Developing Organisational Intelligence

Written by

Sergio Caredda

Posted on

August 17, 2020

Exploring Definitions

Wikipedia has a lengthy post on the concept, which contains the following definition:

Organizational intelligence consists of the ability to make sense of complex situations and act effectively, to interpret and act upon relevant events and signals in the environment. It also includes the ability to develop, share and use knowledge relevant to its business purpose as well as the ability to reflect and learn from experience.
Wikipedia, Organizational intelligence

It seems we are putting together a lot of different pieces, all coming from a Knowledge Management angle applied to a Business Organisation. So I went for a quest out there, trying to identify what Organisational Intelligence is, and what can it indicate. And I found theories, frameworks and ideas based on all three of the topics above.

The first study fully dedicated to the topic is in the book by the same title by Harold L. Wilenskypublished in 1967. This book looks at Intelligence in two ways: informational, i.e. the capability to collect information and analytical, i.e. the ability to extract knowledge from that information. The research which is at the basis of the book looks in depth at the decision-making process and how this is shaped by the quality of information available (and unavailable) to and used (and not used) by organisational leaders.

Although the book tries not to focus solely on the “militaristic” approach to Intelligence and also interprets the concept of the organisation broadly, the resulting view gives a pretty narrow definition of the idea, mainly when it links the capability to develop Intelligence with the “conflictual” level of the relationship of the organisation with the environment.

This interpretation of the concept is not satisfactory. Although there are some exciting aspects to consider (mainly related to diversity in terms of information sources but also points of view in the analysis of the latter), I continued my quest for a better understanding.

Organisational Intelligence as a Leadership Attribute

The reason why I got interested in this topic is linked to a recent article that appeared on HBR by the title Good Leadership Hinges on “Organizational Intelligence”. Written by George Yip and Nelson Phillips, the report focuses on the idea that business leaders need to develop a new quotient, called OQ, that focuses on the organisation settings and behaviours, and that should accompany IQ, EQ and technical competence.

Organisational Intelligence (OQ) as they define it, consists of five competencies:

Sending messages that reinforce strategy, minimising other, contradictory messages, pursuing a concept of simplicity and clarity.
Fostering an ethos, an understanding of “who we are”. This aligns with the idea of crystallising a shared statement, a purpose for the organisation.
Using “action strategy” instead of consensus building. This is about making things happen. By taking a set of coordinated actions that add up to a strategic change, a leader can kickstart the process without creating organised opposition.
Rebelling from the top is the idea that captured my attention most. The concept is that influential leaders should be strategic in choosing what to change, selecting their fights and concentrating on these, avoiding wasting time in rebelling on things that are not strategic.
Staging moments of theatre. Necessarily it’s the idea of staging a moment that will be told and retold in the organisation. The secret is to take advantage of opportunities to do something symbolic in a surprising, high-impact way that will capture the attention (and, hopefully, the hearts and minds) of the organisation’s members. That requires stepping out of the normal flow of organisational life. This is a challenging competency — and a powerful one.

I must admit I was not particularly impressed by these “competences”, as I was struggling to link them with the organisation. However, the second part of the article added some flavour. How do you develop such OQ? The authors identified three actions:

Embrace bureaucracy rather than rail against it, almost like in Judo, use it at your advantage.
Develop an organisational persona, i.e. make sure people immediately understand who you are.
Follow the small rules so that you can break the big ones, which links to the idea to focus the rebellion on what counts.

I was particularly attracted by the first point, as it is the piece where I see an actual link to the organisational aspects. As we discuss of moving away from traditional corporate models, very often the direct shortcut is that of dismantling bureaucracy. But bureaucracy per se is not harmful, as it is the simple results of the division of labour. We have seen it as a necessary phase of the emergent design of organisations. The problem comes when processes are created just to perpetuate the bureaucratic rule. This is the piece that we need to fight, not demolish the necessary aspects of task division, at least not immediately.

This said, I’m not convinced about this approach to organisational Intelligence, and have tried to look for a different approach.

Organisational Intelligence as an Assessment Framework

Scouting the web, I found a framework introduced by the Organizational Intelligence Institute, a branch of Skyline G, a leadership development company. The framework is defined as “

The Organizational Intelligence Model™ serves as a useful framework to facilitate the design and interpretation of most employee survey or organisational assessment efforts. The model includes 11 factors or variables that impact employee engagement and organisational performance. In many ways, the model can be thought of as a representation of your organisation.

Fig.1: Organizational intelligence Model. Source: OI Institute

In the definition of the website “the model defines important factors and relationships to consider during HR strategic planning and innovation efforts“. I could not track a lot more information than these. Still, it is interesting the usage of “intelligence” as a reference to the collection of private information, similarly to the activities of intelligence agencies. Again, a definition that did not satisfy my curiosity.

Organisation Intelligence as an Information Framework.

In his book “Building Organizational Intelligence“, Richard Veryard, a business data architect based in London, develops a framework to support the identification of “intelligent organisations” based on six connected capabilities. The fact that Veryard is a business data architect, with deep expertise on the technology side of how organisation work, makes his approach particularly interesting. I have already mentioned how much there is an alignment between Organisation Design and Enterprise Architecture as disciplines. An Operating Model can be easily overlapped to an Enterprise Architecture chart, and I have also mentioned how some DevOps technology principles would work perfectly if applied to HR. In a new world, the separation between HR and IT is becoming more and more artificial.

Veryard defines “an intelligent organisation” as being characterised by four collective abilities:

an ability to make sense of complex situations and act effectively
an ability to interpret and act upon relevant events and signals in the environment
an ability to develop, share and use knowledge relevant to its business purpose
an ability to reflect and learn from experience

His fundamental assumption is that it is not sufficient to recruit the brightest people. Still, it is essential to assist them with several organisational capabilities, focused on demonstrating the potential Intelligence.

Fig.2: Organisation Intelligence Scheme. Source: Richard Veryard, Building Organizational Intelligence.

The capabilities he identifies are as following:

Information Gathering: how well does the organisation collect and process information about itself and its environment?
Sense-making: how well does the organisation interpret and understand itself and its environment?
Decision, policy, action: how effective are the (collective) processes of thinking, decisions, policy and action?
Knowledge and Memory: how does the organisation retain experience in a useful and accessible form?
Learning and Development: how does the organisation develop and improve its knowledge, capabilities and processes?
Communication and Collaboration: how do people and groups work together? How do they exchange information and knowledge? How do they share ideas and meanings?

The assumption is that all these capabilities need to be balanced to ensure that the organisation develops an intelligence.

This model makes much sense as it thinks of Organisational Intelligence not as an individual competency, but as a collective entity living at the intersection between people and information systems. However, as usual, I am a bit diffident towards the concept of “capabilities” developed at an organisational level, as it is always difficult to define these, which leads too often to the wrong answers when the question on how do I develop such a capability is posed.

Defining Intelligence for an Organisation

I went back to trying to define what Intelligence really is. A problematic quest per se, as psychologists and other researchers, have been struggling to establish a definition for centuries now. The Encyclopedia Britannica carries a good holistic definition, though.

Human intelligence, mental quality that consists of the abilities to learn from experience, adapt to new situations, understand and handle abstract concepts, and use knowledge to manipulate one’s environment.
Encyclopaedia Britannica, Human intelligence

There are a few elements here that I wanted to single out, as Intelligence is associated with:

Learning from experience: thus, the capability to learn is a crucial attribute here.
Adapt to new situations: i.e. the ability to cope with the unknown, abstracting learnings from other content, is another critical attribute.
Understand and handle abstract concepts: this piece is a bit more philosophical, but it refers to the innate human ability to handle concepts that are not grounded in reality. There are many examples of this ability, think about the idea of Freedom, and how it is relevant for us, although it doesn’t exist in reality.
Use knowledge to manipulate the environment: this ability is the “usage” side of the Intelligence, in the sense that is is about reacting to the situation and proactively modifying it.

There are many other elements, and endless authors have been commenting on other attributes as well. The above, however, is captivating also for what concerns a very actual issue with defining Intelligence, that of the relationship with Artificial Intelligence. In many ways, the debate about what is Human Intelligence is more and more forced by the technology developments of what AI is. We have already met two interesting theories in some of the books that I have reviewed: that of Ray Kurzweil, that in his Singularity is Near book expects AI to supersede that of the Human Being in a short time. And that of Luciano Floridi, philosopher, that challenges this and doesn’t see anything like that happening in the future. As he sees it, current AI is not more intelligent than a coffee machine. For sure part of the issue is linked to different definitions, but there is also the philosophical question of what humanity is versus technology.

A key attribute, therefore, is the development of what has been defined as Systems Intelligence, the capability of human beings to understand and work with systems of any nature. However, also with this term, we need to be careful.

A Systems Theory view of Organisational Intelligence

I also think that there is a Systems Theory perspective to be applied to this concept. I’ve always been very fond of Boulding’s framework of Systems Theory, where he provided a Chinese box framework that allows understanding the different types of system. Each science is the theory, addresses precisely one level of this classification. All together they help understand and shape the whole, but it is impossible to give a clear picture by analysing elements at a level that is below that of the system we are checking on. I’m providing a short table of his nine levels here. Some things have changed with the advancements of society, but it is still a very valid classification.

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Boulding’s Classification of Systems.

When we look at Intelligence through a technology lens (like many AI expert do), we end up very often analysing a Cybernetic System (level 3 of the classification, primarily based on a simple feedback loop. Yes, these are becoming more complex as we feed more data in, and they are becoming faster and more powerful. However, the critique from Floridi (who instead looks at Intelligence at level 7) is that it still does not possess any of the characteristics that match Human Intelligence.

It is for this reason that, in my view, organisations represent the first and foremost example of artificial Intelligence built by human beings. And probably represent a much more developed one compared to the technological aspect. But to understand this, we need to move one level up, to the a level 8 analysis, that of a social system.

If we take the same attributes we have looked at in the definition fo Human Intelligence above, how do they look like into a social context?

Learning is a crucial attribute for every organisation, and we are aware that the concept of Learning Organisation is probably one of the most revolutionary ones, as it allowed to move away from a purely mechanical view.
Adaptability is vital, as it is intrinsic in the effort to survive of any org.
Using abstract concepts: well, the organisation itself is an abstract concept, as so are the elements that compose it. One of the key concepts that each organisation develops for its existence is that of the role, and the whole level 8 of Boulder’s classification is based on the capability to abstract.
Use knowledge to change the environment: organisations are formed precisely to do this, influence the environment in ways that a single individual could not do… which calls for the critical understanding of the relationship with the entire ecosystem.

By applying these elements together, we get a pretty impressive view of what an Intelligent Organisation might look like. However, I have a feeling that something else might be added. And it is the Intentionality factor of how some pieces of the organisation are built, which gives a direction to the entire organisation. Which becomes not just a social system built for survival, but a system that is aware of its role in the ecosystem.

Conclusion

The topic of Organisational Intelligence is vast and variegated. As with many attributes of organisation, there is a layer of “noise” linked to too many marketing and business topics that make it difficult to reach the core of the idea. I’ve tried to nail down a few new lenses and interpretations. I have then tried to dive deep into what could be the characteristics of an Intelligent Organisation applying a systemic perspective that develops on top of the definition of Human Intelligence.

The outcome is a definition of four attributes that would define Organisational Intelligence, plus a fifth one that helps to understand those organisations that have a direction, a purpose on top of the simple survival, which is intentionality.

Organisations can form for many different reasons, and represent the most crucial cluster of social systems that humanity has created. We can start looking at classifying these organisations also mainly on the factors of Intelligence as above listed. We can, therefore, list many types of non-intelligent organisations based on the absence of at least one of the above factors:

Learning: there’s plenty of organisational forms that do not learn. When there is no form of organisational learning, from my point of view, we very quickly cease to have an actual organisation, because the organisation will never be more valuable than the sum of its components.
Adaptability: an organisation that cannot adapt to the changes in the environment, will not be able to sustain itself over time. Covid-19 is the “perfect storm” to understand how organisations change and support a shock. And it is a clear example of the adaptability DNA built into the social system.
Use knowledge to change environment: this effectively means “leaving a mark” by adding value to the ecosystem. Many feel this to be a given, but the reality is that many organisations are merely extracting value from the environment, not necessarily changing it for good.

On the Usage of Abstract Concepts, I want to spend a couple more lines. Right, an organisation is established on abstract concepts such as that of the role. But to me, many organisation take a lot of Abstract Concepts mostly as given entities, without questioning their meaning for the organisation. Concepts like Value, Satisfaction, Respect are never challenged or interpreted. We see this in many aspects. Think about the reality of budgeting, which for many organisations equates to a hardcoded routine that cannot be questioned. Same for KPIs and so forth. There’s an entire discipline that under the name of benchmarking tries to concretise specific experiences into universal rules. For me, this simply shows how important it is this attribute as a development opportunity for many organisations.

Many organisations have all these elements above, but some are missing one additional part, that of directionality and purpose. This is what distinguishes and Intentional Organisation from an Organisation for which the sole goal is survival. However, this topic requires a further explanation in a future article.

So what do you think of Organisational Intelligence?