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?

Expectations for digital competencies for workers keep increasing, without much of a clue from management what these really are. Today’s workplace demands emergent practices just to keep up, but there is little time or thought provided to develop these. In most cases our current models for managing people and supporting their knowledge-sharing are ineffective.

Knowledge workers today need to connect with others to co-solve problems but the best tools to do this are often outside the enterprise. For instance, social media can enable the development of emergent practices through ongoing conversations. Sharing tacit knowledge in this way is becoming an essential component of knowledge work. But too often the tools needed are not available, or internal policies cripple knowledge-sharing, especially if contract or external workers are involved. The modern enterprise is its own worst enemy.

In the network era, learning and working are tightly interconnected. Connected knowledge workers need more than directives; they need ongoing, real-time, constantly-changing, collaborative, support. This should be a major management responsibility but it is often ignored.

To create professional knowledge-sharing connections requires a level of trust that has to be developed over time. Trust cannot be turned on as desired, no matter what the company directives state. The default action is often to turn to the closest colleagues for advice, but they may not be the most knowledgeable on the subject.

Company policies that try to limit information sharing, in case it may be inaccurate, further sabotage organizational learning. Social bonds keep us together and connections between people drive innovation. However, management can routinely ignore social learning because it is not visible. Our complicated industrial organizations are quite good at keeping their structural problems hidden.

The end of simplicity

Most companies started with relatively simple structures; a few people gathering together around an idea. For small companies, decision-making, task assignments and direct interaction with clients are rather straightforward. With growth, the simplicity ends. Organizational growth is usually viewed as a positive development, but it comes at a cost.

As organizations grow, the original simplicity gets harder to maintain. Some management experts consider the ideal size of an organization to be around 150 people. This is based on Robin Dunbar’s research and is supported by the consistent size of military units through history. Beyond this size, knowing everybody in person becomes impossible. Above 150 people, additional layers of power and delegation begin to develop and companies enter the realm of complication.

Complication

Most of today’s larger companies have a complicated structure. It takes a lot of analysis to understand all the pieces. Over time, even more processes and departments are put in place. To ensure reliable operations and mitigate risk, the core competencies of decision-making and innovation are centralized, creating a structural knowledge-sharing bottleneck. New layers of control and supervision continue to appear, and knowledge sharing is so formalized it becomes useless for decision-making.

Without two-way knowledge-sharing, workers get disconnected from the company. For example, the company’s vision will be established at the board level, but individual workers will be far removed from it. A company vision statement that says people are its greatest asset will not be respected by workers who fear the next down-sizing event designed to increase stock value.

As companies get even bigger, internal growth and innovation reach a tipping point, and companies rely on mergers and acquisitions to maintain the illusion of growth. By transferring jobs to subsidiaries, contractors and subcontractors, these large firms do not even create new jobs any more. The reliance on these workers creates more control protocols as management trusts them less than full-time employees, thus choking off meaningful knowledge-sharing.

However, the acquisition and sharing of new knowledge remains a critical factor for innovation. To compensate for its complicated processes, the large enterprise may put significant effort into compliance training for workers, and leadership training for executives. The former is often useless and the latter can be a scam.

Today’s complicated organizations are now facing increasingly complex business environments that require agility in simultaneously learning and working. Typical strategies of optimizing existing business processes or cost reductions only marginally improve the organization’s effectiveness. Faster markets challenge the organization’s ability to react to customer demand. Decision-making becomes paralyzed by process-based operations and chains of command and control.

Re-wiring for complexity

Organizations need to understand complexity instead of adding more complication. This lack of understanding is a major barrier to becoming a truly connected enterprise in the network era. To succeed in complex environments, the organization should focus on four basic pillars:

Knowledge

Trust

Credibility

a Focus on Results

These are the principles of the wirearchy management framework.

First consider that innovation comes from a diversity of ideas and networks, but only if knowledge is freely shared. Trust emerges over time through transparency and authenticity, practiced by people working out loud. Credibility is earned through collective intelligence, developed through an active questioning of all assumptions, including our own. Finally, a focus on results is enabled through both collaboration and cooperation, and is further enhanced by ‘subsidiarity’ — the promotion of the furthest possible distribution of all authority.

These four simple principles can help address the real industrial disease — complication. The pillars are the foundation for management practices in the network era and are directly linked to managing open networks and practicing connected leadership. In the network era, everything is connected — leadership, management, learning, & getting work done.