Intelligent company, evolutionary development

Knut Bleicher   |  Wed, 06/25/2008 10:32 AM  |  Management

The intelligent corporation as a target for evolutionary development in business is based on the insight that changes in society and the economy and not so much created as evolved through the evolution of societal factors that have to be analyzed and understood and not treated quick term by measures in the shape of short-term fused management approaches.

KNUT BLEICHER

The necessity for innovation is of crucial importance within this set of environmental changes, demanding managerial attention and actions on the conceptional basis to understand the highly complex relationships between relevant factors that govern this evolution. Thus the key success-variable for management abilities to draw conclusions for remedial actions to adapt to changing conditions is the gift for perception of the influences that this highly complex interplay of changing variables might have on the environment and the corporation in the future as a basic for necessary remedial actions.

This ability to see through the "mist of complexity" has to be addressed in the realm of the development of intelligent corporations for the future and can be considered the ultimate prerequisite for development of an advanced type of the corporation of the future: The intelligent corporation.

Intelligence is commonly defined as the ability of a person or organization to comprehend the essentials of highly complex developments even arising out of undefinable and unpredictable developments by drawing insights out of them mostly for taking remedial actions for survival.

This might be the ultimate approach to change, rather than become its victim -- trying to be the master of it: "In times of profound change, the learners tend to inherent the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists." - or as Peter Drucker remarked: "Today perception is much more important than analysis" -- this holds particularly true considering taking the time difference between both approaches into account.

Henry Minzberg commented in the same vein: "The real challenge in creating strategy lies in detecting the subtle discontinuities that may undermine a business in the future. And for that there is no technique, no program, just a sharp mind with the situation."

What all this is about boils down to the necessity of providing visions by management that are sound and inspiring to move the minds of people working in an organization in coherent directions to the future with a highly inspiring drive of motivation and for cohesion. My experience with many commercial and industrial organizations indicates that the crucial variable of successful management has mostly not been analyzed to its full extent and emphasized to the detriment of getting lost while pursuing other less critical future paths of development.

I propose a new vision for viewing the organization as a core of intelligence meeting future demands of society in a coherent and effective manner by a purposeful integration of human contributions. To focus on this role an organization can be considered "intelligent".

Under the present conditions of development evolution demands to follow this ideal type by leaving the reliance on bureaucratic forms of organizations.

Organizational intelligence cannot simply be equable with human intelligence, therefore the question has to be raised: Are organizations capable of behaving in an intelligent and scientific way, to adapt to changing conditions, influence and shape the environment, if necessary, to find a new milieu ("playing field") or to reconfiguring to a new situation of their environment, to master a positive new contribution to the viability and development of the larger wholes in which they are embedded?

It might be interesting to note that the set of capabilities enumerated here goes far beyond the criteria of intelligence as established by diverse disciplines as psychology and of information technological instruments which support decision-making. It also transcends those theories of management in which organizational performance is conceived of and measured in terms of criteria such as profit, efficiency or shareholder value only.

The foundation thus lies in the Conant-Ashby-theorem to design organizations in such a way that they behave intelligently and enhance their ability to cope with the complexities they face.

These emerging concepts of a new prototype of organization models can contrast in many ways with the established modes of organizing around our division of labor based hierarchical structures that are in place on a worldwide scale, the ideal model of a bureaucratic organization as outlined a century ago by the esteemed German thinker Max Weber.

The model does not have to be described here in detail as we are living with it, be it in industry, trade, financial organizations, etc. It can be recognized by its multi-layered look giving room for distinguishing tasks and responsibilities coordinated by a formal chain of command.

The bureaucratic model of organization has -- with hindsight -- proved to be a great human success story by providing a reliable framework for orderly human contributions to a set overall goal in an orderly fashion of interplay with people of different capabilities and motivation. It thus can be considered one of the most successful human inventions for social and economic endeavors accordingly following a division of tasks and responsibilities approach by applying hierarchical control to bear.

There can, however, be a multitude of factors recognized that this highly regarded and standard approach to deal with organizational problems has to be taken to the test ground as new demands on the function and unviability of organizations within an environment of rapid change creep up and are beginning to threaten the survivability of this type of a "fortress" organization. The main reasons for a change to other concepts can be identified in the increasing dynamism surrounding these well structured fortresses that might indicate that their structures will not be able to sustain a "storm of change".

This raises the interesting question of what kind of a new "building" could be able to replace these well proven bastions of the industrialized society -- the bureaucratic organizations -- during the last decades. Ideas have been developed in organization theory and practice to address more specific issues of organizational change that can be regarded as successful but do not comprehend the change in its wholeness of a new comprehensive model.

The partial attempts of renewal addressed in most cases address specific disadvantages of the bureaucratic model as lacking coordination of interdepartmental problems (matrix tensor organizations), bringing complementary experiences to bear for improved problem solving (tasks forces, centers of competence, project management, etc.), and the need to increase the speed of action by task-force structures.

What is left for development, however, is the development of an overall "grand design" of a new formal ideal type of organization. The above deliberations about the intelligent organization seem indeed to be an ideal typical design to meet the requirements of a now progressing world. This gives rise to the task to deliberate in more detail on the vision of an intelligent organization model.

An intelligent organization can be considered to behave in an intelligent scientific way (M. Schwaninger) to adapt to changing conditions, influence and shape the environment, if necessary, to find a new milieu ("playing field") or to reconfiguring to a new situation of their environment, to master a positive new contribution to the viability and development of the larger wholes in which they are embedded.

Virtuality as promoter of intelligence

Visions have to provide "sense" as a basis for mobilizing "motivation" and making "satisfaction" via the experience identification possible.

An evolving element of the evolution of this new organizational prototype seems to lay in its virtuality. The term of the virtual organization has already be coined and we can expect interesting developments particularly in the connection of the design of intercompany networks -- as the outgrowth of the evolution of strategic alliances in the future. Early experiments in the fields with forms of virtual corporations give hope for further development of an organization based on the lateral rather than the hierarchial principle of design.

Knowledge -- the resource base of intelligence

Virtuality makes the access to other knowledge basis possible and encourages its use in a widespread field of application. It incorporates also the potential to develop integrated systems solutions bringing products and services closer together for application. The intelligence of virtual systems thus can be seen in their ability to transcend unusual situations faster and react to them with a higher degree of interest and adaptability as they provide a wider scope of performance know-how, structural and systemic competence and personality base.

Igor Ansoff has made the point that a systemic competence can be considered a Meta Competence as it raises the sensitivity of organizations to weak signals, and to better handle highly complex tasks, and projects as well as gaining competence to deal with dynamism under time pressure and insecurity. The general ability for reaction is increased.

As a result, a kind of "learning organization" is developing that knows when changes are necessary as a part of an overall learning process within an organization and learning and de-learning become the core processes in this type of organization.

This type of a learning organization has to be based on an organizational culture of non-conformity and openness encompassing heterogene subcultures, strong autonomous subforces interested in pursuing their own values as well as a tolerant management that cares for an organizational culture that is based on self organization and trust within a highly decentralized progressive form of structural evolution centered on developments that are worthwhile and successful.

The ultimate task of management remains to provide a management capacity that is in a qualitative way able to innovatively contribute to the evolution of problem solving and is committed to the exploration of new solutions by developing systemic competence and creativity. The high degree of decentralization and lateral information flow applied is strategically governed by the build-up of a highly qualified human resource base considering its intellectual resources and its innovation driven motivation and cohesion in virtual structures and an organizational culture based on trust.

The just developing terminology describing them as being learning, virtual, intelligent and cooperative as then all address with warning foci the emerging new form of an organizational setup.

The intelligent organization as the prototype of an emerging knowledge society

The upcoming transition of our well structured industrial society and economy that is based on a philosophy of creating value by developing and the use of producing and marketing of physical goods which implied the use of technocratic approaches and of methods culminating in a bureaucratic and hierarchical treatment of societal problems based on providing knowledge for meeting complex challenges that might even be linked to the overall survival of mankind.

A knowledge society and economy will highly depend in its survival, however, on the creativity in confronting problems of tomorrow mainly with people who have built yesterdays structures and won't live to see a tomorrow within its organization. Interactiveness of its systems including the intelligence of its members and organizations will become the new core competence.

With the envisioned shift to a knowledge-based society it should be taken into account that its implications can or will be met not only with enthusiasm, as we still work in yesterday's structures with methods of today.

Prof. Dr. Dres. h.c. Knut Bleicher is a professor in the field of business management and president of the Management Committee at the Institute of Management.

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