Designed to Last – Organisational Longevity

Nov 7, 2014 | Ideas for Organisation, Organisation, PurposeCORE

Đọc bản Tiếng Việt

The ultimate test of any idea is the ability to build enduring institutions to influence future generations.

In 1783, George Washington led his comrades to victory. He could have claimed power over the newly-independent states, but he surprised everyone by resigning as commander-in-chief. This act won admiration from foes and led King George III to call Washington “the greatest character of the age”. In 1796, Washington again denied himself power when he refused a third term as President. He set a precedent that strengthened the institutions of the young government, setting the stage for the United States to emerge as a global power.

The West has a long history of restraining the power of individuals so as to strengthen institutions. Centuries before George Washington denied kingship in America, the Magna Carta limited the powers of the English Crown and encouraged shared ownership, laying the foundation for the rise of the British Empire.

In Asia, institutions tend to exist in the shadow of powerful leaders. It is common for leaders to appear to subvert institutions to be seen as strong. We tend to believe that strong CEOs and political leaders are beyond reproach and that we should be grateful for their leadership. On the plus side, this type of power creates conditions for doing things quickly. However, when poor leadership emerges eventually, the weak institutions are unable to step up and correct the situation. When so much depends on so few, it’s hard to create institutions that can stand the test of time.

This preference for personality over institution means that family names matter and strong leaders tend to stay in power longer. In a fast-changing world with a more educated workforce, this limits Asian organisations from becoming truly powerful institutions. For all of Asia’s advantage in terms of heritage and size, the organisations that shape today’s world in terms of innovation, business thinking and cultural influence are still distinctively Western.

The hard truth is, most leaders eventually outlive their usefulness and relevance. The sign of enduring power is how long your ideas continue to influence others when you are no longer around. As a leader, you must not only lead in the present but think of how others will lead after you.

An important factor for sustained performance in many of the world’s best companies is great succession planning. Procter and Gamble (P&G) started out as a family-owned enterprise, but in 1887 William Arnett Procter began a profit-sharing programme. The workers then gained a sense of ownership and made a greater contribution to the company. Eventually P&G groomed staff to rise up the ranks and help lead the company. Today its fabled leadership programme allows P&G to be among the few companies that continues to promote CEOs from within.

The new generation of Asian companies seems to appreciate this. Companies such as Lenovo and Alibaba are professionally run and are investing significant resources to develop talent and building institutions. After taking over the PC business from IBM, Lenovo has proved critics wrong by being able to retain talent and introduce better products. Tata of India is another great example of how it has evolved from a family enterprise into a global conglomerate with talents from all over the world.

To meet the complex challenges of our time, we will need more organisations that are designed to stand the test of time. In our work, we have found that organisations with the following conditions called the 9 Dimensions – categorised into 3 distinct columns of practice – are the strongest in achieving organisational longevity.

1st Column: Code of Beliefs

Every organisation is unique even within the same industry. Many organisations miss out on the opportunity to identify what principles have helped them thrive in trying times. They fail to turn their beliefs into a code to guide future development. This contributes to high talent turnover, as there are few reasons to stay and build their future with the organisation. The following three aspects are essential ingredients to identify a distinct code of beliefs.

1. Founders

All great companies have iconic leaders. Use them as learning tools rather than view them as idols. When leaders share the aspirations and the dilemmas they had, during the founding years, emerging middle management will have a better understanding of the work that they do. This depository of leadership know-how should eventually become guiding principles on running the business.

2. Purpose

Define the fundamental reason for the company’s existence. Companies without a clear understanding of their value proposition and the meaning of their work are not likely to succeed, much less attain longevity.

3. Inspiration

Every company has an inspiring story, but few bother to document it. Companies that are able to draw inspiration from their shared history and encourage staff to continue sharing stories that reflect company values have a higher chance of inculcating a sense of ownership.

2nd Column: Exercise of Power

How you exercise power sets a precedent for the organisation to grow in the future. If you seek scalability, you will need to create and implement the following three aspects to ensure sustained success.

4. Broader Leadership

Build a succession plan to retain and attract great talent to ensure the longevity of the firm. Put every emerging leader to the test before letting them enter the top echelon of leadership. Companies that have an indigenous system to promote leaders based on a unique set of success factors, are best able to produce leaders who are competent to deal with future challenges.

5. Governance

Institutionalise power to secure growth. Define and limit reckless use of power. When people see that you are serious about respecting the rules, they will be more willing to make a greater effort to innovate and contribute. Otherwise, it weakens commitment within the organisation to think and build for longevity.

6. Know-how

No organisation has ever made it to the top with weak knowledge transfer. Organisations that fail to harness their know-how tend to produce managers and not leaders. Set aside time for internal learning and identify emerging leaders who are able to coach and share useful insights.

3rd Column: Securing Legitimacy

With every new generation, organisations must fight to stay relevant. The challenges are different every time, so it’s all about creating conditions for the team to remain aware of the signs of the times. Here are the three aspects to stay relevant.

7. Activists

In every business, there are customers and then there are fans. Identify what type of fans you have and why they feel so strongly about your organisation. Activists help organisations stay true to the purpose of their work. Set up a process to receive feedback, good or bad. Negative feedback is not necessarily a bad thing, as it can help your organisation improve and sometimes rediscover the inspiration for your brand.

8. Promise

As technology evolves, review the way the organisation delivers its promise. Many traditional firms like to use heritage as an excuse for not adopting change while ignoring the obvious business trends. Paying attention to changing expectations and means of delivery makes a difference in ensuring longevity.

9. Practice

A truly powerful organisation creates rituals and educate their followers to adopt them. The organisations that fail to appreciate and harness the power of the rituals cannot hope to inspire a following.

At the end of the day, the test of any idea is the ability to build enduring organisations that continue to shape and influence the world. Everyone has the power to influence and change people’s lives. But its impact will depend on how well we have exercised our power in the present and whether we have prepared the ground for future leaders to continue leading. This should be common sense but few are determined to see this through.

Don’t fear the better idea, but the better organisation.

Photos: Wikipedia, CBCEW, CNBC

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