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Business Decision Making Take initiative

Rethink modus operandi before corona crisis ends!

Now that we are a few weeks into this global corona crisis. Most organisations have found a way to deal with the operational challenges it comes with. I hope that leaders in organisations that are economically affected by this corona crisis, are shifting their focus. Strategising what will happen after this lockdown or other restrictions are lifted. I believe that it’s not an option to return to business as usual.  If you are a leader, you should not be micromanaging the current crisis. Your employees know very well what can or cannot be done at this moment. Do not feel the temptation to invest a lot of your time and energy in optimising your business for the short term. Shift your focus towards the long term and how to restart your business.

Necessary actions are taken

The longer this crisis and the restrictions are upheld. The more likely we have to fundamentally rethink how to run our organisations. It would be naive to think we could just pick up where we left off. 

Maybe in the last couple of weeks you and your organisation have restructured your processes to be able to deliver the best possible value to your customers. Many organisations have decided to let their flexible workforce go, cancel training courses and stop all non essential investments. These are relatively easy and logical actions taken to create room to breathe on the short term. And because the economy is in low output mode, the remainder of the workforce can deal with the remaining work at hand.

Once restrictions are lifted, you customers won’t automatically return. You probably don’t have the funds or work to hire new employees. Or make too many investments. I would expect leadership teams are already thinking about what can be done to restart their organisations. Think about what will likely happen. Which approach might help and how this situation can be used to rethink their current method of operation. If not? Keep reading!

Before the corona crisis

Since the industrial revolution, we have been trying to optimise our value creation processes. We have created an impressive number of ways to govern it. The variables below used to be extremely influential in determining how successful we are able to do this.

The primairy factors triangle
Three primairy factors to be successful

Those who were able to control and utilise the three primary factors (resources, labour and capital) were successful. Large corporations dominating the markets because competitors are unable to obtain the natural, monetary and labor resources. To maximise these rewards we adopted numerous ways to optimise them.

When the restrictions to manage the spread of the coronavirus will be lifted. The scarcity of resources will not have changed. Maybe the oil prices are lower at this moment, but they will eventually rise again quickly. Organisations have probably used a significant amount of their financial reserves to prevent them from going out of business. They might not have the funds to (re)hire the flexible workforce they have let go. Organisations will resume their operations with less capabilities than they used to have. That might feel like a disadvantage. But in fact it’s an opportunity to do ‘things differently’, be more effectively with less.

Entrepreneurial Abilities

When these three primary factors are scarce, the entrepreneurial abilities of an organisation can make the difference.

Entrepreneurial abilities triangle
Entrepreneurial abilites

The ability to optimise the utilisation of the production factors is entrepreneurship. This involves five elements:

  • Taking initiative – Action oriented and driven by forward motion
  • Strategic business decision making – Based on a clear vision and strategy being able to make decisions
  • Innovation – Exploring and experimenting
  • Bearing risk – taking the consequences of the previous three elements regardless the outcome.
  • GUTS!

Focus on maximising outcome!

The last couple of months, I have been working with my clients to focus more on maximising outcome delivered. Many organisations tend to focus primarily on maximising the output. Being extremely efficient to deliver an assumed outcome. If there is no crisis at hand, you might get away with this. However, in a couple of weeks or months from now (who knows when). You will be restarting your business. Probably with fewer people available and with limited (financial) resources. The worst thing you could do is resume to the state before the corona crisis. Following the same procedures etc. I predict the outcome will be significantly lower. 

The restart of your business will provide you with the opportunity to rethink your modus operandi. How you can maximise the outcome with the capabilities you currently have. And the only thing you have to do is to involve your employees and tap into their entrepreneurial abilities. 

Inspect and Adapt

As a leader, you will have to set clear goals (outcome or even impact) and clear boundaries. Also, you might want to adopt an empirical approach to inspect and adapt. To navigate uncertainty (maybe you are have been using frameworks that assist you on that). This way you can reinvent your organisation in small iterations. Rethink all the things you used to do if these is necessary (procedures, protocols, documentation, sign-offs etc). Do these actions add value to your customers? Or can you achieve the same results with a different approach. Give your employees the freedom to change things without compromising on quality or safety. Most organisations have been practicing this approach for the last couple of years. For example, adopting the Scrum Framework or attempting to ‘transition’ towards more agility. 

The time will come to really put all these investments into practice. We will be facing a time with a lot of uncertainty. So, the only way to deal with that is to set up your organisation to frequently inspect and adapt the value it delivered. And how to get better at doing this with the limited resources available. 

If you are a leader, you should not be micromanaging the current corona crisis. Your employees know very well what can or cannot be done at this moment. Do not feel the temptation to invest a lot of your time and energy in optimising your business for the short term. Shift your focus towards the long term and how to restart your business.

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Voice of the System

A new voice a leader should listen to

Do you always hear the same people speak up when you present a new idea or when you ask for feedback? You might be dealing with an important voice here. The voice of the system! A voice any leader should (learn to) listen to. If you don’t? It will never go away!

This is how I would describe a system.

The system is a complex entity that contains all the knowledge, emotions, thoughts and memories of the entire group of people. This system has its own purpose, value system. And it has a voice!

Defining the voice of the system

The Voice of the System are people who do not only have (and share) their individual opinion or vision. They sense and share what is happening in the system. Are closely connected to the values of this system and they function as the air valve when there is pressure in the system. They speak on behalf of the system they are a part of. Another entity for leaders to take into account and to listen to.

A few months ago, I spoke at Agile 2019 in Washington D.C. on this topic. And the response I received during this session was the same as any other conversation I had about the topic. As soon as I explained what this voice is, people could very quickly identify the voice in their system.

Think about this for a minute, who is the voice in your system?

Recognize the Voice in your System

If you haven’t already identified this voice, here are some signs to look for.

They speak up!

This is an obvious one but a crucial sign. When no one speaks up, you have a big problem in your system!

Loyal to the system values

A voice of the system has a close connection between the values of the system (for example the organizational values) and their own. If one of these values is under pressure or at risk, they will be the first to speak up!

Dedicated to the system

Because of the close connection of values they tend to be very dedicated to the system. They made a conscious decision based on the purpose of your organization and its norms and values to dedicate their full self to the system!

Sense of state of the system

When there is pressure, stress or unrest in the system they will feel this immediately. There is a close link to their own values and that of the system they are part of. They are the first to tell you the system is under pressure. They act the same way as the air valve on a tire. If there is pressure on the tire, that is the first place the air will come out (if you are lucky and you monitor the pressure).

Transferable

Many people during my session at Agile 2019 were able to identify who used to be this voice. And it turned out a lot of them gave up being the voice and left the organization or were silenced by leadership. However, if this voice decides to leave, the pressure is still there and the voice of the system is transferred to a different person in the system. A new voice of the system!

Fed by the system (through historical events)

The voice of a system operates in the historical context of the system. It’s things we have done before and still need to be done now, which is proof the system is still there. Takeovers that haven’t been dealt with properly leaving this open wound in the system. All historical events feed this voice. They feed the system. The things the system has experienced together shape the values of the system.

It’s never the boss!

One important thing to take into account. It is never the hierarchical leader of the system. It’s never the boss! Within a leadership team there can be a voice of the system as well, within that smaller system of the leadership team. This voice always originate from deeply within the system. 

Listening to the Voice of the System

Now that you have identified the voice of the system, it is crucial for leaders to listen to this voice. An extra voice that needs some extra attention!

Create safety for the voice to speak up

In an unsafe environment people will feel less likely to speak up. This also applies to the voice of the system. Although they will usually speak up first, if there is no safety, this voice will be quiet and find different means to speak up (strike, slow down, war or leave). Find inspiration on creating safety in the video below.

Incorporate this voice into your decision making

Bringing on board this important voice, that person or those persons who tend to speak on behalf of the entire system will increase you changes of effective decision making and acceptance of the decisions made. A useful technique to apply is Deep Democracy.

Connect the voice to the entrepreneurs

The voice of the system only has a voice. Actually fixing what is under pressure, you also need to identify those who have the entrepreneurial abilities to fix whatever needs fixing. It can be the same person if you are lucky, but don’t count of it.

A new voice

The Voice of the System is an entity you, especially as a leader, should be aware of it being an essential source of information on the state of your team/department or organization. It is the Voice of the system and not the personal opinion of the person being the voice. They feel very connected to the norms and values of the system but do not personify the system! They are the air valves!

You can try to ignore the voice but it will never go away!

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Entrepreneurability

What is Entrepreneurability about?

Traditionally to make a product or provide service you need three primary factors. First, we need resources: like land, water or wind. Let’s call these resources.  Secondly we need time and money, starting or scaling capital.  For the sake of simplicity  let’s referred to this as the monetary component. Third, we need labor resources, or human resources: people.  to create it. Now, these three primary needs: resources, money and people together we  call them input factors. By connecting them we can create. The input factor will indeed make creation possible is the fourth one: entrepreneurial ability.  And this factor is becoming the differentiating factor in our current economy. In this article we will explain what entrepreneurial ability (in short Entrepreneurability) is and how we can plant its seeds, cultivate and grow from it.

Stick and stones

In the first human labor practices we used primarily natural resources like sticks and stones, nature provided us to fulfill our primary needs. As we developed into tribes and later smaller communities, we started to specialize and focus on a particular product (farming, blacksmith etc.) doing so people we no longer able to fulfill in their basic needs by themselves. They would withdraw from consuming to produce their product, in order to do so they would need capital to bridge this gap hence we were introduced to an economy in a smaller scale.To accommodate this withdrawal we created financial institutions like banks to facilitate the exchange of products and service. This resulted in an enormous growth in productivity and wealth (for some).

This worked well for smaller communities, however we were unable to scale to larger groups of people. Until the industrials revolution. This is where we began utilizing the potential of the combined efforts of machine and labor forces. This led to significant economies of scale and enabled organisations to reach a global market. At that point, those who were able to control and utilize these three primary factors were successful. Large corporations dominating the markets because competitors are unable to obtain the natural, monetary and labor resources and to maximize these rewards we adopted numerous ways to optimize them.

Optimizing the primary factors

Since the industrial revolution we have been trying to optimize our production processes. We have created an impressive number of ways to govern it. In the past couple of decades we introduced Projects and Project management frameworks like Prince2, to optimize our productivity we introduced Lean and to facilitate in creative environments we introduced Agile values and principles along with numerous frameworks and practices. All to optimize our labor resources. Capital resources are nowadays heavily regulated and controlled (for obvious reasons) and we try to be more careful in using our natural resources by focussing on circularity.

Applying and optimizing these three factors alone, won’t make your organization a successful organization in these times. Adding entrepreneurship to your mix might do the trick. Here are the key ingredients.

Entrepreneurability

The ability to optimize the utilization of the production factors is entrepreneurship. This involves four elements:

  • Taking initiative – Action oriented and driven by forward motion
  • Strategic business decision making – Based on a clear vision and strategy being able to make decisions
  • Innovation – Exploring and experimenting
  • Bearing risk – taking the consequences of the previous three elements regardless the outcome.

In future posts, we will elaborate on these factors. These four elements determine if a product or service produced will actually come to life. Go to market needs these skills. Improvements to keep going and arriving at a market need this way of thinking. And  with an increase in the number of independent professionals, the purpose economy and a generation entering the workforce that is raised with Entrepreneurability, so the skill are already available too. This might explain why more and more organizations are exploring concepts like ‘ Lean startup’ and organize hackathons to facilitate in Entrepreneurability.

What hasn’t evolved though is the organisational structures of companies and the rewards and compensation structures. So if we need these skills to work, how we will adjust our organisation formats? And maybe more important, how will we rewards people if we expect entrepreneurial behaviour from them. Will we get away with just paying them a monthly salary?

Where the three primary factors generate income through rental income (natural resources), interest (capital) and wages (labor). The fourth factor , Entrepreneurability, is compensated through profit and loss. Owning a company you only earn when profit is made, if not, you get nothing. With the rise of Entrepreneurability in our labour force we need to radically rethink our organisational structures and rewarding and compensation structures.

In practice

Entrepreneurability  is already happening. There are several companies already experimenting with elements of Entrepreneurability.

RYSST

A small student startup RYSST (Rent Your Student Scrum Team) founded by two software engineering student as part of a school assignment. They identified the need for companies to early bind talented engineers and students wanted to have a meaningful job to build experience and earns some money as well. A great combination and continuation for companies since students are available to work at night and during holidays. You rent a team of students and when they graduate you get first pick in hiring them. Onboarding is a piece of cake since they are already familiar with the product. A completely new concept using the rise of popularity of the Scrum Framework and a shortage of software engineers. Within a year they employ over 30 students and starting a new branch in another university city.

ITM Group

A machine manufacturer for among others the tobacco industry. A highly competitive market where ITM is able to do things differently. Self-organising production teams are responsible for the development, assembly and aftercare of a production line. This organisation’s leader took a conscious choice to delegate a portion of the entrepreneurial abilities to their employees.  There is no innovation department.“I honor  personal initiatives from the work floor by challenging my employees to work on innovative projects. They will also be inspired to take responsibility of the future of the customer relations though.” Of course that requires a special kind of leadership.(source)

Incentro

This IT company is only steering on happiness. They believe that when their employees are happy, they make their customers happy. Having a no-policies-policy and teaching people to balance both the personal, company and customers’ interest has resulted in more and sustainable growth in profit and headcount since 2012. While continuously experimenting with stock options for employees (that is not really creative of course) or having employees dividing the budget for raises themselves and where people are encouraged to start new services and adopt new technologies they have expanded their portfolio in various directions. Starting and stopping services when needed and continuously looking for new interesting opportunities, not by a sales team or innovation team but by its own employees. Teaching them to act as an entrepreneur.

Netvlies

An internet bureau with more than 50 internet professionals, with clients like Dick Bruna’s Nijntje, NautaDutilh and Karcher Netherlands. Their bureau does not employ a single manager. Each and every one of their employees applies Entrepreneurability and takes it to a next level. If you are selected to be their client, the work to be done is posted on the intranet, for all employees to look at, who has the most interest, the best fit. When a team has been formed, the client has an official place in the team.

Since teams apply the Scrum framework, each client becomes a Product Owner. Being part of the team, part of the process and always aligned with what’s being created. Often Netvlies adds value to their clients’ teams because they not only deliver the requested product or service, but also a way of working, insights in how to work with high performance teams and maintaining the power of collaboration, while honoring individual talents too.

Challenges

As all these four companies acknowledge that enabling Entrepreneurability is necessary, a great way to work and of course all of them are struggling too. Experimenting to find  the ideal culture and governance structures. We want to help them and inspire them to find formats, models and ideas to enable Entrepreneurability.

We are curious whether you have other examples of organizations experimenting with Entrepreneurability (or elements of it). Please leave a comment.