The way we manage our organizations is largely ineffective for the complex challenges we face, whether driven by the environment, demographics, economics, or politics.
Hierarchies assume that management knows best and that the higher up the hierarchy, the more competent and knowledgeable that person is. But hierarchies are merely centralized networks. They work well when information flows mostly in one direction: down. Hierarchies are good for command and control. They are handy to get things done in small groups. But hierarchies are rather useless to create, innovate, or change. Hierarchies are ineffective when things get complex.
Distributed networks are in a state of perpetual Beta. Unlike hierarchies, they can more easily change shape, size, and connections, without the need for a formal reorganization, as there are no central control nodes. In a fast evolving environment, management thinking needs to continuously change as well. This means letting go of control. Hierarchies are essentially a solution to a communications problem. They are artifacts of a time when information was scarce and hard to share, and when connections with others were difficult to make. That time is over.
The Internet has highly connected markets, competitors, customers, and suppliers. With an external environment that is highly connected, organizations have to get connected inside. A networked enterprise needs to be organized more like the Internet, and less like a tightly controlled machine. While hierarchies are practical to get work done, they should not be the overarching structure for the organization. There is still a need for responsibility and accountability, but authority has to be distributed to deal with complex problems.
Complex problems cannot be solved alone. They require the sharing of tacit knowledge, which cannot easily be put into a manual. In addition, tacit knowledge flows best in trusted networks. This trust also promotes individual autonomy and can become a foundation for organizational learning, as knowledge is freely shared. Without trust, few people are willing to share their knowledge.
Organizations have to become knowledge networks. An effective knowledge network cultivates the diversity and autonomy of each worker. Networked leaders foster deeper connections, developed through ongoing and meaningful conversations. They understand the importance of tacit knowledge in solving complex problems. Networked leaders know they are just nodes in the knowledge network and not a special position in a hierarchy.
What does a post-hierarchical organization look like?
It will be one that provides a sense of belonging like a tribe, but with more diversity and room for personal growth. It will have the institutional structure to manage the basic systems so people can focus on customers and community, not merely running the organization. It will have market type competition, but without a winner-take-all approach. Finally, it will promote cooperative actions that add to the long-term value of the ecosystem and community, not just short-term collaboration to get the next project done or achieve some arbitrary quarterly results. Making the networked organization more resilient will help everyone in it, not just a few central nodes. The networked organization takes the long view.
To get closer to the real world of an organization, which is a (very) complex world indeed, you might as well, or even better take into account 3-D models of organization, of fluid networks, dynamically evolving over time. See Jorg (1994) and Wimsatt (2014) for a causal modelling of networks with generative change and generative entrenchement.
Your post sent me looking for Robert Keidel’s “Seeing Organizational Patterns,” which posits that org design works best when an organization’s need for (1) autonomy, (2) cooperation, and (3) control are explicitly addressed in designing an org structure. His thinking still resonates with me.
I’ll have to see if I can get a copy of this book. Seems to be out of print.
“Keidel’s “seeing Organizational patterns” is a great, great book.
Harold, I have a copy at my place in Vancouver. I am going back there over Christmas.
If you would like, I will dig it out of storage and mail it to you, though I will want it back some day.
Thanks, Jon. If it’s a book you want back, then it’s worth it for me to find my own copy. I note that Amazon has some used copies.
Good riff. More exploration on the big assumptions around network attributes is a good idea. My experience suggests that networks can be both functional and dysfunctional just like other structures, sloppy networks can be just as destructive as hierarchies. But as you point out, networks can often “route around” problems and be more fluid in design improvements. Also networks don’t automatically change people, for example, markets can be very short-term view and some old-boy networks just hide authority and accountability. Finally, I would like to push on the norm that networks are often characterized as a “letting go of control” which is not good for network champions and strategists. I also don’t think it is accurate, many networks are very effective in control. The issue is that control comes form protocols for use, rather than management. Think how controlling monetary networks, DOD security networks, or even social networks and norms can be. The challenge is designing network with purpose, diversity, typography, functionality and protocols for use that can create the desired network throughput.
I am looking forward to digging into more of your work. Thanks for pushing the concepts.
It would be a big error to consider the hierarchical organization alternative to the networked one. They can live both in order to create value following business dynamics. Our consultancy experiences suggest that the big challenge is to change the organizational culture. We have summed up the new networking mindset through the Open Leadership Manifesto (http://www.openleadership.it – look at the english version).
The open leadership manifesto is still premised on the assumption that “the leader” is special and different from other employees.
My views on leadership:
While hierarchies power dynamic is highly problematic, organisation do continue to need people who have different perspectives on different parts of the system which is where the roles in the hierarchy stem from.
What is equally as problematic (though equally challenge by PKM) is the communication infrastructure which is totally ineffective in sharing tacit knowledge. Relying on meetings and emails is a poor use of time on fast-paced projects etc.
If offices were designed for communication, not doing individual work, there might be better knowledge flow.
In a knowledge world era in a economy populated with more startups, we are experiencing the loom of the flat organization, however, based in my experience it is necessary to match the kind of network structure, and some times a multicore network it is not the best solution. More elaboration here https://ultrabpm.wordpress.com/2012/04/28/new-killer-star/
Interesting read. It makes sense to have different structures for different types of work. I recommend networks for human work because most procedural or routine work is being automated. Your work aligns well with Verna Allee‘s image of the Cynefin framework.