Leadership must also administer and execute to deliver value to the organization and its participants and realize value potential that provides ongoing benefit for them. The benefits participants realize stem from reduced uncertainty of the continuing access to resources and predictability with respect to future access. This reduces the discount rate of future value exchanges and thus creates value potential.
Thus a significant amount of value accrues to participants of the community by increasing the predictability of its dynamics. Leadership interactions promote interaction that administer and execute programs increase predictability in an otherwise uncertain environment. This reduced uncertainty creates local value by reducing the risk that resources will be available in the future.
Wages, for example, are most often related to value exchange. Work, it is assumed, whether it be physical labor or knowledge work, is expended by individuals. In exchange for this effort, each is compensated with resources or an exchange currency. Autonomous individuals can practice this exchange in the economic ecosystem by performing day labor or through piece work in the “gig economy”. But this exchange can also occur when participation is as an employee, partner or owner, in which case, there is a longer term relationship assumed to be in place. Economic activity can therefore continue occurring whether the worker is salaried or hourly, an employee or a contractor, and owner or consultant. However, when a work is done in the context of participation in a community, as owner, partner, or long term employee, some of the value that accrues to the individual comes from membership which offers reduced uncertainty (i.e., increased predictability) regarding continuing access to resources. When one calculates value as the present value of future cash flows, decreased uncertainty (i.e., risk) about the presence of future cash flows increases current value because the rate of discounting the future declines but only for those participating in the organizing system. Effective administration and execution increase predictability and there for give confidence to participants in the present that that future value will indeed be realized.
These activities focus on the disciplines of management, such as implementing management plans, programs, policies and procedures that operate efficiently while and holding people accountable.
Leadership Interactions Enable Activities that Administer and Executes Programs
The Administer & Execute function maintains stability in emergent coarse-grained properties such as organizational capabilities like, for example, product management, financial planning and quality management, in the face of a changing environment. It does this by amplifying downward pressure to influence individual interactions in an effort to nudge them to conform to a common model of effective coordinated action. It does this by enforcing certain local rules of interaction and in this way limiting individual degrees of freedom and guiding compliance. This dynamic process is called entrainment.
A shared model of the organizing process entrains action. It does this by reflecting its requisite constraints on action on local rules of interaction. Coarse-gran forces such as market conditions managerial policies and clear due dates and timelines as well as the roles and responsibilities of the members are recognized by the members. Katz and Khan point out that leadership must deal with changing boundaries, weaknesses in design and the rights and responsibilities of membership in the context of performance. This implies that leadership must channel convergence to a predictable, dynamically stable organizing form within a CAS so that its semi-autonomous members know what to do, as well as how and when to do it.
The most obvious way that individuals would find that the rules governing their interactions are changing is when what is changing is causing the organizing form to become more effective or more efficient, that is, when the organizing form ─ as an organization or process, coarse-grained property, that can be recognized over the environment as a background─ becomes more predictable. Budgets are cut or schedules are enforced, for example. One can count on a weekly status meeting beginning at 9:00AM, for example, and know what will happen. For this discipline to develop, “local rules of interaction”, norms and conventions, must be reinforced. Crisp agendas in meetings and project timelines, for example, can enhance efficiency, but to maintain order the protocols that enable them need to be continuously reinforced against individual self-interest.
There is a context, of course, wherein the rules are relevant. This is the organizing form. For organizing to be effective, each individual has to carry with them a model of what that form is about and how its various components should be working in order to know how to participant in order to exploit its predictive value. This is an organizations operating model. Since each individual’s model may be quite different, some accurately reflecting the organizing form, others, perhaps, even delusional, synchronizing the models that are used by disparate individuals ─ publishing a meeting schedule and agenda ─ is one mechanism that promotes convergence, albeit an indirect one, toward dynamic stability. One would expect actions that promote conforming to common practice would be perceived as leadership. Leadership enacts “entrainment” toward dynamic and operating capabilities through actions and communications that establish, govern, or enforce local fine-grained rules of interaction to promote convergence toward more predictable coarse-grained outcomes.