The Intentional Organisation - Issue #41 - Return on Imagination

May 13, 2022

I've been asked a fundamental question. How do you evaluate investing time in developing an Intentional Organisation?

I thought for a long time around this. Unfortunately, it's very improbable that standard Return on Investment measures would work. Why?

Return on Investment, calculated using traditional metrics, is an important performance measure. However, it is very much limited by the ways we measure inputs and outputs, particularly as we tend to assume most financial measures.

When we create business cases, the list of assumptions tends to be very long to ensure a proper measure of ROI. Yet, results often differ from expectations, essentially because there is a very scarce understanding of value chains in organisations.

Without understanding how value is created, how can you estimate a return on investment? That's why the measures are, at most, limited, if not entirely incorrect.

Return on Imagination.

In an Intentional Organisation, I believe we should be looking at a different kind of ROI the Return on Imagination (ROIm).

As suggested by Tom Wujec in his 2008 book by the same title, the idea is that the actual value of design can only be assessed by the level of imagination it carries.

Imagination, after all, means the action of forming new ideas, which is exactly what we are trying to do with our organisation design efforts. We want to architect a future organisation imagining its complex consistency system.

Very often, organisation design effort is marked by defining a Target Operating Model, measuring the gap with the current state, and then estimating the investment needed to fill the void. Returns, however, are primarily dependent on reaching that future state.

Reasoning in terms of Return on Imagination means also taking into consideration the variegated inputs of the implementation process and the design process itself.

Imagination is associated with a general sense of positivity. When we imagine something, we tend to associate the value of an improvement with our destination design. This positive energy flow is already an important asset to be considered.

But ROIm is not just something that "happens": it's a way to assess the permanence of several organisational capabilities, as well as a way to control the build-up of organisational debt.

Building Specific Organisational Capabilities.

Ideally, several organisational capabilities need to be fostered, based on individual solid competencies:

Active Sensing
Learning Agility
Applied Learning
Envisioning
Innovation

The idea is the following: the organisation needs to constantly and actively listen for internal and external inputs about change necessities (Active Sensing), especially at the edges of the ecosystem. It needs to translate these mostly "weak signals" into adaptive organisational practices through a cycle of Learning Agility (learning something new everyday) and Applied Learning (application of the new learnings). Joined with the capability of Envisioning Future State Results it will help shape the true Innovation for the company.

Enabling true innovation.

In the context of The Intentional Organisation, innovation takes a key significance:

Innovation is the capability of the entire organisation to become an adaptive part of the ecosystem, able to deliver distinctive and sustainable Value(s) to all its Stakeholders for prolonged periods of time.

This is achieved by constantly innovating products, services and the organisation itself.

Imagination is the "fuel" that enables the innovation engine, which, as seen, is not just about products or services, but also the organisation itself.

ROIm becomes a critical concept, as it moves the focus from one of the value flow (financials) to a more "holistic" view. It will consider the impacts of investment that the organisation does in time dedicated to learning, to experimentation and agile prioritization.

Conclusion.

Thinking in terms of Return on Imagination means considering a number of factors that are part of the intentional design of the future of an organisation. It means understanding that a big part of the work is building on the capability to imagine the future, and building the consistency elements necessary to get there.

This is particularly relevant when we think at the impacts on Leadership and Corporate Culture components: their inconsistency with new design is often the biggest laggard element for successful change.

ROIm is particularly relevant as we build Ecosystems, simply because we can't control all actors of the environment. And the concept itself of sustainability is not easily measurable with sole financial values.

This topic needs further study, and I will be putting some more effort on this. Feedback are warmly welcome!

Sergio

Cover Photo by J. Balla Photography on Unsplash