business environment

Bob Mercer, a marketing executive from Manhattan, took two of his associates to the mountains where he and his father had camped many times. It had been fourteen years since his last trip. During the drive Bob reminisced of the wonderful memories he shared with his father. Upon arriving Bob decided to forgo setting up camp for a short hike into the woods, to a river less than three miles from camp. They took with them a backpack containing a few jugs of water, some light snacks and their fishing gear. Bob sensed he had enough equipment for their short journey. After all, he’d planned to get back before the sunset to set up camp, build a cozy fire, and fry some of the fresh catch of the day for dinner. Along the trail Bob bragged about the river he and father had fished several times in the past. After they had traveled a few miles, the river was nowhere in sight… Bob kept saying, “I’m sure it’s here. I’ve been here several times with my dad.” They kept walking a few more miles, no river in sight.

What Bob did not know is that the river was rerouted due to a heavy mudslide in the area several years ago. If they had read the signs along the path they would’ve been alerted of the latest change in landscape. But wait, even the trail signs were burned by local fire a few years ago, and since the camp area became unpopular with the campers the signs were not replaced. The ridges and peaks seemed familiar to Bob but certain rest areas and other key landmarks had been eradicated by the fire’s fury and ensuing erosion. Soon Bob and his friends were lost, and the weather above them was rapidly changing; a small detail they had not anticipated. The weather in these high altitudes can change within a moments notice and cause temperatures to drop drastically. Suddenly the ominous clouds above them burst sending a heap of water over them. Bob and his friends needed to respond quickly to the environmental changes. Although Bob was an avid camper for many years as a youth, he had not gone for a long time, and his friends were city dwellers all their lives. They simply didn’t have the expertise or knowledge to respond to these types of situations. The hiking trails filled and flowed with water, which made it more cumbersome to walk uphill. After walking several hours in the rain and mud they luckily stumbled into their campground late into the evening extremely exhausted, nursing the large blisters on their feet. Too tired and late into the night to set up camp they simply spent the night in their rented car, grateful they had made it out of the wilderness alive.

As a businessperson can you relate with this story? Do you approach your business or the workplace with the same mentality that the economy will look and operate the same as yesterday’s glory years? When the current economic recession blindsided you, how do you react to it? Did you see it coming? Did you have a ready recession proof plan in place to guide you through tough times? In Bob’s story, what was required to make their trip less risky and more enjoyable? If intelligence matters in a simple hiking trip, then it would make even more sense in the way you operate your business or manage your organization.

Organizational Intelligence

According to Professor William E. Halal, “Organizational intelligence is the capacity of an organization to create knowledge and use it to strategically adapt to its environment or marketplace. It is similar to I.Q., but framed at an organizational level.” Author Verna Allee defines it as “the cognitive capacities and capabilities of an organization.” In sum, organizational intelligence is tapping into your organization’s collective knowledge quotient, and then applying new learning capabilities to seize opportunities to gain an advantage in the marketplace. Utilizing organizational intelligence does more for you than just help you stay afloat; it’s about perceiving and taking advantage of new trends and shifts in the marketplace, then creating strategies to stay competitive in an unstable business environment. Organization’s who place a high value on learning and accessing new knowledge increase in strength and are better prepared to absorb fast changing environments. How can organizational and business leaders prepare themselves and their teams to become more aware of the environmental changes in their sphere of business? This article addresses a few ingredients essential to help you, the organizational leader, access new knowledge, and use this knowledge to adjust organizational strategy to meet the changes emerging in your environment. First, we must look to our living systems to get our queues.

Take Note of Living Organisms

One way organization’s can make the adjustment is to think like living organisms, which learn to live in, adapt and survive in changing environments such as seasons of drought or when imminent danger looms. Animals have built in systems of awareness and networks that alert them to apparent changes emerging in their environment. Do you remember the tsunami that hit Thailand’s beaches unrepentantly on Christmas Day 2006? It was noted that birds and animals were seen taking flight away from the ocean to higher ground moments before the tide hit the beach. In other words, these animals sensed atmospheric changes in their ecosystem, which triggered an internal “flight” mechanism. As an entrepreneur, manager or business leader can you sense the emerging trends in your business environment, gain knowledge, learn to respond, and create strategic approaches that will help you thrive? The world of living organisms can teach us many things. Second, you’ll need to depend on your team and learn to optimize their collective intelligence.

Optimize Team Intelligence

Organizational intelligence requires a constant conversation with your team, not just at the executive level but also throughout the organization, including the shop floor. It’s a top to bottom conversation. Therefore, as you gather your team members’ mine for their collective insights and knowledge, which are crucial for navigational purposes. You should not underestimate the wisdom of your team members regardless of their background, experience or education. Pure wisdom often comes from the simple minded. Certain employees in your organization interact with suppliers, customers and others vital to your existence. Many times the information shared in these exchanges don’t make it to the top, and organizations miss vital intelligence data required to lead masterfully. In the story you read, Bob’s two companions had no experience neither camping nor hiking, however, a conversation would have been better than none at all. In this respect, community learning is essential for acquiring new knowledge. Rapid changes in the environment must also include speedy discussions. One leader can’t have all the right answers all the time but a team’s collective insights, knowledge and intuition can be the deal breaker in situations like Bob’s excursion.

Stay Connected to Your Business Web

Your business operates among a web of networks within and without the organization. Your internal web consists of various departments, a system of reporting and accountability, and employees with varying degrees of experience, knowledge and education. Your external web is made up of vendors, shareholders and consumers who also may interact with your competitors and other related enterprises. As you become more intimate and connected to the entire web you begin to sense the slightest changes within your field of relationships. According to author Mary Beth O’Neil, “When anything comes in contact with a spider web, anywhere on its surface, the whole web moves… so it is with an interactional force field established between two or more people. It has its own anchor points, resiliency, and breaking point, and it is most often invisible to the members within it. When anyone in the field moves, all members feel the effect, though differently based on their positions.”

When you become more familiar with your internal and external business webs you become more sensitive to slight movements, and their effects upon your business. In the opening story in this article at what point should Bob have felt change in his environment? Could it have been the moment he sensed the missing river? Remember he had been there several times before with his father. At this point he should have stopped and asked himself, “Something isn’t right here. Let’s regroup.”

Back to Bob

If Bob had detected and thought through the changes in his environment early and learned to use this information, he probably would have made better decisions and avoided an embarrassing trip. Some environments do not stay the same within time; they change, while others stay the same. Therefore, we must remain on constant vigil or else learn life’s lessons the hard way. What could Bob and his companions have done differently? It’s easier to gain insight from hindsight but it’s even better to develop foresight; insight fostered by perception and knowledge. Therefore, learning how to learn is the key to increasing intelligence capacity, which must become a priority for every organization. A “winging it” approach simply won’t help you survive through the unexpected changes in your business environment.

The concept of social legitimacy is based on the premise that business relationships between a company and a particular stakeholder will not irresponsibly damage the legitimate interests of other stakeholders. Legitimate is used in a broader sense than legal. It implies an entitlement which is recognized by others as correct.

Justification

Justification means that the action is acceptable to both affected and interested parties. Very often the affected party is being overlooked.

Confidentiality

Despite the need for openness, in some areas, such as customer data, employee data, citizen data and others, confidentiality is crucial. It is a source of added value to these groups.

Sincerity

Sincerity excludes pretending and leads to doing what is right, not only is what dutiful. It covers also honesty, respect for others and adherence to promises.

The importance of the above mentioned pillars is interrelated and changing in different situations. Within the democratic and market reforms in post-totalitarian countries, these pillars themselves are being built / re-built. In the transition and adjustment periods, there may be tensions or even conflicts among individuals pillars. The most problematic relations are between legality, legitimacy and justification. We may assume that the reconstruction of the entire legal system and functioning of courts is at the core of this disharmony.

Responsibility (accountability) is another related concept which needs further specification. In the context of building the national integrity system we are not concerned with the so called causal responsibility which may be characterized as a relation between one event and another when the former causes or helps cause the latter. We should focus on moral (personal or collective) responsibility when ones role is defined by virtue of moral, legal or some other sort of rules. In business ethics debate, a considerable attention has been paid to the problem whether collectives such as nations or formal organizations may bear responsibility. There are some very influential critiques of collective/corporate responsibility arguing that corporations and other formal organizations are at best legal but not moral entities. They can be held legally liable, but only human beings have moral responsibility. Among the main arguments for the existence of corporate responsibilities the following ones can be mentioned: A firm (an organization) is qualitatively different from an individual and other entity such as community or country. Since the organization makes decisions and takes actions, it can be qualified as an actor. Its actions affect people, and these actions can be evaluated from a moral point of view. A company or organization is capable of moral behaviour and, therefore, has a moral responsibility.

The Federal Sentencing Guidelines adopted in the U.S. A. in 1991 represent an important input into this debate and especially in the cultivation of business practices. This model of good corporate citizenship is designed on the basis of compliance approach and stresses the concept of due diligence. It requires companies set up compliance standards to be followed (communicated, trained, enforced sanctioned).

Personal, as well as collective, responsibility requires two conditions: freedom and intention (awareness of the moral character of an action). Basically, responsibility involves three components: the subject who bears responsibility that cannot be completely determined by rules and laws; for what the subject is responsible (the spheres of responsibility); and the authority to whom the subject is accountable. We have to go further and try to evaluate the degree of responsibility or the kind of the ethical challenge involved. It is suggested in the business ethics literature to distinguish between minimal ethical requirements, positive obligations beyond the minimum, and aspirations for ethical ideals. The first degree includes basic ethical norms such as do not kill, not rob, not exploit, etc. Going further means that it is becoming more and more difficult to find consensus than in the first case. Here is a broad space of freedom and inspiration companies (acting with integrity) can use to define their mission, build their culture and reputation.

From a very vague concept of social responsibility of the whole system, where it was hard to find concrete bearers of this responsibility, and to define their responsibility in a totalitarian regime (the condition of freedom was not fulfilled), which by its behavior in fact discredited the idea of social responsibility, at present we find ourselves in a very different environment. With democratization of our societies and market of the economies, new actors have emerged. They play various roles in the economy, and have also various interests. Consequently, companies and other organizations in this new system have to deal with various new stakeholders (mainly shareholders, management, employees, competitors, suppliers, creditors, local community where the business operates, global community). What is their responsibility towards the stakeholders? This is a crucial question which is being raised by businesses all around the developed world, and also by the academic sphere. Neither business, nor academics have fully answered this question. Moreover, there is not a consensus on the stakeholders’ model itself (in some perceptions, only shareholders are important). I would like to even broaden this problem and to interpret it in the political and economic context of emerging market economies. The identification of various responsibilities from both sides could help to improve the business environment and even to clarify some basic concepts or categories of the market system.