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Natural design for conscious companies

The company learns and improves through constant implementation of learning cycles that promote a culture of compliance under these five principles.

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This article was translated from our Spanish edition. Opinions expressed by Entrepreneur contributors are their own.

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By Juan Alberto Gallo Macías, Regional Manager of the Wadhwani Foundation

Many companies are born by solving a need for certain clients through their technical skills. It is common that, during the first stage, the owner acts as a man orchestra and takes care of all the activities to achieve a result.

When things are done correctly, there is an opportunity to cover more market and the employer decides to hire staff seeking to increase their capacity. In this stage, the entrepreneur must focus on their coordination and leadership skills to recruit, retain and develop their collaborators so that income grows more than expenses.

Most of the time, this process is done empirically and many errors are generated that leave the employer exhausted between the problems of staff turnover, inefficiencies, quality errors, poor service, and astringency in cash flow. This generates the first crisis and triggers the first step towards institutionalization when the entrepreneur realizes that doing more of the same is not going to give better results. Through reflection, visualize a new business model.

When it seems that things are starting to move, the environment changes, customer habits evolve, new competitors emerge and make the first vision obsolete. The businessman again feels frustrated and enters a second crisis: the loss of self-confidence.

As on the previous occasion, the crisis is the gateway to the next step towards institutionalization. The owner accepts that he cannot know everything and humbly accepts that it is important to know how to ask and receive advice.

It is essential to know who to ask what. As Machiavelli states in chapter XII of his book the prince. about the prince's secretaries:

“The choice of ministers is not an unimportant point, which will be good or bad according to the sanity of the prince.

The first opinion that one has of the judgment of a prince is based on the men around him: if they are capable and faithful, he will be able to consider it wise, since he knew how to find them capable and keep them faithful; but when they are not, a prince cannot be considered prudent if the first mistake he makes is made with this choice. "

Approach to natural design for companies

Throughout 30 years of experience in professionalizing the financial work of companies I have tried to understand what are the factors that make companies succeed, looking for alternatives that allow organizations to better adapt to the environment and evolve adequately to develop all their potential.

I was able to take a big step by finding in the work of Benoit Mandelbrot the definition of fractals to generate iterative algorithms that help describe how natural systems interact with complex and unpredictable environments.

Based on this framework, I share some essential definitions for organizational architecture that make the institutional process efficient by combining substantive elements with a qualitative framework, implementing the model through constant iteration.

Substantive elements

It is essential to have the following definitions of the business model, ordering them in an upward spiral that complements them:

Image: Juan Alberto Gallo Macías

A. The spirit and vision : Detailed definition of the genesis of the organization to create wealth in the environment through its transcendent purpose. Understanding wealth as the ability to focus the resources of a system to achieve the transcendent purpose, we must consider that in this purpose we fulfill the client's solution, the satisfaction of internal and external collaborators and the success of the capitalist.

The more comprehensive and inclusive a purpose, the more likely it is to attract markets, which is why it is highly convenient to include social and environmental responsibility in this definition as part of our exchange for long-term sustainability.

B. Required diversity : As the ability of the system to absorb the complexity of the environment, learn and self-regulate. For this we must take into account the amplifiers such as the purpose and the attenuators such as the definition of the appropriate policies and guidelines.

C. Organic structure: Through the understanding of systemic approaches and cybernetics we must design the structures observing complex organic systems, such as the human body, thus we can define four essential subsystems: the circulatory system, central nervous system, peripheral nervous system and the operating muscular system. * See Stafford Beer viable system model.

D. System dynamics : Understand that the organization works at two times in a continuous movement creating a rhythm, the dance of evolution. There are harvest and planting times, as well as entry and exit cycles.

E. Control section : The supervision points for the activities that guarantee the fulfillment of the business objectives in such a way that we can verify in a reliable and timely manner the performance of the organization.

Quantitative framework

To quantify the relevant aspects of the performance evaluation, a map of indicators that go from the desired final effects should be created, delving into their causes, where, the explicit interconnection is very useful to understand how and what to improve.

To exemplify this aspect, we combine Dupont's theorem with the Balanced Scorecard, illustrating the work to be done:

Image: Juan Alberto Gallo Macías

Constant iteration

The company learns and improves through constant implementation of learning cycles that promote a culture of compliance under these five principles.

Image: Juan Alberto Gallo Macías