Purpose of Organisation’s Operating System

On the Blind Side

Can you recall the last time your organisation’s operating system was a Board discussion topic, or when it was last benchmarked?

Probably it wouldn’t be a surprise to respond with “I’m not sure”, or even, “is that really necessary?”.

And you wouldn’t be alone if one of the above is your answer.

What is an Organisation’s Operating System?

The organisation’s operating system is made up of a set of assumptions, principles, values, tools, processes and policies that act as the foundation upon which day-to-day work unfolds.

The goal of an organisational operating system (OOS) is to increase organisation effectiveness and improve strategic outcomes. This effort can lead to a more harmonious work environment that retains good staff and produces tangible results.

The Industrial Revolution and an OOS

Over the last 100+ years organisation operating systems have been heavily influenced by industrial efficiency practices introduced by Frederick Winslow Taylor. These industrial efficiency practices separated the thinking from the doing by finding and enforcing the one best way to do every task. The intent was to make work as controllable, predictable, and efficient as possible. This saw a meteoric rise in quality, consistency, and productivity.

However, the rub is that slowly but surely, a way of working, which was designed for maximum efficiency and the compliance of an unthinking workforce, while still existing, now has become woefully outdated.

The Rise of Digital & VUCA

The meteoric advancements in technology over the last few decades, globalisation and the pervasiveness of VUCA (volatility, uncertainty, complexity, ambiguity) as now a steady force at play has made the legacy of the industrial OOS highly limited.

Organisations have evolved in complexity to such a degree that the system cannot be broken down into discrete independent parts and controlled for predictable widget outcomes.

What’s most interesting is that when you look at successful organisations, no matter how different their purposes and objectives, there is a commonality in their approach to their operating system.

Organisations Successfully Adapt in Their Ecosystems

Successful organisations embrace operational systems that are fluid and dynamic, with varying levels of interconnectedness.

The organisation is not a rigid structure but one that ebbs and flows with market forces. This allows staff with full oversight of impact and effectiveness to reflect, assess and decide what work practices presently operate and whether this is aligned with the organisation’s purpose and values. It facilitates easier adoption and adaption of latest industry developments, standards, and practices, and more quickly meeting today’s customers’ needs.

This may include any of the mechanisms and interaction points which enable an organisation to do what it seeks to do or has approved plans to do. It helps to identify and separate the various roles and responsibilities needed to achieve successful outcomes across an organisation.

While the descriptor clearly has the word ‘operating’ associated with the system, it’s far reaching impacts are a significant Board consideration. A Board needs to be across the system and confident that it’s doing both what it’s required to do from a governance perspective while optimising delivery and impact against KPIs.

Why is it Important? 

An organisation’s operating system includes the necessary processes and ‘tools of trade’ required by staff to carry out their roles. It captures how a business operates in its entirety.

In other words, the foundation for the organisation’s interface with its market, how it produces or delivers its product and or services, the basis for decision-making and problem-solving, and ensuring everyone is aligned to the same purpose and objectives.

The operating system’s importance is in helping an organisation be both more efficient and effective in what is does, especially in its day-to-day activities. The more friendly and attuned to the needs of users that an operating system is, the more streamlined will be an organisation’s operations and the higher the performance and hence productivity.

Any Negative Consequences?  

It is easy to think that because the value of an operating system is obvious, then it would attract the interest and ongoing monitoring from Boards of Directors. 

That it does not, begs the question – why not? 

Maybe the reason lies in the name – operating system. 

Boards still seem to consider that if they are monitoring or tracking areas of operations then they are interfering or becoming too involved in operational matters and not remaining true to their governance responsibilities. 

This approach has the potential to diminish the critical nature of the organisation’s operating system as a fundamental contributor to the health of the organisation. 

Multiple Benefits 

As an example, the more effective an organisation’s processes and/or workflows are, then it is likely they are more competitive in their marketplace.

Such competitive advantage may reveal itself across the various following aspects:

1. clarity of strategic focus
2. minimal confusion among staff
3. limited overlap/duplication in roles/tasks
4. higher efficiency in processes
5. improved productivity
6. consistent quality outcomes
7. ongoing relationships
8. improved collaboration
9. effective communications
10. limited error rates
11. minimal complaints/improved customer satisfaction
12. effective risk management
13. ongoing cost savings
14. valued reputation

In Need of Regular Nurturing 

This area of an organisation does need regular evaluation. As nothing lasts, then there will be a time when it becomes necessary to change existing workflows and/or processes for the benefit of the organisation. To be confident that this will occur in your organisation, there is a need for everyone to be fully open to feedback. Some describing this as being vulnerable, especially those in leadership positions.

Fundamentally, it is really about closing the governance feedback loop. For Boards, this is a key role as part of their governance role and responsibilities.

Worth noting too, it is more than simply an act of compliance. It is essentially a key value creation opportunity for all Boards to be involved with.

The Board’s Role

As there are several types of operating systems in existence for an organisation to adopt and use, then, as part of the board’s governance responsibility, it needs to answer ‘what is their organisation’s current operating system? And, is this optimum for the organisation’s performance needs to be a continuing success?

As the board has an oversight responsibility for the whole of the organisation, then it needs to be satisfied with the handling of purpose, strategy, finances, resources, compliance, risks, well-being, remuneration and rewards, talent, innovation, and other important aspects that go directly to the optimum health of every organisation.

This will demand a clarity around the importance of governance at all levels within the organisation.

It is a Call to Action

Most organisations have some form or other of a design. How relevant and useful is the challenge for today’s board. Too often, an organisation’s structure is considered a critical objective. Naturally, this offers a means to address the roles, responsibilities including decision-making, reporting lines, financial authority, risk management, and regulatory reporting to highlight a few areas. But it is more about compliance options, which are needed but not the whole story.

As for the governance link to the operating system, it needs to be more broadly considered, assuming a more meaningful, transparent, relevant, proportionate, and functional role to underpin the success of the organisation itself. Because, if it works well, it is like magic that gives the organisation’s stakeholders a sense of purpose and ownership.

Ultimately, the OOS must enable an organisation’s staff, leading to their experiencing empowerment. The Board in turn can seek to measure the success in achieving this outcome, by determining the level of staff empowerment, operational impact, and a real sense of an organisation’s health.