Part I: Leadership and Organization Development by Design Series - Organization Environment

Upon which foundations and according to what structural plans have organizations’ leadership and organization development (L&OD) programs been designed?

Josh Bersin, principal and founder of Bersin by Deloitte, recently noted in a LinkedIn article the following conclusions from 50 or so chief learning officers:

• Leadership development is a critically important challenge.
• To understand leadership, one must understand followership.
• Leadership development programs are too fragmented and not focused enough on company specific and current business strategy.

The first two posts for this blog were focused on conclusions one and two. The next series of posts are dedicated to exploring causes and solutions for the third conclusion...program fragmentation and lack of specific business focus. The discussions will include:

• Organization Environment
• Organization Strategy
• Strategic Agility
• Strategic Organizational Frameworks
• Environmental Dynamism and Complexity
• Munificence: Resource Scarcity or Abundance
• Distributed Intelligence and Accountability
• A Leadership Development Program Model

Let’s begin with organization environment.

Henry Hansmann said there are fundamentally three forms of business ownership in the United States. The three forms of ownership are for-profit, private nonprofit, and public or government-owned. Private nonprofits are categorized as either donative or commercial. Donative nonprofits receive their income from donors who are in effect purchasing services and/or goods to be delivered to a third party. Commercial nonprofits receive their revenue from fees for services and/or goods charged directly to the payor. 

Regardless of the form of business, what is done by organizations should create value. An organization’s environment should inform how leadership practically and strategically guides the creation of value. What is value? Robert M. Grant describes value as the monetary worth of a product or service. If L&OD programs align with building capabilities that increase the worth of products and services, then L&OD programs have a better chance of adding value. So, what is an organization’s environment? 

Ricky W. Griffin proposed an organization’s environment consists of internal and external forces that must be understood from the perspective of change. Forces include economic, government, legal, media, etc. Thomas Cummings and Christopher Worley correctly said major disruptions in an organization’s external and internal environment have the possibility of triggering transformation in response to or in anticipation of those changes. The most recent United States industry illustration is health care. 

Additionally, Jim Underwood described marketing and technology forces as dictating the rate of change. The two combined indicate the level of turbulence or competition in the environment. Why is this important? Two words describe current business environments across the world. They are chaos and complexity. Technological evolution is causing the rate of change to be exponential.

John W. Payne proposed, when uncertainty and complexity increase, leaders take mental shortcuts to quickly reduce the number of options available. Their decisions are based on limited information search and evaluation.  So, what? The question is perfect. Under chaotic, uncertain, and complex conditions, Scott Julian and Elton Scrifres proposed leaders are more likely to mismatch the response of the organization and the demands of the environment.

Potential for mismatch is essentially why L&OD practitioners, executive sponsors/leaders, and leadership industry experts need environmental clarity specific to the business. It provides a pathway to program alignment with the organization’s response to its environmental demands. After all, appropriate response is the stake upon which value creation hinges. 

The next post is dedicated to organizational strategy. Until then, ask and seek answers to the right questions in the right way and be the change you want to see. Let the conversation begin!

Phyllis L. Wright, Ph.D.

View my profile on LinkedIn: www.linkedin.com/in/phyllislajunewright/

Follow @PhyllWright Twitter

References
  
Cummings, T. G., & Worley, C. G. (1997). Organization development and change (Sixth
        
      ed.).  Cincinnati, OH: South-Western College Publishing.

Grant, R. M. (2010). Contemporary strategy analysis (Seventh ed.). Chichester, United 

     Kingdom: John Wiley & Sons, Ltd.

Griffin, R. W. (1990). Management (Third ed.). Boston, MA: Houghton Mifflin Company. 

Hansmann, H. (1996). The changing roles of public, private, and nonprofit enterprise in 

     education, health care, and other human services. In V. R. Fuchs, (Ed.), Individual and 

     Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in 

     America (pp. 245 - 275). Chicago, IL: University of Chicago Press. Retrieved from 

     http://www.law.yale.edu/documents/pdf/Faculty/Hansmannthechangingroles.pdf

Julian, S. D., & Scifres, E. (2002). An interpretive perspective on the role of strategic control 

      

     in triggering strategic change. Journal of Business Strategies, 19(2), 141. Retrieved from 

     http://www.questia.com/read/5000638778

Payne, J. W. (1976). Task complexity and contingent processing in decision making: An 

     information search and protocol analysis. Organizational Behavior and Human 

     Performance, 16(2), 366-387. Retrieved from http://www.sciencedirect.com.

Underwood, J. D. (2002). Thriving in e-chaos: Corporate strategy for uncertain times. 

    New York, NY: Writers Press Club.