Hierarchies are obsolete

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Your hierarchy is the smallest & least valuable part of your network — Simon Terry

Hierarchies may technically be networks, but they are merely simple branching ones. 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.

org-chart-dennisonImage: Richard Dennison

We have known for quite a while that hierarchies are ineffective when things get complex. Matrix Management was an attempt to address the weakness of organizational silos resulting from simple, branching hierarchies. I remember in 1992 working on a capital project that required 17 signatures in order to proceed to the next step. By the time all the issues were addressed by a high ranking officer in the hierarchy, the situation had changed and we had achieved nothing, other than producing a lot of paper. During my 12 months on the project, no progress was made at all. In fact, the project later died. This was matrix management at defence headquarters.

Any hierarchy, even one wrapped in matrices, becomes an immovable beast as soon as it is created. The only way to get real change in a hierarchical organization is to create a new hierarchy. This is why reorganizations are so popular — and so ineffective. Most organizations still deal with complexity through reorganization. Just think of the last time a new CEO came in to ‘fix’ a large corporation.

We trained hard, but it seemed that every time we were beginning to form up into teams we would be reorganised. Presumably the plans for our employment were being changed. I was to learn later in life that, perhaps because we are so good at organising, we tend as a nation to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralization. —Charlton Ogburn: Merrill’s Marauders (Harper’s Magazine – 1957)

Reorganization has to be part of an organization, not something done to it. This is why everyone, from an individual contributor to the CEO, has to understand networks. Networks enable organizations to deal with complexity by empowering people to connect with whom they need to, without permission. Enterprise social network platforms epitomize this, usually letting anyone connect to another colleague, and where the default permission to get access to information is public.

Networks are in a state of perpetual Beta. Unlike hierarchies, they can continuously change shape, size, and composition, without the need for a formal reorganization. Our thinking needs to continuously change as well. Of course this means letting go of control. Hierarchies were 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.

So here’s the situation — markets, competitors, customers, suppliers, are already highly connected. The Internet has done this. It is why a connected enterprise needs to be organized more like the Internet, and less like a tightly controlled machine.

@MarietjeD66 [Member of European Parliament (D66/ALDE Group)] RT @carlbildt [Foreign Minister of Sweden since 2006] Tried to sort out 21st century statecraft at #bf7 [Brussels Forum]. Hierarchies losing and networks gaining in a world of hyperconnectivity. [2012]

Do you want to be efficient or effective?

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“What is it about the ‘organization’ of the Internet that has allowed it to thrive despite its massive size and lack of hierarchy?

The work of identifying which relationships and connections to build and grow and maintain is dispersed to the nodes themselves — and they’re the ones who know which ones to focus on. That’s why the Internet can be so massive, and get infinitely larger, without falling apart. No one is in control; no one needs to hold it together. It’s a model of complexity. And, like nature, like an ecosystem, it is much more resilient than a complicated system, more effective, and boundary-less. And, like nature, that resilience and effectiveness comes at a price — it is less ‘efficient’ than a complicated system, full of redundancy and evolution and failure and learning. But that’s exactly why it works. “—Dave Pollard: What if Everything Ran Like the Internet?

connected enterprsie network
While a certain amount of hierarchy may be necessary to get specific project work done, networks function best when each node can choose with whom and when it connects. Hierarchies should be seen as temporary, negotiated agreements to get work done, not immutable power structures. Networks enable work to be done more effectively when that work is complex and there are no simple answers, best practices, or case studies to fall back on.

Thinking like a node in a network and not as a position in a hierarchy is the first mental shift required to move to a connected enterprise. The old traits of the industrial/information worker may have been intellect and diligence but networks need people who are creative and take initiative. People cannot be creative on demand. Nurturing creativity becomes a primary management responsibility.

The Internet has finally given us a glimpse of the power of networks. We are just beginning to realize how we can use networks as our primary organizational form for living and working. A connected enterprise has to be based on looser hierarchies and stronger networks.

In networks, even established practices like teamwork can be counter-productive. Teams promote unity of purpose. Sports metaphors are often used in teamwork, but in sports there is only one coach and everybody has a specific job to do within tight constraints. In today’s workplace, there’s more than one ball and the coach cannot see the entire field. The team, as a work vehicle, is outdated. In a complex world, team unity may be efficient, but not very effective.

Exception-handling also becomes more important in the connected enterprise. Automated systems can handle the routine stuff while people working together deal with the exceptions. As these exceptions get addressed, some or all of the solutions can get automated, and so the process evolves. Complexity increases the need for both collaboration (working together on a problem) and cooperation (sharing without any specific objective). Networks enable rapid shifts in the composition of work groups, without any formal reorganization. Networked colleagues, learning together, can close the gap between knowing and doing.

“Many conventional thought leaders conceive of the current global crisis in terms of closing a knowledge gap: if only we could close the knowledge gap (on how to address the current challenges), we would be able to take appropriate action. But true change making practitioners often express the other view: the real gap today is not a knowledge gap, it’s a gap between knowing and doing. That is, the real problem is a collective capacity gap of sensing and shaping the emerging future at the scale of the whole system. If that is so, how can we create new spaces that allow people to co-sense, lean into, and co-shape the emerging future?” —Otto Sharmer: Fire from Within

The connected enterprise adoption curve

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[First …] Here’s the final word on social business from me: informal social relationships have always been linked to effective performance.

[So …] Now here we are with all that we know, or should know, about the importance of informal relationships, creating high performance work environments and learning cultures.

[But …] Mental models, behaviours and formal systems remain stubbornly resistant to change.

– Anne Marie McEwan

Socbiz fullcircleYou have the enterprise social technology and you may have even developed training programs, in conjunction with supporting collaboration aligned with the workflow. But it’s those pesky “mental models, behaviours and formal systems” that still stand in your way of becoming an open, connected enterprise.

Very few organizations are truly open. The same ones keep getting cited: W.L. Gore, Automattic, Zappos, Semco SA. These are the innovators. There are others who are moving to a more cooperative work environment, where outside and inside are allowed to mix, without undo control. These are the early adopters. The majority of companies are still satisfied with improving internal collaboration and getting the job done, blind to the faster moving competition building up outside. Finally, the laggards are merely coordinating work, according to some timetable, oblivious to the end of the industrial era.

the connected enterpriseIf “informal social relationships have always been linked to effective performance” then open organizations are really a business necessity. Helping move organizations to the left is my work.

Thriving in networks that are smarter and faster than you are

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industrial era

Many of today’s larger companies have overly complicated, hierarchical structures. As they grew to their current size, control processes were put in place to create efficiencies. To ensure reliable operations and avoid risk, work became standardized. New layers of supervision appeared, more silos were created, and knowledge acquisition was formalized, all in an attempt to gain efficiency through specialization.

These organizations are now facing increasingly complex business environments that require continuous learning while working. Typical strategies of optimizing current business processes or reducing costs only marginally influence the organization’s overall performance. Faster  market feedback challenges the organization’s ability to react to customer demand. Decision-making becomes paralyzed by process-based operations and the formal chain of command. Agility is almost non-existent.

We are seeing growing complexity both inside and outside the enterprise, so can anyone really predict what’s going to happen next in their market? Even most of the world’s economists have been wrong about where we are headed. Looking backwards has not helped us much.

In this complex and connected world we cannot predict outcomes, but we can engage our environments and markets and then learn by doing. This makes constant learning a critical business skill. It requires do-it-yourself learning as well as social learning skills. How can we help people in the organization develop these skills?

Providing good tools and teaching by example is a start. While communication does not equal collaboration, social media have the potential to support emergent work practices. In changing complex environments, it’s not much use to rely on previous best practices. Social media can provide a space to develop new practices. How these tools get used is itself an emergent practice, but if workers are not allowed to practice, nothing will emerge.

In an age when information is no longer scarce and connections are many, organizations must let all workers actively manage their knowledge networks. Systemic changes are sensed almost immediately in an interconnected world. Therefore reaction times and feedback loops have to get faster. Workers need to know who to ask for advice at the moment of need. However, this requires a certain level of trust, and we know that trusted relationships take time to nurture. The default action in emergencies is usually to turn to our friends and trusted colleagues; those people with whom we have shared experiences. Workers have to start sharing more of their work experiences now, in order to grow their trusted professional networks to deal with new and more complex situations. This is called working out loud. It helps build trust.

Sharing complex knowledge in trusted networks does not happen over night. It requires a combination of actively engaged knowledge workers, using optimal communications tools, all within a supportive organizational structure. Continuing to use industrial era structures and concepts will only lead to irrelevance in the network era.

It’s all about thriving in networks that are smarter and faster than you are. It’s all about being utterly screwed if you don’t know what I’m talking about. – Hugh MacLeod

New values colliding with the old

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Friday’s Finds:

friday2

@CelineSchill –“‘I’m only playing devil’s advocate’ and ‘I’m just here to warn you’ should be forbidden sentences. Propose, instead of censoring.”

@tkadlec – “Was asked the best advice to give to someone new to web dev. My answer was to get a blog and write about what you learn—no matter how basic. Writing helps clarify your thoughts & increases understanding. It’s one thing to use a technology. It’s another to be able to explain it.” #PKM

@jamienotter – “‘The business all around was changing, but the mechanisms to manage and support our employees were stuck in a time warp.’ Adobe’s HR chief”

The genesis of a new way of looking at business: Flow is everything – by @sig

The Organisational Hierarchy is kaput – as single purpose executor of the Business Model it requires reorganisation every time you need to get better, an utterly futile exercise most of the time. Replace it.

Managing is a waste of time. Leadership I need, getting out of bed in the morning I can do myself.

The rise and fall of Wired – by @downes

In times of revolution, the Edge is found where the new science is found. It is found in the underground. It is found in rebellion. It is found at the point of change. It is found where new values collide with old. It is found in new understandings of the world. It is found in new senses of self.

The early Wired tapped all of those pulses. The later Wired does not.

When Marshall McLuhan penned The Medium is the Message, he was tapping into the core of the new understanding of the world on the brink of which we all stood. What he said, in essence, is that the content of the information being transmitted is no more important – and possibly less important – than the means by which the information was transmitted.

Hierarchy is Overrated – by @timkastelle –

All of these are examples where everyone is a chief.  The flat organizational structure can work anywhere.  This works best when:

  • The environment is changing rapidly.  Firms organized around small, autonomous teams are much more nimble than large hierarchies.  This makes it easier to respond to change.

  • Your main point of differentiation is innovation.  Firms organized with a flat structure tend to be much more innovative – if this is important strategically, then you should be flat.

  • The organization has a shared purpose.  This is what has carried Second Chance through their tough times – their shared commitment to the women they are helping.  While the objectives may differ, all of the firms discussed here have a strong central purpose as well.

Structures, skills and tools

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In a complex economy, the way to think about the future is this:

  • We can’t predict the future.
  • But we can learn about the patterns from which the future will emerge.
  • In fact, while we can’t control the future, we can influence it.
  • The best way to influence the future is by innovating through experiments.

– Tim Kastelle

The innovative work structures required for complex economies need to be supported by skilled workers with the right tools. We know that sharing complex knowledge requires strong interpersonal relationships, with shared values, concepts, and mutual trust. But discovering innovative ideas usually comes via loose personal ties and diverse networks. Knowledge intensive organizations need to be structured for both. Effective knowledge-sharing drives business value in a complex economy and this requires a workforce that is adept at sense-making.

Content Creation

In what is often called a ‘social business’, capabilities need to be aligned with tools. A core requirement for both knowledge workers, and enterprise tools, is to share what we are learning and doing. Making work more explicit enables the organization to learn. Sharing user-generated content (knowledge artifacts) is how everyone can make tacit knowledge more explicit. Work is learning and learning is the work, when everyone shares. Of course this is more difficult if communications systems do not allow the easy creation and sharing of this content. Tools have to support the work.

Collaboration

Most organizations have tools that support working together for a common objective. Coordinating tasks, conducting meetings that don’t waste time, and finding expertise are common collaborative tasks. Letting workers pick their own collaboration tools can go a long way in getting work done. Having an array of tools is also helpful. Modelling collaboration skills throughout the enterprise is even better.

Cooperation

When people share openly, without any direct gain, knowledge networks thrive and the organization benefits. Cooperative skills include sharing openly with colleagues, communicating effectively, and networking to improve business performance. In addition, social media require new skills, beyond traditional face to face interchanges. Setting sharing as a default behaviour is a good start, but providing tools to enable sharing is also needed. As with collaboration, cooperative behaviours need to modeled and encouraged.

Structures + Skills + Tools

A combination of organizational structure changes, skills development and modeling, plus a suite of tools, can help to create a social business. All three are needed. Focusing on only one or two areas will likely not yield much success. This has been a problem with many social business initiatives which are too focused on the tools, like enterprise social networks (ESN). While an ESN may cover all the facets shown in the image below, workers still need those matching skills. In addition, the structure must support these behaviours on an ongoing basis. It takes all three components.

social-business-tools-skills

Democracy is coming

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“Democracy is neither a gift nor a license; it is a possibility realized through practice grounded in a deep commitment to truth and an acceptance of the responsibility to seek justice for all.” —David Korten

A guiding goal in much of my work is the democratization of the enterprise. Democracy is our best structure for political governance and I believe it should be the basis of our workplaces as well. As work and learning become integrated in a networked society, I see great opportunities to create better employment models. I know that we can do better than huge wage inequalities, generic work competencies, and dead-end jobs.

The Web is the catalyst that could democratize the workplace. The effect of the Web is explained by Yochai Benkler in The Wealth of Networks. He describes the changes that a networked society can have on our governance, economic and cultural structures:

“The networked information economy improves the practical capacities of individuals along three dimensions: (1) it improves their capacity to do more for and by themselves; (2) it enhances their capacity to do more in loose commonality with others, without being constrained to organize their relationship through a price system or in traditional hierarchical models of social and economic organization; and (3) it improves the capacity of individuals to do more in formal organizations that operate outside the market sphere. This enhanced autonomy is at the core of all the other improvements I describe. Individuals are using their newly expanded practical freedom to act and cooperate with others in ways that improve the practiced experience of democracy, justice and development, a critical culture, and community.”

We need to undo our dominant  business models which are the legacy of military hierarchies because they are inefficient, ineffective, and stifle innovation. Not a single major business disaster in the last half-century can be blamed on too much democracy. However, many can be blamed on overly controlling management practices. Hierarchies are only as smart as the smartest gatekeepers. Networks are smarter than the sum of their nodes.

Business models that will allow connected leadership to prosper are essential in a network era. But democratic leadership depends on an educated and informed citizenry. While we may have easy access to information, we still need to continue with the education, especially social learning in peer networks. We need to learn how to change the rules of the game, because work is just a game, with man-made rules.

“For the vast majority of us who sell our labor in the marketplace, our economic insecurity and relative powerlessness impel us to play by the rules.” —Thomas Homer-Dixon

Perhaps the most effective business model for the Internet age is free agents working within a peer network. As tenure was essential for academic freedom, so an unfettered labour model may be necessary for effective connected business. In addition, imagine what kind of societal benefits would ensue if all individuals had the rights of today’s corporations? Given the loss of mid-skill jobs, outsourcing of labour, and the increasing wealth of the 1%, it’s time for a change in how work is done and wealth is redistributed. Those who sell their labour now have the ability to easily connect, learn, and do.

“The darkest places in hell are reserved for those who maintain their neutrality in times of moral crisis.” —Dante Alighieri

It is time to bring democracy to the workplace on a large scale. Democratic workplaces do not divide labour and capital. Democratic workplaces are the real social enterprises, because they are open. The democratic workplace is how business can finally catch up to society.
liberty leading the people

Open – Review

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“How do our minds cope with the torrent of information coming at us from every angle today? How do we convert so much knowledge into socially productive wisdom? What can we do to close the gap between those who have access to open learning, and those who (still) do not?

The genuine democratisation of knowing is still being fought over.”
– David Price in Open: How we’ll work live and learn in the future

I really enjoyed reading “Open” as it flowed well and was full of interesting stories, all bound into a singular framework. The core of this book is David Price’s SOFT model and I have highlighted some components in this summary table, with further explanations below.

Open SOFTSociety

A Global Learning Commons is “… essentially a shared resource, which works through carefully balancing rights and responsibilities. As it is with air, or water, so should it be with learning. Your right of access to the knowledge and skills of others is balanced with a responsibility to share what you can offer.”

Three characteristics of a GLC are participation, passion, and purpose. “The enthusiasm and ability of small groups of self-organising citizens to respond to respond to challenges makes bigger, better funded, organisations look slow and cumbersome in comparison.”

Business

“A commitment to sharing radically alters the culture of organisations.” On the subject of open for business, the CEO of Ingenious media, an investment and advisory group, states, “The reason why we don’t worry about giving that knowledge away is because most people can’t implement what they know. The capital value of something these days is the ability to implement it rather than to create it originally.” Freedom to fail is what enabled 3M to invent post-it notes and Google to develop new products through Google Labs. Finally, trust needs to be a core business value; “The lesson to be learned from IBM is that trust demands courage; the courage to let go, the courage to trust others, and, more than anything, the courage to jump the knowing-doing gap.”

Education

“[Innovators cited in the book] believe in education as a force for social equality – Marc Lewis sees his school as a catalyst for diversity and equality in the communications industry (a notoriously white, male, middle-class occupation). They believe in values-driven learning – Larry Rosenstock is fond of quoting Thomas Jefferson, ‘The purpose of public education isn’t to serve the public; the purpose of public education is to create a public.’ And they see it as a duty to ensure that the ideas behind their successes don’t remain in the petri dish, but spread virally throughout the system – witness Anne Knock’s sense of responsibility to educators across Australia. They all see themselves as part of a social movement to redefine education, not simply to lead it in their own schools.”

I recommend this book and would see it as a good one to keep a couple of extra copies, so you can give them away to those on the other side of the Open adoption chasm.

Tacit Knowledge Not Included

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It’s rather interesting to hear from the same company that 1) their situation is unique, and 2) they are looking for examples of best practices in their industry. If they are so darned unique, why aren’t they developing their own emergent practices?

When working with large organizations I frequently hear that their main business strategy is to be fast followers. This means looking for examples of best practices and applying them after they have been proven. You might even think this practice makes sense in industries like banking, where change could be rather risky.

The big problem with trying to be a fast follower is this: tacit knowledge.

Tacit knowledge is stuff that we know, but we can’t explain how to do it.  Think of it this way: have someone throw something at you, and try to catch it.  Now, describe exactly how you figured out where to put your hand to catch the flying car keys (or whatever).  You can’t.  There are calculations of speed, and trajectories, and muscle movements, and all of that goes on inside your brain and you can’t explain any of it.  That’s tacit knowledge. – Tim Kastelle

The major problem with any best practice is that it was proven to work for someone else. All best practice case studies should have a warning label attached: Tacit Knowledge Not Included. Tacit knowledge is one of the few things that cannot be copied, and what makes creative, non-standardized work so valuable. Tacit knowledge cannot be automated or outsourced. There are no best practices for tacit knowledge because it cannot be codified. Best practices can only help with lower value, routine work. They can help refine your existing business processes, but they are not a source of innovation.

tacit knowledge business valueAs Tim Kastelle says, “You build up tacit knowledge when you learn by doing.” That is why I keep saying that work is learning and learning is the work. Tacit knowledge is a source of core business value. It can only be developed through experience. Companies need to focus on learning from the work experiences throughout the enterprise, find ways to share tacit knowledge, and then make some of that knowledge explicit. But the real value is the stuff that cannot be measured, which requires a much different way of thinking about business value.

All human systems are complex and today most economic value is intangible, so that the most important knowledge for any organization is tacit.

In this world, workplace learning should be guided by a 70:20:10 approach, all workers should be empowered to actively practice PKM, and companies should promote knowledge-sharing & collaboration.