Today’s boards face increasingly complex governance issues and tight timelines to resolve them. As directors and senior managers who have taken on this role to bring about positive change, it is our responsibility to address this issue, but how?
It’s easy to assume that the answer is to guide and manage organizations with purposeful efficiency. After all, classical management has taught generations of leaders that organizations are like machines, with efficiency, productivity, and control as their primary goals. What is worrying is that he convinced the leaders that there was only one way to find solutions. How suffocating! Time has shown us that classical management allows for a one-way flow of communication – a form of bad governance.
An open system fosters agile, holistic, and humanistic workplaces that are fun to work for. Employees operating in an open system know their creativity is valued, have space to collaborate, and feel empowered to apply their expertise in an environment that fosters innovation that does not condemn failure (failure is a essential element of learning and growth).
Open system organizations also cultivate leaders who bring out the best in their talent and reduce attrition. And in the war for talent, providing good salaries, pleasant work environments and inspired leadership (a job trait that younger generations expect) can be the difference between retaining talent for the long term or losing it to profit. of your rival.
However, failures due to poor governance should never be rewarded; otherwise, you are actively creating a negative feedback loop in the system that requires gobs of time, energy and money to rectify – if ever rectifiable.
Healthy interdependence, not independence
An open system is open to its environment by constantly absorbing new or updated information, which is dynamically transmitted to the people who power the procedures that produce positive results. Entrepreneurs are particularly adept at this behavior, constantly scanning their environment for strengths, weaknesses, opportunities and threats, then applying creative and agile course corrections, sometimes hourly, to move their organization forward in the rough seas of incubation.
Environments are inherently unpredictable – just look at COVID-19 lockdowns, stock markets, supply chains or geopolitics for proof. But when boards cultivate honest, safe, and open communication with business leaders, they can consistently analyze their environment (internal and external), identify issues, and apply agile solutions from a pool of insights. dynamic, creative and productive minds. Ultimately, and as with any successful relationship, healthy interdependence, not independence, allows organizations to thrive the most – and it doesn’t stop there.
Connected like never before
Organizations in an open system are also deeply interconnected, and when change is applied to one part of the system, all other parts feel the effects. One way to view this idea is through the lens of planet Earth, our only home.
The Earth is one of the most interconnected systems in existence because it is made up of five interconnected spheres: the atmosphere (gas), the lithosphere (land), the cryosphere (ice), the hydrosphere (water) and the biosphere (all living beings). . When one of these spheres loses its stasis, a ripple effect occurs in all the other spheres – think of them as different departments in your organization.
The most obvious example of a system losing its stasis is anthropogenic climate change. Our species has pumped extreme amounts of methane and carbon dioxide into the atmosphere and hydrosphere. As a result, the oceans have acidified and warmed, polar ice is shrinking, weather conditions are more extreme (catastrophic fires and floods!) and the climate is changing. As a result, this collapse requires a myriad of human responses to keep the system viable to sustain life.
So how do we protect a system from failure? How do you effectively manage so many systems when it seems nearly impossible? One of those ways is to understand the inherent nature of a system – and of physics.
Entropy is your friend
It is now accepted that as modern organizations gain more complexity, they also take on greater entropy. Our response to the growing challenges was, in many ways, a tribute to chaos theory; the avalanches of meetings and bureaucracy were our way of trying to counter the growing mess in the system.
It’s a fascinating law of the universe that, if left unchecked, increases disorder over time. The key is not to eradicate clutter (it’s impossible) but rather to dance with it.
By understanding entropy, you know organizations. In an open system, entropy is kept low but not zero; therefore, good governance remains essential.
Ultimately, an organization that chooses the path of good governance will be the organization that stakeholders and shareholders will gravitate towards because it injects certainty and hope into disordered systems. Good governance is more than an advantage; good governance is, at its core, open source, providing guidance to organizations around the world.