Sunday, August 31, 2014

An Alternative Organizational Structure

Digital favors the hybrid solutions-the delicate balance between solid and flow.

Digital is the age of options. The option to build business physically or run virtually; the option to serve customer via traditional counter or digital channel; the option to work in the large building or the remote office; the option to be the titan industry leader or the fitting niche player? How about organizational structure, what’s an alternative organizational structure, to differentiate from the command-control pyramidal hierarchy?

The delicate balance between solid and flow: Did you realize that the membrane around every living cell is neither solid nor water? Rather, it is a delicate balance between solid and water. It’s just solid enough to hold some sort of form and liquid enough to allow movement in and out of the cell so the cell can interact with its environment. This is the image we need for business, just solid enough to give some sort of form/meaning and open enough to its environment to allow movement (of people, ideas, and information) in and out. This "guiding senses" are a mixture of life experience, knowledge, and the willingness to look for the benefit of a group rather than individual profit.

An "octopus organization” - Octopus is on "building and maintaining significant mutual trust and long-term relationships. An analogy that makes some of the same points about recognizing the need for structure, while continuing to permit flexibility is the "octopus organization." It is a vivid metaphor because the additional complexity of the octopus seems to be a better mapping of real-world business complexities than the wall of a single cell. The octopus has a central nervous system and a set of strategic objectives--reproduction and survival among them. However, each leg is capable of independent responses to threats and feeding opportunities. This diffuses the overall objectives throughout the organism while allowing parts of the organism to respond independently within its scope and ability to contribute to the overall objectives. Thus, decisions within a scope defined by the central system, are made more quickly and, due to the proximity to the stimulus, more effectively than if the stimulus were sensed, communicated to the central system for interpretation, and directives dispatched downward. At some point, the analogy will fall apart, but you get the idea. Empowering, communicating overall objectives, and providing the right resources at the point of interaction, allows those best capable of responding the quickest to do so. Many people feel that they can not lead others or tell others what to do. There is a certain kind of courage and self-confidence needed to take responsibility for others. Octopus organizations encourage to build mutual trust and a long-term relationship.

A “Beanbag organization”: Like a beanbag, these organizations have porous, flexible walls; rather than the thick, impervious, solid walls of silo-like organizations. Like a beanbag, these organizations fit exactly to their environment, no matter how much it changes; unlike the silo which is inflexible and slow to move. Like a beanbag, the individuals inside are free to move far more easily to whatever shape their environment becomes. They can easily move to where they can add the most value to the person being served, unlike silos where people are fixed in jobs and silos of power. Most importantly, beanbags, like all complex adaptive systems, can emerge into systems that self-organize and take on all the characteristics of a living entity. This is quite different from silos or hierarchies that are deliberately designed to reduce variation and retard self-organization of change in favor of control and top-down, linear, no choices allowed, power-based, mechanical change and processes. It would be a good first step transforming an organization into a beanbag to break the silo thinking, to have positions or functions that need the individual to cross the department lines, to think interdisciplinarily, to connect the dots. Every organization has a vision and goals are set accordingly. Every individual has his/her own perception. A full bean bag structure may lead to counter actions because of variations in perception of vision and goals. A clear guideline up to bottom line will be necessary to avoid such confusion.

Leadership and management are boundary activities. This resulted in a different way of conceiving organizational structures which are primarily related to organizational processes rather than hierarchies. This reveals how organizations actually work now. The information feeds into the hierarchy with organizational plan and relationship structures merging to create individual and corporate power. Once organizations understand more about now, you should be in a better position to invent or develop new ways of making things work better. Information and Authority permit informed decisions / personal and corporate power. Once the Relationship Structure and Hierarchy are sorted out, the organization will be massively more competitive and well run.

It is an idea to analyze and observe how things work in organizations before suggesting changes. For instance, instead of ignoring it, you should examine the reason for company politics, how it operates and then start to understand how information flows in organizations, how it is tainted or how its flow is blocked. Negative company politics distorts relationship structures training and strangling information flow. Count the value of lines going to each person and construct a hierarchy of the most valued to the least valued. The extent individuals are valued above or below their management grade indicates how effective they are in their work be able to make informed decisions with surplus influence or how vulnerable and weak they are. When management ceases to understand or comprehend what the staff has to do in order to make the business function, it is time to move on, because all credibility in management is lost.

The emergence of relationship structure: Rather than try to change the hierarchy/organizational plan, perhaps it is worth revealing the Relationship Structure that goes with every hierarchy? The Hierarchy largely defines the level and scope of authority; it is not an information flow chart. The information does not flow well up to an authority gradient. The Relationship Structure handles key real-time information. It can now be revealed using a very simple series of steps. It wraps around the hierarchy ensuring informed use of authority. There's nothing wrong with the hierarchy as long as the Relationship Structure is healthy. This is formed by relationships and provides real-time information to the hierarchy about what's going on. If the Relationship Structure is well formed, every manager will have the information to make informed decisions and so will have the power to go with their grade. This will create maximum corporate power and competitive edge. 

The problem is freedom versus control. Both are exploited, people are given too much freedom to exploit it, people controlled are exploited by those given the power. Centralism and anarchy are both prone to those who like shortcuts. If your system does not take this into account, it will fall prey to one of these errors or probably both because it will jump from one end of the spectrum to the other without actually solving the inherent problem. The flattening of organizations is an objective of many new managers/executives. The outcomes from this are alienation and the perception of a threat. Neither of these is the positive feature of these organizations. Add the cult of personality to this mix and the final outcomes will be far from healthy. 

Digital favors hybrid solutions. Ideally, the two structures, hierarchy, and relationship structure wrap around each other to ensure responsibility, good information flow and the creation of power. 


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