designing the emergent organization

In The Rise of Emergent Organizations, Beth Comstock, Vice Chair at GE, provides some rules of thumb to guide organizational design for the emerging network era. It is wonderful to see a large corporation putting into practice the recommendations I, and many others, have been making on organizational design for more than a decade. I have taken five of these rules of thumb and annotated them with images from my last book in the perpetual beta series: Working in Perpetual Beta. With such an example set by GE, more organizations should be able to convince their executives that a serious redesign of how they work is essential. The alternative does not look good.

“The Elephant in the Room: Our current approach to business and employment (two crucial drivers of the economy) are designed to screw and take advantage of far too many people in the workforce. Extensive changes are required to fix this, much faster than most leaders are willing to admit, talk about, or address.

The elephant in the room is the future of work and every person’s place in that future.”

Bill Jensen

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a workable future

In the IFTF report Ten Strategies for a Workable Future, the authors highlight issues for the US labour force, which I believe are applicable to many other countries and economies. (full report PDF)

  1. Combine the best of investor-owned and commons-based platform models
  2. Solve for both transparency and privacy
  3. Integrate marginalized workers in a sustainable economy
  4. Ensure opportunities for workers to advance outside of traditional organizational hierarchies
  5. Support worker-owned identities
  6. Create ways for workers to bring their voices together
  7. Reinvent benefits to follow workers everywhere
  8. Integrate learning and work
  9. Prepare youth for “the hustle”
  10. Champion a good work code

I have discussed most of these issues on this blog, such as platform capitalism, integrating work & learning, and the limits of hierarchies. The triple operating system model for network era organizations aligns with these recommendations, particularly the need to operate as temporary, negotiated hierarchies and the requirement for safe places to work on alternatives (communities of practice). This model is based on the core principles of subsidiarity, wirearchy, and network management.

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hierarchy shift

“it is a battle between those for whom hierarchy and authority reign supreme and those who believe diverse, distributed and democratic approaches are best.” – the-war-between-authority-and-democracy-happening-now/

“Finally, the very definition of conservatism entails conserving something.  This is not an urgent priority for someone who sees reality as improving.  But, if the world is going to the dogs, then we need to hold on to the more just hierarchy of yesterday.” – what-reality-are-trump-people-living-in/

“The real engine of value in your organisation is the interactions and collaborations in and through the hierarchy. These collaborative relationships are where the work gets done and where the formal hierarchical decisions are shaped, influenced or frustrated.” – the-wirearchy-makes-your-hierarchy-work/

“A hierarchy is a hub-and-spoke network and pure hub-and-spoke network is nothing more than a hierarchy.  Many organizational consultants today make the argument of Hierarchy versus Network — you have to pick one.  But, hierarchies are networks with specific properties!  Hierarchies and networks are on a continuum — they are not separate species! They don’t collide, they meld.” – watson-looks-at-networks.html

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implementing a triple operating system

A triple operating system aligns work and learning and has a network perspective. It is based on three interrelated processes, first proposed by Valdis Krebs: Awareness, Alternatives, Action. My perspective is that people in organizations cannot take appropriate action unless they have systems in place to consider alternatives, and are aware of the complex environments in which they operate. While my network learning model [previous post] looks at knowledge flow from the individual’s point of view, the triple operating system is an organizational perspective.

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principles and models for the network era

The End of the Market Era

Capitalism today is the ultimate expression of a market dominated society, where money is made from nothing, as financial traders manipulate stocks, currencies, and whatever else they can. Its final growth spurt was enabled by ubiquitous fossil fuels so that supply chains could take advantage of either cheap goods or cheap labour due to the human inequalities on our planet. But the age of oil is ending, and markets are being replaced by networks as the dominant organizing model. Nafeez Ahmed recently stated that the end of capitalism is inevitable.

“At the core of this radical re-wiring is a transformation of the human relationship with nature: moving away from top-down modes of political and economic organization, to participatory models of grassroots self-governance, localized sustainable agriculture, and equity in access to economic production.” – Medium.com

One theory that has informed my own work is David Ronfeldt’s TIMN (Tribes-Institutions-Markets-Networks) Theory showing that all four of these forms will co-exist as we enter the next evolution of society, but networks will dominate. This explanatory theory shows what has happened as we have previously transitioned from one dominant organizing form to the next and is a good starting point to discuss what we can do about it.

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Industrial disease

some blame the management, some the employees;
and everybody knows it’s the Industrial Disease Dire Straits

Complexity is the new normal

We are so interconnected today that many cannot imagine otherwise. Almost every person is connected to worldwide communication networks. News travels at the speed of a Tweet. Meanwhile, inside the enterprise, reaction times and feedback loops have to get faster to deal with markets that can create multi-billion dollar valuations seemingly overnight. But are they getting faster?

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Wirearchies are smarter than the sum of their parts

Many parts of knowledge work have been routinized and standardized with the ongoing marriages of business processes and integrated enterprise information systems. What has not changed much yet is the adaptation of structures and culture to permit easily building flows of information into pertinent, useful and just-in-time knowledge, or fanning out problem-solving and accountability into networks of connected workers. —Jon Husband

Chee Chin Liew’s 2010 slide presentation on moving from hierarchies to teams at BASF shows how IT Services used their technology platforms to enhance networking, knowledge-sharing, and collaboration. The slide on the character of communities (#14) shows one approach to “building flows of information into pertinent, useful and just-in-time knowledge”.

character of communitiesAdapting these ideas to a model that promotes a “dynamic two-way flow of power of authority enabled by interconnected people and technology” shows how knowledge can flow in order to foster trust and credibility. Creating this two-way flow of dialogue, practice, expertise, and interest, can be the foundation of a wirearchy.

wirearchy foundation[Note: I might rename Dialogue to Coordination in a future version.]

Work in the network era needs to be cooperative and collaborative, and organizations have to support both. This may not be an easy transition for companies based solely on unified leadership. Collaboration is not the same as cooperation. Collaboration means working together, with an objective, and usually for a boss. This can work well when the objective is clear and the conditions do not change. Cooperation means sharing and helping others without expectations of direct reciprocation. Cooperation helps to strengthen networks, without central managerial interference. In times of rapid change, and decreasing lifespans of companies, cooperation trumps collaboration.

In complex environments, weak hierarchies and strong networks are the best organizing principle. While many companies today have strong networks, they are too often coupled with strong central control. Becoming a wirearchy requires new organizational structures that incorporate communities, networks, and cooperative behaviours. It means giving up control. The job of those in leaderships roles is to help the network make better decisions.

connected enterprise.003As markets get more complex in the network era, most business value is created through innovation, not process improvement. Innovative ideas come through loose social ties and diverse opinions. Companies therefore need to push work beyond the practice layer and out to communities and networks. Openness improves task coordination, so that all problems can be seen. Transparency can improve collaboration to get tasks done better. In such a work environment, trust emerges. With openness and transparency in place, cooperation with more diverse knowledge networks can then lead to real business value. Hierarchies  are merely simple control networks, while wirearchies are complex human networks.

Let me once again put forth my Principles of Management for the Network Era: It is only through innovative and contextual methods, the self-selection of the most appropriate tools and work conditions, and willing cooperation that more productive work can be assured. The duty of being transparent in our work and sharing our knowledge rests with all workers, as well as management.

We need to undo our dominant  business models which are the legacy of military hierarchies because they are inefficient, ineffective, and stifle innovation. Hierarchies are only as good as the smartest gatekeeper. Wirearchies are smarter than the sum of their parts.

Collaboration is a means not an end

Collaboration Isn’t Working: What We Have Here is a Chasm writes Deb Lavoy in CMS Wire.

Why do teams fail to act the way we think they will? Are we oversimplifying the notion of team? What about organizations? Where is the deeper insight on the relationship between teams and organizations? Why isn’t a sophisticated vocabulary breaking out? Why do we not yet have 100 words for different kinds of collaboration and teams, as expert in it as we think Eskimos are about snow? What is the difference between an intranet, a community and a team?

My immediate response was to say to myself, why of course it isn’t working, based on my own observations and client experiences. Collaboration is only part of the solution to building social or open businesses. I have looked at the two types of behaviours necessary in a social enterprise: collaboration and cooperation. Cooperation differs from collaboration in that it is sharing freely without any expectation of reciprocation or reward. Try to get people to openly cooperate in most businesses and they will be reprimanded for not being focused on their jobs, the bottom line, or shareholder value. However, cooperation contributes to the REAL bottom line: the entire business ecosystem.

One other necessary change in becoming a real social business is much more difficult. Both Don Tapscott (via Ross Dawson) and I see certain principles necessary for open networked business.  Transparency, Collaboration, Sharing, and Narration are all relatively easy. Empowerment, or distributed power, is rarely, if ever, discussed when it comes to social business. It’s the big gorilla in the room that can scare owners, executives, and managers senseless. But we have the technology to move away from command & control, because, as Gwynne Dyer clearly shows, “Tyranny was the solution to what was essentially a communications problem.” We no longer have that communications problem in business.

Social business lacks overarching principles. Social business is a means to an end, not an end in itself. For me the objective is clearly the democratization of the workplace. Many business leaders shirk away from such thoughts. Wirearchy, as Deb notes, is an excellent example of such a principle [notice the bit about “power & authority”]. It sounds more like a democracy than a well-oiled industrial business machine.

“Wirearchy: a dynamic flow of power and authority based on trust, knowledge, credibility and a focus on results enabled by interconnected people and technology.”

wirearchy

Vendors of collaboration platforms are selling tools that can enable a more democratic workplace, but most clients don’t want that, so vendors don’t mention it. Business just wants more efficient and effective work. Networks, by their very nature, subvert hierarchies, whether those in charge like it or not. But hyper-connected work environments require different operating principles. That’s the big shift that has happened over the past two decades. It’s becoming much more obvious now because people outside the business structures are seeing the value of cooperation in a networked world; Wikipedia being the best-known example. Many in business still need to wake up to the notion of cooperating with your environment, your customers, your suppliers, and especially your workers.

Until workplaces becomes more cooperative, enterprise collaboration software will amount to very little. Social business is just a hollow shell without democracy (I wrote that a year ago and little has changed). Businesses can harness the powers of knowledge networks by promoting cooperative behaviours, within an overarching organizing principle like Wirearchy. While it’s not about the technology, the technology has changed everything. I cannot see any other way that businesses will remain relevant in a networked world other than by becoming more open, and democratic.

Lead, follow or get out of the way

A while back, it was only those nasty dictatorships that shut down communications, but now “enlightened” democracies like the USA and the UK are doing the same. However, it’s not really about social media, as they’re just the current manifestation of the Internet. The Cluetrain made it clear in 1999, “Hyperlinks subvert Hierarchy”. We are living in a complex, hyperlinked society and this interconnectivity is changing how we work and live.

Nine Shift likens it to 100 years ago when we left the agrarian age and moved into the industrial age: we are at a turning point in society (2008-2012) and the old way gives way to the new way (2010-2020). Mark Federman sees this point in time as just past mid-way in a 300-year transition of our dominant communication medium, from the print age to the electric age, starting with the telegraph and currently manifested with Web 2.0 [see Why Johnnie & Janey Can’t Read and Why Mr & Mrs Smith Can’t Teach PDF].

Social media for marketing was the tip of the iceberg. This didn’t shake much up, as there was no significant power shift. Corporations stayed in charge. But the real power of social media is for getting things done. Social media facilitate learning and working; which are now joined at the hip in the creative, complex workplace that’s 24/7 in multiple time zones. They give communication power to each person. Social media enable ridiculously easy group-forming, for both furthering democracy and enabling hooligans.

Institutions are just beginning to realize how profound these changes are and they are fighting back. The role of bureaucracy is to maintain the status quo. For the last one hundred years, our positions in the hierarchy have given us our purpose. In North America, people still ask, “What do you do for a living?”. It places us in the pecking order. This was very noticeable when I worked for the federal government in Ottawa 20 years ago. Each job title had a number of digits. The more digits you had, the lower you were, and therefore of less importance. Traditional, stable hierarchies will be blown apart by the interconnected, always-on electric age.

My observations show these are some of the required qualities for what is currently called the social enterprise, a better way of working together:

Work is open & transparent
There is a constant need to share and work is narrated
Continuous learning is a must
Conversation is valued
There is time for reflection
A culture of Perpetual Beta
Metrics are understood and measured by the workers

These are at cross-purposes with most of our existing organizational structures, whether it be the non-democratic enterprise with the CEO as anointed ruler or the bureaucracies where process trumps purpose. There is little doubt that the powers-that-be will continue to fight against the new medium because it is already destroying many of the old forms of power. This has happened with each communication revolution.

Therefore it’s no surprise that we will continue to hear about the Web being censored or government controlling our communications. If we want open and transparent work, education and governance then we will have to fight for it. The good thing is that the next generation is already onboard. We only have to look to them for inspiration. It’s up to us to step up and provide some leadership.

“Lead, follow or get out of the way”

~ Thomas Paine

Some notes on Bureaucracy

In 2005, I wrote – Seth Godin’s quotable Bureaucracy = Death raises a number of issues on why preventive actions are seldom taken by bureaucratic organisations. Seth talks about the effects of bureaucracy on marketing, but it also results in inertia in healthcare, education, et al. I doubt that his idea of a Chief No Officer would be embraced by many companies or institutions.

My belief is that it is the basic nature of managerial organisations that is the prime contributor to a reactive versus a preventive mindset. Why were the levees around New Orleans not maintained? Why is there no funding for programmes such as Canada’s Participaction, but we continue to add more expensive acute care machinery to our hospitals? Why is early childhood education ignored when it is a prime contributor to healthy, contributing citizens? And finally, what can we do to change this?

My belief that bureaucracies are a key contributor to many of our societal and economic problems has not changed in six years, and I’ve picked up a few more references confirming this.

Bureaucracies can amplify psychopathic behaviour, writes David Schwartz, a psychotherapist:

Since psychopaths are usually very smart, they can be quite competent at impersonating regular human beings in positions of power. Since they don’t care how their actions affect people, they can rise to great height in enterprises dealing with power and money. They can manufacture bombs or run hospitals. Whatever the undertaking, it is all the same to them. It’s just business.

Daniel Lemire looks at bureaucracies from a computer programmer’s perspective:

Bureaucracies are subject to the halting problem. That is, when facing a new problem, it is impossible to know whether the bureaucracy will ever find a solution. Have you ever wondered when the meeting would end? It may never end.

Bureaucracies are the enemy of innovation, as they favour self-preservation over change. They are self-serving. They are preventing organizational growth and we don’t need them any longer.

Bureaucracies are (finally) outliving their usefulness, as the economy changes. Valdis Krebs wrote on Adapting Old Structures to New Challenges:

When change was slow, and the future was pretty much like the present, hierarchical organizations were perfect structures for business and government. The world is no longer predictable, nor are solutions obvious. Old structures are no longer sufficient for new complex challenges.

And bureaucracies may be in danger from social media, says Peter Evans Greenwood:

Social media – as with many of the technologies preceding it – streamlines previously manual tasks by capturing knowledge in a form where it is easily reusable, shareable and transferable. What is different this time is that social media is focused on the communication between individuals, rather than the tasks these individuals work on. By simplifying the process of staying in touch and collaborating with a large number of people it enables us to flatten our organizations even further, putting the C-suite directly in contact with the front line.

This is having the obvious effect on companies, eliminating the need for many of the bureaucrats in our organizations; people whose main role is to manage communication (or communication, command and control, C3, in military parlance).

However, some bureaucracies, like the Canadian military,  just keep plugging along, as Mark Federman notes:

On resistance to this report [LGen Leslie’s Report on Transformation].

“[At] a large meeting in December 2010 involving the generals, admirals and senior DND civil servants … it became apparent the tendency was to argue for the preservation of the status quo. … Though grimly amusing, these interactions proved that consensus has not and probably never will be achieved on any significant change.”

We need to reinvent management so that it does not include bureaucracy. Steve Denning suggests dynamic linking as a better alternative to bureaucracy:

Even the best intentions to delight clients or empower staff will be systematically subverted if the work is coordinated through hierarchical bureaucracy. Meshing the efforts of autonomous teams and a client focus while also achieving disciplined execution requires a set of measures that might be called “dynamic linking,” The method began in automotive design in Japan[1] and has been developed most fully in software development with methods known as “Agile” or “Scrum,”[2]

“Dynamic linking” means that (a) the work is done in short cycles; (b) the management sets priorities in terms of the goals of work in the cycle, based on what is known about what might delight the client; (c) decisions about how the work is to be carried out to achieve those goals are largely the responsibility of those doing the work; (d) progress is measured (to the extent possible) by direct client feedback at the end of each cycle.[3]