Socionomics and Business Performance


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Have you ever had the opportunity to experience a work situation in which the company is doing well, but things just don’t feel right — they just don’t add up — something has changed?

Many now believe this is the result of a relatively new field of study called “socionomics,” which essentially says that an economy (like the economy of a corporation) is altered when the mood of the people change, like sharholders, employees, customers and so on.

If socionomics prevails over conventional economic fundamentals, its possible that the mood of the people is a leading predictor of future financial success (at the enterprise level). Certainly, we see this association in work teams.

When the members of a work team become demoralized, productivity an other things like quality inevitably suffers which, in turn, effects profitability (regardless of how small the impact is). Given this, its not a stretch to understand how the collective mood of all employees could have a significant impact on current profitability — perhaps even future sales.

Now stay with me on this. If we look at chaos theory, what we discover is that small changes in the initial conditions of an otherwise stable system can propagate into a state of chaos. Then, after a period of time, the system naturally returns to a relatively predictable steady state condition, although the return state may be different from the original state.

For example, after a big football game, people rush to their cars. At first, the way people get off the grounds is chaotic — cars going every which way, but then over time, without a word being said, orderly lines start to form and you-go-then-we-go mentality falls into place and order is restored. Now let’s apply this way of thinking to the idea of what often happens in the corporate world.

Suppose a small change in company policy triggers “people talking.” As the scope and depth of internal discussion grows over time, a small change in the mood of the workforce occurs. As the mood slowly worsens, the “point of bifurcation” is reached. This is the point where an otherwise stable system becomes chaotic.

This now means people are seeing the workplace in a different light and; as a consequence, some of their behaviors change in an imperceptible but unfavorable way. It is at this point that the system becomes unstable and chaos erupts (i.e., people are no longer of a common mindset — they’re individual moods are all over the board, so to speak). After a period of time, the chaotic moods naturally seek an equilibrium point and order returns.

However, just before natural order is restored (as the chaos burns out), management makes another change to try and overcome or otherwise compensate for the effect of the first change. Thus, the system goes into cycles of order and chaos. Consequently, the organization is in a continual state of flux and; therefore, less predictable across one or more dimensions, like financial performance.

Given this, the previously high-level of enterprise productivity starts sinking into what appears to be a downward random walk (statistically speaking), much like the unpredictable patterns we see as the price of stocks rise and falls on an overall upward or downward trend.

So what’s the big take-away from all this? Simple, maybe we should consider measuring employee “mood” versus “satisfaction.” Perhaps the same could be said for an organization’s customers.

Thus, we have made the connection between employee moods and the financial performance of their organization.

 

Mikel J. Harry, Ph.D.
Co-Creator of Six Sigma
National Best Selling Author
Consultant to World’s Top Executives
Working Philanthropist

About Mikel Harry

Dr. Harry has been widely recognized in many of today's notable publications as the Co-Creator of Six Sigma and the world's leading authority within this field. His book entitled Six Sigma: The Breakthrough Management Strategy Revolutionizing the World’s Top Corporations has been on the best seller list of the Wall Street Journal, New York Times, Business Week, and Amazon.com. He has been a consultant to many of the world’s top senior executives, such as Jack Welch, former CEO and Chairman of General Electric Corporation. Dr. Harry has also been a featured guest on popular television programs, such as the premier NBC show "Power Lunch." He is often quoted in newspapers like USA Today and interviewed by the media, such as The Economic Times. In addition, Dr. Harry has received many distinguished awards in recognition of his contributions to industry and society. At the present time, Dr. Harry is Chairman of the Six Sigma Management Institute and CEO of The Great Discovery, LLC.
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4 Responses to Socionomics and Business Performance

  1. Kurt Peterson, P.E., ASQ CSSBB, MBB says:

    The concept of repeating arrivals at order and then chaos and then back to order, etc., calls to mind my own “theory” that I’ve been putting some thought into for a while, which I call the pendulum theory. Much like in your article, Dr. Harry, an organization will often swing from one extreme to another with the hope of finding middle ground, homeostatis, natural resonance, any number of ways of describing the state of control, calm. We’ve all seen it in business in the way they cycle from consolidation to diversification, hiring to firing, spending to cost cutting.

    • Mikel Harry says:

      Kurt Peterson:

      You’re right on spot. You’re “Pendulum Theory” is interesting. This theory would seem to suggest that business moves in cycles, much like nature. Some of the cycles are longer, some shorter. This pattern of behavior is seen in many things, like the stock market, as well as the patterns created using fractal geometry, which is closely related to chaos theory. One thing is for sure, while things may be cyclical, they are not perpetual.

      Best of Regards,

      Mike Harry 🙂

  2. Pingback: Socionomics and Business Performance | Mbarriger

  3. Hello Dr. Harry very interesting article, brings the reader to look at the relationship of social chaos in the business environment, and what is needed for order.

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