Creating Structures That Facilitate Organizational Wisdom
Section audio
Developing organizational wisdom requires structures that facilitate adaptability, innovation, and the prevention of problems. These structures should be conducive to problem-solving and risk-taking. Organizations with such structures engender trust, enthusiasm, integrity, and a long-term view.[1]
Achieving these attributes is a tall order, but there are ways to create such organizations, including:[2][3][4][5]
- Including multiple stakeholders in goal-setting
- Pushing decision-making authority to points of expertise in your organization
- Focus on training general rather than firm-specific skills
The following sections discuss each of these in more detail.
Include multiple stakeholders in goal-setting
Historically, business education focused on the primacy of a company’s owners. Under such a view, a manager’s sole responsibility was to the owners, and the company’s purpose was reduced to the creation of profits.
Organizations, however, operate in open systems where they affect and are affected by multiple stakeholders. To develop organizational wisdom, create goals and plans that focus on multiple stakeholders, including customers and employees, in addition to owners.
Push the authority to make decisions to those with relevant expertise
Since wisdom is action-oriented, we want to create organizations capable of action. To achieve this, push decision-making to the organization’s sources of expertise and base rewards on performance. Distributing decision-making in this way requires trust, which leaders can develop by:
- Creating systems that foster the free flow of communication,
- Honouring integrity, and
- Maintaining stability within the organization.
Focus on training general skills
Tapping into the potential of collective reasoning, appreciative inquiry, and experimentation requires the organization to see differences among its members as potential innovation sources. Translating innovative ideas into actions requires a workforce that is creative and adaptive.
An organization can foster creativity and adaptability through training programs that focus on general rather than firm-specific skills. As crucial as firm-specific skills are, focusing exclusively on them to the exclusion of all else narrows people’s focus and creates tunnel vision. Tying compensation to skills and knowledge that employees gain further promotes an organization’s innovative potential.
As Chapter VIII discussed, it is through creating appropriate bureaucratic rationalities that organizations produce these types of structures. How do we gain the skills needed to create and shape the bureaucratic rationalities of our organizations? The following section addresses that question.
Key Takeaways
- Develop goals and plans that focus on multiple stakeholders, including customers, employees, and owners
- Push decision making to sites of expertise in your organization & base rewards on performance
- Create systems that facilitate the free flow of communication
- Maintain stability
- Recognize differences as a source of innovation
- Focus on training that develops general skills rather than firm-specific skills
- Tie compensation to employees’ skills and knowledge
- Kotter, J. P., & Heskett, J. L. (1992). Corporate Culture and Performance. New York: The Free Press. ↵
- Beckhard, R. (1969). Organization Development: Strategies and Models. Reading, MA: Addison-Wesley Publishing Company. ↵
- Burke, W. W. (1994). Organization Development: A Process of Learning and Changing (2nd ed.). Reading, MA: Addison-Wesley Publishing Company. ↵
- Burke, W. W. (2007). Organizational Aesthetics--Aesthetics and Wisdom in the Practice of Organization Development. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of Organizational and Managerial Wisdom (pp. 243–259). Thousand Oaks, CA: Sage Publications Inc. ↵
- DeNisi, A. S., & Belsito, C. A. (2007). Strategic Aesthetics--Wisdom and Human Resources Management. In E. H. Kessler & J. R. Bailey (Eds.), Handbook of Organizational and Managerial Wisdom (pp. 261–273). Thousand Oaks, CA: Sage Publications Inc. ↵
A system that has an effect on and is affected by the outside world.
One party takes purposeful action to avoid conflict with another party.
