Institutional Actualization: The “5 A” Process of Virtuosity

If actualization is defined as becoming what one is capable of becoming, who would not want to reach a point of actualization? The desire to actualize one requires a process of virtuosity. Nothing comes easy in life, more so actualization. In a previous blog post, “Self-actualization by One’s Self for Oneself: An Enlightened Process for the Elusive Goal” published on April 21, 2013 in Strategy Musings (http://cbrao2008.blogpost.com), I proposed a model of ten-component self-actualization that had strong performance and philosophical undertones, and traced several phases and steps that need to be gone through during one’s lifespan.  The blog post postulated and demonstrated that the ten components, namely, self-awareness, self-appraisal, self-confidence, self-control, self-development, self-discipline, self-expression, self-improvement, self-motivation, and self-respect, together, constitute an enlightened process to achieve the typically elusive goal of self-actualization.

The above mentioned approach to actualization was proposed as a holistic solution to handling life’s challenges and opportunities for a human being in a social or organizational context. One question we face is whether the model of actualization for institutions would be any different from that of individuals. The answer probably is in two parts. One, to the extent that institutions are led and managed by individuals, individual actualization should lead to institutional actualization. Second, institutions are also like citizens and need to fulfill certain responsibilities and also seek fulfillment. That said, institutions have a life of their own and individuals may not be able to influence a particular course of actualization, without institutions themselves taking up actualization as a process. This blog post proposes a simple model that would capture the process of virtuosity by which institutions can achieve actualization.

Institutional actualization

Actualization of human beings and of institutions makes the world a better place to live in. There is no single benchmark of what actualization means. In fact, it is established that actualization varies vastly for individuals even within the same trade. For a particular actor or musician, for example, actualization could mean winning of an Oscar. For others in the same artistic domains, actualization could mean mass popularity amongst the audience. For a particular corporate executive, actualization could mean being a generation ahead in growth and creation of personal wealth. For another, it could mean training a vast pool of leaders and creation of institutional wealth. Whatever be the gross difference or subtle nuance, actualization is a key driver of social and economic progress.

For institutions too, actualization could be different even within an industry. For certain organizations scale is important and for others scope is important. Some are inspired by market share and some by profit share. Some aspire for growth while others are content being model corporate citizens. Whatever be the actualization benchmark, it is clear that when actualization ceases, progress plateaus. There was a time when the government-owned public sector corporations were a showpiece of India’s engineering progress. This arose as the bureaucrats and executives found actualization alike in laying the first foundations of national technological development. However, as monopoly power stalled and licensing raj stymied competition, complacence set in and actualization faltered.

Actualization, beyond strategy

Institutions rely on structures and processes to govern growth. Strategic planning or long term planning is one such systemic discipline adopted by corporations. Starting with vision, the process develops a strategy, guides execution and measures progress as an iterative process. The strategic process, unfortunately, is both an enabler and an inhibitor to institutional actualization. The SWOT analysis of long term planning, for example, is akin to the processes of self-awareness and self-appraisal, and lays the foundation for development of a corporation. However, once a strategy is developed metrics take over. Achievement is measured against hard metrics rather than soft aspiration. The even more qualitative goal of actualization never gets assessed. Strategy, while being an important enabler of actualization, also cannot be allowed to dampen the quest for actualization.  

The issue with strategy is that past performance or current competition almost always serves as a benchmark for vision and strategic goals. Strategy is rarely determined in a corporation by a true understanding of its actualization potential. That hardly does justice. Actualization is pushed to limits when a person or institution charters into a completely unchartered territory or imagines a completely invisible. Actualization for a corporation is a lifetime experience rather than the result of a five year strategic planning process. A review of the multinationals, such as Lever, Glaxo, SKF, GE who entered India more than 100 years ago and have tasted a level of growth in, and integration with, India, that would not be visible to the trained mind even at the time of entry, demonstrates how actualization of a lifetime actualization differs from a limited perspective strategic goal setting. Most pioneering inventions and most path-breaking businesses, national or multi-national, and in India or abroad, owe their success to higher levels of actualization inspired by an unknown but imagined future.

A 100 year horizon

Institutional actualization, as a process, has a horizon of several decades. While institutions exist in perpetuity, and therefore have no specified life as individuals, probably 100 years, in rests of 20 years, as with individuals is a good way of establishing actualization horizon even for institutions. Continuing that concept, a corporation can be postulated to grow up in the first twenty years, become established in the second twenty years, season itself in the third twenty years, emerge as a bellwether in the fourth twenty years and become an icon in the fifth twenty years. Today’s corporate analysts and business historians judge corporate evolution far too early. As a result, young startups are praised as bellwethers and icons even in the first decade of their growth. Like individuals, institutions are also prone to the adverse consequences of headiness caused by premature recognition, which may impact their ability to secure lifetime achievements.  

This is not to suggest that corporations do not or cannot become innovators or pioneers in the first twenty years of their life, or even within the first few years of inception. Certainly, they do and can as demonstrated by many young achiever-companies. Success of entrepreneurial efforts or competitiveness of business models, however, does not ipso facto imply sustained institutionalization of a corporation or its actualization of a lifetime. A whole series of Internet product or service companies have made their mark in their first years in the recent post but it would remain to be seen whether they would keep up a sustained momentum and achieve actualization. A process that helps institutions target actualization as a lifetime objective would be well-merited. This blog post proposes a five component process, comprising Aspiration, Ambition, Analytics, Achievement and Actualization (called the 5 A Process) that would be particularly relevant for institutions. 

The "5 A" process

Aspiration, which implies a strong desire to achieve something, is largely seen as an individual trigger. At an organizational level it gets translated into getting into a business or growing a business based on targets of revenue and/or profitability. The real aspiration for a corporation, however, must be in terms of making available to customers or society something which has not been available thus far and thereafter remaining a leader in that pioneering business for a lifetime. Whether it is Lever, Glaxo, Philips, SKF, Tata or GE who entered India over 100 years ago with consumer products, healthcare products, electronics, bearings, steel or infrastructure equipment the rule of making something available for the first time, and remaining a leader for decades in that business reflects an aspiration that lays the foundation for lifetime institutional actualization.

Ambition is aspiration reinforced with the determination to achieve and succeed. The difference between ambition and aspiration is same as the difference between determination and desire. Corporations need to be fired with an ambition to succeed. Pioneer-entrants mentioned above and a host of other private sector and public sector firms in India made their entries, braved near hostile circumstances, brought in novel products, opened up unreachable regions and all the while successively introduced new technologies, products and business models. Determination helped these corporations become institutions. Even ITC, which depended only on the socially regressive tobacco and cigarette business demonstrated pluck and determination to re-charter its course into multiple socially acceptable businesses to survive and grow.

Aspiration and ambition need to be channeled through a robust framework of analytics for corporations to achieve their aspirations. Analytics is the science of analyzing data to develop trends and providing guideposts to future. That said, decades ago there was no analytics as a domain, yet the pioneers did successfully what they did over hundred years ago. The reason lies in the fact that there is no better analytical tool than the human brain. All of GE’s inventiveness is no match to the invention of GE’s great founder Thomas Edison and his analytical ability that foresaw the need for a corporation based on technology in the 1800’s. So has been the analytics of Henning Holck-Larsen and Soren Kristian Toubro, the two Danish engineers who foresaw India’s future and established Larsen & Toubro (L&T) in 1938 in India. Human analytics still remains the best bet for providing a framework for channeling aspiration and ambition.

Measuring achievement is apparently the easiest of the five step actualization process which moves as per set aspirations. If achievement is to be measured against revenue/profit metrics, it is indeed an easy task. If, on the other hand, it is to be measured in terms of sustainability of the aspiration, it is indeed a hard task. However, there are ways to measure the sustainability of the transformation. The robustness and scalability of technology deployed in a corporation is the first measure of achievement. The breadth and depth of market reach of a corporation is the second measure of achievement. A corporation which consistently maintains its high score on these two dimensions would be on a sustainable path of actualization. Toyota and Sony are examples of such sustainable achievement; they are helped to overcome financial setbacks on the strength of sustainability of their technological depth and market reach.   

In a process of institutional actualization, why should actualization figure as a discrete process component instead of as the final outcome as would be in the case of individual actualization? The reason is fairly simple; corporations are expected to be perpetual in life while individuals are not. For individuals, actualization is nearly an end-of-the-active life experience, almost synonymous with nirvana. On the other hand, for corporations actualization is a reminder of how they can transform themselves into institutions and how they can contribute to societies in a perpetual manner. Each actualization cycle should ideally lead to the next one. In institutional actualization, the very fact of actualization should spur thinking on the next frontiers. This applies whether corporations see a 20 year horizon or a 100 year horizon for institutional actualization.

Leaders’ responsibility

Corporate leaders and their boards must, from time to time, take time off to assess their corporations on their actualization journey. Even if their corporations have met all the performance metrics and even if they are the preferred ones of the Street (and in some cases, in spite of their not being so), the leaders and boards would do well to introspect and review whether their corporations have become what they must become, and actualized themselves to the best extent. Institutional actualization tends to be a perfect blend of all the positive faculties of the individuals comprising an organization, in time spans appropriately visualized.  

Posted by Dr CB Rao on May 19, 2013