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In the 21st century, it’s hard to argue that the only method to look at business is in a systematic way. If we want to understand what works, how it works, why it happens, what needs to be done to make something happen, then we should use complex systems theory. In fact, business itself is a complex system, which is the Sapience approach.
With the Sapience method any business can build for success, longevity and become ever evolving!
Business is a complex system, like our brains or ultimately the universe. As any complex system, it is composed of many components that may interact with each other, in this case it is made up of individuals who are constantly engaged in value exchanges with one another directly or indirectly.
Complex systems show us the way to achieve the outcomes we want to see from a business, for example: how it can become stable, resilient, evolving, healthy and profitable. Moreover, due to the specificity of complex systems, a lot of feedback can be extracted about the functioning and operation of the business, which is based on negative feedback loops of needs and organised from the bottom up.
An enterprise is a person or group of people who believe they can create value for others who need it, or who have a problem they know about. This is a complex system. Just as in every system, we always find some kind of value exchange between the ‘constituent elements’, for instance a great product for the customer and in return profit for the business, or something intangible.
Value creation is always at the individual level, hence subjective and situational for each person. A business’s value proposition must offer a solution to this subjective and individual need in order to create an exchange. At the same time this value proposition must be as universal as possible for scalability.
A business becomes a business when the number of these exchanges increase and making it sustainable through development, and the activities create value for the business beyond the cost of providing value to customers.
A system’s, aka an enterprises’ potential to realise value exchanges depends on the quality of the relationships, their typical patterns and logic, and their impact on each cooperation.
Exercising collective sensemaking, using tools like constructive debating a system can create shared narratives and better quality relationships, which will significantly increase the growth potential of the company and its ‘crisis resilience’ will be outstanding. Strong relationships unleash enormous operational energy without reducing management control.
The quality and logic of the relations in the system depends on the individuals’ competences that define the system’s potential across all levels. All organisations need a set of distinct competences to be successful, some may be specific to the purpose or product of the business, some are more universal.
Creating a team based on these sets of competencies needs to be an emergent map that should be continuously evolving as the organisation changes.
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© Sapience Business Design
and Management Method 2023