The Executive Function: Three Essential Elements11 months ago
The executive function aligns activities and resources with values. For individual people, this means focusing attention, bodily movement, and cognition for some result, toward some outcome. It is necessary for anything more than simple reaction.
Organizations are just multiple people working together for shared purpose. Physical resources such as buildings, machines, materials, and tools—the means of production—enable them to get things done. Resources must be acquired, allocated, processed, and delivered as products or services, which requires coordination and control. Data, software, and other virtual resources multiply the value of physical resources.
The executive function of organizations aligns resources with customer value to generate revenues that are greater than the costs of the resources.
The most important resource for any organization is embodied in and owned by individual people: capabilities to combine and use resources to produce valued goods. The critical resource is not people, per se—people are people, not “resources,” who have inherent value—it is their knowledge, skills, and ability.
People supply capabilities—talent—to organizations as contractors, employees, partners, etc. They decide how to develop and capitalize on their capabilities, which determines the talent available to organizations. Clear foresight about what capabilities are—and, ideally, will be—needed, how much they pay, and, most importantly, why is necessary for people to make informed decisions.
The “why” of organizations is purpose or customer value. Executives must be clear about why customers pay for or otherwise support their organizations. It should distinguish the organization, its products and services, from other similar organizations. Mission and vision are important but purpose is even more fundamental: why are we here?
Executives must communicate purpose to people as customers, employees, and partners. Each of these audiences must be identified and engaged. Clarity about customer value comes from listening to customers and sensing their values. Employees and partners want income for other purposes that can interact with organizational values. People must be clear on what the organization does but also what it means to them as individuals and members of society. They want to be recognized.
Defining how purpose is achieved is the ultimate element of the executive function. It is inevitably a dialog. Dictating how works only with the simplest tasks. Complex, high-value activities require people to be fully engaged, which requires them to be fully informed and clear about purpose. The executive must empower people to help define and communicate customer value proposition, including their roles in achieving purpose.
Beyond defining and communicating purpose, the executive must position resources and remove barriers for people to be successful. Executives typically direct and empower others to do these tasks rather than do them directly. Executives should understand how all of this is done at least to the extent they can ensure resources are adequate if not abundant and barriers clearly understood, eliminated, or at least avoided.
To summarize, the essential elements of the executive function can be boiled down to:
Understand customer value, its essence and dynamics, to translate it into purpose for customers, employees, partners, and other stakeholders.
Communicate customer value and purpose as a dialog that recognizes people and motivates them to apply and develop their capabilities.
Position resources and remove barriers for people to achieve purpose.
There are many ways to be an executive, but in a technological world, the focus shifts from physical resources to human resources. Human capital and intellectual capital in the form of technology supplant labor. Because people are generally self-directed, this requires a key that has largely been missing from business for nearly a century: Community. Not an artificial “community of users” centered on the business, but a true, organic, multi-faceted community of which the business is a part. It is the means of capitalizing and converging people’s diverse capabilities.
The next few posts will focus on some big ideas and core concepts for success in the technology-enabled digital economy, which will reveal why community is so critical. We will also consider what “success” means in this age of astounding prosperity and true existential threat. Beyond that I plan explore how and where technology is being used successfully in America.