Karl Albrecht: Organisational Intelligence
Internationally recognised speaker, author and futurist, Dr Karl Albrecht was a guest of the Institute in June 2003 when he travelled from the US to speak on his theory of Organisational Intelligence.
AIM: You mention that, "Intelligent people, when assembled into an organisation, will tend towards collective stupidity". What do you mean by this?
Karl Albrecht: In over 25 years of experience as a management consultant, I've seen many more organisations defeat themselves than get beaten fair and square by worthy competitors. Executive incompetence, palace wars, political battles at all levels, lack of direction, malorganisation, nonsensical rules and procedures - all conspire to prevent a business from deploying all of the brainpower it's paying for. I call that collective stupidity - the people may be very intelligent, and highly capable of doing great things, but their collective brainpower gets squandered.
Think of it this way: when the employees arrive for work every morning, they bring with them a certain total number of IQ points - their practical intelligence and learned mental capacity. When we pay them, we're buying an option on those IQ points. At the end of each day, we've either exercised that option or we've let it expire. How many executives can say they're actually getting all the IQ points they're paying for?
If we borrow an idea from the physicists, we can talk about this lost or squandered brainpower as causing an increase in entropy. In thermodynamics, entropy is a measure of disorder in a system - the amount of energy which is unavailable for productive output. In contrast, we can talk about syntropy, which is the gain in available energy - or brainpower, in this case - due to operating more intelligently in many ways.
If you like math, the basic equation of OI is "net intelligence equals available brainpower, minus entropy, plus syntropy." Net intelligence is what we have left when entropy takes its toll and after we do various clever things to make good use of the brainpower we've hired.
AIM: What is Organisational Intelligence and what role can it play in today's busy workplace?
Karl Albrecht: My definition of OI is "the capacity of an enterprise to mobilise all of its brainpower, and to focus that brainpower on accomplishing its mission." By that definition, the role of OI is simple: to make the enterprise more successful in its environment.
My model of OI has seven key dimensions: Strategic Vision, Shared Fate, Appetite for Change, Heart (or spirit), Alignment & Congruence (the structure, systems, and rules), Knowledge Deployment, and Performance Pressure. The organisation that is moving in the direction of its highest potential must be continuously advancing in all seven of these key dimensions.
We don't really know the upper limit of any organisation's real capacity for intelligence, but there is little doubt that most organisations could improve substantially.
AIM: If an organisation could do just three things to channel individual and team potential into organisational intelligence what would you recommend?
Karl Albrecht: The best way is for the senior leaders of the organisation to start thinking and talking about their enterprise as a potentially intelligent operation, and to undertake a never-ending assessment of its possibilities for advancement. There should be an ongoing conversation around the simple question: "How can we operate more intelligently?"
The second step is to start giving people the authority to think. When even the lowliest worker believes that his or her ideas, experiences, insights, and suggestions will be listened to and appreciated, we begin to liberate more of the tremendous brainpower that we've already hired - and that we're already paying for every payday.
The third step is a systematic, relentless, and never-ending attack on the causes of collective stupidity: organizational structures that don't make sense; "silos" that have grown up between departments or factions; policies, rules, and procedures that thwart the value-creation process; incompetent, ineffective, or failing managers; turf wars between managers and departments; union-management conflict; caste systems that have grown up in the organisation; top-management behaviours that confuse, divide, or demotivate people; unfair or unjust treatment of employees that destroys morale and the sense of shared fate; and, sometimes, even the lack of a clearly defined vision and mission.
The most intelligent organisations operate on the principle that "good is never good enough."
AIM: What importance does human imagination play in the overall success of an organisation?
Karl Albrecht: In all of the developed economies, organisations are shifting from "thing-work" to "think-work." This applies to government and the non-profit sector as well as the corporate sector. In the knowledge economy, fewer and fewer people make their living by making things, and more of them make their living by working with data, information, and knowledge. This means that practical thinking skills - including imagination, but certainly not limited to that - will be ever more in demand.
HR experts predict an increasingly severe "smart gap," meaning that we'll have a tougher time finding employees who can think beyond their noses. Inasmuch as the public education systems are failing miserably to provide us with the smart people we need, we will find it necessary to grow our own smart people. I believe more and more organisations will take up the role of educator of last resort, and invest more heavily in the mental competence of their workers.
At a time when companies are spending tens of millions of dollars on information technology - the machine software - they've so far not seen fit to spend a few tens of thousands of dollars on improving the mental skills of their employees - the human software. As we begin to realize how much of the IT investment is being wasted or misdirected, I believe we'll be spending less on the machine software and more on the human software.
AIM: Can you supply an example of an organisation that successfully utilised OI and one that suffered from 'collective stupidity'?
Karl Albrecht: One of the most legendary episodes of collective stupidity was with Ford Motor Company in Detroit. In the early 1980s, they launched a new advertising program with the slogan "No unhappy owners." The TV ads promised that every Ford owner would have a car he or she was happy with, and if there was anything wrong, the company would make it right. The only problem was that they neglected to tell several thousand dealers about the ads. The dealers were swamped with unhappy owners, who became more unhappy when the dealers couldn't handle the volume of traffic.
This is the quintessential case of what I call "ballistic podiatry," otherwise known as shooting one's self in the foot.
On the opposite side, one of the legendary examples of collective intelligence, which has been going on for many years, is the remarkable orchestration of the daily experience of magic in the Disney theme parks. From the recruitment, indoctrination, training, placement, and supervision of the employees, all the way to the design and maintenance of the facilities, the delivery of customer value expresses the Disney business model, which is "fun and fantasy in a theatrical setting." Disney designers and managers are some of the world's best experts at eliminating the contradictions to the core proposition of value.
AIM: How do you think the OI of Australian companies compares to those in the United States?
Karl Albrecht: I don't have enough data to even speculate on this, although I have some unverified impressions. Not to seem unkind, but it does seem to me that Australian managers - and possibly executives - tend to have somewhat less formal education than their American counterparts, and are somewhat less likely to read up on and follow the development of the latest management ideas. This could indicate a somewhat more traditional, "safe-zone" style of leadership, although - again - this is mostly conjecture on my part.
Also, Australian industry has historically had considerably more labour strife than the Americans have, and this can contribute to a loss of a sense of shared fate and esprit de corps, although this condition seems to have diminished considerably in recent years.
We've recently collected several hundred samples of opinions of Australian managers about the OI status of their organisations, and we'll be compiling a summary of those findings. As we develop a larger data base for the survey, we'll be able to make some useful comparisons of their perceptions.
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