Can organizations still function if we dismantle hierarchies?
In the social imperative, Jay Cross asked me how can organizations restructure in order to deal with complexity. In other words, how can they loosen hierarchical (direct) control and strengthen network (indirect) control?
“So essentially, we need to rely on others (via networks) to thrive above the midline of Verna’s chart, but we must become flexible in order to deal with the left hand side. Dave Snowden implies that mistaking the left for the right is fatal, since they require different responses.
Harold, is this a tipping point phenomenon or can organizations dismantle bureaucracy incrementally? What drives the lessening of top-down control to enable the flex to deal with the increasingly complex world?”
Last year I suggested a re-working of F.W. Taylor’s principles of scientific management (1911), which still seems to drive most organizational structures.
It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.
My alternative is called the principle of networked unmanagement:
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.
Breaking this paragraph down shows the fundamental changes necessary to shift the dominant organizational model toward looser hierarchies and stronger networks.
1. innovative & contextual methods = work and jobs cannot be standardized, which means getting rid of job descriptions and individual performance appraisals.
2. self-selection of tools = moving away from enterprise tools toward an open platform in which workers can use their own tools in order to be knowledge artisans.
3. willing cooperation = lessening the emphasis on teamwork and collaboration and encouraging wider cooperation. This is the essence of silo-busting.
4. duty of being transparent = shifting from ‘need to know’ to ‘need to share’ especially for those with leadership responsibilities. This is probably the biggest change for organizations today.
5. sharing our knowledge = changing the environment so that sharing one’s knowledge does not put that person in a weaker organizational position. For example, rewarding individuals for ideas, such as patent royalty sharing, means that sharing information could lead to another person benefiting from what you have shared. Rewarding the organization (network) is better than rewarding the individual, but only if people feel empowered and can be actively engaged in decision-making.
Walls can come down one brick at a time in some kind of orderly fashion, or they can suddenly collapse. Given the challenges of the network era, with hyper-connected markets and competitors, it might be best to get started on those walls now.
Given how tightly most org’ns are structured today (the methodologies underneath the structure effectively ‘weld’ activities and protocols), the dismantling implies a significant re-thinking and re-building of the organization as networked activities take hold.
On the surface, many org’ns will not know how to replace their existing protocols nor how to (un)manage networked activity. But the good news is many will have been ‘practicing’ for some time, I think. I continue to believe that the answers can and will be found in the principles of organizational development and individual and group-based learning principles and activities. There is a long and rich history of OD and self-directed work groups and systems from which to draw.
But guidance and guides and facilitators are much needed, especially when things get tricky or unfamiliar. As we know from experiences with bioth individual and collective change efforts, when entering unfamiliar and turbulent territory, many people regress or revert quite quickly to what is familiar, what they have known in the past or been socialized into (i.e. the workplace structures and rules as we have known it over the past 50 years).
I don’t like at all being pessimistic, but in general ‘this ain’t gonna be easy’.
Harold,
Total agreement on the need to shift to new organizational structures – in fact, I think this is where the next revolution will happen. That being said, for all this to stick, I think we really need to reach into the heart of the beast and change the way we do accounting – specifically related to how we account for humans (there needs to be a shift from people as liabilities to people as assets)….or am I way off?
John, Mark, Jon & Nollind: I think that accounting is a critical component to consider, as it drives so much of organizational structure & development. I recently spoke with Jay Deragon about some of these issues, on his site dedicated to intangible asset valuation.
http://www.smarter-companies.com/video/smarter-companies-interviews-harold-jarche
Check out the main site as well. This is an area I only peripherally understand at this time.
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Nope. In my opinion. I’m not even sure re-conceiving of people as assets is sufficient.
I wouldn’t be surprised if at some point we end up considering talent and human energy as a common pool of resources, just one large line item on an operating budget with little differentiation as to the cost of individual workers. Not quite sure (yet) how it might work .. but I think the means for managing overall cost relative to overall revenues are probably available, but not the mindsets.
For example, an org could pay the people that work for / with it monthly based on the past month’s revenues (on an ongoing basis). But there would likely be regular (if not sometimes drastic fluctuations, and not many people today who are in full-time jobs would not like to put themselves into such a situation, unless … they are deeply motivated by an org’s mission and values.
This scenario is I think not unlike the core dynamics of what it means to be self-employed, and associated with the work of an organization as a short or medium-term contractor.
These thoughts are rudimentary and unpolished .. which is seen pretty easily by the fact that I’m probably unable to express clearly what I am thinikng about.
Mark .. the “nope” was meant to signal that I for one do not think you are way off ..
Great stuff Harold. Your touch points resonate with my own which are a bit more radical and thus probably harder for people to digest.
1. Jobs descriptions, job titles, and careers are dead. The future is understanding your passion, your natural talent, which will allow both the individual and organization to become flexible and adaptable (i.e. specialist generalists). Assessment will be both on an intrapersonal and interpersonal level, with constant feedback and awareness (rather than being side swiped once a year).
2. We’re going to see a next generation open web platform that itself will be highly flexible and adaptable (i.e. no rigid hard coded behaviours), thus customizable to the individual’s and organization’s needs. And by customizable, I mean something with such great usability and design that anyone can customize it at a moments notice, rather than it taking days or weeks with special “coders”. I’ve already done a bit of conceptual work on such a platform myself.
3. Instead of separate departments each in their own silo group, you’ll have interdisciplinary groups and individuals (see #1). This resonates somewhat with Dave Gray’s pods within his book The Connected Company. It is the teamwork and collaboration of diverse groups of interdisplinaries on the local level that will create holistic levels of trust previously unseen before. As this ripples outward, it will virally affect the culture of the entire organization on a wider scale. Don’t like the words teamwork or collaboration? Replace them with any word that to you implies a level of interaction that it almost becomes symbiotic.
4. Leadership shifts from a few to everyone (i.e. interdependent with no titles in #1). This is the thing that people just can’t and won’t believe which is why it’s the primary thing holding back the transformation process. It is the key, the catalyst. The reason people can’t believe it is because they are still thinking traditionally, thus if everyone was leaders, how would any work get done? What they don’t understand is that true leadership isn’t about commanding but about serving (i.e. servant leadership). Thus imagine a group of individuals who have mastered their individual potential and are primarily focus on serving each other.
5. Knowledge sharing is about empowering the group and thus all individuals within it (i.e. situational awareness, shared mental model). With information everywhere, people can’t help but be responsible and take leadership.
What strikes me about this list – a very good one, in my view – is that it still calls upon the organization to remake itself. As Nollind implies, the change is happening; just under the radar. Even some large organizations with lofty hierarchical titles are becoming internal meritocracies. There is a limit to this without structural change, but those walls are being tested.
Some of these walls will become obviously obsolete and just fade; but others will require catastrophe. My hope, now fading, was that the disasters of 2008+ would lead to a rethinking of accounting and value, as Mark asks. That rethinking is happening on an individual level, but the brittle structures remain.
A human-centric accounting system would be exactly the right place to start. Now, which CFO is going to start that conversation?
Harold, awesome video with you and Jay. You touched on a lot of points that resonated with me deeply.
Intangibles: Making the intangible tangible is what I believe the Social Era is all about and it’s something I’m focusing my work on. For example, culture is often seen as an intangible, something that many people don’t understand but with which I have a strong familiarity with, both online within communities and offline within organizations.
Working Models: I actually believe that a working model is emerging because for me it resonates extremely closely with the way I developed communities of practice online in the past. This model is being used by Semco, Morning Star, and W.L. Gore, and even Valve Software to a degree (but they have some cultural issues in my opinion). BTW this heart of this model resonates with the way the Web works and even ecosystems themselves (i.e. permaculture principles).
Finally I loved hearing a bit of your background. We sound very similar in that I did a ton of technology related stuff in the past as well, even working for the Federal Government for some years (around 1990 – 1995). But then with my online community activity, I realized my passion was on the social end of things, particularly helping to define the identity of this new way of working together.
PS. Love your democratization of the workplace post as well. Nice to see someone else have the guts to say this.
Jon and Mark, I know you guys too well. The mention of accounting above gave me a shiver, probably the same one you experience with this issue. People aren’t things. Accounting and people aren’t apples and oranges; they’re cheeseburgers and the cosmos — impossibly different scales.
I refuse to rework F.W. Taylor. Fred was a prescient man for steady times. Man vs. Machine. But John Henry is dead. Today’s world is up and down. Taylorism tells us what not to do. Beware of the One Best Way!
I don’t remember what got me started here, but I am optimistic a new humanism is afoot in corporate/organizational America.
Please don’t get me started on accounting.
When spreadsheets on computers came into the world and cost accountants found them, the world changed ;-) And frankly, from my perspective NOT for the better.
Long ago in another dimension, I used to be an accounting manager in progressively larger commercial bank branches, and then a financial analyst for a couple of years after that. Why, I don’t know .. other than I was young and absolutely had to pay the rent and thought I should have a ‘career’.
Stripping human activities down to nothing but numbers representing transactions does an impressive job of emptying those transactions of their social meaning and human impact. Yes, it offers managers another form of meaning and impact … but it reinforces and embeds Taylorism and other industrial-era core assumptions into the fabric of human activities, as we see all around us today.
It’s important to have signposts and to be able to get some measure of what activities “add up to’ in a context, but to have made managing costs and profit a dominant dogma has bent why we do what we do into a driving force that arguably is not healthy for human society.
Under the current rules of the game, paying humans to work is a cost to organizations. However, humans live in societies, and if they do not work and do not have ways of obtaining money in order to live (even in basic ways), helping them stay alive in order to try to participate in their society becomes another type of cost (liability). Etc.
We all know this. But we continue to let established paradigms and practices manage us and our organizations towards unhealthy societal arrangements. Accounting standards and rules are created by humans and are a central part of the game we call an economy. The current set could easily be changed in radical ways, if there were the political will to do so.
Imagine if the stock markets around the world rewarded metrics that addressed something like ‘net benefit to society’ just as much as they rewarded whether an organization met analysts’ quarterly earnings forecasts. And yes, it could be done .. change the rules of the game. You all know, I’m sure, the emerging field of the economics of happiness (and so on).
An interesting sighting last fall whilst doing research for a client; I discovered that ..
“USA’s National Endowment for the Arts that the US Bureau of Economic Analysis will open a GDP-related account (ACPSA- Arts and Cultural Production Satellite Account) to begin assessing and tracking the contribution of the arts-and-culture sector to the economic output and vitality of the country.”
But imagine the howling if the hallowed ‘free market’ rules of capital markets were to be fundamentally changed by law and / or by FASB.
Like I said, once I get started .. ;-)
I very much appreciate your thoughtful piece. (A colleague of mine, Jeff Miller, is actually the one who introduced me to your website a while back.) Because I am especially interested in workspace cultural shifts, I find the five points you outline to be quite the inspiration for furthering my perspectives. Thank you for all you do.
I like this piece and the comments. I’m not so sure the organization is the one that can drive a restructure. But, when organizations with hierarchies and silos flatten they reform ad hoc due in part to Reed’s Law where the larger the group the greater there are going to be like individuals to group and cluster with as the largesse of the whole of the organization the individual starts loosing connection and bonding to that.
In early social platforms being rolled out organization wide, the common story from large multinational organizations was small clusters of like minds around the globe (2 to 10 people) finding each other and creating a space to discuss. To a tee each of the individuals felt they were alone with this knowledge, interest, or something they saw as a need for improvement and felt alone and wanted to leave the company to find more cohesion. Many times these ad hoc small clusters had something of value to the organization as a whole, but it was lost in the sea of many. I continually hear about these bondings today even in smaller virtual organizations as the interaction platforms provide the means to bond.
In another direction much of this restructuring has been happening for years through downsizing or organizations with not great workable environments. Employees move from being employees to contractors, but often bonding with others to form small company to have benefits and collectively sell their services back to the organization. The outside organization allows them to work in the manner that fits their strengths and have tools that enable them to be more efficient for their work. I ran into this a lot around Seattle, make that Redmond in mid-2000s with many Microsoft employees doing just that. I’ve been talking the last few months with a consulting company that is mostly former colleagues at one institution that now consults back to the organization they left as well as others in the industry, doing mostly the same work they did and loved. This group also has people in organizations running their groups to help them get things sorted out and restructure in a manner that is sustainable.
When situations call dismantling structure what happens after often depends on the culture around the organization and the cultures with in it. Some organizations have wide variance of cultures and others are tighter.
The key to a more ad hoc approach as a whole or at the edges is tools that enable this more open structure. Large orgs will re-silo naturally, but sorting who knows what, finding that easily, finding the skills that are more quiet gets really hard. Also finding people for the boring or less pleasant jobs gets tough.