Research Interests

Requisite Organization International Institute focuses on expanding the application of key discoveries of Elliott Jaques (work complexity and human capability) in various fields of business and social activities.

Requisite Portfolio

Yield favorable returns for their shareholder clients by selecting the companies for investment that are capable of achieving positive return on investment, typically within the investment horizon between four and seven years.

Private equity companies, in general, have two main functions:
  • Transaction execution that involves management assessment, financial assessment, industry assessment, market forecasts and overall investment attractiveness of a company.
  • Portfolio management that involves oversight and support of the firm’s various portfolio companies and their management teams.
From the requisite viewpoint, private equity funds’ objective is to identify the companies that have potential to deliver the maximum return on investment. Typically, it can be described that the company has good value of the products but due to poor management / organizational effectiveness struggle to realize the potential business value. Therefore, the objective is to identify the companies with poor management / organizational effectiveness. And, then, after the investment guide and support the companies in improving their management / organizational effectiveness.

Requisite assessment of a company’s investment attractiveness focuses on three keys aspects:

  • What is the current state of the company?
  • What is the strategy looking forward?
  • How capable is the company to deliver the strategy?

Requisite assessment is based on a set of critical evaluation criteria.

Business complexity:
it is critical to understand the level of business complexity (value chains, geography of assets, type and number of value chains, potential operating revenue, products, etc.)

Potential for business value growth:
If current operating revenue exceeds the operating revenue that corresponds expected from the level of business complexity, it means that the company has good business value (delivers higher value with less complexity), it also means good market position, good opportunity for investment.

Strategy alignment:
How the level of strategy complexity fits the level of business complexity.

System alignment:

  • How the complexity of business processes, systems, functions, etc, is aligned with the strategy and complexity of strategic tasks to be delivered.
  • How mature are systems of the company? Are there the gaps in their maturity and effectiveness?

Structure alignment:

  • How effective is organisational structure? Are there an optimal number of levels that correspond to the level of business complexity?
  • Are all the processes, systems, functions accountable by the roles with respective level of complexity?

Staff alignment:

  • What are critical roles for the strategy delivery?
  • Is the complexity of these roles matched with the capability of the role holders?

Sustainability alignment:

  • Does the company have social license to deliver the strategy?
  • Does the company have environmental license to deliver the strategy?

The plan to ensure the alignment between business complexity, strategy, systems, structure, staff and sustainability is developed for the management team to execute with support from Private equity fund’s team.

Link with us if you are: professional / researcher / consultant in the field of private equity and investment and interested in applying requisite principles.

Requisite Social License

Design the parameters of social licences to operate for the companies and ensure that social license holders have positive intention to provide support to the business strategies and objectives within the parameters required by the companies.
Social environment for the companies is getting tougher (more social license holders, who are more knowledgeable and have tougher expectations). Increasing number of companies who lose their capitalization due to failure to get support from social license holder. Lack of quantitative tools and depth in relation to social bottom line in comparison to economic bottom line. The complexity of work for social bottom line / social license to operate is frequently of second priority and poorly measured. As a result, lack of capability can be found in the systems accountable for social bottom line / social license to operate.

Growth of economic bottom line must be support by positive social bottom line to ensure
its sustainability.

Positive social bottom line means that a company has Positive Social License to operate from key stakeholders. There are different levels of Social Licenses to operate. Levels of Social Licenses to Operate depend on the level of business complexity.
Key social license holders are: employees, trade unions, communities, governments, NGOs, etc. Social License to Operate can be measured quantitatively.

Positive social license means that key social license holders have positive intention to support the company’s goals and strategy.
There is a stratified hierarchy of social systems (employee relations, community relations, etc.) to manage the relations with key stakeholders and ensure positive social license.

A company has a positive Social License to Operate if:

  • Social strategy (planning horizon) matches the complexity of the business
  • Complexity of social strategy is matched with the complexity of stratified hierarchy of social systems
  • Social systems are mature
  • Stratified hierarchy of social systems is matched with the hierarchy of roles
  • The complexity of roles within the hierarchy of social systems is matched with respective level of capability of the role holders
Link with us if you are: professional / researcher / consultant in the field of social license to operate, community relations, employees relations, government relations, corporate social responsibility, etc. and interested in applying requisite principles.

Requisite B2B Sales & Marketing

Improve the sales conversion rate by aligning the complexity of the product value message with the capability of the sales personnel.
One of the key objectives for any sales organization is to increase sales conversion rate. One of the key barriers to sales conversation is poor Product Value Proposition. Lack of understanding and quantitative measurement in relation to Product Value Proposition. Important task for sales organizations is Talent management: to get right people for right roles. Lack of tools to measure quantitatively the complexity of sales work. Lack of tools to match the complexity of sales work with capability of sales personnel. As a result of mismatch, sales organizations experience high turnover of the personnel and poor effectiveness of sales personnel.

Product Value Proposition has various levels of complexity. Complexity of sales message is matched with the complexity of Product Value Proposition. Sales personnel has different levels of sales capability. Complexity of sales roles is different based on the complexity of a client’s business, complexity of decision makers, geography of sales, clients, etc.
Decision makers in a client’s company differ in the levels of complexity and capability.

High conversion rate in B2B sales can be achieved if the following conditions are met:

  • Level of a business need of a client’s company is matched with the level of product value proposition
  • Level of product value proposition is matched with the level of sales message
  • Level of sales message to be delivered is matched with the level of capability of a sales person
  • Level of sales person is matched with the level of a decision maker in a client’s company

High turnover of sales personnel is explained by a mismatch between the complexity of a sales work and the capability of sales personnel.

Link with us if you are: professional / researcher / consultant in the field of sales management and marketing and interested in applying requisite principles.

Requisite Projects

Improve the project people feasibility at various project stages by measuring and aligning the complexity of project aims and milestones with the capability of the project employees.

Analytics in the field of project management shows that small number of projects are completed on time within budget and with the quality expected. In a majority of cases the failure of projects is explained by poor decision making.

Majority of poor decisions are made at the stage of project initiation (ineffective project scoping, resourcing, scheduling). Poor project decision making is caused by a lack of attention and quantitative measurements in relation to project people feasibility.
Another key barrier to effective project is poor contractor management.

Projects differ in levels of project complexity. The level of a project manager matches the complexity of project. Number of levels in the organizational structure for a project matches the complexity of the project. Complexity of a project role is measured on the complexity of project tasks assigned to the role. Level of a project role’s complexity is matched with the level of a role holder’s capability. The work contracted out differ in the level of complexity. The structure of the contractor’s team must match the level of complexity for the work contracted out. To ensure effective contractor management 7 types of project initiating accountabilities and authorities are clearly set.

Link with us if you are: professional / researcher / consultant in the field of project management and interested in applying requisite principles.

Requisite People Risk (Banking)

Reduce a probability of financial or reputational loss due to ineffective decision about processes, IT systems and external events.

Operational risk management in accordance to Basel accords includes process risk , IT system risks, people risk and risk of external events. Based on various survey in OpRisk communities around the world People risk is the most significant risk within the operational risk management framework for financial institutions.

Frequently, the management of people risk is limited with training and development system. Lack of tools that managers at various levels are provided in order to manage people risk they are accountable for.

Critical roles are priority for people risk management.
Critical roles are the roles that are critical for delivering the overall strategy of the company, the objectives of the business function / unit to which the role belongs and dependent on competencies of a role holder.
Complexity of work is measured for critical roles.
Roles differ in levels of work complexity.

Work complexity in roles is measured by time span of discretion in the roles and the complexity of decisions made in the roles.
People risk happens when the complexity of a role (decisions in the role) is not matched with the capability of a role holder.
Every decision has a potential financial and reputational loss if the decision is ineffective.
Decisions in the role that are characterised by people risk must be controlled and Key Control Indicators must be set up and monitored on a regular basis.

Link with us if you are: professional / researcher / consultant in the operational risk management in the banking industry and interested in applying requisite principles.

Requisite Portfolio (Project Finance)

Improve the return on the investment from the projects by ensuring that a borrower has a capability to repay the loan and accrued interest using the cash- flow generated by effective delivery of the project in the current political and economics conditions.

In project finance, lenders and investors rely either exclusively (“non-recourse” financing) or mainly (“limited recourse” financing) on the cash flow generated by the project to repay their loans and earn a return on their investments. This is in contrast to corporate lending where lenders rely on the strength of the borrower’s balance sheet for their loans.

Therefore, the key objectives of the various commercial parties and their advisers when negotiating a project finance transaction include:

  • Identifying each material risk associated with the design, construction, development and operation of the project.
  • Determining which participant is best able to bear each such risk and the mechanic for it to do so.

Failing to identify a major risk or requiring the wrong party to assume or control a particular risk can result in:

  • Delays in the project’s construction and operation schedule.
  • The need to revise transaction documents at additional cost to the parties.
  • The project company being unable to repay the lenders.

Ultimately, loss or abandonment of the project.
One of the key risks for the project finance is management or people feasibility of the projects. Management / people feasibility is characterised by a lack of quantitative tools and is dominated by qualitative tools, as a result, frequently, this part of assessment is rarely relied upon.

Some studies show that improvement in the quality of management risk assessment in deciding on financing a project increases a probability of higher return on investment from the project.

To evaluate the management feasibility of a project for finance lenders must request from borrowers the following key elements:

  • project plan (with description of the project phases, project tasks),
  • project structure (with allocation of accountabilities for project tasks to particular project roles)
  • project team (resumes, profiles, etc.)

Lenders must evaluate the complexity of project and complexity of the project work in every project role:

  • Critical project tasks to be established
  • Critical roles to be identified: the project roles accountable for critical project tasks

Lenders must evaluate the fit of the project team members with the complexity of the critical roles they are accountable:

  • Borrowers must provide the team members for the assessment by the lenders to evaluate the capability of the critical role holders to deliver the critical project tasks (making effective project decisions) on time and budget and with the quality expected
  • Lenders identify the management risk for the project (mismatch between the complexity of critical project roles and capability of critical role holders)
  • Lenders advise the borrowers to remove the gaps before making a project finance decisions

Lenders must ensure an ongoing monitoring of the management project feasibility after the project finance decision is made to track change in:

  • The complexity of the project, project phases, project tasks
  • The capability of the project team (turnover, individual ineffectiveness, etc.)

As a result, an assessment of the project’s management feasibility allows lenders to increase their return on investment into projects.

Link with us if you are: professional / researcher / consultant in the field of project finance and investment and interested in applying requisite principles.

Requisite Safety

Improve the behaviour compliance of the employees with the safety standards by developing the Safety Managerial Accountability Hierarchy.

Safety (zero fatalities) is one of the key priorities for the companies and a critical element of social license to operate for any company. Key objective for methodologies in safety management is to ensure safe behaviour of the employees by compliance to the behaviour standards.

Typically, there are three reasons of behavioral non-compliance:

  • Employees do not have skilled knowledge about the behavior required
  • Employees face a dilemma between production pressures and compliance to safety standards due to poor work organization
  • Employees have knowledge and not under production pressures, but still consciously decide not to comply with the standards of safe behavior.

At present, conscious behavior non-compliance is the key reason for safety accidents. Companies tend ensure compliance by increasing the volume of controls (behavior audits, observations, visual felt leadership, etc.) As a result, interviews with managers show that managers spent a lot of times in various audits, controls, that are transformed into routines and cause resistance from the managers.

To ensure compliance there is a need to create requisite conditions for a team and its members that lead to conscious compliance to safe behaviour standards instead of continuously increasing the amount of control and monitoring activities.

One of the key elements for ensuring the compliance to safe behaviour standards is to create effective managerial leadership conditions for the team. The key focus of safe behaviour compliance is on Stratum II Output teams

The following requisite conditions for Stratum II Output teams must be present:

  • The manager of a team has full managerial authority and accountability
  • A size of a team (number of team members) matches the requisite requirements depending on the level of the team
  • The manager regularly performs Requisite Managerial Leadership Practices
  • The quality of managerial leadership is regularly appraised by capable Stratum III Manager
  • The manager of an output team has Stratum II capability
  • Task Initiating Role Relationships are clearly set for the team
  • Safe behaviour standards (SOPs) are described for the work performed by the Team
  • The manager of the team performs an assessment of positive / negative intention of the team members to comply with the safe behaviour standards
  • For the safe behaviour standards with the negative intention to comply by the team members there are improvement plans to ensure positive intention
  • Stratum I roles of the team are filled with the employees competent and competent to deliver the work
  • The workload in the Stratum I roles of the team is optimal in regard to Full Time Equivalent
  • The team is provided with integrated planning
  • Stratum II programming and dispatching service is provided to the team
  • Stratum II technology troubleshooting service is provided to the team

These requisite conditions for the team ensures conscious compliance from the team members to the safe behaviour standards.

Link with us if you are: professional / researcher / consultant in the field of occupational health and safety management and interested in applying requisite principles.

Requisite Technology

Improve the control and development of the technology (metallurgy, mining engineering, processing, manufacturing) by identifying the complexity level of key technological decisions (physical / chemical parameters, recovery rate, etc.) with the capability of the technology personnel accountable for making the decisions.

Companies spend significant amount of financial and people resources and time on developing and investing into new technologies to improve quality, cost and reliability of their technologies.

However, less amount of time spent to understand on how effectively the companies are managing their current technologies in order to achieve maximum return from the technologies utilised.

As a result, the key objective is to ensure that the approach the companies are using to manage the existing technologies is effective enough to ensure the maximum return.

Only when the companies are confident that they are effective and at maximum with the existing technologies, it is expedient to invest into new technologies. Otherwise, frequently the companies invest into new technologies and developments and later struggle to make them operational on time and within the budget and leads to changes in the expectations about return on investment.

To ensure that that the company knows what its technology is the technology must be clearly mapped and standardised:

  • Inputs / raw materials and their physical / chemical specification
  • Technology circuits
  • Physical / chemical parameters of raw materials’ transformation
  • Methods to deliver the parameters
  • By-products and their specification
  • End products and their specifications
  • Equipment specifications, etc.
  • Materials and consumption rate

To ensure that the technology is managed effectively key decisions (accountabilities & authorities) about the technology must be mapped:

  • Who can change the physical & chemical parameters
  • Who can change materials and their specification
  • Who can change methods and their specification
  • Who can introduce new equipment with new specifications, etc.

Decisions about the technology differ in the level of their complexity. Complexity levels must be measured for all the decisions about the technology. Accountability and authority for the technology decisions are allocated into the roles that have the level of work complexity matching the complexity level of the decisions. Capability level of role holders accountable for the technology decisions must match the complexity level of the technology decisions the role holders are accountable for.

Three key technology-related systems must be mature:

  • Technology Control System
  • Technology Development System
  • Technology Information Management System
Link with us if you are: professional / researcher / consultant in the field of production engineering, technology control, management and development and interested in applying requisite principles.

Your Research Suggestions

If you have your research suggestions (that are not on the above- mentioned list) on how to apply requisite principles in your area of knowledge and expertise, link with us immediately.

Masters / PhD Students

If you are a Master or PhD student who:

  • Is interested in Elliott Jaques’ work and in exploring requisite principles.
  • Plans to write or is working on a thesis on Elliott Jaques’ work, Stratified System Theory or Requisite Organization.
  • Needs guidance & support, working papers, articles, experience from the people with detailed knowledge about Elliott Jaques’ work.

We are glad to support your requisite journey.

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