To amplify the performance of your business, it is helpful to think about organisations as an open-system.
Organisations are open-systems. Like a human cell they are continually interacting with their environment, importing energy, people and materials; completing an internal value-add process; and exporting products and services back into the environment.
Organisations are open-systems
All living organisms like plants, animals and human beings are open systems, as are non-living systems that exchange both heat and matter with the environment (such as a boiling pot with no lid).
Based on this metaphor, the performance of the system depends on the effectiveness of the value-add process.
The CEO’s role is to grow business value. Not just annual revenue; but the actual market value of the business. The more valuable the business – the better it is at converting inputs to outputs.
At its most basic level, business buyers and investors make judgements about the effectiveness of your value-add process – how you convert inputs (people, supplies, energy) to outputs (products and services). Your value-add process is your internal business process that generates value. The greater the revenue; the greater the market valuation.
To improve the conversion of your inputs to outputs – what you need are systems of performance. That is processes for leadership, culture and strategy that systematise how leaders lead; how culture is defined and shared; and how strategy is executed in response to changing market conditions. The more effective your value-add conversion process; the more value your business generates; and the more valuable it becomes.
Improving the conversion rate of your value add process
When organisations implement integrated systems for leadership, culture and strategy this results in people who focus on continuous improvement, amplifying their efforts and delivering superior market performance compared to competitors.
If you want to know more about how you can systematise leadership, culture and strategy – look out for my book available from my website and online this Friday 30 October.