marketplace. Phase Four, 1970- ? -- The ""actor"" is a complex social actor, a human with strengths, weaknesses, limitations, contradictions, and irrationalities. The ""system"" buffeted by a fast-paced, ever-changing array of external forces. Weick, March -- Identified a plethora of new metaphors for organizations and decision making -- sailing, playfulness, foolishness, seesaws, space stations, garbage cans, marketplaces, savage tribes, satisficing, bounded rationality, uncertainty absorption, problem solving, innovation, exploration and exploitation. Gareth Morgan's Images of Organization (Morgan, 2006) -- Morgan shows (a) how different metaphors give rise to different theories of organization and management, (b) how an understanding of the process can help us master the strengths and limitations of different viewpoints, and (c) how we can use this knowledge to become more effective leaders and managers. Morgan presents eight very different metaphorical perspectives on how organization -- drawing out their strengths, limitations, and implications for practice. His aim is to give practical demonstration of the power of metaphor and how it can be sued to generate deep understandings of the nature of organizations and organizational life. The metaphorical perspectives are -- organizations as machines organizations as organisms organizations as brains organizations as cultures organizations as political systems organizations as psychic prisons organization as flux and transformation Stacey's causal frameworks -- Below find Stacey's causalities that can be at work in order for organization to occur. These causalities, whether implicit or explicit, under-lie all explanations for strategy and firm behavior, as well as explain firm potential. Stacey (2000, pp 14 - ) has defined five causal frameworks providing insights into various management approaches. See teleology for Stacey's view on causality as it relates to organizations. The reason for making these teleological distinctions is to enable one to obtain some insight into the fundamental differences between different ways of understanding change in organizations. Aspects of causality differentiate between types -- The causal framework addresses the following aspects of causality... The nature of or kind of movement into the future that is being assumed -- movement toward a future that is... The reason or cause for the movement into the future -- movement for the sake of, in order to... The process of the movement into the future -- the cause of movement... The source of meaning... The kind of self-organization implied (i.e. learning, knowledge creation, production of novelty) The nature and origin of variation... The origin of freedom and the nature of constraints... Five causal (teleological) frameworks -- secular Natural Law Teleology (Newtonian Physics) and efficient cause (timeless rules of an ""if - then"" kind) in which movement is perfectly regular and predictable and the parts add up to the whole. This teleology survives in modern times as an unreflected assumption about the nature of reality and as an assumption of the existence of optimal states. Everything that is possible is already given and there is no change under the sun. In regards to change, there is no concept of self-organization or emergence, thus there is not transformative change, only change as a movement to perfect. Change comes from an external agent. In regards to time, time has no dimension as hidden order is revealed or discovered in realizing or sustaining an optimal state. This teleology comes from Newtonian mechanics used to explain the universe as a mechanism being applied to organizations. Rationalist Cause -- the objective observer-designer in which movement is toward a goal autonomously chosen by humans as an expression of universal ethical principles. Freedom means that the final form is unknown. Unpredictable, truly novel change is thus possible and stability is sustained by ethical universals. In other words, identity, or organization, evolves in essentially unknowable ways. Here the unknowable whole is achieved through choice, or design of the parts. In regards to change, there is no particular implications for self-organization and change is the consequence of human choice. Though this allows for freedom to choose, how choices result in novelty are not explained. In regards to time, cause is human motivation that lies in the future. This teleology comes from Kant's view of humans and human actions, where humans have freedom within universal ethics. Formative Cause -- the organization as a system, to be designed and managed. Kantian dualism as the basis of systems thinking -- rationalist plus formative cause. Philosophical basis for systems science. in which movement is to a final form, a pre-given state already contained within the formative process that produces it. This means that change takes the form of continuity of identity, with only context-dependent variations in its manifestation. In this framework there is no explanation of true novelty. Self-organization here is repetition, with variations in manifestations of identity but no transformation in that identity. In other words, identity is developing in knowable ways. The theory of causality here is one of functional, formative processes, formative cause, producing movement to an already given final state contained, as it were, within that process and so subordinated to it as Formative Teleology. Organization is continuity of form with small variations, all enfolded so that genuine novelty is not possible. In regards to time, a mature or final form is unfolded form an enfolded from a whole already enfolded in the nature, principles, or rules of interaction. This is a macro process of iteration, that is, formative cause that lies in the past enfolded form and/or unfolded future. In regards to change, there is a form of self-organization towards a mature state of the system that reproduces forms without any significant transformation. This teleology is Kant's view of organisms and organizations. It is a functional teleology, with the organization's continuity of form with small variations. Transformative Cause -- the cause inferred in a branch of complexity science. in which movement toward and unknown form; that is, to a form that is in the process of being formed, to a form that is itself evolving. Truly novel change is possible and self-organization is a paradoxical process of repetition and potential transformation. It is emergence of identity in a transformative, self-organizing process and paradoxical experience of identity in transformation. Here teleology is not contained in the process since the teleological is being formed. In other words, identity, or organization, is evolving in unknowable ways, being created as it goes along. Here, the parts form and are formed by a whole that is under perpetual construction. In iteration, the continuity of identity is always open to change. Self-organization is then a process of interaction characterized in an essential way by paradox and the emergence of the truly unknowable. What is being so organized is identity. It is a process that produces novelty, the creatively new that has never existed before. In regards to change, a form of paradoxical self-organization is implied, characterized by both continuity and potentially radical transformation. In regards to time, variation arises in micro diversity of interaction, transformative cause arises in the present, as does choice and intention. This teleology is Hegel's view that applies to both human action and nature. It is a paradox of stability and change. Adaptionist Teleology -- from neo-Darwinian science and a branch of complexity science, evolutionary science Formative cause is an accident, chance variation followed by competitive selection operating as a search mechanism to find a stable strategy or fitness peak. In regards to change, this teleology implies a chance-based competitive search for optimality with a weak form of self-organization confined to the selection process. Change is movement to a stable state of adaptation to the environment. In regards to time, formative cause lies in the future selected adapted state. This teleology is from the works of Darwin as supplemented by Mendel, Mead, et al.
organizational typeOrganizational types often refers to the primary purpose of the organization, such as -- voluntary social and political movements, churches, banks, mining companies, electronic commerce ventures, etc. For example, churches are usually much more similar to each other than any of them is to a mining company. Within a an organizational type, there can be significantly different organizational identity, the basis for distinguishing between organizational forms.
organizational valuationSource: Carroll & Hannan, 2000, 70-71 Organizational valuation is related to organizational forms and organizational populations. A firm exists only as long as it has value in its ecosystem. Organizations and other corporate actors face evaluation by members, particular external constituencies, and the society at large. The various kinds of evaluators might have different perspectives and impose different, perhaps conflicting, demands. The more positive the (aggregate) evaluations of an identity, the more resources will be available for the organizations with that identity. Valuation judgments are made both by insiders and outsiders. Members decide how much loyalty to give to an organization, constituencies decide whether to engage in transactions with the organization and whether to support it in disputes, and so forth. To represent this abstract content, we specify two evaluation functions, one pertaining to the judgments of ""insiders"" (members of the organization) and one pertaining to ""outsiders."" Valuation involves all sorts of social reactions to organizations based upon their identities. For instance, valuation can involve judgments by members about whether an organization has remained faithful to its traditions and culture. Valuation can also mean general social approval by controllers of resources, the belief that organizations possessing a certain identity are valid organizations deserving of support. Valuation can also mean the literal calculation of pecuniary value in the sense that investors in stock markets explicitly or implicitly make calculations of the expected value of films. When these expectations take form of organization into account, then the process bears on the definition of identities. Valuations of features can change over time, as new practices emerge, technologies evolve, and cultural and political views shift. In this context, we must address the volatility of the evaluations of identities. If big changes in the evaluation of an identity can take place instantaneously, then evaluations of identities do not serve as a basis for potentially stable social identities. So, we make the seemingly reasonable assumption that valuation functions change smoothly over brief intervals, that the views that underlie evaluations do not change sharply and discontinuously.
organizationsThe subject is organizations; The verb is organizing. (Scott & Davis, 2007) The basic raw materials on which organizations operate are informational inputs that are ambiguous, uncertain, equivocal. Whether the information is embedded in tangible raw materials, recalcitrant customers, assigned tasks, or union demands, there are many possibilities or sets of outcomes that might occur. Organizing serves to narrow the range of possibilities, to reduce the number of ""might occurs."" The activities of organizing are directed toward the establishment of a workable level of certainty. An organization attempts to transform equivocal information into a degree of unequivocality with which it can work and to which it is accustomed. (Weick, 1979, pg 6). Compare with business. See organizing and organization for more on what organizations are and how/why they come about. Danger in the reification of organizations -- Organizations are, while people act. To attribute organizations with acts confuses what an organization truly is. Organization is connecting episodes of social interaction (Weick, 1979, 45). Think of organizations using verbs, not nouns, in order to bring attention to the collective actions that make an organization. Don't anthropomorphize the organization and lose sight of the people doing the acting. People act, organizations are. Organizations' place in the creative-destruction cosmos -- The creative-destruction cosmos encompasses all that business leaders need concern themselves about in seeking competitive advantage. From the conceptual elements of the definition of strategic management comes elements of this cosmos -- advantageous performance, business-organizations, strategy, environment, management, internal organization, and resources. Human organizations are the means to carry out a business. (Stanley M. Davis, Future Perfect, Addison Wesley,1987). Organizations, despite their apparent preoccupation with facts, numbers, objectivity, concreteness, and accountability, are in fact saturated with subjectivity, abstraction, guesses, making do, invention, and arbitrariness...just like the rest of us. Much of what troubles organizations is of their own making. (Weick, 1979, pp 5). ...organizations are often reluctant to admit that a good deal of their activity consists of reconstructing plausible histories after-the-fact to explain where they are now, even though no such history actually got them to precisely this place. ""How can I know what I think until I see what I say?"" (Weick, 1979, pp 5). In every case of organizing, there is a shard sense of appropriate procedures and appropriate interpretations, an assemblage of behaviors distributed among two or more people, and a puzzle to be worked on. The conjunction of these procedures, interpretations, behaviors, and puzzles describes what organizing does and what an organization is. (Weick, 1979, pp 4). Definition -- ""Organizations are ""structures of mutual expectation, attached to roles which define what each of its members shall expect from others and from himself"" (Vickers 1967, pp. 109-10) in Weick, 1979, pp 3. Definition -- ""An organization is 'an identifiable social entity pursuing multiple objectives through the coordinated activities and relations among members and objects. Such a social system is open-ended and dependent for survival on other individuals and sub-systems in the larger entity -- society'"" (Hunt, 1972, p. 4) in Weick, 1979, pp 3. Definition -- Organizational confusion as an indicator of validity is a crucial nuance because many of the ways of thinking about organizing portray organizations as superimposed structures. This imagery implies that there is not an underlying ""reality"" waiting to be discovered. Rather, organizations are viewed as the inventions of people, inventions superimposed on flows of experience and momentarily imposing some order on these streams. In the process, many portions of the streams of experience will remain unorganized, and those portions temporarily organizes by imposed ideologies will remain equivocal. These enduring equivocalities should be detected by scrupulous observers, but since that which is noticed is partially indescribable and partially incomprehensible, the efforts at description will appear flawed. Such are the dilemmas that face those who choose as their topics of interest phenomena that are complex, fluid, collective. Weick, 1979, pp 12-13. Definition -- ""Organizations are goal directed, boundary-maintaining, and socially constructed systems of human activities."" (Aldrich, Howard, (1979), Organizations and Environments, Englewood Cliffs, NJ: Prentice-Hall) Organizations are designed and built for a purpose An organization's goals provide a force that motivates action There are collective goals and activity coordination They distinguish between members and non-members Organizations have activity systems for accomplishing work Organizations are open thermodynamic systems whose goal it is to produce lower entropy inside the organization relative to the outside environment Definition -- Decision opportunities are fundamentally ambiguous stimuli. Although organizations can often be viewed conveniently as vehicles for solving well-defined problems or structures within which conflict is resolved through bargaining, they also provides sets of procedures through which participants arrive at an interpretation of what they are doing and what they have done while in the process of doing it. From this point of view, an organization is a collection of choices looking for problems, issues and feelings looking for decision situations in which they might be aired, solutions looking for issues to which they might be the answer and decision makers looking for work. (Cohen, March, and Olsen, 1972, pp 2). See garbage can decision process. Some elements of organizing - properties of organizations (Weick, 1979, pp 13) -- Equivocal information triggers organizing. Efforts to stabilize meanings for equivocal displays typically involve the efforts of two or more people. Most efforts at sensemaking involve interpretation of previous happenings and of writing plausible histories that link these previous happenings with current outcomes. Interdependencies among people are the substance of organizations, but these interdependencies are fluid and shifting. Organizations have a major hand in creating the realities which they then view as ""facts"" to which they must accommodate. An ambivalent stance with respect to ""lessons of experience"" is a major way in which organizations preserve some adaptability to cope with changed contingencies. Events in organizations are held together and regulated by dense, circular, lengthy strands of causality perceived by members. Networks of self-regulating causal links are realized in the form of coordinated behaviors between two or more people. Organizations frequently use only parts of persons, and those portions used vary in the ease with which they can be replaced. Most policies within organizations have both internal and external consequences, whether intended or not, and these consequences may work in opposite directions. There is ambivalence within organizations toward being open and closed and toward being suspicious and trusting. Subordinates ultimately determine the amount of influence exerted by those who lead. (pg 16) Control is made possible by the pattern of alliances that exists. (pp 16-17) Organizations levels explain functioning in organizations. Flat organizations offer more autonomy, members' feeling of freedom vs. coercion, easier effective communication, and relies on the formation of informal organization, the interaction patterns that develop in addition to those that are formally prescribed by lines of authority. (pg 17) The reason for organizing may only become apparent after the organization is formed. The notion of a social contract is implicit in organization membership. It specifies why members consent to join and remain in organizations. Individual members consent to be governed; in return, some smaller body agrees to govern in a beneficent manner. (pp 18-19). Organizations engage in problem solving, describes as localized problem solving. (pp 20-21) Environments are the outcome of organizing. (pg 22) The creation of actors within the organization is an outcome of organizing. (pg 22) Technology is relevant solely for the information is provides the organizational members and for the effects it has on equivocality. (pg 22). Organization classifications -- organizations can be classified many ways. See industry for the economist's view of organization classification. See populations of organizations for the organizational ecologist's view. Organizations and organisms -- organizations are often compared to organisms. Though this analogy can provide some insights, it can also be very misleading. See organisms for the way organizations and organisms are different. See media for a discussion of how organizations are the most significant media of our time. See organizational theory further discussion of organizations and views of organizations. See organization, causality, and teleology for discussion of the phenomenon of organization.
organizeTo organize is to assemble ongoing interdependent actions into sensible (readily perceived, showing reason) sequences that generate sensible outcomes. (Weick, 1979, pg 3)
organizingThe subject is organizations; The verb is organizing. (Scott & Davis, 2007) From Karl E. Weick (Weick, 1979, pg 3 - 4) --Organizing is a consensually validated grammar for reducing equivocality (ambiguity) by means of sensible (readily perceived, showing reason) interlocked (united, closely joined) behaviors. Organizing is first of all grounded in agreements concerning what is real and illusory, a grounding called consensual validation. ""...consensual validation seems to be ""common sense"" of a high order -- the things people agree upon because their common sensual apparatus and deeply common interpersonal experiences make them seem objectively so. It is a critical and cautious term for the ""reality"" so often used by other psychological schools (Munroe 1955, p 356, f.n.)."" The important issues of consensus in organizing concern rules for building social processes out of behaviors and interpretations that can be imposed on the puzzling inputs to these processes. Organizing is like a grammar in the sense that it is a systematic account of some rules and conventions by which sets of interlocking behaviors are assembles to form social processes that are intelligible to actors. It is also a grammar in the sense that it consists of rules for forming variables and causal linkages into meaningful structures that summarize the recent experience of the people who are organized. The grammar consists of of recipes for getting things done when one person alone can't do them and recipes for interpreting what has been done. The substance of organizing, the raw material that supplies the stable elements for the grammar, is interlocking behaviors (Buckley, 1967, chpt. 4). This interlocking is circular. In every case of organizing, there is a shared sense of appropriate procedures and appropriate interpretations, an assemblage of behaviors distributed among two or more people, and a puzzle to be worked on. The conjunction of these procedures, interpretations, behaviors, and puzzles describes what organizing does and what an organization is. (Weick, 1979, pp 4).  Elements of organizing -- see organizations subtopic ""properties of organizations.""
organizing processSource: Weick, 1979, pp 130 - 133 The four elements of organizing are ecological change, enactment, selection, retention. ecological change - ecological changes provide the enactable environment, the raw materials for sense-making. enactment - enactment is to organizing what variation is to natural selection. The term enactment captures the more active role we presume organizational members play in creating the environments which then impose on them. Enactment is the only process where the organism directly engages an external ""environment."" The activity of enactment parallels variation because it produces strange displays that are often unlike anything that the individual or the organization has seen before (novelty). Enactment is an action that produces equivocality (ambiguity due to the possibility of multiple meanings). These actions produce the raw materials which can then be made sensible. Enactment produces the occurrence that can then be made sensible by the selection process. Sense is made of previous actions, retrospective sense making. Some degree of unjustified variation is necessary to produce true novelty. selection -- selection involves the imposition of various structures on enacted equivocal displays in an attempt to reduce their equivocality. The selection process typically attempts to utilize existing retained cause maps or frameworks built from past experience. If what is retained fails to reduce equivocality of the enacted displays, it is time to discover a cause map that does reduce equivocality, i.e. make-sense of enacted displays. retention -- retention involves relatively straightforward storage of the products of successful sense-making, products that we call enacted environments. An enacted environment is a punctuated and connected summary of a previously equivocal display. It is a sensible version of what the equivocality was about, although other versions could have been constructed. The terms enacted environment and cause map refer to retained content. The label enacted environment emphasizes that meaningful environments are outputs of organizing, not inputs to it. Environments are created out of puzzling surroundings and these meaningful environments emerge quite late in the organizing process. Prior to enactment and an environment emerging from the selection process, organizing processes are directed at externalities that may or may not become environments. The label cause map is a second means to characterize retained content to emphasizing maps of retained content consisting of variables connected by causal relationships.
paradox"" The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function."" -- F. Scott Fitzgerald. (F. Scott Fitzgerald, ""The Crack-Up,"" in American Literary Masters, vol. 2, ed. Charles R. Anderson, New York: Holt, Rinehart and Winston, 1965, p. 1007) Paradox is ... The simultaneous existence of two contradictory ideas A seemingly contradictory statement that may nonetheless be true An assertion that is essentially self-contradictory, though based on a valid deduction from acceptable premises Conflicting opposites simultaneously existing without being resolved. The genuine simultaneous coexistence of two contradictory movements -- such as stability and instability at the same time. Kant, like Aristotle, believed that paradox was a sign of faulty thinking. Kant used the notion of dualism to eliminate the contradictions between the realists and the radical skeptics See strategy for an explanation of dynamic phenomena pertinent to strategy and organizational change. Strategic management and views of opposing ideas -- See dichotomy for a comparison of dualism, dichotomy, paradox, and reconciliation and their implications for approaching strategic management.
paradox thinkingAn ongoing process of balancing conflicting priorities. This becomes especially important with thre increasing scope and complexity of business organizations. Contrast paradox thinking with problem solving. Paradox thinking compares to problem dissolution where the higher order solution is found vs. an either-or solution.
part-whole thinkingThis type of thinking derives from Newtonian physics and the scientific method. It is a a reductionist approach in that it is believed that an understanding of the parts leads to an understanding of the whole. This type of thinking incorporated into an approach to management focuses on understanding and managing the parts of the whole of he organization as the key to effective management. Part-whole thinking is at the core of analytical thinking.
passionPassion is one of the most essential elements of a business organization that sustains its advantage. Passion, a passion for a purpose, generates enthusiasm, energy, and focus that overcomes obstacles and bears the trauma of novelty creation and the organization transformation needed to sustain an advantage.
path dependencePath dependence is a concept related to complexity theory that recognizes that where you are going, or able to go, depends on where you have been. The economy and business organizations are nonlinear dynamic systems. Nonlinearities cause small differences in initial conditions to be magnified over time. Nonlinear dynamic systems are path dependent. Where they have been in the past determines where they can go in the future. History matters in making decisions. The history of the business organization has shaped its chosen purpose, values, value of offerings, competencies, culture, its value system and perception in the market. As such, the future choices are both constrained by and enable by the past decisions and results. In a dynamic world calling for radical innovation, requiring healthy exploration to create new exploitation opportunities, it is not enough to simply continue blindly down the current path. Decision makers must take actions to explore future possibilities while being respectful of the history of the organization. Path-dependency, lock-in, and dynamic capabilities (Source: Schreyögg, 2007) -- Path dependency means first of all that 'history matters' (David, 1985), i.e., that a company's current and future decisions capabilities are imprinted by past decisions and their underlying patterns (Arthur, 1989; Cowan and Gunby, 1996). In many cases, path dependency means more than mere historical imprinting: it refers to forceful dynamics called 'increasing returns' (Arthur, 1983). That is, once successful combinatorial activities generate positive feedback loops, thereby emergently constituting self-reinforcing processes. Empirical studies show that such self-reinforcing processes may establish strategic paths which are prone to dramatically narrowing the scope of strategic management. In the worst case, a specific orientation becomes locked, i.e., any other alternative is excluded.
perennial philosophy The notion of perennial philosophy (Latin: philosophia perennis) suggests the existence of a universal set of truths and values common to all peoples and cultures. The term was first used in the 16th century by Augostino Steuco According to the tenets of the perennial philosophy, people in many cultures and eras have experienced and recorded comparable perceptions about the nature of reality, the self, the world, and the meaning and purpose of existence. These similarities point to underlying universal principles, forming the common ground of most religions. Differences among these fundamental perceptions arise from differences in human cultures and can be explained in light of such cultural conditioning. Among these perceptions are the following assertions: The physical or phenomenal world is not the only reality; another non-physical reality exists. The material world is the shadow of a higher reality which cannot be grasped by the senses, but the human spirit and intellect bear testimony to it in their essence. Humans mirror the nature of this two-sided reality: while the material body is subject to the physical laws of birth and death, the other aspect of human existence is not subject to decay or loss, and is identical to the intellect or spirit, which is the sine qua non of the human soul. In the modern West, this second or other reality has been frequently discounted or ignored. All humans possess a capacity, however unused and thus atrophied, for intuitive perceptions of ultimate or absolute truth, and the nature of reality. This perception is the final goal of human beings, and its pursuit and flourishing are the purpose of their existence. The major religions try to (re)establish the link between the human soul and this higher and ultimate reality. This ultimate reality, in the Abrahamic religions (Judaism, Christianity and Islam), is called God; God is the Absolute principle from which all existence originated and to which all existence will return. Non-theistic religions, such as Buddhism, Jainism, and Taoism, may characterize the ultimate or absolute somewhat differently than the Abrahamic religions, but the fundamental concept is the same. These worldwide perceptions are thought to be amendable with one another and reliable in themselves because of their internal consistency and due to the similarities among them, in spite of their often independent origins. According to Huxley, the perennial philosophy is: ""the metaphysic that recognizes a divine Reality substantial to the world of things and lives and minds; the psychology that finds in the soul something similar to, or even identical with, divine Reality; the ethic that places man's final end in the knowledge of the immanent and transcendent Ground of all being; the thing is immemorial and universal. Rudiments of the perennial philosophy may be found among the traditional lore of primitive peoples in every region of the world, and in its fully developed forms it has a place in every one of the higher religions"" (The Perennial Philosophy, p. vii). Wikipedia contributors, ""Perennial philosophy,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Perennial_philosophy&oldid=104562819 (accessed February 1, 2007).
performance measurement-- add in here, what are effective performance measures, how are they formed, what purpose do they serve, etc. -- See enterprise value for a discussion of enterprise valuation. See ""Measuring competitive advantage"" in competitive advantage for performance measures related to competitive advantage.
perspectiveA perspective is a point of view. Multiple points of view are essential to effective systems thinking. The more perspectives one has of a complex system, the greater one's understanding of that system. Perspectives have no basis in values per se. There may be perspectives that are useful or not useful, but not wrong. 'Perspective' and 'aspect' are used interchangeably here. See aspect for a more complete discussion of perspective/aspect. Management application -- The development of more perspectives enriches the mental models of decision makers.
phenomenaSee phenomenon.
phenomenalThe appearance of reality to people in the form of sensations, as opposed to reality itself, the noumenal. Kant argued that people can never know reality in itself, the noumenal, but only the appearance of reality as sensation, the phenomenal. (Stacey, 2003, pp 20).
phenomenonphenomenon (singular), phenomena (plural) A fact, occurrence, or circumstance observed or observable. Phenomenon, as related to Kantianism, refers to human perception of things, as opposed to their true existence -- noumenon. Empirical knowledge conveys information that shapes perceptions. Human observers do not simply perceive the world as it is but impose an intuitive structure. For example, the human observer imposes concepts of time and space on things, though time and space are not intrinsic properties of the world but were created in the mind of the human observer. Types of phenomena -- The world is composed of physical, social, and mental phenomena. These phenomena cannot all be explained in the same terms. Categories into which we carve up the world are not simply naturally given but also historically construed. A historical perspective of phenomena -- The categories of 'human', 'animate being', and 'inanimate thing' are, to a certain extent, fluid and shaped by historical and social developments. The same must be true of the categories 'physical', 'social', and 'mental.' For example, 'mental' is specifically a Cartesian concept from when Descartes cleaved the world into the physical and mental, he also defined the mental in a new way. The Cartesian mind brings together phenomena such as thoughts and beliefs (which have an external reference but no phenomenal quality) with feelings such as pain or joy (which have no reference but only ineffable (inexpressible) quality, which we call subjectivity). Within Greek philosophy, which dominated prior to Descartes, he key division was not between mind and body but between reason which existed in the structure of the world, and the living body, which included perception and sensation - what we now consider to be part of 'mind.' With crumbling of Aristotelian philosophy, Descartes had to repackage the various items the Greeks had separated, and he did so around the notion of 'indubitability' - I am certain of nothing but the contents of my mind. (Malik, 2000, pp 342). Human reason is the source of the intuitive structures imposed on the world. Source: Malik, 2000, pp 72 See noumenon.
philosophersA chronological list of philosophers and philosophical thought with major eras or periods of time demarcating the largely philosophical periods of history. Classical antiquity era, or period (8th or7th century BC - 5th century AD) -- a long period of cultural history centered on the Mediterranean Sea, which begins roughly with the earliest-recorded Greek poetry of Homer (8th-7th century BC), and continues through the rise of Christianity and the fall of the Western Roman Empire (5th century AD), ending in the dissolution of classical culture with the close of Late Antiquity (300-600 AD), or the similar and better known periodization of history, the Early Middle Ages (500-1100 AD). Wikipedia contributors, ""Classical antiquity,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Classical_antiquity&oldid=102490872 (accessed January 31, 2007). Homer (8th or 7th century BC) - not necessarily a philosopher, but his writings demarcate the beginning of Classical Antiquity era, or period. From a philosophical perspective of the examination of 'self', it is interesting to note that in his works, the Iliad and Odyssey, revealed little conception of self as a single entity within the body. Homer rarely refers to the internal mental state of his heroes, or to their sense of self or identity. Equally, there is an absence of ideas such as 'mind', 'soul' or 'consciousness.' The Homeric psyche seems to designate a life-force within us - a life-force not unique to humans, or even animals, but something possessed even by trees and magnets - rather than the place at which thinking and feeling occurs. (Malik, 2000, pp 43) Socrates (470 - 399 BC) - widely credited for laying the foundation for Western philosophy. Plato's teacher. Perhaps his most important contribution to Western thought is his dialectic (answering a question with a question) method of inquiry, known as the Socratic Method or method of elenchos, which he largely applied to the examination of key moral concepts such as the Good and Justice. It was first described by Plato in the Socratic Dialogues. For this, Socrates is customarily regarded as the father of political philosophy and ethics or moral philosophy, and as a fountainhead of all the main themes in Western philosophy in general. Wikipedia contributors, ""Socrates,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Socrates&oldid=104415037 (accessed January 31, 2007). Plato (428 - 348 BC) - a unified soul is a single locus of all our thinking and feeling. Thought referred to both an internal process by which humans come to understand the world AND to the external order of things which must be understood. The process of thinking was the process of coming to realize the rational order that exists in the world. There is no modern concept of self and the distinction between the inner self and outer world. (Malik, 2000, pp 43 - 44). Aristotle (384 - 322 BC) - Same a Plato, thought referred to both an internal process by which humans come to understand the world AND to the external order of things which must be understood. 'Actual knowledge is identical to its object' - Aristotle. Ideas are not representations of the world confined to the mind, but are located in the world iteself. There is no modern concept of self and the distinction between the inner self and outer world. (Malik, 2000, pp 43 - 44). Middle Ages (500 - 1500s AD) -- The Pax Romana, with its accompanying benefits of safe conditions for trade and manufacture, and a unified cultural and educational milieu of far-ranging connections, had already been in decline for some time as the 5th century drew to a close. Now it was largely lost, to be replaced by the rule of local potentates with a dramatic change in economic and social linkages and infrastructure. Black Death (1348 -1350) - the plague kills one-third to two-thirds of the people of Europe. Renaissance (1300s - 1500s) -- The principal features were the revival of learning based on classical sources, the rise of courtly and papal patronage, the development of perspective in painting, and the advancements of science. Wikipedia contributors, ""Renaissance,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Renaissance&oldid=104480823 (accessed January 31, 2007). Early Modern Period (1500s - late 1700s) -- a term used by historians to refer to the period in Western Europe and its first colonies which spans the time between the Middle Ages and the Industrial Revolution that has created modern society. The early modern period is characterized by the rise to importance of science and increasingly rapid technological progress, secularized civic politics and the nation state. Capitalist economies began their rise, beginning in northern Italian republics such as Genoa. The early modern period also saw the rise and dominance of the economic theory of mercantilism. As such, the early modern period represents the decline and eventual disappearance, in much of the European sphere, of Christian theocracy, feudalism and serfdom. Wikipedia contributors, ""Early modern Europe,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Early_modern_Europe&oldid=102322833 (accessed January 31, 2007). Reformation (1300s - 1530 ) -- Starting with Wycliffe's proposing reform in the Roman Catholic Church, through Luther's publication of 95 Theses... in 1517, to the formation of a church separate from Rome in 1530. His original intention was not schism, but with the Reichstag of Augsburg (1530) and its rejection of the Lutheran ""Augsburg Confession,"" a separate Lutheran church finally emerged. Reformation's principal arguments were based on ""direct"" Biblical interpretation. The Roman Catholic Church had for several centuries been the main purveyor in Europe of non-secular humanism: the neo-Platonism of the scholastics and the neo-Aristotelianism of Thomas Aquinas and his followers had made humanism a part of Church dogma. This was of course due to the Catholic Church's use of historic, religious tradition (including the Canonization of Saints) in the forming of its liturgy. Thus, when Luther and the other reformers adopted the standard of sola scriptura, making the Bible the sole measure of theology, they made the Reformation a reaction against the humanism of that time. Previously, the Scriptures had been seen as the pinnacle of a hierarchy of sacred texts. The Protestants emphasized such concepts as salvation by ""faith alone"" (not faith and good works or infused righteousness), ""Scripture alone"" (the Bible as the sole rule of faith, rather than the Bible plus Tradition), ""the priesthood of all believers"" (eschewing the special authority and power of the Roman Catholic sacramental priesthood), that all people are individually responsible for their status before God such that talk of mediation through any but Christ alone is unbiblical. Because they saw these teachings as stemming from the Bible, they encouraged publication of the Bible in the common language and universal education. Humanism's intellectual anti-clericalism would profoundly influence Luther. The increasingly well-educated middle sectors of Northern Germany, namely the educated community and city dwellers would turn to Luther's rethinking of religion to conceptualize their discontent according to the cultural medium of the era. The great rise of the burghers, the desire to run their new businesses free of institutional barriers or outmoded cultural practices, contributed to the appeal of humanist individualism. Wikipedia contributors, ""Protestant Reformation,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Protestant_Reformation&oldid=104215032 (accessed January 31, 2007). Nicolaus Copernicus (1473-1543) -- in 1543 argued for the heliocentric theory of the solar system. Scientific Revolution (1543 or earlier - around 1800)-- a period of fundamental transformation in scientific ideas in physics, astronomy, biology, in institutions supporting scientific investigation, and in the more widely held view of the universe. Sir Francis Bacon (1561-1626) -- penned inductive reasoning, proceeding from observation and experimentation. See induction. Galileo Galilei (1564 - 1642) -- an Italian physicist, astronomer, astrologer, and philosopher who is closely associated with the scientific revolution. His achievements include improvements to the telescope, a variety of astronomical observations, and effective support for Copernicanism. According to Stephen Hawking, Galileo probably contributed more to the creation of the modern natural sciences than anybody else. He is often referred to as the ""father of modern astronomy,"" as the ""father of modern physics"", and as the ""father of science"". The work of Galileo is considered to be a significant break from that of Aristotle. The motion of uniformly accelerated objects, treated in nearly all high school and introductory college physics courses, was studied by Galileo as the subject of kinematics. Wikipedia contributors, ""Galileo Galilei,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Galileo_Galilei&oldid=104251203 (accessed January 31, 2007). Johannes Kepler (1571-1630) -- published the first two of his three laws of planetary motion in 1609. Thomas Hobbes (1588-1679) -- ...ridiculed the Aristotelian notion that 'stones and metal had a desire, or could discern he place they would be at, as man does.' (Malik, 2000, pp 322) Age of Reason, (1600s) -- separate from the Age of Enlightenment, refers to 17th-century philosophy, a successor of the Renaissance and a predecessor to the Age of Enlightenment. René Descartes (1596 - 1650) - 'I think, therefore I am' - established 'first person privilege', drawing a distinction between the inner world of the mind and the outer world of reality. To know reality is to have a correct representation of things, a correct picture within of outer reality. Man is also imbued with innate ideas from birth. Descartes proposed a humanist view of man. (Malik, 2000, pp ) See humanism. Descartes, like Bacon, sought to find a way through the skepticism of Renaissance scholarship to establish a new basis on which to found objective knowledge. Descartes method is based on four precepts - to accept nothing as true which I clearly did not recognize to be so to divide up each of the difficulties which I examined into as many parts as possible to carry on my reflections in due order, commencing with the objects that were most simple and easy to understand, in order to rise, little by little, or by degrees, to knowledge of the most complex to make enumerations so complete and reviews so general that I should be certain of having omitted nothing In an age in which reason meant solely arguing from ancient texts, Descartes' approach was indeed revolutionary. His commitment to arguing from first principles came to be called rationalism. Descartes proposed the metaphysical system of dualism - there are two kinds of substance, matter and mind. Everything that is ""matter"" is deterministic (see determinism), belonging to natural philosophy, and everything that is ""mind"" is volitional and non-natural, and falls outside the philosophy of nature. Wikipedia contributors, ""Natural philosophy,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Natural_philosophy&oldid=104427688 (accessed January 31, 2007). Descartes pioneered deductive reasoning. See deduction. The work of René Descartes, who set much of the agenda as well as much of the methodology for those who came after him. Wikipedia contributors, ""17th-century philosophy,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=17th-century_philosophy&oldid=104315302 (accessed January 31, 2007). Robert Boyle (1627 - 1691) -- an Irish natural philosopher, chemist, physicist, inventor, and early gentleman scientist, noted for his work in physics and chemistry. Although his research and personal philosophy clearly has its roots in the alchemical tradition, he is largely regarded today as the first modern chemist. Among his works, The Sceptical Chymist is seen as a cornerstone book in the field of chemistry. Boyle's law, the discovery of the part taken by air in the propagation of sound. Boyle's great merit as a scientific investigator is that he carried out the principles which Francis Bacon preached in the Novum Organum. Wikipedia contributors, ""Robert Boyle,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Robert_Boyle&oldid=103276508 (accessed January 31, 2007). John Locke (1632 - 1704) - who more than any other philosopher kick-started the process of viewing the mind as an object. Locke suggested that human irrationality was the product of erroneous association of ideas, which became fixed in childhood. Human progress could be managed through managing experiences and education to produce better human beings. Locke created metaphysics, almost as Newton created physics, reducing metaphysics to the experimental physics of the soul. Locke's work allowed philosophers to replace revelation with knowledge as the basis for moral conduct. Locke rejected the Cartesian notions of innate ideas, the belief that 'Characters ... are stamped on the Mind of Man, which the Soul receives in its very first Being.' Locke pictured the mind as a white paper, void of all characters and ideas, upon which experience writes. (Malik, 2000, pp 51, 66, 64-65). Sir Issac Newton (1643 - 1727) -- an English physicist, mathematician, astronomer, alchemist, and natural philosopher, regarded by many as the greatest figure in the history of science.[2] His treatise Philosophiae Naturalis Principia Mathematica, published in 1687, described universal gravitation and the three laws of motion, laying the groundwork for classical mechanics. By deriving Kepler's laws of planetary motion from this system, he was the first to show that the motion of objects on Earth and of celestial bodies are governed by the same set of natural laws. The unifying and predictive power of his laws was integral to the scientific revolution, the advancement of heliocentrism, and the broader acceptance of the notion that rational investigation can reveal the inner workings of nature. Enlightenment philosophers chose a short history of scientific predecessors-Galileo, Boyle, and Newton principally-as the guides and guarantors of their applications of the singular concept of Nature and Natural Law to every physical and social field of the day. In this respect, the lessons of history and the social structures built upon it could be discarded. It was Newton's conception of the universe based upon Natural and rationally understandable laws that became the seed for Enlightenment ideology. Locke and Voltaire applied concepts of Natural Law to political systems advocating intrinsic rights; the physiocrats and Adam Smith applied Natural conceptions of psychology and self-interest to economic systems... Source: Wikipedia contributors, ""Isaac Newton,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Isaac_Newton&oldid=103820841 (accessed January 31, 2007). The Age of Enlightenment - 1700s - philosophers, inspired by the natural philosophy of the 1600s, especially Newton's kinematics, argued that the same kind of systematic thinking could apply to all forms of human activity. Kant defined the Enlightenment, in the essay ""Answering the Question: What is Enlightenment?"", as an age shaped by the motto, ""Dare to know."" Industrial Revolution (late 1700s - 1840s) -- a major shift of technological, socioeconomic, and cultural conditions in the late 18th and early 19th century that began in Britain and spread throughout the world. During that time, an economy based on manual labour was replaced by one dominated by industry and the manufacture of machinery. It began with the mechanisation of the textile industries, the development of iron-making techniques and the increased use of refined coal. Trade expansion was enabled by the introduction of canals, improved roads and railways. The introduction of steam power (fuelled primarily by coal) and powered machinery (mainly in textile manufacturing) underpinned the dramatic increases in production capacity.[1] The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. Wikipedia contributors, ""Industrial Revolution,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Industrial_Revolution&oldid=104480355 (accessed January 31, 2007). David Hartley (1705 - 1757) -- His principal work Observations on Man, his Frame, his Duty, and his Expectations was published in 1749, three years after Condillac's Essai sur l'origine des connaissances humaines, in which similar theories were expounded. It is in two parts--the first dealing with the frame of the human body and mind, and their mutual connections and influences, the second with the duty and expectations of mankind. His two main theories are the doctrine of vibrations and the doctrine of associations. Doctrine of vibrations -- Hartley's physical theory gave birth to the modern study of the intimate connection of physiological and psychical facts, though his physical theory in itself is inadequate. He believed that sensation is the result of a vibration of the minute particles of the medullary substance of the nerves, to account for which he postulated, with Newton, a subtle elastic ether, rare in the interstices of solid bodies and in their close neighbourhood, and denser as it recedes from them. Pleasure is the result of moderate vibrations, pain of vibrations so violent as to break the continuity of the nerves. These vibrations leave behind them in the brain a tendency to fainter vibrations or ""vibratiuncles"" of a similar kind, which correspond to ""ideas of sensation."" This accounts for memory. Bolding added to the original text. Doctrine of associations -- The course of reminiscence and of the thoughts generally, when not immediately dependent upon external sensation, is accounted for by the idea that there are always vibrations in the brain on account of its heat and the pulsation of its arteries. The nature of these vibrations is determined by each man's past experience (path dependence), and by the circumstances of the moment (context), which causes one or another tendency to prevail over the rest. Sensations which are often associated together become each associated with the ideas corresponding to the others; and the ideas corresponding to the associated sensations become associated together, sometimes so intimately that they form what appears to be a new simple idea, not without careful analysis resolvable into its component parts. Words in parentheses and bolding added to the original text. Free will -- Starting from a detailed account of the phenomena of the senses, Hartley tried to show how, by the above laws, all the emotions, which he analyses with considerable skill, may be explained. Locke's phrase ""association of ideas"" is employed throughout, ""idea"" being taken as including every mental state but sensation. He emphatically asserts the existence of pure disinterested sentiment, while declaring it to be a growth from the self-regarding feelings. Voluntary action is explained as the result of a firm connexion between a motion and a sensation or ""idea,"" and, on the physical side, between an ""ideal"" and a motory vibration. Therefore in the Freewill controversy Hartley took his place as a determinist. It was only with reluctance, and when his speculations were nearly complete, that he came to a conclusion on this subject in accordance with his theory. Wikipedia contributors, 'David Hartley (philosopher)', Wikipedia, The Free Encyclopedia, 5 January 2007, 13:07 UTC, [accessed 31 January 2007] David Hume (1711-1776) -- a Scottish philosopher, economist, and historian. All human reasoning is of two types -- Hume view is that all human reasoning is of two kinds, Relation of Ideas and Matters of Fact. While the former involves abstract concepts like mathematics where deductive certitude presides, the latter involves empirical experience about which all thought is inductive. Now, since according to Hume, we can know nothing about nature prior to its experience, even a rational man with no experience ""could not have inferred from the fluidity and transparency of water that it would suffocate him, or from the light and warmth of fire that it would consume him."" (EHU, 4.1.6) Thus, all we can say, think, or predict about nature must come from prior experience, which lays the foundation for the necessity of induction. Free will and determinism -- Hume went beyond the free will and determinism conflict to note there is a conflict between indeterminism and free will, because with indeterminism your actions are completely random. Thus, free will seems to require determinism, because otherwise, the agent and the action wouldn't be connected in the way required of freely chosen actions. Is-ought problem -- Hume presented a nasty challenge regarding how exactly can you derive an 'ought' from an 'is.' See is-ought problem. Wikipedia contributors, ""David Hume,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=David_Hume&oldid=104434310 (accessed February 1, 2007). Adam Smith (1723 - 1790) -- a Scottish political economist and moral philosopher. His Inquiry into the Nature and Causes of the Wealth of Nations was one of the earliest attempts to study the historical development of industry and commerce in Europe. That work helped to create the modern academic discipline of economics and provided one of the best-known intellectual rationales for free trade, capitalism, and libertarianism. One of the main points of The Wealth of Nations is that the free market, while appearing chaotic and unrestrained, is actually guided to produce the right amount and variety of goods by a so-called ""invisible hand."" Immanuel Kant (1724 - 1804) -- regarded as one of the most influential thinkers of modern Europe and the last major philosopher of the Enlightenment. Kant defined the Enlightenment, in the essay ""Answering the Question: What is Enlightenment?"", as an age shaped by the motto, ""Dare to know"" (latin: Sapere aude). This involved thinking autonomously, free of the dictates of external authority. Kant's work served as a bridge between the Rationalist and Empiricist traditions of the 18th century. He had a decisive impact on the Romantic and German Idealist philosophies of the 19th century. His work has also been a starting point for many 20th century philosophers. Kant asserted that ""All the preparations of reason, therefore, in what may be called pure philosophy, are in reality directed to those three problems only (God, Soul, Freedom). These themselves, however, have a still further object, namely, to know what ought to be done, if the will is free, if there is a God, and if there is a future world. As this concerns our actions with reference to the highest aims of life, we see that the ultimate intention of nature in her wise provision was really, in the constitution of our reason, directed to moral interests only. "" Pierre-Jean Cabanis (1757-1808) - the brain secretes thought as the liver secretes bile (Malik, 2000, pp 50) Georg Wilhelm Friedrich Hegel (1770 - 1831) -- His great achievement was to introduce for the first time in philosophy the idea that History and the concrete are important in getting out of the circle of philosophia perennis,, see perennial philosophy. Also, for the first time in the history of philosophy he realised the importance of the Other in the coming to be of self-consciousness. The Other -- Crucially, for Hegel, self-consciousness cannot come to be without first recognising another self-consciousness. Such an issue in the history of philosophy had never been explored and the conclusion of which, marks a watershed in European philosophy. Innovation in logic -- In response to Immanuel Kant's challenge to the limits of Pure Reason, Hegel developed a radically new form of logic, which he called speculation, and which is today popularly called dialectics. Hegel's dialectically dynamic model of nature and of history made it, as it were, a fundamental aspect of the nature of reality (instead of regarding the contradictions into which dialectics leads as a sign of the sterility of the dialectical method, as Kant tended to do in his Critique of Pure Reason). Freedom -- Since 1990, new aspects of Hegel's philosophy have been published that were not typically seen in the West. One example is the idea that the essence of Hegel's philosophy is the idea of freedom. With the idea of freedom, Hegel attempts to explain world history, fine art, political science, the free thinking that is science, the attainment of spirituality, and the resolution to problems of metaphysics. Wikipedia contributors, ""Georg Wilhelm Friedrich Hegel,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Georg_Wilhelm_Friedrich_Hegel&oldid=103317477 (accessed February 1, 2007). 2nd Industrial Revolution (1850s -into the 1900s) -- when technological and economic progress gained momentum with the development of steam-powered ships, railways, and later in the nineteenth century with the internal combustion engine and electrical power generation. By 1920 innovator Henry Ford, father of the assembly line, stated, ""There is but one rule for the industrialist, and that is: Make the highest quality goods possible at the lowest cost possible, paying the highest wages possible."" It has been argued that GDP per capita was much more stable and progressed at a much slower rate until the Industrial Revolution and the emergence of the modern capitalist economy, and that it has since increased rapidly in capitalist countries. Wikipedia contributors, ""Industrial Revolution,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Industrial_Revolution&oldid=104480355 (accessed January 31, 2007). Charles Robert Darwin (1809 - 1882) -- Darwin's theory of evolution and natural selection offered a new form of causality, change occurring from chance variation. Darwin's theory of evolution makes human beings an integral part of the natural world and suggests a way of resolving the Cartesian conundrum: the human mind is as much a part of the natural world as is the human body. (Malik, 2000, pp 27).
philosophical naturalismSee teleology.
philosophyPhilosophy concerns itself with -- what is the best way to live (ethics), what sorts of things really exist and what are their true natures (metaphysics), what is to count as genuine knowledge (epistemology), and what are the correct principles of reasoning (logic). See ethics, metaphysics, epistemology, and logic. Also, see philosophers for a chronological presentation of the history of philosophy. Fracture of philosophy and science (late 1700s) -- We can understand Man as a being within nature who can be studied by science. But the very act of studying Man in this fashion takes him outside of nature because our capacity to understand nature relies on making a distinction between inert, mechanical nature and active, thinking man. The subject-object distinction and the human-nature cleavage, therefore, are both different ways of expressing the problem of representing the seemingly transcendent aspect of our humanity within a mechanical universe. Unfortunately, very rarely have these two aspects of the same fundamental problem been considered simultaneously. Modern philosophy has concerned itself, rather abstractly, with the problem of the relationship between subject and object. Philosophers have attempted to delineate what can be known of nature construed as 'external' reality, and whether humanity, as the knowing subject, is necessarily distinct from it. Scientists, on the other hand, have concerned themselves with the question of how the empirical knowledge we have of nature can be applied to understanding the specific qualities of Man. The reason for this division of labor lies in the fracture between science and philosophy established towards the end of the eighteenth century. (Malik, 2000, 53) Today we tend to regard science and philosophy as different domains of knowledge and, occasionally, as contradictory domains of knowledge. Science provides objective information about the real world through experiment and analysis, while philosophy provides general, abstract principles about human knowledge and human conduct through the application of reason. For many people, science deals with 'hard facts', while philosophy revels in speculation. In the seventeenth century no such distinction existed. Science and philosophy formed a common endeavour and created a common body of knowledge. Descartes, for instance, believed that human knowledge was a tree, the trunk of which was physics and the root metaphysics. Indeed, in Descartes' day, what we now call science was labelled 'natural philosophy' - the philosophy of nature. Much of what I discuss in this chapter we would today consider not science but philosophy. Not until the mid-eighteenth century did the modern conception of the relationship between science and philosophy begin to emerge. The very success of the scientific method led to the separation of science and philosophy and to the distinction between scientific fact and philosophical speculation. This distinction proved invaluable in developing scientific knowledge, but it also became highly problematic in certain areas, particularly the science of Man. Science allowed scholars to ask new and revolutionary questions about the nature of humanity. At the same time, though, it created new and seemingly intractable dilemmas about what it meant to be human. These dilemmas were deepened by the separation of science and philosophy. The biologist E. 0. Wilson once suggested that 'The history of philosophy consists largely of failed models of the brain.' One might equally say that the history of the science of man consists largely of failed philosophical theories. The separation of science and philosophy meant that scientists exploring the meaning of humanity could remain blind to the philosophical assumptions that animated their work, and at the same time pass off philosophical speculation as scientific fact. The problems of applying the scientific method to understanding Man, problems exacerbated by the separation of science and philosophy, have never been properly resolved. The consequences of this division between science and philosophy have been disastrous. Philosophers (and, following them, social scientists) debate the nature of human subjectivity without considering its rootedness in biology (except in the most superficial way). Natural scientists consider the biological origins of humanity's special qualities without entering into a discussion of human agency (again, except in the most superficial way). The result has been the creation of two mutually hostile camps, one viewing Man from a purely naturalistic viewpoint, the other seeing him as an entirely cultural being. Each is equally one-sided and equally flawed in its attempt to understand what makes us human."" (Malik, 2000, pp 53 - 54).
physical technologySee technology.
planPlans are important to organizations, but not for the reasons people think. Cohen and March (1974) argue that plans are symbols, advertisements, games, and excuses for interaction. (Weick, 1979, pp 10-11) symbols -- plans are symbols in the sense that wen an organization does not know how it is doing or is failing, it can signal a different message to observers. advertisements -- plans are advertisements in the sense that they often are used to attract investors to the firm. games -- plans are games because they often are used to test how serious people are about the programs they advocate. excuses for interaction -- plans become excuses for interaction in the sense that they induce conversations among diverse populations about projects that may have been low-priority items. The interaction may yield immediate positive results, but such outcomes are usually incidental. Much of the power of planning is explained by the people that it puts into contact and the information that these people exchange about current circumstances. When people meet to plan for contingencies five years away, contingencies that rarely materialize, they may modify one another's ideas about what should be done today. But that is about all that can be accomplished. Plans are a pretext under which several valuable activities take place in organizations, but one of those activities is not forecasting.
pluralismPluralism defined -- Philosophy - a theory that there is more than one basic substance or principle and a theory that reality consists of two or more independent elements. Contrast pluralism with monism and dualism. Source: pluralism. Dictionary.com. Dictionary.com Unabridged (v 1.1). Random House, Inc. http://dictionary.reference.com/browse/pluralism (accessed: February 18, 2007). Importance of pluralism to strategy -- Pluralism is at the heart of the dynamic evolution of markets, and as such, becomes a required attribute for the business organization seeking to develop and sustain a competitive advantage. Micro-diversity, at the root of causality of self-organizing systems, is pluralism. See self-organization. Disciplined pluralism - John Kay -- ""Disciplined pluralism is the process of perpetual experiment in market economies, in which most experiments fail and are terminated, but the few that succeed are quickly imitated. Disciplined pluralism diffuses authority and exploits local knowledge."" (Kay, 2004, pp 18) The important distinction between pluralism and monism or monolithic control is between centralized and decentralized decision making. ""The combination of moral rigor and free inquiry is the basis of disciplined pluralism - the defining characteristic of a market economy."" (Kay, 2004, pp 56). Recognizing the superiority of free markets' ability to create leads to the understanding, which is deeply counterintuitive, that disorganization is superior to organization. The genius of markets is that they are not dependent on the genius of an individual. (Kay, 2004, pp 19)
police cultureSource and adaptation from: Richard A. Posner, Remaking Domestic Intelligence, Hoover Institute, Sep 8, 2005 accessible at http://www.hooverpress.org/productdetails.cfm?PC=1112 and Posner's adaptation at http://www.freedomsadvocate.com/Research/Intelligence%20&%20Interrogation/Richard%20Posner-HD%20-%20The%20Job%20the%20FBI%20Cant%20Do%20-%202006.pdf retrieved 4Apr2008 -- ""Criminal investigation is case-oriented, backward-looking, information-hugging and fastidious (for fear of wrecking a prosecution). Intelligence, in contrast, is forward-looking, threat- rather than case-oriented and free-wheeling."" Criminal investigation is case oriented, backward looking, information hugging, and fastidious. Intelligence, in contrast, is forward looking, threat oriented rather than case oriented, and freewheeling. Criminal law enforcement is oriented toward punishment, but punishment cannot undo the consequences of a catastrophic attack. Good police officers learn to think like criminals; good intelligence officers learn to think like terrorists and spies. The hunter must be empathetic with his quarry to catch him, but cops and spies have different quarry. The two worlds of law enforcement and intelligence don't fit comfortably together in the same agency-let alone in the same individual. An agency that is not responsible for bringing criminals to justice can concentrate full time on pursuing terrorists without any of the distractions created by the complex demands of criminal justice. Because of the gravity of threats to national security, intelligence officers must track down any lead, however implausible, that might point to an attack that would endanger national security. Chasing such will-o'-the-wisps is simply alien to the police mentality.
policyPolicy, an accordion word, which applies to determining payment for overtime at one extreme to the position of a firm in its markets at the other. (Andrews, 1987, pp xii). See business policy. Delineating between policy, strategy, resources, and tactics (Davies, Warnock, (2000), Understanding Strategy, Strategy & Leadership, 28, 5) -- Strategy can be best understood if it is viewed as an element of a troika that includes policy, strategy, and resources (the PSR Troika). It also helps to focus on two aspects of strategy: the causal relationship between strategy and the other elements of the PSR Troika; and the plurality of inputs, options, and outcomes that characterize strategy. Policy -- Policy is from the word for the Greek city-state, polis. In government, policy is the product of a legislature that delineates the goals, objectives and priorities of the state. In business, the term ""policy"" is used to define a company's principal goals and objectives and to prescribe the company's operational domain. Corporate policies define a company's reason for existing (to maximize shareholder wealth and/or fulfill one or more social or economic function), what the company does (design, develop, manufacture and/or market products and/or services), and where the company does it (by industry and/or geographical area). The responsibility for determining corporate policy rests with a company's legislative branch - its board of directors - under the leadership of the chairman of the board. Policy defines a company's raison d'être and sets the parameters within which it intends to achieve its purpose. Policy defines what is to be achieved. Strategy -- Strategy is from the Greek strategos, which means general. In the Greek city-states, the military general was responsible for formulating a plan for bringing the legislature's policy decisions to fruition and for implementing that plan. In business, strategy is a design or plan for achieving a company's policy goals and objectives. Whereas, policy defines the company's goals and objectives and its operational domain, strategy decides how the company's goals and objectives will be achieved, what operational units will be used to achieve the company's goals and objectives, and how those operational units will be structured. Strategy also determines what resources will be needed to achieve the company's goals and objectives and how these resources will be acquired and used. Strategy is a design or plan that defines how policy is to be achieved. This definition of strategy applies to corporate strategy and unit strategy. Unit strategies are plans for achieving the goals and objectives of an operating unit, an industry or geographical operating area, or a managerial or business function. Unit strategies include a company's marketing strategy, acquisition strategy, alliance or affiliation strategy, human resources recruitment and retention strategy, production strategy, and financial strategy. They also include a company's division strategies, subsidiary strategies, and country strategies. Corporate strategy, on the other hand, refers to strategy that is used to achieve corporate goals and objectives, that is, to achieve corporate policy. Whereas policy is a legislative function, strategy is an executive function. The responsibility for formulating and implementing a corporation's strategies rests, therefore, with a company's senior management, under the leadership of the chief executive officer. Resources -- The third element of the PSR Troika is resources. Resources are the materiel and methods that provide the components of corporate and unit strategies. Materiel includes capital, physical plant, raw materials, and parts, and less tangible components such as distribution networks, technology, human resources, market data, market reputation, and the ability to borrow. Methods includes a range of management, manufacturing, and marketing functions and processes, such as motivational, negotiating, and alliance skills, and other intangible resources that are covered by the terms ""benchmarking,"" ""best practices,"" ""outsourcing,"" ""ISO 9000,"" ""total quality management,"" ""core competencies,"" and ""competitive capabilities."" A company's resources make the formulation of corporate and unit strategies possible and give effect to strategy implementation. Resources are the sine qua non of strategy: without resources, strategy can achieve nothing. The resources element of the PSR Troika provides the with-what for implementing strategy and, therefore, for achieving policy. It is strategy, however, that drives decisions relating to the acquisition, development, and deployment of a company's resources; and it is strategy that determines the priority that will be given to different resources, how the combination of resources will be configured, and how resources will be used. Tactics -- Because resources are a means for implementing strategy, they can be confused with tactics. Both resources and tactics are related to how strategy is achieved, but tactics (from the Greek taktikos, of order or arranging) refers to the detail of strategic designs and to the detailed actions that are needed to effect strategy implementation. Tactics are the detail-how of strategy, whereas resources are strategy's with-what. Weighting of the elements of the PST Troika -- The three elements are equal in weight and standing, and all three elements act in unison. In the case of the PSR Troika, however, current usage by management theorists and corporate executives gives the three elements very unequal weight and standing. Policy is seen as an abstract and somewhat bookish concept that is more applicable to the public sector than to business, and resources are seen as necessary but boring. Strategy, on the other hand, is seen as the glamorous, 2,000-pound gorilla. The distortion in the perceived weight and standing of policy, strategy, and resources has meant that everything that matters gets to be called ""strategy."" The term is frequently applied to what is, in fact, policy. This terminology transposition makes it difficult to differentiate between policy and strategy - to distinguish between the what and the how - making it necessary to invent new terms such as strategy action plans when referring to strategy, or strategic intent when referring to policy[2]. To make matters worse, some strategy theorists argue that strategy includes not just everything that matters, but ""everything a company does or consists of"" [3] . The terminology transposition is also applied to resources. Some authors have defined strategy as resources development and utilization[4]. Hamel and Prahalad present core competencies as strategy[5] - as do some proponents of total quality management, benchmarking, best practices, outsourcing, and ISO 9000. A materiel or methods resource (such as David Kearns' Leadership Through Quality Program, which is credited with the turnaround at Xerox) can become the critical factor in a company's survival and success. But even in these cases, they remain resources. Causality in the PSR Troika -- The primary characteristic of strategy is that it has a causal relationship with the other two elements in the PSR Troika. Resources provide the with-what means for achieving strategy; and strategy is the how means for achieving policy. These direct relationships result in an indirect means-ends relationship between resources and policy. Example of GE -- In practice, policy defines the principal goals and objectives of the corporation and the domain in which it will operate. In 1983, two years after becoming chairman and CEO of General Electric, Jack Welch mandated that GE would only be in businesses where it could be number one or two, and redefined GE's operational domain by drawing his now famous Venn diagram (the three overlapping circles that prescribed the three areas within which GE would concentrate). Corporate policies define goals and objectives that are relatively fixed and that help develop and sustain direction. This fixedness of corporate policy is especially applicable to a company's raison d'être, which may go unchanged for decades. Operational domain policies, however, are more subject to periodic change. For example, since 1981, Jack Welch has periodically adjusted GE's policy to focus on financial services, to shift GE from a hardware company to a services company, and most recently to focus on Europe. Some analysts have called these changes in strategy, but they are changes in policy: they relate to operational domain - to what the company does and where it does it. The practical purpose of strategy is to provide a plan that employs multiple inputs, options, and outputs to achieve a company's policy goals and objectives. To achieve GE's corporate policy goals and objectives, Welch used divestiture strategies to remove units that did not satisfy financial performance policies or that fell outside the parameters of his Venn diagram; he used acquisition strategies to add units that fit with his vision of GE as a ""unique, high-spirited, entrepreneurial enterprise""; and used vertical and horizontal diversification strategies to achieve the company's policy shift from hardware to services. This resulted in the divestiture of Utah International (one of the GE's largest and most profitable subsidiaries), because as a mining company it did not fit within the company's domain parameters, and drove GE's acquisition of NBC and financial services companies. The purpose of the resources element of the PSR Troika is to supply the materiel and methods that are the components of corporate and unit strategies. Although many of the measures taken by Jack Welch to keep GE achieving its policy objectives have been strategic, part of GE's success is due to the design, development, acquisition, and implementation of resources that provide the with-whats that are needed to give effect to the company's new strategies. For example, GE's highly publicized use of workouts, benchmarking, process mapping, and best practices - and the aggressive use of other motivational and cost cutting measures - are all resource methods. Elements of policy -- policy positions -- Policy positions are formal statements that are developed by a company's board of directors or senior management to spell out the company's core values and beliefs, and/or define the company's position on a specific issue. For example, General Motors, General Foods and Johnson & Johnson issue policy positions on affirmative action, professional ethics, the environment, and customer service, and issue ad hoc policy position statements relating to the recall of a defective product or to communicate their response to regulatory or industrial action. operations policy -- Operations policies are rules, regulations, guidelines, or contractual standards that govern the conduct of a company's operations. When Nordstrom states its legendary return and refund policy