Look at the known world’s total GDP over 55 years, from 1960 to 2015. The only two drops in global output over that time happened in the last decade. What’s happening? The world economy is experiencing turbulence created by the convergence of three megatrends: free market economics, the digitization of process, and a millenial-dominated workforce.
● Economic governance in many countries has shifted from Maynard Keynes’ idea of government-driven markets to Friedrich Hayek’s free market ideology. Starting in 2016, Indonesia is already party to special economic ties with 29% of the world’s population that owns 40% of world GDP. When the APEC goes live in January 2020, those numbers go up, respectively, to 70% and 86%.
● Internet users reached 3.2 billion in 2015, two-thirds of which can access each other using two billion smartphones. Never before in history has the world become so accessible. Shipping costs have fallen from $5.60 per ton in 1965 to $0.16 per ton in 2015, and long distance communication costs have fallen to practically zero.
● A digital savvy new generation form the majority of the workforce. They are infinitely more knowledgeable and open to new ideas compared to their parents. They prefer being technopreneurs, and disrupt traditional ecosystems and build new ones that redefine business practices across geographic borders.
The rise of these three inescapable megatrends calls for a new definition of organizational effectiveness. The ability to produce results with efficiency, the traditional definition, is inadequate. A more powerful and operative definition is the process-driven capability to execute a business model for sustainable optimum results, with agility, flexibility and efficiency.
When two equally efficient businesses compete, the organization with more agility and flexibility will win. Agility, flexibility and efficiency are process-driven capabilities. Sustainability is the new test for any business model, to survive the disruption from changes in technology, customer preferences, and regulations.
The new definition of organizational effectiveness begs the question: how to measure organizational effectiveness so as to manage it? The answer: (1) correctly perceiving organization—it does not exist, except in juridical terms. You cannot shake hands with nor engage an organization in a discussion—you can only shake hands and talk with individuals who represent the organization; and (2) mandating the building of process-driven capability to manager-leaders, each of whom must supervise a team of individuals.
Manager-leaders should be individually responsible for their respective teams’ effectiveness. Organizational effectiveness is the sum total of the work of the respective teams—their management quality—and leading their team members to execute—their leadership quality. To survive and grow in the turbulent years ahead, redefine and develop your organizational effectiveness by measuring, monitoring and heightening the personal effectiveness of all your manager-leaders.