Let’s consider what we actually mean by growth.
In a nutshell
- When we measure growth we rely on numbers, be that a share price, an NPS number, a score on a monitor, a percentage of comms awareness or a brand tracker.
- But with the world changing so much around us, perhaps we should be focusing on a more holistic way of measuring growth, one that considers an organisation as a complex system rather than individual components.
- Organisations need to develop their skills at recognising patterns to understand how one small change can result in an impact somewhere else. We should be looking at how healthy the system is, how elements are working together, and how each action is amplifying the effect of the other elements.
We measure growth as shareholder value, revenue and profit. Or for government organisations it might mean more tax compliance or better driving behaviour leading to fewer deaths on the road.
That’s because we have a predominantly Western outlook leading to a view of growth as a linear process where ‘better’ and ‘more’ are synonymous with positive growth criteria. However, the Maori world view has shaped our perspective, meaning that in New Zealand there is a slight lean toward a more harmonious and holistic view of the world. For example, we have a greater sense of fairness and connectedness than many Westernised nations.
So, when we look at growth we have our own unique lens or perspective. For example, New Zealand is one of the first governments in the world to reassess what success means, introducing a Wellbeing Budget focused more on ensuring New Zealanders’ wellbeing than improving GDP. There are global movements to support this stance. Otto Scharmer, co-founder of the MIT-affiliated Presencing Institute describes this change as an axial shift where “the coordinates of the economic discourse are shifting from the old debate between more government vs. markets, to more GDP vs. wellbeing.”
The circular economy is gaining some traction here too, which suggests we are changing and keeping cadence with the many cultural movements around new business models, social licence and workplace experience.
What’s the number?
But when we measure growth, we still rely on maths, on a number. This speaks to Peter Drucker’s tenet that “if you can’t measure it you can’t improve it.” The same of course is true that “you get what you measure”.
This idea is deeply seated in the Western model of business and government. Pythagoras laid the groundwork back in 500BC: “And all things that are known have a number – for without this nothing could be thought of or known.” So even though the world is changing we still believe that a single number is something to strive for, be that a share price, an NPS number, a score on a monitor, a percentage of comms awareness or a brand tracker. But why are we so hung up on the numbers if the world has changed so much, especially when it’s changing by being more and more about complexity?
The 3 existing strategies for measuring success:
- The ‘must do better’ strategy: We pick a number an arbitrary level higher than we are currently achieving to give us something to aim for.
- The ‘we need to beat them’ strategy: We use a number relative to how other companies are doing, despite the fact these competitors may have very different operating conditions, customer bases, propositions and goals.
- The ‘Lord of the Rings’ strategy: When we are faced with too many numbers, we pick one that will rule them all.
Holistic measures for complex systems
"Why are we measuring individual components in a complex system while the reality is that one small, seemingly inconsequential change in one area can have an impact across the entire system?"
Think for a moment about a clipboard at the end of a hospital patient’s bed. It will have a measure for blood pressure, one for temperature, another for pulse rate. Doctors can prescribe different medications for all of those. The really good doctors and, more often than not the nurse, will look at the patient’s behaviour and note any changes.
Is the patient agitated or lethargic, how do they respond to visitors – to all visitors the same or to just that one visitor? They get a sense of the mindset, the behavioural patterns – which repeat and which are erratic? In short, they take a holistic whole of system view.
It is this holistic mindset that organisations will need to adopt in order to grow and thrive and that is because customer-facing organisations are operating as complex systems these days. Consider how people build and evolve their feelings about a brand and the mental constructs that result – it is a mash up of customer experience, brand comms, consumption and purchase experience, and how they understand and evaluate the proposition, word of mouth and media stories.
So, if customers see it that way, why is it hard for companies to see it that way? Why are we measuring individual components in a complex system while the reality is that one small, seemingly inconsequential change in one area can have an impact across the entire system?
Edward Lorenz in the 1960s coined the term ‘chaos theory’ based on an accidental discovery when he was working on weather system forecasting models. He had run a set of data, a little like the data on our hospital patient – things like air temperature, pressure, wind strength and so on which produced a weather system prediction map. For reasons that are not important, he needed to run the data again and he input the same data yet the weather pattern that was generated looked very different. On re-checking his input he had made one very small change. He had shortened one of many hundreds of variables from 0.506012 to 0.506 and this was sufficient to change the results.
He spent the rest of his scientific life looking at how complex systems work – or more poetically expressed as “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?”
We now talk about this as a ‘systems approach’, defined as self-organising non-linear systems. Systems work in a state of equilibrium, self-correcting when things change but making it almost impossible to predict the outcome of change across the whole system unless you have a deep understanding of the patterns that interact – and this is key, it is the patterns not the individual components.
The truth is in the patterns
"Companies and their agencies need to develop their skills at recognising patterns to understand how one small change here can result in a tornado somewhere else."
Just like that patient in the bed. Ninety-eight percent of the atoms in a person’s body are replaced each year – yet we are all recognisably the same. Self-organised patterns give us our continued identity. Organisations are the same.
The reason the nurse is good at recognising patterns of behaviour in their patient, apart from their training, is that human beings are good at recognising patterns. We have a patterning instinct. Nature is full of repeating patterns at small and large scale – think of a fern leaf or the way water swirls and eddies. Companies have these repeating patterns too, they are self-organising systems where the whole is the sum of the parts.
Companies and their agencies need to develop their skills at recognising patterns to understand how one small change here can result in a tornado somewhere else. Instead of striving to measure ROI in individual elements – what do I get if I spend this much on comms, what is the impact if I change CEx in this particular way? – we should be looking at how healthy the system is, how elements are working together, and how each action is amplifying the effect of the other elements.
So, what do we measure?
Maybe we have to find something better than maths. Maybe we have to dig deep and connect with our patterning instinct, hone our skill and our comfort with working with complexity. We should be employing tools that detect and leverage patterns from programmatic systems to real time flow or emergent collective behaviour models that can give us insight into the evolving pattern that is emerging. In this way we gain foresight and can react at the same cadence as the system instead of wrestling it into siloed elements.
It’s going to be hard, but surely better than grabbing at random scores just because numbers feel like they have an intrinsic truth that they simply don’t have.