How do we judge whether an organization is effective or not? – stock price, (i hope not), how much the CEO makes (haha!), good commercials? (better that the first two choices), profits (too likely), products (probably). Today, unfortunately, it would seem that public companies or those owned by private equity investors are too often driven by short-term returns, higher and higher
margins, or narrow views of top-line growth. I certainly understand that a company needs to make money to survive; however, when you step back and really examine the companies that you know or have been part of in the past, or those that you may have scrutinized, you have to ask what separates long-term effective companies from those that are but a flame burning for their fifteen minutes or those that are grinding themselves and their employees into
the ground for the sake of a few beneficiaries.
I hear the word “resiliency” used quite a bit. Yes, I think resiliency is a word that plays a role in making a company successful, as long as it is used to describe how the whole company adapts and not just used when leaders in a company are thankful that the remaining employees seem to be okay in the face of massive downsizing and churning leadership. So, what does make a
company successful in the long-term?
Corporate success is likely best judged in the light of adaptability and flexibility, and not the usual and obvious measures of profit and productivity. Yes, a business that loses all profits will not survive, the profit alone cannot make a business successful. Warren G. Bennis, who contributed major works in the study of leadership both at MIT and as part of the Leadership
Institute at the University of Southern California, wrote this:
“if we view organizations as adaptive, problem-solving, organize structures, then inferences about effectiveness have to be made, not from static measures of output, but on the basis of the processes through which the organization approaches problems . . . The measure of health is flexibility, the freedom to learn through experience, the freedom to change with changing
internal and external circumstances . . .”
– “Toward a ‘Truly’ Scientific Management: The Concept of Organizational Health”, Industrial Management Review (MIT)
When you let that sink in you may experience the proverbial “light bulb” coming on about one of the foundational truths about life, living, people, countries, associations, and yes, organizations. Woven into the fabric of all living things is this notion of adapting to what life deals us, figuring out how to learn from circumstances, being flexible when rigidity would endanger survival. in fact, at the core of human development is the real need for an individual to ascertain skills such as learning emotional coping, learning to learn (not just learning facts), learning to have healthy
communications, learning how to adapt when faced with obstacles, learning how to solve problems. You simply cannot separate out measuring the effectiveness of a company or individual, either one, on the basis of a static value in one instance of time.
My point is this. Organizations, in a similar way to individuals or the other types of entities named above, will be as effective as their ability to learn and embed learning to act in a way that is adaptive, flexible, responsive, and cohesive within the external environment and also its own internal environment. Where does a learning organization fit? It is the model of an effective organization. A learning organization is the template for organization effectiveness and a true measure of that effectiveness.
