Lateral Organizations

Hierarchical organizational forms have been the norm through much of history, especially the last 2,000 years. Lateral organizations, or more egalitarian structures, have been the exception. In the endless allure of non-hierarchical organizations, David Creelman notes that both forms have their flaws, but says it’s best to thoroughly understand the history of the field.

I once asked Dr. Ed Lawler, an expert on the high-involvement form [lateral organization], why it had not become the dominant type of organization. He speculated that it was a fragile form. It needs trust and a strong culture to work. Any crisis can knock a lateral high-involvement firm back into hierarchical mode. Lateral may be better, but if it is inherently unstable we cannot expect it to become the norm.

Trust is something we don’t see a lot of in our current organizational forms, with many examples cited in the hard costs of low trust:

According to The Economist Intelligence Unit (2010), 84% of senior leaders say disengaged employees are considered one of the biggest threats facing their business. However, only 12% of them reported doing anything about this problem.

Jon Husband’s wirearchy framework has influenced me over the years and I think the game-changer today is the Internet. It brings back the intimacy and connections we had in earlier organizational forms. For example, hunter-gatherer societies were relatively small, and many actively practiced ways of deflating egos and bullies, which enabled trust and a stronger egalitarian culture. They could control this culture within their geographic bounds. This became more difficult in larger societies.

If you observe organizations from a TIMN (Tribal, Institutional, Market, Network) perspective, then looking back at the dominant structures in a T+I+M society, which we have had for many years, may not give much insight. If we are heading toward a quadriform T+I+M+N society, then we may want to adjust our assumptions of what can work and what is now practical. Here is  a quick overview of David Ronfeldt’s TIMN framework:

According to my review of history and theory, four forms of organization — and evidently only four — lie behind the governance and evolution of all societies across the ages:

  • The tribal form was the first to emerge and mature, beginning thousands of years ago. Its main dynamic is kinship, which gives people a distinct sense of identity and belonging — the basic elements of culture, as manifested still today in matters ranging from nationalism to fan clubs.

  • The institutional form was the second to emerge. Emphasizing hierarchy, it led to the development of the state and the military, as epitomized initially by the Roman Empire, not to mention the Catholic papacy and other corporate enterprises.

  • The market form, the third form of organization to take hold, enables people to excel at openly competitive, free, and fair economic exchanges. Although present in ancient times, it did not gain sway until the 19th century, at first mainly in England.

  • The network form, the fourth to mature, serves to connect dispersed groups and individuals so that they may coordinate and act conjointly. Enabled by the digital information-technology revolution, this form is only now coming into its own, so far strengthening civil society more than other realms.

TIMN by David RonfeldtThere are growing examples of new organizational forms testing themselves in the network (TIMN) era (e.g. Automattic; Occupy Movement; Arab Spring). I think there is a lot more testing to do, but we should keep on trying. If not, we will have sub-optimal structures for the challenges that face us as a networked society.

Warren Bennis wrote that hierarchy is a prosthesis for trust. With more lateral organizational structures, trust can emerge.

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7 Responses to “Lateral Organizations”

  1. Frank Wyatt

    I’ve just discovered your work through others on Twitter who I respect; must say I love the succinctness of it and your models.
    Regards
    Frank

  2. Ana Silva

    It’s interesting to note that I’d just finished reading Creelam’s post prior to reading your view on the matter Harold (coincidencies!).

    I keep wondering this: we can’t deny that the Internet is a game-changer and that historically changes in the way we communicate and coordinate collective action end up changing society itself. But how much of our “renewed allure” with lateral/networked organizations can be attributed to recent crisis (including the financial one) that make many of us question the validity of traditional organizing models? What is the influence of our increasing understanding on topics such as what motivates people (especially at work), how teams work and the importance of networks in being more open to looking into new modus operandi? I think both have an important influence but would love to hear your view.

    • Harold

      The Internet, based mostly on open source principles, has shown all of us the power of networks. With that example, more structures based on those principles will be attempted. As with other communications revolutions, people are more willing to take chances, as traditional institutions fail to cope with the big challenges of our day. It is likely that things will stabilize in the future, and that can be a more open society, or perhaps a closed one. The current opportunity to try new, lateral organizational models should not be wasted.

  3. Jon Husband

    This (link follows) is perhaps the best essay I have ever read on the application of open source principles to the management of activities in a networked (and vitualized) form of organization. The author explores conventional management practices and the differences encountered (the hows and whys) during the creation and evolution of what we know as Linux.

    Written in 2001 by George Dafermos, a young Greek management scholar as he was completing his Master’s degree .. it has been much overlooked ;-)

    “Management and virtual decentralized networks: the Linux project”

    http://firstmonday.org/ojs/index.php/fm/article/view/1481/0

    • Harold

      Thanks, Jon. I haven’t seen George’s name mentioned for a while. I’m looking forward to reading the article.