Attaining Sustainable Organizational Growth and Profitability
Copyright Enterprise Design Labs 2005 - 2018
Organizations have to change in order to grow. Typically, organizations change as a result of their strategies to re-position themselves and adapt or react to changes in external factors that create market opportunities and/or threats. Change is a certainty so business managers must actively engage in a process that identifies change in the environments and modifies organizational behavior to best take advantage of this change. Organizational change invariably involves change in people's behavior and relationships in the internal/external environments of the organization. Change in the internal environment factors involve those factors that are influenced by how the company is run, or decisions that introduce conditions inside an organization that forces a change. Managers however, do have some control over how the business reacts to changes in the external environment through management of the internal environment factors which is to some extent are controllable and changeable through the strategic management process. Change in the external environment involve external environment factors that are not controllable by the organization; these include business competitors, changes to law, general economic conditions, etc. All businesses have internal and external environments in which they exist and operate; organization change invariably involve change in these environments' factors such as described above.
Internal Environment and Factors
The internal environment is defined by the set of internal factors resulting from either the way the business is run, or decisions made, or both. The factors resulting from how the business is run include: business reputation and image, credit worthiness, etc. The factors resulting from business decisions include:
Internal factors can be controlled directly or indirectly; but changing these factors usually involves indirect costs such as lost productivity for example, while new employees are being trained, some direct costs such as a penalty for terminating a lease before it expires. The performance of an organization is influenced by factors or elements in the internal and/or external environments that shape the behavior as well as determine the strengths and weaknesses of the organization that are relevant to its survival and growth.
External Environment Factors
The external environment is defined by external factors such as characterized by PESTEL factors e.g., tight lending conditions, government regulations and competition. These factors are uncontrollable, and can be modeled as the institutional relations between the business and the external organization/entity of interest to the business, but are not directly controlled by it.
The external environment is modeled as a network of "External Entity" actors and their goal dependency relations with the business organization. The external entity abstraction is an abstraction over the concept of influencer in Motivational Modeling and can denote concepts such as regulators, competitors, market forces, customers, technology, etc. The category of external entities (influencers) is large and inclusive. Every business has hundreds of potential influencers. Influences can be political, economic, ecological, societal, and technology. There will always be too many influencers to model. The decision as to what influencers to model is determined by the influencers that impact the organization's strategies and tactics, and affect the achievement of goals and objectives of the organization.
Managing Organizational Change
An organization can be defined as a 4-tuple, composed by a set of goals and objectives, a set of (direct internal) sub-organizations, a set of institutional relationships, and a set of external organizations.
Organization System Structures
The organization structure defines the arrangement of accountability, authority and responsibility of a group of people in a hierarchy, and network of functional and business units, and the governance relations between these units. The organization structure is designed to enhance communication and information flow among organization system elements (people or groups of people) that comprise the organization social system. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over members’ behaviors.
Organizational structures are the manifestation of strategic orientations and regulate information flows, decision making, and patterns of behavior, that is, the “internal allocation of tasks, decisions, rules, and procedures for appraisal and reward, selected for the best pursuit of a strategy. Structures develop due to the need to organize behavior in a meaningful way and provide orientation for organizational members to set actions that comply with organizational strategy, organizational culture, and, as a result, accepted patterns of behavior. The structure is comprised of organization units that organize activity within these units (business units, bureaus, teams, or departments) in which people perform specialized functions such as manufacturing, sales, IT, human resource management, accounting/finance, etc. People who perform similar functions (tasks) are clustered together.
Organizations as Systems
An organization as a system is a set of interacting or interdependent functional entities and individuals/groups of individuals forming an integrated whole. It can be one organization, a set of organizations, population groups or individuals. Organization as systems are “open”, social systems.
An organization is a system in that it is greater than the sum of its parts. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together.
Actors represent the perspectives and objectives of the individuals themselves responsible and accountable for implementing the organization design and strategy through their behavior. Actors are taken to be inherently autonomous, i.e., their behaviors are not fully controllable, or are they perfectly knowable. Although the behavior of actors is not perfectly knowable or fully controllable, they are nonetheless not completely random. The behavior of actors can be explained and rationalized through the motivations and intentions attributed to actors.
Organization System Behavior
The behavior of an organization is usually guided by its strategic and tactical goals. The performance of the organization can be expressed through goal-based performance indicators and measures. Behavior and performance unfolds as observable manifestations (phenomena) of predefined strategies as regulated by organizational structures. This domain puts into effect patterns of behavior, derived from strategies and structures. It makes an organization’s existence as a market player visible.
Organizational System Dynamics
Organizations are dynamic social systems which are a collection of people with a common purpose. The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors rather than the actual behavior of the actors. An intentional description of actors' behavior offers a way of characterizing actors that respects the autonomy premise underlying the actor concept.
Organization System Interactions
Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals.
I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.