Stopping critical errors of commission and omission

April 2022 | SPOTLIGHT | BOARDROOM INTELLIGENCE

Financier Worldwide Magazine

April 2022 Issue

One critical error of commission and one critical error of omission are commonly made due to the rarity of the right conditions for sustainable success. These two errors are complementary and synergistic, intersecting with each other. Stopping the error of commission (planning to produce a plan) prevents failure. Stopping the error of omission (failing to work on the business) causes success.

Error of commission: planning to produce a plan

The most effective leaders are servants to the people they lead. They focus their ambition on the organisation to optimise the effectiveness of the people working in the organisation while setting up the next generation of leaders to achieve sustainable success. These leaders have an unbending commitment to developing a systematic discipline for strategic and total capital management, causing all projects, processes and resources to earn more than they cost and enable winning strategies producing sustainable shareholder and stakeholder value.

When these leaders engage in planning, their goal is to create a superordinate level of organisational capability supervening on the people in the firm, enabling them to consistently achieve extraordinary results. These leaders understand the purpose of planning is to architect an organisation capable of continuously managing effective change in response to a continuously shifting landscape. They do not engage in planning to produce a plan.

The ability to manage effective change stems from management principles, theories and models integrated into a single system utilised throughout the organisation on a continuing basis. Creating this system requires the right planning process. When done right, the product of planning is a dramatically increased organisational capability to manage effective change.

Planning to produce a plan is an error of commission simply because plans tend to be static. As one executive asked: “What’s the point of spending all this time, money and effort developing a plan that we all know will be obsolete six months from now?”

One indicator of this error of commission is corporate leaders describing the outcome of planning as a roadmap for succeeding in the future. Roadmaps are useful sources of direction when the landscape is static, fixed and unchanging. They are not useful when the landscape is fluid, dynamic and disruptive. The only certainty of the competitive business landscape is its uncertainty, which in turn means the only constant in a business organisation should be its capacity to change. Governing, leading and managing in this dynamic environment calls for a compass, not a roadmap. This capacity to change, this structured adaptability, is the value-creating outcome of planning done right.

Moreover, the notion that there is a single future in which to succeed or fail is invalid. While some leaders may appear to have the ability to see around corners and predict the future, the truth is they are leveraging their organisation’s supervening intelligence, agility and adaptability developed through planning done right to imagine a future of extraordinary results and then pull that future into the present through effective action. Rather than engage in planning as an attempt to predict the future, these leaders engage in planning to create a future of supervenience, breakthrough performance and sustainable success.

In addition to building organisational intelligence, agility and adaptability, planning done right puts corporate leaders on anticipatory alert, ready to manage effective change as needed, similar to fighter pilots going through the observe, orient, decide and act (OODA) loop. The combined effect is an organisation well-equipped to exploit the unexpected, transforming it into a breakthrough opportunity for competitive advantage and sustainable shareholder and stakeholder value. When the planning-to-produce-a-plan error of commission is made, the common result is a binder filled with PowerPoint slides that ends up as strategic plans on the shelf (SPOTS).

It has been said that when the rate of external change exceeds the rate of internal change, the end is in sight. Relatedly, well-planned change has been defined as changing parts of the organisation in ways that improve the performance of the whole organisation. By applying the right planning process, focused on the right outcome, superior internal rates of well-planned change become a sustainable competitive advantage of the firm.

Planning done right ensures all the parts of the organisation are aligned, linked and working interdependently at the systems-level of thought and action instead of the departmental or functional level. The effect is controlled agility, a governing mechanism utilised by the organisation to adapt and adjust on the fly better and faster than the competition to consistently achieve the goal of sustainable shareholder and stakeholder value.

When planning is done at the systems levels, the organisation becomes the firm’s most powerful and enduring competitive advantage. Cited in research as “where the rubber meets the road”, systems-level governance, leadership and management provide members of the organisation with profound knowledge of its interdependent relationships, increasing organisational predictability while decreasing variability, enabling root-cause problem resolution, anticipation of unintended consequences and effective change.

Systems-level knowledge also equips corporate leaders to manage the distinction between ineffective and effective combinations. Ineffective combinations include organisational parts that look fine in isolation but do not fit together nor complement the whole. These ineffective combinations are prevented as a matter of course at the systems level. Conversely, effective combinations, complementary and synergistic, are optimised at the systems level achieved by planning done right. The result is extraordinary value creation through sustainable means. Planning done right positions corporate leaders to transform their organisations into positive net present value machines.

Error of omission: failing to work on the business

There are two groups of corporate leaders: those who agree with the following statement and those who do not. Watching the organisation perform without our involvement is like looking in the mirror. When responding to this statement, those who agree often add that they are dissatisfied with the current reflection. Those who disagree say it is unrealistic to hold a select few responsible for the behaviour of every person in the firm. Research reveals that leaders who agree with this statement attribute success to others while taking responsibility when things go wrong, while the leaders who disagree with this statement do the opposite: take credit for success and blame others for disappointing results.

Those who agree with this statement practice leadership by design, also known as organisational architecture. Leadership by design is high-leverage leadership – a select few working on the business to enhance the performance of the many working in the business. Integral to being an organisational architect is embracing a systems-level notion of ethical behaviour. While conventional wisdom considers ethical behaviour as being open, honest, trustworthy and transparent, organisational architects working on the business define ethical behaviour as managing the intersection of individual competence and organisational integrity. This distinctive view of ethical behaviour serves as the foundation for professional and industry values and standards needed to optimise sustainable shareholder and stakeholder value.

Procedurally, the role of organisational architects includes designing the leadership table, determining the right positional seats at that table, and selecting the right leaders to sit in those seats. The right leaders are skilled and equipped to continuously architect the organisation to ensure the people working in that organisation have the skills and behavioural competencies needed to manage the firm’s systems – practicing its culture and achieving a winning strategy, leading to the fulfilment of the mission and vision.

This star team, as opposed to a team of stars, works on the business to develop organisational capital to a supervening level of intelligence, agility and adaptability through an ongoing structured conversation of effective actions produced by doing planning right. The result is an organisation always perfectly designed to cope with threats, seize opportunities and change the competitive forces to its advantage. This star team of organisational architects then designs the work of the organisation into a form producing superior levels of sustainable value for shareholders and stakeholders compared to the value produced by alternative investments of comparable risk.

Organisational architects work on the business to produce effective and efficient entity interdependencies between the board, management and workforce as well as effective and efficient procedural interdependencies between financials, strategy, organisation and operations. This carefully designed work positions the firm at the intersection of individual competence and organisational integrity essential to sustainable success.

People working interdependently in these super organisations are equipped to identify the points of constraint hindering the growth, development and performance of the overall firm and then apply quality tools and techniques to increase the capacity of those constraints to a degree where new constraints emerge as the next opportunities for working on the business to increase capabilities, performance and value creation. This focused approach to continuous improvement and systems-level governance, leadership and management equips corporate leaders to achieve the goal of well-planned change.

Stopping these two critical errors of commission and omission will differentiate a firm from the pack, transforming its organisation into a strategic asset and sustainable competitive advantage. This advantage includes an immune system shielding the firm from all other errors causing organisational ineffectiveness and value destruction.

Mark W. Sickles is the chief executive of SuperOrg, Inc. He can be contacted on +1 (201) 315 3653 or by email: msickles@superorg.solutions.

Mark W. Sickles

SuperOrg, Inc.