The current crisis in organisations!

Organisations are in crisis! Leaders do not lead! Strategy is ineffective! Governance does not work!

These are serious assertions and accusations – why do I say this?

Firstly why are organisations in crisis? Organisations are in crisis because many were built in a world that no longer exists. What do I mean by this? Well there is no doubt that the world is changing and has changed significantly in the last decade – there is also no doubt that the world has always been changing. Effective organisations go through a regular process of reinvention to remain relevant and effective. If organisations do not reinvent themselves fairly regularly they become irrelevant and archaic. I would argue that the types of changes we have seen recently; are challenging organisations in ways never seen before – in fact the very definition or purpose of organisations has been challenged.

A major reason for this is that leaders do not lead in a way that is appropriate to the challenges that organisations face – again I would argue that this is due to the fact, not only that things have changes, but more importantly due to the type of change that has occurred during the last 10 to 20 years – the expectations on leaders, who they need to be and how they need to act has changed significantly. Leaders who learned the art of leadership in an era that no longer exists need to unlearn the skills that made them successful and learn a whole new set of leadership skills. Whereas leadership succeeded in the past due to power and authority leadership now needs to exercise care and consideration – I would argue that these are the new sources of power for leaders, not just emotional intelligence but social intelligence as well.

Strategy is therefore ineffective because organisations are not identifying the right things to do – and if the right things are not identified then no-matter how well you do them the organisation as a whole will not be effective. Too often strategy is short term – yes it may look 5 years down the line and try to identify actions for the next 3 years – but this is at most medium term. The obsession with short-termism was instrumental in the financial crisis of 2007/2008 and continues to dominate the thinking, deciding and acting of leaders throughout organisations across the globe. Strategy must look further to better identify risk and opportunity on the way.

More than ever before organisational leaders need to take into account not just what they want to achieve but who is impacted as they achieve this objective. This is what governance is all about – it is about ethics and integrity – about doing things right. It is not just about doing things right according to the law but more importantly according to the values and conduct that the organisation wants to be known for. Governance is determined by both formal and informal systems in a business – and it is characterised by a company that is effective (does the right things), responsible (does them right) and sustainable (makes decisions based on the long term view.)

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