How the Absence of a Taxonomy Impacts Organizations

This is the second article in the series ‘The Art and Science of Taxonomy Development for Market and Competitive Intelligence’. Click here to view other articles.

I t will be a mistake to view organizations as machines, where separate components perform various functions in a pre-defined, constrained, and static manner. This view had benefited us since the time of Henry Ford and through the remainder of the Industrial Age.

However, the increasing complexity and speed of change in today’s business environment are forcing organizations to evolve and adapt faster. Those who evolve will survive — just like living organisms. It’s important to view organizations as living organisms. Once we accept this view, then it’ll become clear that the same survival principles apply to organizations that are true for other living organisms in nature.

Organizations are living organisms

Our species, homo sapiens conquered all other species because of their unique ability to communicate with one another. Our vocabulary, the fundamental unit of language, allowed us to communicate not only threats from other animals but also the availability of food and other opportunities to survive and thrive. It differentiated us from other animal species — our competitors.

The same principle of efficient communication will enable successful organizations, with a consistent vocabulary (taxonomy), to prevail over the competition.

If organizations are living organisms, then information systems are their central ‘nervous systems’. And…

“Taxonomy is the foundational pillar of an information system”

An efficient information system enables an effortless flow of information from one function to the other, from one user to the other, and prevents organizations from neural disorders. Such as:

1. Urgencies, emergencies, and ‘knee-jerk’ responses to events

More often than not, these disorders are caused by poor decisions. Let’s accept that no one deliberately makes a bad decision. Decisions are based on the available information. Employees have to make decisions with whatever information they have access to. Sometimes, they don’t know whether any helpful information exists, and even if they know, it’s not easy to find. It might be stored in some files with cryptic names inside some unrelated folders. This struggle to find information not only wastes time but also drains away vital energy — making organizations less competitive.

2. Mistrust, politics, and CYA (Cover Your A**)

A toxic corporate culture develops in situations where team-members have different versions of the truth about things that matter — about external market forces or internal capabilities. They all are right based on the limited information that they are exposed to. Precious time and energies are wasted in meetings, arguments, and preparing reports trying to prove one’s point of view. Coupled with egos and insecurities, these battles become one of the biggest waste of resources — making organizations less competitive.

3. Communication break-down

It isn’t uncommon that a salesperson finds out about the launch of a new competing product from a customer while this information was already available with his marketing team. Or, the marketing team learns about competitor’s promotions from distributors, while the salesperson was already aware of it. Or, the product team finds a problem in the user interface, when customer service knew about it all along. Such inefficiencies, caused by a dysfunctional information system, make organizations less responsive — making them less competitive.

4. Growth challenges

As new individuals enter the organization, it’s a challenge to connect them with the rest of the organization because of the broken “nervous system” — the information system. The senior and experienced team members are busy (doesn’t always mean productive) and have no time to train, share information and knowledge with the new team members, limiting everyone’s growth — making organizations less competitive.

Any obstruction in the flow of information affects the health of various organs of an organization. Making the whole organization sick and less competitive.

Many of these problems that plague organizations can be cured by being mindful about information systems. When the information is organized using taxonomies, it enables a seamless connection between the user and the information.

Besides, organizing information in a structured and machine-readable format will also lay the foundation for advanced AI-enabled information systems and other digital transformation initiatives. But when the benefits are so obvious, then why aren't organizations actively using taxonomies?

Let’s explore this further and develop an appreciation of the challenges involved.