Organizational Constraints

The four constraints are:

• Business model and strategy
• Processes and organizational structure
• Leadership
• Culture

When we started Leaderonomics a few years ago, I decided to see if these four constraints worked even in a start-up. Surprisingly, it does.

1. Business model

This is simple. If you have a wrong business model, you will fail. If you have a wrong strategy in place, you will ultimately be doomed.

For years, despite the advent of the smartphones and with Apple and Samsung ripping up their mobile phone market dominance, Nokia refused to relook at its business model. By the time it did, it was too late.

The same happened to Eastman Kodak who refused to budge from their “film” business model. Likewise Polaroid and many others that refused to pivot their business model when they needed to change or scale. Your business model and strategy is the cornerstone of your success.

If you are having issues scaling your business, the first place to start examining is your business model as an organizational constraint.

2. Processes and organizational structure

One of the biggest mistakes organizations make is to focus on people. Yes, you read that right! The problem with solely focusing on people is that we end up pampering our people.

The key to successfully getting your employees to achieve high performance is to focus on “process.” You can still care and love them, but your emphasis must be on building institutional processes.

One of the biggest mistakes Enron and its leadership made was to rely on their “top talent”. They hired really smart people and focused entirely on these “special” people making the organization great.

Initially, Enron had stellar performance. But ultimately, it blew up. Structures and processes dictate behaviour.

If we do not spend time intentionally creating structures and processes that drive the behaviours and performance that we want, we will continually lament the actions of our employees.

3. Leadership

When we talk about leadership being a constraint, it not only means the quality of leadership at the top of the organization but also the quality of leaders across all the different levels.

It’s said that people don’t leave companies, they leave bosses, and we have had employees who made the decision to leave due to dissatisfaction with their leaders.

This shows that it is not only the senior leadership team who are important, but also the middle managers who play an equally important part in talent retention and growth.

If you look at all the top organisations in the world, a key part of their success is leadership. In fact, many problems of the world and even in our country are related to the lack of leadership.

4. Culture

Culture is the cumulative beliefs or mindsets of an organization, manifested in actions. These actions ultimately drive a result. But the “mindset” each of us has is deep-seated. So are organizational beliefs. Martin Seligman at the University of Pennsylvania believes that our mindset dictates our actions.

For example, if you believe that your failures are produced by personal deficits beyond your control, you will make no effort to try to change.