This series on implementing a betterness portfolio was all about ways your business could benefit society while staying financially sustainable.
The different forms of societal wealth that we covered all create value in the short-term that can be accessed and built upon in the future:
- Building financial wealth generates cash that can be invested in something else.
- Protecting natural assets means they can be enjoyed or used later.
- Fostering human wealth improves the health and education of individuals so they can contribute more to their jobs and communities.
- Cultivating social wealth strengthens the bonds between people, leading to better health and business outcomes.
- Creating emotional wealth leaves people happier and helps them create more in all areas of their life.
- Advancing intellectual wealth builds up our collective knowledge base of ideas and processes to help us solve problems and create future value.
We’ll close out this betterness series by talking about organizational wealth. Organizational wealth is the value that emerges from systems. Which is based on the mix of elements in the system and how the pieces interact.
This form of wealth is created by businesses, governments, markets, platforms, institutions, and other systems that organize resources in ways that solve problems or unlock opportunities beyond what individuals and one-to-one social bonds could achieve.
Resources and people can flow into and out of these structures while the institution lives on.
The structure is represented in the business architecture, enterprise architecture, business model, and the system of systems that emerges when multiple groups work together.
Fully understanding this structure means considering people, process, technology, and policy. It means looking at the entities that make up that system and the flows of resources or information that connect them. Organizational wealth at the national level means zooming out and looking at the country as a whole.
Figuring out the structure of an enterprise or industry requires research, but the task is relatively straightforward. But how do you measure the value created by that structure?
Measuring organizational wealth
“Betterness” author Umair Haque writes that organizational capital “harmonizes and synchronizes other types of wealth.”
At the national scale, Haque suggests looking at organizational wealth metrics such as the creation of new jobs, the rate of political decision making, social and economic mobility and how well financial wealth maps to value creation.
To evaluate the wealth created by an organizational change, you could look at the change in rate of decision making. The distribution of power, people, money, and knowledge. The impact on how effective this organization is at meeting its goals or how efficiently it uses its resources. How many new opportunities, jobs, customers, ideas, positive emotions, etc. this new organizational tweak enables.
Relating this back to our other forms of wealth in a betterness portfolio, we can pick a starting point and look at the flow of resources between groups over time.
We could,
- Examine the distribution of financial wealth and look at how it flows (or doesn’t flow) between groups.
- Research the environment and identify areas at risk, areas that are thriving, and the role that institutions play in changing them for the better or worse.
- Review national health and education trends, the players involved, who benefits and how resources are used.
- Evaluate social bonds across a company or country and see where they are stronger or weaker and why.
- Track emotional trends and which policies or cultural norms are different in happier countries.
- Explore why ideas that get recognition and funding are concentrated in certain geographic areas, socioeconomic groups, or industries.
Examining the value created by an organizational structure forces us to recognize and perhaps question our deeper values. What’s important to us as a company? What’s important to us as a nation? As humans inhabiting the same planet? Some values are shared yet others may be controversial.
Your company mission statement and strategic goals may give you some guidance. But at the core, our morals strongly influence what we believe and the decisions we make.
At some point, we can’t ignore politics, beliefs, and worldviews when designing solutions. Politics are the ultimate organizational challenge, and varying moral beliefs explains why there’s so much political tension. How we define and prioritize the goals of equality, efficiency, security, and liberty tend to be themes that come up in both politics and corporations. If discussions about the value created by an organizational change aren’t going anywhere, it may require uncovering what people’s underlying values are.
Business value
We can work out the societal value, but what’s the business value of enhancing organizational wealth beyond what happens within your own organization?
- External organizations already exist and can influence how you run your business, so taking this viewpoint can help anticipate and shape decisions before they impact you.
- A strong culture and institution help improve the flow of employees and partners without hurting your operations.
- Playing a proactive role can help head off future issues due to shifting industry dynamics or social unrest.
- Creating and supporting institutions around you can help you generate referrals and expand your customer base.
Some ways to create organizational wealth with your betterness portfolio
- Host a platform or marketplace for connecting people so they can exchange value.
- Support your local entrepreneurship and small business community.
- Build a channel for connecting people to news, worldviews, and opportunities in communities they aren’t currently a part of. (ex. The Bridge)
- Create solutions that make group decision making easier and faster.
- Develop models and presentations that help other people understand the organizational aspects of an industry, problem, or solution.
- Encourage an entrepreneurial ecosystem directly connected to your business (ex. with partners and add-ons).
- Change your business or product architecture to better fit the broader needs. For example, either a more integrated or modular architecture than what you currently have may better address stakeholder needs.
- Create quality job opportunities.
- Simplify experiences. Address normal organizational entropy by streamlining periodically.
- Review and improve your portfolio approach (how investment decisions are made).
- Review and improve your systems engineering approach (what investment decisions are made).
- Create value by reorganizing existing resources (ex. new team structures, turning wasted products into valuable ones).
- Engage in policy formation.
How to incorporate organizational wealth generation into your portfolio process
You can fold an organizational perspective into each of the portfolio essentials with a few tweaks.
Current State
Addressing organizational challenges starts with understanding the current players, their role, and behaviors in the system. Stakeholder, network, and industry analysis are helpful tools for understanding the baseline. Then move on to the processes, technologies, and policies involved in the current state.
Future State
How would everything be organized in the ideal state? Where would the entity boundaries be and what information would be shared across boundaries and how? What kinds of partnerships or collaborations would be in place? You may want to create a business model playbook to track all of your ideas.
Value Framework
To prioritize organizational initiatives you might incorporate criteria like autonomy, alignment, efficiency, equality, or collaboration depending on if you want to distribute resources, connect existing groups or improve flow.
Portfolio Allocation
A portfolio focused on organizational wealth would include a higher percentage of internal transformation projects that impact how decisions are made, resources are allocated, and how they flow between internal and external groups.
Execution Support
Building organizational wealth means creating a culture and systems that allow others to quickly create value without relying on one particular person. Servant leadership and streamlining internal project and external contracting or licensing processes are ways for your brand to help others take initiative.
Research & Experimentation
To test out organizational changes you could prototype different management options like team composition, processes, and tools. Workshops could be a good test of new combinations before rolling out the change across the enterprise.
Intake Process
Solicit ideas from managers and teams, and allow employees and customers to suggest partnerships.
Dynamic Views
Create reports showcasing how the organizational changes impacted metrics related to your values, such as equality, efficiency, security, and liberty as discussed earlier in this post.
Profit is just one metric to consider. Over the course of this series, we’ve explored a handful of ways that you could create additional forms of wealth with you betterness portfolio. We also discussed how to practically incorporate this mindset into each of the portfolio essentials.
If you’d like some help applying these concepts, Recharted Territory helps purpose-driven enterprises construct and improve their portfolio management processes. Check out our services to learn more and set up a free consult.
How will you incorporate these ideas into your business? Do you have other ideas of how to build organizational wealth with your enterprise portfolio?