The Engine Analogy
There’s a video I saw a long time ago that I’ve never forgotten of Russ Acoff explaining systems thinking using the analogy of an automobile:
If I bring an automobile into this room and disassemble it, although every single part is in this room I don’t have an automobile. Because the system is not the sum of the behavior of its parts it’s a product of their interactions.
This analogy is super helpful when you think about how a company works. There are functions for producing products, providing services, marketing, sales, finance, strategy, HR and many more. Within each function, there are people doing different work and using diverse processes, tools, and resources. Over the past fifty years, technology has helped automate and accelerate the work of all these distinct components of a company. But there has been less attention to the whole, how it’s all interconnected. In Acoff’s words, we’ve been focusing on the parts, not the whole engine.
So, how can you think about the whole engine? First of all, you make a map to document its design. Few companies have this. They have an org chart that shows how labor is organized. They have an accounting chart of accounts that shows the financial effects of their work. But they don’t have a map that shows how all the pieces fit together. They have the parts but not the whole automobile.
Tuning the Value Engine
That’s why the first step for any organization is to map its complete value engine. The map should include a listing of how work actually gets done with processes, metrics and resource detail. Creating this in a centralized platform shared broadly across they organization is a powerful tool in itself. It can increased shared understanding among teams inside the company as well as with external advisors. But a map opens many more doors, enabling internal teams to improve the company’s operations to:
- Build a more valuable company – Use KPIs and OKRs to measure how the engine is working. Review, prioritize and conquer the most pressing challenges.
- Rationalize AI – Use the map to provide context for AI. Ensure that every AI point solution is fully customized to the organization’s corporate context
- Tell a more compelling story – Help justify a higher valuation using detailed reports on the organization’s design and performance. Give investors, valuators and acquirers confidence that they are buying an engine for future growth.
The Role of Outside Advisors
Outside advisors can be especially helpful in jumpstarting this process. Arm your clients with a complete map of how things work today. Help them build a cadence of continuous improvement and plan for the future. Get the CFO involved to connect the value engine to the accounting system. Use the information to ensure AI is implemented successfully. You’ll be the hero that helps the team turbocharge their value engine.
About Insights7: Our aligned execution hub helps companies unify strategy execution data and decision making. Advisors deliver their findings in our platform in an actionable form. This causes a fundamental shift from advising to helping make change happen. Our platform is a great fit for consultants who work at either the process or the strategy level. Let’s talk! We’ll start with your deliverables and map how these can become actionable in our system. Feel free to message me at XPX or connect and schedule with me on LinkedIn.
