Organizational Intelligence

Organization Intelligence Richard Veryard

Contents Improving the relevance and effectiveness of OI. Challenges
Organizations can become more intelligent. To increase organizational intelligence:
identify and remove what stupifies an organization
identify and strengthen the elements of intelligence
develop structures and processes that promote and enhance intelligence
Improvement In an intelligent organization, the complementary capabilities of people and technology are deployed to the full. We support both technological and organizational aspects of achieving and enhancing intelligence. Elements Organizations contain many pieces of intelligence. But lots of intelligent pieces doesn't add up to an intelligent organization. Algebra We have an intuitive idea of intelligence. Organizations as well as people display degrees of intelligence. Definition

We have an intuitive idea of intelligence
In everyday life, we recognize people as intelligent by the way they speak and the way they act.
We generally recognize a person as intelligent based on the following three characteristics.
ability to grasp complex information from the outside world,
ability to respond appropriately to this information,
and an ability to learn quickly.
One kind of intelligence can be measured using IQ and Mensa tests, but there are other kinds of intelligence these tests don’t cover.
Some organizations are characterized by what can only be called crass stupidity. They fail to detect even the most obvious signals of change in their environment, and they fail to respond appropriately - or at all - to the most insistent demands from their stakeholders. They learn slowly, making the same mistakes repeatedly without any insight or understanding.
In contrast, some organizations display the same qualities that we can recognize in intelligent people:
an eager and receptive curiosity,
a consistent but flexible set of responses (sometimes called 'requisite variety'),
and an ability to learn quickly.
Most organizations lie somewhere in between these two extremes.
Some people seem more intelligent than others. Organizations as well as people display degrees of intelligence

What things may display “intelligence”?
John Searle makes the point that when computers can beat grandmasters at chess, this does not prove that computers are now more intelligent than humans. "The real competition was not between Kasparov and the machine, but between Kasparov and a team of engineers and programmers."
New York Review of Books, vol xlvi number 6, April 8th 1999
As in Formula One racing, where the driver takes the credit for the work of a team, so Deep Blue took the credit for the work of a well-coordinated team of people and other machines. A Formula One driver does not need to be a creative thinker - that falls to other members of the team - but must have incredibly fast reactions. The same is true of a computer.
And consider a child who passes an “intelligence” test to get into a selective school. What is really being tested in this situation is the effectiveness of a collaborative system involving the child, parents and teachers in some complex combination. The child is merely the member of this team who has to sit in the driver’s seat on the day of the “test”.
We may think we are testing the intelligence of an individual, but the individual cannot be separated from his/her support system.

Algebra of Organizational Intelligence
Organizations contain many pieces of intelligence
An organization is a socio-technical system, and may be composed of many interoperating systems, each containing some intelligence. Thus the human intelligence of many employees is combined with the artificial intelligence of machines, contained in intelligent buildings, and distributed through intelligent cyberspace.
Organizational intelligence is what systems thinkers call an emergent property - it is an attribute of the whole system, not of the individual parts. What matters most is how the parts of the organization are put together.
But lots of intelligent pieces doesn't add up to an intelligent organization
To make an intelligent organization, it isn't enough to recruit the brightest people, locate them in state-of-the-art office buildings, and provide them with the smartest computer tools and networks. Super-intelligent individuals are often poor at talking to one another and sharing knowledge, let alone coordinating their work effectively. Each individual may only make a given mistake once, but if the people don't talk to each other, the same mistake can be repeated hundreds of times without any organizational learning.
And even if an organization is collectively oblivious to major threats and opportunities in its environment, that doesn't mean that the individual employees are unaware of these threats and opportunities. Intelligent people get very frustrated and demotivated in stupid organizations; they can see what is happening, and they can often see what needs to be done, but they don't have adequate channels of communication or action.
Intelligence does not follow simple rules of arithmetic (2+2=4). So what are the rules governing intelligence?

Elements of Organizational Intelligence
Our notion of intelligence is focused on active and appropriate engagement with what is going on (WIGO), both inside and outside the organization.
Business intelligence is a combination of perception/ monitoring and appreciation/ sensemaking.
Command, coordination and control calls for a combination of reasoning/action and communication.
Appreciation / Sense-Making Communication Learning Knowledge / Memory Perception / Monitoring Reasoning / Action WIGO (what is going on) Judgement Effectiveness Cognition Relevance

Elements of Organizational Intelligence
Perception / Monitoring
How well does the organization collect and process information about itself and its environment?
Appreciation / SenseMaking
How well does the organization interpret and understand itself and its environment?
Reasoning / Action
How effective are the (collective) processes of thinking, decisions, policy and action?
Knowledge / Memory
How does the organization retain experience in a useful and accessible form?
Learning
How does the organization develop and improve its knowledge, capabilities and processes?
Communication
How do people and groups exchange information and knowledge? How do they share ideas and meanings?

Improving Organizational Intelligence
Organizations can become more intelligent
We believe that improvements in organizational intelligence are generally both possible and desirable.
The benefits of such improvements are manifold.
The organization is likely to become more successful in the short term, and have greater prospects for survival and growth in the longer term.
Staff morale is likely to improve, and the individual employees will themselves have greater opportunities for personal growth and fulfilment.
In the broader socio-economic system, intelligent organizations will create more wealth - not merely economic wealth but in human potential.

To increase intelligence: remove what stupifies an organization
As consultants concerned about organizational intelligence, we focus much of our attention on the opposite: organizational stupidity.
Each organization has its own particular form of stupidity - it is up to the consultant (or the above-average manager) to recognize the ways that stupidity manifests itself and to find a way of doing something about it.
Stupidity is not making errors. Stupidity is repeating them.
Most people are born intelligent and creative. A lot of this intelligence and creativity gets lost by the time we leave school - but sometimes it can be rediscovered in later life.
Thus the focus for personal development is not "How can I become more intelligent and creative?" but "How can I remove the blocks that get in the way of the intelligence and creativity that is buried within me?"
Psychoanalysts look at the hidden repetitions in a person's behaviour and relationships. Similarly, we can look at the barriers to intelligence and creativity in organizations. Here too, stupidity manifests itself in a repetition of some kind.

To improve organizational intelligence: different approaches, different styles, but the same underlying ideas
Communication Strategies Addresses the extent to which meanings and intentions are successfully shared across the organization, especially between multiple subcultures. Addresses the extent to which the organization is successful in speaking to its stakeholders, and in hearing what its stakeholders are saying to it.
Group Dynamics Addresses how people work together - the psychological structures and processes of the teams and groups making up the organization.
Knowledge Management Addresses how ideas, information and intellectual property are developed, disseminated and deployed within the organization.
Process Improvement Addresses the congruence (or lack of congruence) between business processes and the organization's goals and values. Addresses the extent to which business processes improvement is dependent upon external intervention, or whether learning is integrated into the system itself.
Risk Management Addresses the extent to which individuals and groups within the organization face up to (or retreat from) the challenges and uncertainties of the task.
Space Management Addresses the physical environment in which the organization lives. Addresses the congruence (or lack of congruence) between business processes and the physical space that contains them.
System Investment and Evaluation Addresses how the costs, benefits and risks of new and proposed technologies, systems and environments (including physical environments) are distributed within and outwith the organization. Addresses the congruence (or lack of congruence) between IT and property investment on the one hand, and the organization's goals and values on the other.
Technology Management Addresses how new technologies and systems are implemented and used by the organization. Addresses the congruence (or lack of congruence) between human systems and technical systems.
Organizational intelligence can be improved from several different angles, and you need to consider which is the right starting point for your organization. In some cases, an interdisciplinary approach will be appropriate, in which improvement action is taken on several fronts simultaneously. In other cases, a single discipline will be able to offer significant initial benefits - remaining open-minded about bringing in other disciplines later.

Primary Source
Richard Veryard, The Component-Based Business: Plug and Play. Springer 2001.
The material in this presentation is extracted from Chapter 2.
Other Sources
I first encountered the term Organizational Intelligence in a conference presentation in Paris by Takehiko (Bill) Matsuda, of Sanno College, Isehara, Japan. My work on organizational intelligence started as an elaboration of Matsuda's work.
I later discovered that the term was used in a book called Organizational Intelligence by Harold Wilensky of Berkeley. Apparently this book won an award in 1967. Amazon reports that it is out-of-print.

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Organizational Intelligence

by Richard Veryard on Jan 31, 2009

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Organizational Intelligence — Presentation Transcript