Theory O – The Relevant and Performing Organisation (RPO)

Theory O explains a Relevant and Performing Organisation (RPO). It shows how Org must relate intent, resources, and intelligence, to purpose to create an RPO. In Theory O, the "O" stands for organisation or Org.

Purpose is a common denominator to organisations who do the same thing. E.g., a bank in Singapore has the same function as a bank in Bangladesh. Yet, it is unlikely that they will yield the same results. Theory O holds that the intent of Org, and the way in which it uses its resources and intelligence, will change the nature of its purpose.

The basic assumption behind Theory O of the RPO

 If two organisations with the same purpose yield different results, then it is intent, resources, and intelligence that distinct them, because these are the only elements that can make the purpose of Org unique.

The components of a Relevant and Performing Organisation

The task of Org is to organise activity. The aim of activity is to produce outputs that has a favourable effect. The purpose of Org will define its processes. E.g., A farmer must produce food. If not done, then he or she is not a farmer. Amazon does not sell goods in the same way as most other shops do. But they are still in retail. Intent, energy (resources), and intelligence could turn you from good to great, or vice versa.

To keep it simple we use the acronym TEIP…

• T = Intent.
• E = Energy (resources).
• I = Intelligence.
• P = Purpose.

Please note that these symbols hold no mathematical significance. We only use them to simplify the explanation.

Org must function within an environment which must sponsor its existence. An environment also creates competition, poverty, politics, etc. This will disrupt Org. Disruption creates disorder. We use entropy to measure the disorder within a system. A Force of Entropy (FOE) thus threatens the existence of Org. To combat FOE, Org needs TEIP. Together FOE and TEIP will keep the activity within Org meaningful.

Purpose is the denominator

Purpose (P) is neutral. E.g., a boxer is a boxer. Yet, each boxer uses own skill, physique, coordination, reflex, surprise punches, etc., etc. This means that not all boxers will measure the same against the purpose of boxing. The same goes for banks, governments, ICT firms, etc. To create hierarchy, one must measure Org against its purpose. Entities with similar purpose are never equal in terms of relevance and performance. For Org to survive, TEI must be greater than P. This calculation will show an ability to be both relevant and performing.

The Performance / Relevance Crucible

Hypothesis 2x gives a simple grasp to the duality of Org. When understanding an RPO, it becomes more complex. Purpose drives the algorithmic side of Org. It uses processes, resources, and systems intelligence, to drive performance. Through purpose, Org creates its efficiency. Intent drives the abstract part of Org. It uses projects, resources, and human intellect to create relevance. Through intent, Org will create its effectiveness.

The energy or Org are its resources. They are the people, money, and assets that it has, to do its work. Therefore, resources make a performance / relevance duality inverse. They create a common pool that Org must use to do two things. Effort for relevance will decrease effort for performance. In so, strategic initiative will impede performance activity. Because they draw from the same resource pool. This understanding holds significant implications for the way we manage and lead Org.

We cannot measure an RPO, but we can define an ability to be one

The human body functions on efficiency and survives on effectiveness. No person knows exactly what goes on in his or her body. We have some idea, but that's about it. It runs on implied intelligence. This creates algorithm and directs energy. You do not have to think about breathing or digesting. That is efficiency at its best. But to survive and be relevant, one will need every one of your five senses. We are thus designed to respond to an outside world. Org should design itself to do the same.

In orgtology, efficiency drives performance, whilst effectiveness ensures relevance. Jointly, they create an ability to be an RPO. This will ensure that Org does the right things in the right way. They must happen the whole time.

The ability to perform

The shoemakers of old had great skill. They were performers who put a lot of energy into their craft. Yet, the purpose that shoes fulfil, became greater than their energy and skill. People want different shoes for doing different stuff. Shoemakers could not keep up with this demand. Machine intelligence replaced them. Factories now have energy efficiency and process intelligence far beyond that which any shoemaker had. Manufacturers found a way to outweigh the purpose of shoes. Shoe companies now drive the demand for shoes. With machine intelligence and clever marketing campaigns, shoe companies can set fashion trends. This is the case with Bata, Nike, Hi-Tec, etc. The average person has more than four pairs of shoes. A cheap pair of Jimmy Choo shoes will cost you around 4000USD. When purpose begins to serve Org, Org becomes a high ranking RPO.

Resources and systems intelligence create an ability to perform. The people, money, and assets of Org create its energy. We call this energy "resources". It feeds the systems and processes of Org. In doing so, it delivers outputs. The aim of performance is to be efficient. High performance means that an entity can deliver more outputs than its peers. This should be the case, even if all measured entities hold similar inputs. Where Org outperforms its competitors, it "owns" its industry.

Where energy and implied intelligence outweighs purpose, Org becomes High Performing.

• E = Energy (people, money, and assets). I.e., the resources of Org.
• Ii = Implied (systems) intelligence.
• P = Purpose.

The ability to be relevant

During the 1800's, shoe factories supplied on demand. Today, they create fashion and value through mere brand. At first, they were receptive suppliers. Now they are projective agents of change.

Something is relevant if it is meaningful to those who use it. There is no point in producing a product or service that no one wants. Sponsorship is the true test of relevance. Any person or organisation wants an environment that fully sponsors them.

To negotiate relevance, Org uses desire and abstract thought. Intent defines desire and abstract thought creates tacit intellect. Governments must excel at service delivery. This will ensure that citizens and investors willingly invest. Young people must study and experience things that enable them to make a living. Companies must satisfy customer needs. To stay relevant, Org must conceptualise a future. This is the crux of relevance. It is therefore also the crux of strategy.

To survive today, one must perform. Today's performance will enable tomorrows relevance. In turn, tomorrows relevance makes todays work meaningful.

Where intent and tacit intellect outweighs purpose, Org becomes Relevant.

• T = Intent.
• It = Tacit (human) intellect.
• P = Purpose.

Practical application

To combat FOE, ORG needs to be an RPO. This means that to contest disorder, Org must efficiently perform and effectively stay relevant. An environment will not sponsor an entity that does not perform in a relevant way. Where Org loses relevance, its performance will weaken. Disorder will set in and sponsorship will decrease more.

Disorder can be many things. To the private sector it is competition. For the public sector it is dysfunctional politics and policy. To the non-profit world it is lack of public sympathy. In orgtology entropy is then the measure of the things that disrupts Org. This could be competition, bad politics and policy, lack of sympathy, etc.

The relationship between entropy and sponsorship is inverse. Full sponsorship holds zero entropy. No sponsorship will ensure 100% entropy. As sponsorship increases or decreases, FOE will weaken or strengthen.

An increase in disorder needs an increase in strategy. You cannot combat external threats with efficiency. I once did consulting work for a sugar corporation. They were extremely efficient. Their process intelligence and resource management were beyond comparison. Yet, this efficiency had no effect on a worldwide declining sugar price. Doing things right will not change the fact that you do not need sugar cane to make sugar. Nor will it change the minds of billions of people who believe that sugar is bad for them. The only way to deal with these external threats is disruptive innovation. That is what Apple did with the iPod. They did not compete with Sony Walkman; they made them irrelevant.

It is also possible that an environment shows little disorder. Org would then rather focus on process efficiency. As disorder increases, the fight for sponsorship will become fierce. In a competitive environment, you will need a competitive strategy. This is different from disruptive innovation. When competition is so rife that all odds are against you, you must be the disruption. A disruptive innovation strategy is the most dangerous of all strategies. It could put you in the lead or secure a quick death.

The more sponsored an entity is, the more it will focus on its performance. This means that where no competition exists, you own the cake. Here you will be process efficient. Org will thus be an operationally focused organisation. Where mild competition exists, find ways to get a bigger slice of the cake. Here you will compete. But where there can be only one, you must go for the kill. This means that you must bake a better cake. Here you must innovate to disrupt. This means that the more disruptive an environment is, the more an entity will focus on relevance. This creates a strategy driven organisation. The graphs below show this relationship.

Conclusion 

TEIP creates the parts that make Org. It shows an ability to be relevant and performing. Yet, Org cannot exist outside a world of time, matter, and space. In this world, there is a force that will consistently work towards the irrelevance of Org. This is the force of entropy, or FOE. It is always there, thus it is a constant denominator. If Org wants to survive, its relevance and performance must be greater than FOE.

This might seem abstract. If you are in the private sector, simply replace "FOE" with "competition". In such case, where competition is greater than TEIP, Org will not be an RPO. In the public sector FOE becomes the lack of taxpayer confidence. In the non-profit environment it becomes the unwillingness to sponsor.

Whichever shape FOE takes, it creates disorder. We will always measure the TEIP of Org against the disorder that it must face. Great disorder requires strong TEIP. To survive and thrive, the relevance and performance of Org must always be greater than the force of entropy.

• T = Intent.
• E = Energy (resources).
• I = Intelligence.
• P = Purpose.
• FOE = Force of Entropy.