Dr. Yilmaz Arguden, Pinar Ilgaz, Hakan Kilitcioglu, and Dr. Erkin Erimez have prepared a nice, easy to understand management model, named it Sustainable Success Model, and registered it, then published their model as a book. (*). If you ask me, I think it deserves a sub-title such as ‘Good Governance’ or even ‘The Good Institutionalization 101 Handbook’. I refer to this book because it is the answer to the most asked question, “How did you become institutionalized?”. The model described in 115 pages provides the answer to this question with plenty of examples. The first question answers why a company exists, what it does, and who is responsible for the profit/loss. I’ve summarized under three headings:
1) A corporation is an institution with limited liability, aiming to make a profit for its shareholders. It is established as a legal entity. A corporation is a structure that ensures that the capital assigned by shareholders is allocated to the company activities within the determined risk limits. In other words, the profit/loss of the company is evaluated separately from the individual. Since the profit/loss is subsequently shared among shareholders, the courage of the executives working in the company in decision making increases.
2) The primary reason why people invest and innovate by taking risks, that is to say, the reason for the free attempt is the expectation of making profits. But special attention is needed here. If the gains from the investment and innovations are considered only for the short term, companies may not reach their primary goal in the long run. Although they may achieve short term success, they can “fail” in the long term.
3) The measure of success of an institution is to create value and benefit its stakeholders. Of course, the value must be a measurable permanent value that it adds to the institution. Creating value alone and delivering this value to stakeholders may not be sufficient to ensure success.
Later, the authors state, it will also be possible to create value by making effective use of intellectual people and relationships. In order for an institution to put forward an effective “value proposition,” it must have a “competitive advantage.” The authors emphasize that strategic processes should be carefully designed, it must be specifi
ed where they will differ from and resemble their competitors, resources must be used effectively and efficiently, innovation and investment skills should be better than their competitors.
In this context, it is said that the ability to reach the resources that will ensure the sustainability of the solutions produced by the institution with the right costs is the most important prerequisite for the long-term success of the institution. Of course, the defined success must be “measurable.”
The concept of “governance” is extremely important in theauthors’ Sustainable Success Model (SSM). There are two headings under the concept of governance, direction and oversight. This definition is similar to Sir Adrian Cadbury’s definition; “the system by which companies are directed and controlled.” Boards are the top bodies responsible for the governance of companies. Relationships in the board of directors are based on trust.
I think that all this applies even to NGOs and all bureaucratic institutions. In its policies, ARGE encourages its consultants to help the development of society by working in NGOs one day a week in order to develop their intellectual capital
, which is the common treasure of humanity, to produce innovative ideas and to develop social and relationship capital. I think this is a very valuable exemplarybehavior. Because the education systems currently applied in our world are systems established to meet the bureaucrat needs of empires a few centuries old. It is now obvious that this is not enough for our future and for the education of today’s youth. This also applies to the company and in-house communication methods and tools. For example, while writing e-mails in my own organization, I could not still succeed in having others skip some formalities (such as beginning with ‘Dear Sir’ and ending with ‘Sincerely Yours’). Nowadays, everyone alleviates this problem by setting up WhatsApp groups anyway, but at the expense of fragmentary closed circuit communication, is it worth it?
According to the SSM, the five key elements for success are Vision, Approach, Learning, Unify, and Ecosystem. The authors chose the initials of these five elements to form an acronym of the word “Value.” These five main elements have a subtitle. The authors state that the sustained success promised by SSM can only be achieved when these twenty five items are linked in the ecosystem (holistic perspective). All of the five main elements mentioned in this model are concluded with a subtitle of “sharing experiences.” The authors emphasize that it is very important to encourage open communication within the organization for sustainable success. Creating experiences and an environment of sharing opens the way for development and learning and increases the quality. This should be added to every element.
1. Vision (Right Direction)
According to the authors, in order for an organization to exist in the greater ecosystem, a “vision” (target) must be determined, covering the stakeholders and ourselves who have the potential to create sustainable value.
The subheadings for VISION include goal, mission, values, and a holistic and understandable corporate philosophy related to value creation, code of conduct, the determination of business processes by adhering to the vision and mission, the definition of The Business Model and the Value to be Created including the evaluation of the value and contribution created, instead of the business results as a result of activities.
The definition of the Governance Model which will provide the formation of ethical leadership (gender, experience, expertise, structure, geographic diversity) and the quality and transparency of communication between employees, shareholders, board, management, and stakeholders, includes the definition of the ecosystem of stakeholders which involves the determination of a rigorous and detailed approach from a holistic perspective, establishing a Business Model Relationship with Sustainable Development Goals (SDG) for people and the world to live in prosperity and peace.
2. Approach (Action)
After the correct strategy regarding the direction the institution needs to move towards is determined, the action plans should be detailed in order to move forward in this direction. The roadmap drawn in this context should be designed with a long-term and holistic perspective, in a structure that can add value and direct the corporate strategy, organizational structure, and business processes. The right business partners, following the trends closely and developing effective communication with stakeholders are classified as important steps to be considered in the implementation of this component.
Subtitles of APPROACH are studying the SWOT & PEST analyzes meticulously, forming important inputs of the strategy with the decisions taken in parallel with senior management, and creating a strategy that will create value in the short, medium and long term, where the “materiality matrix” is defined as a critical concept in the strategy created, only the internal organization not their relationship; establishing an organizational structure that will also consider relations with subsidiaries, collaborations and stakeholders, establishing and operating a process hierarchy that provides improvement in important performance metrics such as speed, quality and cost management, examining resource management in a sustainable manner to gain the ability to see the whole picture, focusing only on financial resources; resource management to prevent non-financial titles from being overlooked, improving the reporting quality to analyze performance under the right indicators, removing the scope of integrated reporting from the financial framework; moving from giving information about the past to a position that can shed light on the future; Key Performance Indicators (KPI), performance management, defining the reporting structure, covering the processes of constructing the resulting reports in a depth that can affect the decision making processes and transforming the data into information.
According to the Sustainable Success Model, the basis of the development process is “if you want your present to be different from the past, you must learn from the past.” understanding lies, say the authors. In order to ensure development, it is important for the decision makers of the institution to define where they are within the framework of the defined criteria, taking into account internal and external audits and continuing to progress by adhering to the strategy created within the scope of the right direction they have drawn, in order to make the success sustainable.
Subheadings of development are like this: resulting performance included as stakeholders comprise measuring the right metrics operational performance and Measuring Perception QOL, certain intervals, subject to inspection while maintaining governance processes right and wrong action taken on releasing a good Evaluation of the Performance of the Board of Directors, which creates a learning environment, Internal and External Audit, defined as “accountability” and “transparency,” reporting processes are based on value creation; conducting reporting activities, which includes presenting it in a summary format, in a holistic and understandable way, by evaluating what we have learned in a critical structure; evaluation and implementation of learning, which establishes a relationship with direction and action plans, covers the process of integrating the institution into business processes within a good setup and is a critical factor in sustainable success according to SBM.
The unification phase is the determination of the right direction, the use of action plans, and the development oriented arrangement of all the outputs; the authors explain that it is the process of integrating the institution into the wide ecosystem it is in. According to the model, it may be possible to shape success in a sustainable structure thanks to this integration. ‘Where are we?’, ‘Where do we want to be?’, ‘What kind of value do we aim to create?’ are your questions. It will be possible to complete the integration processes as a result of responding within the perspectives of time, impact, inputs and performance, contributions to stakeholders and society.
Then there is the determination of resource needs and an understanding of the expectations of resource providers, which covers the processes of meeting these expectations by clarifying the expectations of stakeholders inside and outside the organization; as well as the substages of integration, by establishing the bridge between the past and the future of the institution. Additionally, expanding the time perspective by providing the flow on this bridge and the strategic planning cycle in a way that paves the way for learning. Establishing a connection between strategy and learning, understanding the gaps between the institution’s own and perceived performance, and then making an effort to close these gaps, making the right direction, action, and development process a common communication language for the audience interacting with the institution. Focused Messages must be presented by considering the Stakeholder Management, which aims to support the quality and sustainability of these areas with business goals by establishing areas where all stakeholders can meet on common ground so as to create interaction and value.
Considering the importance of the concepts of “interaction” and “dependency,” being able to see and manage the whole picture is described by the authors as the last step that should be taken in order to develop the ecosystem and achieve the sustainable success of the institution. In the big picture, they say that it is of great importance to develop proactive strategies as well as reactive strategies by developing a holistic approach, including the institution, stakeholders, market area, and global trends.
Its sub articles are as follows: Defining the Stakeholder Interaction Area and Creating a Relationship Strategy, which includes the creation of a stakeholder map according to the level of stakeholder interaction and impact level in order to understand the big picture of SBM in this context by understanding the perspectives and priorities of the stakeholders with whom they interact “constructive” in the management of the ecosystem in which the institution lives. Determining the Priorities of the Stakeholders, which ensures sustainability by laying the foundations for and “reliable” relationships, improving and interpreting the research processes in a quality manner and the Measurement and Management of Perceptions, which enables the management of different interaction environments by making inferences about the researched subjects, by customizing and prioritizing the outputs according to the influence levels and areas of the stakeholders in the system. Measuring and Management of Outputs, including the delivery of the product and resource planning in this context, in line with the principles of governance and the actor in the ecosystem. Communication of Goals and Results, which describes the presentation of the objectives in a framework that also participates in the process.
Next, the authors defend their model as follows: Companies need to meet their goals, that is, to achieve success, in order to continue to exist in the ecosystem in which they are located. Achievements can soften the effects of some failures; some failures can provide the basis for learning through effective reporting metrics. However, no success will be able to maintain its validity forever, or no institution will be able to strengthen its position in the ecosystem thanks to its failures. For this reason, in order to make “success” sustainable, it is necessary to build interconnected processes and to control these processes, and present them in a framework that covers the whole ecosystem in a correct communication plan. Afterward, sharing, developing, and repeating the experiences gained in the processes, together with the processes listed in the previous sentence, constitute the basic structure of the Sustainable Success Model.
The authors describe the Sustainable Success Model as a linear structure; all aspects are intertwined with one another, constructed in a cyclical structure. They say sustainability, by definition, means a cycle on its own as such, and they say there is no endpoint to be reached. In order for the model to be adapted to business systems, decision-makers within the organization should be able to make sense of this cyclical structure. All 25 items under the five main components listed above are related to each other (each component also has a +1 item, but this item is common to all: learning from experience, so I left them out). They conclude by saying that in order to achieve sustainable success, every step from the “Corporate Philosophy,” which is the starting point of the model, to the “Sharing Experiences, Investing in Intellectual Capital,” which is the final point, should be given importance and the fine weaving of their relations with each other should be handled meticulously.
I have come across two metaphors in business management books. One is the metaphor of the machine – an operating style for the gears of the enterprise to work smoothly and achieve the desired result (**); the other is the organism metaphor, that is, an operating style (***) that adapts the organization according to the changing environmental conditions from birth to death. Arguden et al.’s model seems more appropriate to a human organism metaphor, but frankly, I am for both for Sustainable Success. At every moment, our institutions must function like a machine and produce value, and necessary corrections must be made according to the change of people, especially by adapting to the environment. In fact, sometimes existing paradigms must be destroyed, and new structures must be established. Just like our Yildiz Ventures…
With the combination of these two basic metaphors, Yilmaz Arguden et al.’s SBM and our institutions both work smoothly, and the value created by analyzing the environment is constantly increased together with the stakeholders. This is a very convenient model, deserving congratulations.
Note: This article, which is open source, can be quoted by mentioning the author.
(*) Argüden et al. (2021), Sustainable Success Model, Arge.