Market Alignment – An Application of Systems Theory for Organizations
The main components of systems theory that readers might remember are “inputs,” “processes,” and “outputs.” The part that tends to get neglected is “feedback mechanisms.” These mechanisms tell the system the extent to which operations fit the environment. If there is lack of fitness, there is stress. One adaptive impulse is to make processes more complex and intelligent – i.e. sometimes described as the fight response. Another impulse is to give up and run away – i.e. the flight response. The development of an organism – or an organization for that matter – relies on adaptation. The concept of adaptation involves changes made by the organism. On the other hand, natural selection is more about the environment imposing a survivorship regime. Many companies seek out feedback from clients – perhaps by asking them to complete questionnaires. Clients therefore represent a kind of feedback mechanism. Although I entirely agree that clients can provide worthwhile guidance, it is sometimes difficult and impractical to obtain this type of feedback in relation to operational developments. For the moment, I will keep the idea of a feedback mechanism near the body of the organism. It is possible to take clients into account without necessarily approaching them to complete a questionnaire. Market alignment is about making operations (this includes employees) fit its business setting (this includes clients).
For me, one of the joys of reading disability literature is learning to appreciate the distinction between the person as an intellectual being and the body; between the body and the social and physical environments surrounding the body; between the environment of the body and its placement in society and history. In an organization there can be feedback mechanisms both within and outside the body. The concept of “outside” is not a polar extreme that is completely different from “inside”; but rather there is a gradient. A manager can perform an action with intention – i.e. premised on how the body should respond based on his or her intent. I believe that a person would have to be facing a serious illness to truly understand how even the simplest actions can be quite challenging when the body is not fully controllable – as in the case of a corporation – since there are many employees. One might have the idea of raising an arm; but whether or not that arm rises is a separate issue. In an organization, a concerted use of metrics is sometimes necessary to ensure that what one wishes to do is actually happening. We need to establish whether what we have done internally translates to the appropriate external behaviours.
Adaptation is built on effective locomotion. Consequently, for organizations where labour is distributed over many people, the first level of alignment involves matching internal resources with the immediate behaviours intended for the market. There is no assurance that these behaviours are achievable or have been achieved. This is not an issue of control per se but as I mentioned earlier a matter of adaptation. An organization gradually learns what it can do with its body; how the body behaves when the organization attempts to do things; what the body cannot do no matter how much it is forced. This feedback mechanism causes processes to become more complex and intelligent. If the body cannot overcome its incapacity, it might face the cold hands of selection – as the body is overwhelmed by the tasks confronting it.
Before driving home today, I ordered something to eat. I am leaving out the name of the restaurant. Suffice to say, I asked for a Sausage McMuffin. I asked that instead of cheese, I would please have a slice of tomato. I already have difficulty finding things I can eat from this restaurant. So my way of being accommodating is to suggest alternatives. I left without my slice of tomato. I already brought my own drink because the place didn’t sell anything that I can drink. I left thinking that I was running out of options. I would have to stop ordering food from this restaurant. I know there must be an analyst at the head office believing that patrons love fat, salt, oil, lactose, sugar, and caffeine. I am even picky about the cooking oil I use. In any event, this is an example of how a company can become gradually disassociated from a changing market. True enough when I was younger, I ate all sorts of junk food. However, people change. I guess this is the whole point. The changes in people are structurally “invisible” to this organization except at the revenue level. So the company is not accumulating intellectual capital in relation to its day-to-day interactions with people. Operations are not being used as a source of guidance. The company will prosper or perish by egghead initiatives promoted by suits and cheerleaders.
Market alignment is a discussion of systems theory within an organizational context that can be quite close to operational concerns. Operations, whether it is something simple like a line-up or more sophisticated like a restaurant or transit system, can only be designed and controlled by the organization up to a point. In many respects, clients albeit indirectly have the final say over design and control. Without a feedback mechanism and a means to dynamically respond to its signals, the organization might not adapt to the surrounding environment, potentially giving rise to the organization’s disassociation and subsequent termination. Human resources literature routinely covers the issue of “change” – how to make organizations more capable of changing with the times. However, change is actually about market alignment – of becoming more aligned with a fluid market. The concept of alignment is important because it provides a basis for operational metrification: it makes “operational intelligence” something as tangible as “business intelligence.”
I will share the fact that I spend a significant portion of my day analyzing employee performance data. But I never let the idea of “performance” turn to a preconception of “conformance.” Conformance means that the data agrees with instrumental design. Performance means that the data agrees with the market. According to this distinction, a company that produces elastic bands might have great success doing so since this is what is meant to do by design; whether or not the market wants to purchase elastic bands in the manner provided by the company is a separate issue. (The company has been offering individually wrapped elastic bands – each band with its own colourful wrap – and with a little fortune printed on the wrap like a fortune cookie.) I need to state plainly that my company does not produce elastic bands. I am just giving an extreme example to make a conceptual point. Getting a company to begin its life by doing something contrived in a meeting isn’t too difficult; but gradually getting the apparatus to move towards market alignment takes much more effort and certainly an enormous amount of supporting data.
In effect, I am part of the organism’s feedback mechanism – the part that makes the organism more prepared for its market. I am quick to point out that I don’t actually have any management responsibilities; this is a fact that I think sometimes confuses people. I don’t direct employees. I tell managers what their employees are doing and what these employees seem to be accomplishing or failing to accomplish. I also discuss placement and positioning – the extent to which people seem to be strategically positioned to deal with the needs of the market. This means that I am not just looking at employees but also the market. I am sensitive to the hazards of a “conformance regime” – sometimes described as “performance management.” As I have described my duties, it should be apparent that many companies have at least one or several people like me. Consequently, I occupy a kind of profession. The difference in my case is probably the scale of my use data particularly in relation to the market. Alignment for me involves time intervals. I track alignment at each interval. Also, I make use of predictive analytics which for me includes algorithms and pattern recognition techniques. My conceptualization of market alignment represents a highly analytical perspective on systems theory making great use of data on a continuous basis; this is because the market is a moving target. Learning to adapt to the market requires inventiveness, a willingness to experiment, and commitment to long-term analysis.
Link: Market Alignment – An Application of Systems Theory for Organizations