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The power of systems

 What is a system?
A human system is a set of interacting and interdependent practices, procedures and habits that work together with the aim of achieving specified outcomes. A complete system is one that includes all the practices necessary to achieve the overall objective of the system. Partially implementing a system usually results in the system failing to achieve its objectives; systems must be implemented in their entirety.
Appropriate systems
SHEs will not succeed if they omit vital practices from critical systems. In many SHEs, their leaders often fail to invest in developing their people. Sometimes, there is a vacuum where essential practices have been dropped from a system, with the result that some of the vital foundations of SHEs have been eroded or are no longer present. A stark example of this kind of failure is where the practice of ‘only using finance from benign sources’ has been disregarded, and instead, finance has been obtained using international capital markets, with ruinous consequences.

As the world changes, many organizations including SHEs, are becoming more complex. In many cases, they are using systems that don’t take account of the changes taking place around them. Frequently, there is a mismatch between the practices used in the enterprise and those essential to achieving its purpose. SHEs often adopt practices simply because these are the norm in commercial businesses, disregarding the fact that many such practices are clearly not appropriate for use in SHEs. The alternative to using appropriate and rational systems is to allow them to operate without clear direction or boundaries, with those running them making-up how they run them as they go along.

 Professional managers
The bulk of professional managers are only trained to operate within commercial businesses, often having no knowledge of the self-help model of enterprise; this absence of understanding presents a major problem for SHEs. Leaders should be aware that if they appoint senior managers who do not have a proper understanding of the model, such managers will inevitably revert to the practices and systems they do know about, which are often entirely inappropriate for use within SHEs. Leaders need to understand that many aspects of running SHEs involve the use of practices that are hugely different from those in regular use in other forms of enterprise and that they can imperil the very soul of their enterprise if they appoint senior managers who do not fully comprehend the self-help form of enterprise. Therefore, all senior managers working in SHEs need a thorough induction to the self-help model of enterprise prior to being let loose to manage them.

Updated: March 2019  © Edgar Parnell 2019
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