Most people are familiar with the term ’emotional intelligence,’ referring to a person’s capacity to control or be aware of emotions. Again, most people are familiar with the term ‘IQ,’ when we’re talking about someone’s level of intelligence. So when it comes to your organization, I use the term organizational intelligence (OI), referring to an organization’s cumulative knowledge, as well as the leader’s level of understanding of its current state.
This type of intelligence is just as — if not more — relevant as emotional or intellectual intelligence when it comes to running a business, and it can be the deciding factor between a company that rises to the occasion, or one that fails to compete. Achieving high OI allows leaders to spot gaps in productivity, anticipate issues before they arise and keep a pulse on their people. Ultimately, it allows for better decision-making and is the cornerstone of running a successful, growing business.
As a leader, it’s your job to know where your business is positioned currently, where you want it to go, and how your people will help get it there. To do this, we rely on organizational intelligence.
So What Is Organization Intelligence?
OI is a measure of how well an organization understands and utilizes its own data, processes and metrics, allowing leaders to make smarter decisions about the company’s current state, future goals and everything in between.
The more you know about your business’s current position within the market and your growth strategy, the better equipped you’ll be in making strategic decisions for tomorrow. It can be challenging to make sense of complex data and metrics, but understanding the concept of OI is necessary to manage the inner workings of companies of all sizes.
If you can understand your business on an organizational level and the cause behind the numbers, you’ll be able to confidently identify issues and make strategic decisions to focus your efforts moving forward.
How Leaders Should Be Showing Up (But Might Not Be)
The success of any business lies in smart decision-making. Every leader I’ve ever worked with has had doubts: “What am I doing wrong?” or “What else can I do?” or “Am I really the right leader for these people?” In a crisis, it’s easy to fall into self-doubt and blame, but it’s important to step back and look at the business objectively.
Large organizations are often focused on goals rather than people, and as a result, productivity decreases, emotional investment dwindles, and the company loses valuable employees. The churn-and-burn method is no longer — and never should have been — an accepted way to do business.
It’s also not uncommon for organizations to be measuring the wrong indicators when it comes to gauging company performance, leaving them with inaccurate data as to why the company is failing and ultimately leading both their efforts and revenue in the wrong direction.
Neither of these approaches are an ideal way to run a business, but I’ve seen it time and time again. Organizations miss out on the opportunity because they’re unable to view their business through the lens of people, culture and productivity.
With low OI, it’s nearly impossible to accurately assess your company, from where it stands currently to where it will be in 5, 10, 15 years from now. We both know you can’t afford to be stationary, when your competition is continually moving forward. With rapid shifts in technology and an increasingly competitive marketplace, it’s easier than ever for organizations to get stuck in old practices and fall behind if they’re not careful.
But having a deep understanding of organizational intelligence allows leaders to view the business objectively — not just what is happening now, but what is possible in the future. It allows you to make better decisions, identify gaps and anticipate challenges before they arise. Putting the systems and processes in place to gather the necessary information and understand how to use it is what organizational intelligence is all about.
How OI Can Be Applied At All Phases Of Business
Depending on where your organization is in its life cycle, it will likely fall into one of these three phases: startup, established or transition. Below I’ll share some phase-specific examples and demonstrate how understanding OI can help organizations across the board.
Organizations in Startup
The startup phase of any organization is about differentiating, growing the business and hiring the right people. If you start off with the right resources, mindset and company vision, you’ll save yourself and your team a lot of time and money in the long run. Understanding your place in the market, what success looks like and how you’ll achieve that success is crucial from day one.
Organizations in Transition
Organizations go one of two ways after startup: they grow and transition into an established, revenue-generating business, or they eventually fail and close up shop. According to the Bureau of Labor Statistics , approximately 20% of new businesses fail during the first two years, 45% during the first five years, and 65% during the first 10 years. They report that only 25% of new businesses make it to 15 years or more, and these statistics have been fairly consistent since the 1990s. Therefore, having a solid foundation of people, principles and products is key to long-term organizational success.
So to remain successful in an evolving market, organizations and leaders must have the knowledge and skills to anticipate and adjust to changes not only in the market, but within the internal structure of a company to survive the test of time.
Harnessing the power of organizational intelligence and truly understanding how your people work will help you and your company overcome challenges before they arise. You’ll still have to deal with regular business challenges, like increased competition or market saturation, but you’ll have your finger on the pulse of what’s happening and when in your business so you can adapt and position your team in an ever-changing environment.
If you’re looking to enhance productivity, strategically approach your company, make informed decisions and ultimately grow both your organization and revenue, send Talent Transformation Expert, Ed Krow an email or book a call. After 20 years in business, Ed Krow has completed over 750 projects for more than 250 companies, so it’s safe to say he has seen it all.