Humanize the enterprise: Building the identity-centered organization

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Over the past 20 years, organizational identity has become a popular topic in C-Suite conversations, globally. Questions such as who are we?, what do we stand for?, and what is our purpose? have become commonplace.

There have been numerous catalysts of these conversations in the form of books, articles, webinars and conferences. (Indeed, next April, there will be a TEDx conference exclusively about identity.)

To be clear, when I refer to identity, I’m referring to the unique characteristics that define an organization’s value-creating potential – the proprietary contribution it is capable of making in the marketplace and the world.

Now that identity has become an official part of the leadership lexicon, are we done with it? Has its strategic potential been fully revealed? I believe we’re only just beginning to understand the extraordinary possibilities identity contains as a force for corporate innovation.

With innovation in mind, a logical next step on this journey is for leaders to employ identity to design their organizations in ways that align with the motivations inherent in the minds, bodies, and hearts of the human beings they so passionately pursue: in particular, customers, employees, and investors. Why must this occur and how can it be done?

Corporations were originally formed in part as a way to assemble, organize, and deploy labor and capital on a large scale. These entities were designed in largely mechanistic ways that allowed for the greatest possible control. In simple terms, the plan was to minimize the human element in order to maximize efficiency.

But as individuals, we don’t operate as machines. It would never occur to us to do so. We are too multifaceted, complex, and dynamic; too human.

Why then do leaders continue to structure organizations in ways that are antithetical to how human beings function? Why do we routinely think and speak in terms of “divisions,” “operations,” and “units”—the pieces and parts of an enterprise—rather than in terms of the totality of the organization? It’s simply because that is what we were taught; that’s the way it’s always been.

Human beings and organizations share a common purpose: to contribute to the best of their abilities and be rewarded for that contribution in return. From this standpoint, a reasonable conclusion might be that organizations should be structured to capitalize on their innate human capacities. If so, where do we find a model of that structure?

We find it by looking in the mirror.

What this suggests is nothing less than the gradual reorganization of the enterprise into three interdependent systems that support its identity and reflect how human beings function. These systems are:

The Physical System. The disciplines that form the body of the organization; the skeletal structure, flesh, and blood that are its basic anatomy. Such disciplines might encompass finance (capital formation, investment and budgeting), operations, distribution and logistics, and key human resource functions, including, recruitment, hiring, retention and firing.

The Cognitive System. The disciplines that constitute the basic elements of the mind of the enterprise—its rational capacities—allowing it to reason and to discern opportunity and the vital need to adapt. Cognitive systems establish the organization’s capacity to think. Among these disciplines are business, economic, and market analysis; research and development; market research; and key learning processes, including training, employee education, and knowledge management.

The Emotive System. The disciplines that make up the heart of the institution and that are the drivers of morale and attitude, passion and energy. These disciplines are the wellspring of motivation in both quantitative and qualitative terms. They encompass all forms of communication—marketing, employee, and corporate communication. They embrace customer service, employee recognition, and performance management, including compensation.

Why organize in terms of the human being? Because, with its unique capacity to reason and feel, to imagine and invent, to solve problems and to build, all at the same time, thehuman being is by far the most efficient value-creating instrument in nature.

By contrast, the machine model that has dominated business for so long was designed to be repetitive in its output, rather than original. By designing organizations in the image of machines, we have unwittingly obstructed rather than enhanced their natural efficiency. It is time to design organizations in ways that unleash, rather than undermine, their human capacities. Organizing them in accordance with their similarity to the human being is a natural step in liberating the productive potential of the enterprise.

The aim of forming and managing through physical, cognitive, and emotive systems is to understand and engage the organization in a more unified way, one that unleashes the value-creating potential of the whole. Recognizing the existence of these three systems would challenge leaders to think more holistically about the business—about how value is created, and wealth generated as a result.

What we stand to learn from organizing around identity can be used to build knowledge networks that yield new insights into the enterprise itself. What are the truly critical relationships “among the parts”? How can the company create ever-stronger bonds with outside stakeholders that reflect their shared human capacities and needs? How can these bonds be most effectively managed to deepen the company’s competitive advantage?

Humanizing the enterprise will require a great deal of imagination and work on the part of visionary, committed individuals at all levels of the company. But the business logic of doing so is compelling: True value can only be created through the integrated efforts of what is an exquisitely human system, and this system can be brought about only by realizing the potential contained in the identity of the organization.

Note: This article is excerpted from Identity Is Destiny: Leadership and the Roots of Value Creation, by Laurence Ackerman (Berrett-Koehler Publishers, 2000)Next: The leadership implications of identity