Build trust, embrace networks, manage complexity

Hierarchies

A new model for work is required. Hierarchies, simple branching networks, are obsolete. They work well when information flows mostly in one direction: down. Hierarchies are good for command and control. They are handy to get things done in small groups. But hierarchies are rather useless to create, innovate, or change.

We have known for quite a while that hierarchies are ineffective when things get complex. For example, matrix management was an attempt to address the weakness of organizational silos resulting from simple, branching hierarchies. In matrix management people have more than one reporting line and often work across business units. However, the performance management system and job structure usually remain intact so that it adds more complication, rather than increased effectiveness.

Any hierarchy, even one wrapped in matrices, becomes an immovable beast as soon as it is created. The only way to change a hierarchical organization is to create a new hierarchy. This is why reorganization is so popular; and so ineffective. Most organizations still deal with complexity through reorganization. Just think of the last time a new CEO came in to “fix” a large corporation. A connected enterprise starts by building a foundation of trust, embracing networks, and then managing complexity.

Networks

Reorganization has to be part of an organization, not something done to it. This is why everyone, from an individual contributor to the CEO, has to understand networks. Networks enable organizations to deal with complexity by empowering people to connect with whom they need to, without permission. Enterprise social network platforms can help, letting anyone connect to another colleague, where the default permission to get access to information is public.

Networks are in a state of perpetual Beta. Unlike hierarchies, they can continuously change shape, size, and composition, without the need for a formal reorganization. Our thinking needs to continuously change as well. Of course this means letting go of control. Hierarchies were essentially a solution to a communications problem. They are artifacts of a time when information was scarce and hard to share, and when connections with others were difficult to make. That time is over.

So here’s the current situation: markets, competitors, customers, suppliers, are already highly connected. The Internet has done this. It is why a connected enterprise needs to be organized more like the Internet, and less like a tightly controlled machine.

While a certain amount of hierarchy may be necessary to get specific project work done, networks function best when each node can choose with whom and when it connects. Hierarchies should be seen as temporary, negotiated agreements to get work done, not immutable power structures. Networks enable work to be done more effectively when that work is complex and there are no simple answers, best practices, or case studies to fall back on. Large-scale hierarchies have outlived their usefulness.

The Internet has finally given us a glimpse of the power of networks. We are just beginning to realize how we can use networks as our primary organizational form for living and working. A connected enterprise has to be based on looser hierarchies and stronger networks.

Thinking like a node in a network and not as a position in a hierarchy is the first mental shift required to address complexity. The old traits of the industrial/information worker may have been intellect and diligence but networks need people who are creative and take initiative. People cannot be creative on demand. Nurturing creativity becomes a primary management responsibility.

In networks, even established practices like teamwork can be counter-productive. Teams promote unity of purpose. Sports metaphors are often used in teamwork, but in sports there is only one coach and everybody has a specific job to do within tight constraints. In today’s workplace, there’s more than one ball and the coach cannot see the entire field. The team, as a work vehicle, is outdated. In a complex world, team unity may be efficient, but not very effective.

Exception-handling also becomes more important in the connected enterprise. Automated systems can handle the routine stuff while people working together deal with the exceptions. As these exceptions get addressed, some or all of the solutions can get automated, and so the process evolves. Complexity increases the need for both collaboration (working together on a problem) and cooperation (sharing without any specific objective). Networks enable rapid shifts in the composition of work groups, without any formal reorganization. Networked colleagues, learning together, can close the gap between knowing and doing.

To thrive in the network era we need to understand networks – social networks, value networks, information networks, etc. The network era has already changed politics, created new dominant business models, opened up learning, and is now changing how organizations operate – on the inside. Once we are able to talk about networks, we will see that many of our current work practices are rather obsolete. From how we determine the value of work, to how we calculate pay for work; organizations will need to adapt to the network era.

It is possible that hierarchical organizations will not be able to adapt to the network era. As with the assembly line, the view of the company as an organization chart may become a relic of the past.

Complexity

The high-value work today is in facing complexity, not in addressing problems that have already been solved and for which a formulaic or standardized response has been developed. One challenge for organizations is getting people to realize that what they already know has increasingly diminishing value. Solving problems together is becoming the real business challenge. Networks, not simple hierarchies, are needed to do this kind of work.

Our dominant business models are the legacy of military hierarchies. But in a networked world these are inefficient, ineffective, and stifle innovation. Many major business disasters in the last half-century can be blamed on overly controlling management practices. The problem with hierarchies is that they are only as smart as the smartest gatekeepers. Networks are smarter than the sum of their nodes. Business models that enable connected leadership are essential in a network era.

The new work structures required for increasingly complex networked economies need to be supported by skilled workers with the right tools. We know that sharing complex knowledge requires strong interpersonal relationships, with shared values, concepts, and mutual trust. But discovering innovative ideas usually comes via loose personal ties and diverse networks. Knowledge intensive organizations need to be structured for both. Effective knowledge-sharing drives business value in a complex economy and this requires a workforce that is adept at sense-making.

In a connected enterprise, capabilities need to be aligned with tools. A core requirement for both knowledge workers, and enterprise tools, is to share what we are learning and doing. Making work more explicit enables the organization to learn. Sharing user-generated content (knowledge artifacts) is how everyone can make tacit knowledge more explicit. Work is learning and learning is the work, when everyone shares. This is called working out loud (WOL) and learning our loud (LOL). Of course this is more difficult if communications systems do not allow the easy creation and sharing of this content. Tools have to support the work.

Collaboration & Cooperation

Most organizations have tools that support working together for a common objective. Coordinating tasks, conducting meetings that don’t waste time, and finding expertise are common collaborative tasks. Letting workers pick their own collaboration tools can go a long way in getting work done. Having an array of tools is also helpful. Modelling collaboration skills throughout the enterprise is even better.

When people share openly, without any direct gain, knowledge networks thrive and the organization benefits. Cooperative skills include sharing openly with colleagues, communicating effectively, and networking to improve business performance. In addition, social media require new skills, beyond traditional face to face interchanges. Setting sharing as a default behaviour is a good start, but providing tools to enable sharing is also needed. As with collaboration, cooperative behaviours need to be modelled and encouraged.

A combination of organizational structure changes, skills development, and modelling, plus a suite of tools, can help to create a connected enterprise. All are needed. Focusing on only one or two areas will likely not yield much success. This has been a problem with many social business initiatives which are too focused on the tools, like enterprise social networks (ESN). While an ESN may cover all the facets shown in the image below, workers still need those matching skills. In addition, the structure must support these behaviours on an ongoing basis. It takes a systemic approach.

working social facetsThe Connected Enterprise

Many of today’s larger companies have overly complicated, hierarchical structures that grew as control processes were put in place to create efficiencies. To ensure reliable operations and avoid risk, work became standardized. New layers of supervision appeared, more silos were created, and knowledge acquisition was formalized, all in an attempt to gain efficiency through specialization.

We are seeing growing complexity both inside and outside the enterprise. In this complex and connected world we cannot predict outcomes, but we can engage our environments and markets and then learn by doing. This makes constant learning a critical business skill. It requires do-it-yourself learning as well as social learning skills. How can we help people in the organization develop these skills?

Providing good tools and teaching by example is a start. While communication does not equal collaboration, social media have the potential to support emergent work practices. In changing complex environments it’s not much use to rely on previous best practices. Social networks can provide a space to develop new practices. How these tools get used is itself an emergent practice, but if workers are not allowed to practice, nothing will emerge.

In an age when information is no longer scarce and connections are many, organizations must let all workers actively manage their knowledge networks. Systemic changes are sensed almost immediately in an interconnected world. Therefore reaction times and feedback loops have to get faster.

Workers need to know who to ask for advice at the moment of need. This requires a certain level of trust, and we know that trusted relationships take time to nurture. Workers have to start sharing more of their work experiences now, in order to grow their trusted professional networks to deal with new and more complex situations. Working out loud helps build trust. Sharing complex knowledge in trusted networks does not happen over night. It requires a combination of actively engaged knowledge workers, using optimal communications tools, all within a supportive organizational structure.

A guiding principle for connected organizational design is for loose hierarchies and strong networks. This is succinctly explained in the definition of wirearchy: a dynamic two-way flow of  power and authority, based on knowledge, trust, credibility and a focus on results, enabled by interconnected people and technology”. As networked, distributed work becomes the norm, trust will emerge from environments that are open, transparent, and diverse. Strengthening professional social networks will ensure that knowledge is shared and contributes to organizational longevity. Connected enterprises need to learn as fast as their environments.

Connected Leadership

As a result of this improved trust in the workplace, leadership will be seen for what it is – an emergent property of a network in balance and not some special property available to only the select few. This requires leadership from everyone – an aggressively intelligent and engaged workforce, learning with each other. In the connected enterprise, it is a significant disadvantage to not actively participate in social learning networks.

Leadership in networks does not come from above, as there is no top. To know the culture of the workplace, one must be the culture. Marinate in it and understand it. This cannot be done while trying to control the culture. Organizational resilience is strengthened when those in leadership roles let go of control.

Networked contributors (whether they are full-time, part-time, or contractors) do the bulk of the knowledge work at the edges of the organization. Working out loud and personal knowledge mastery are becoming critical skills, as work teams ebb and flow according to need, but the network must remain connected and resilient. A key function of connected leaders is to listen to and analyze what is happening. From this bird’s-eye view, those in leadership roles can help set the work context according to the changing conditions and work on building consensus.

Connected leaders know how to foster deeper connections which can be developed through meaningful conversations. They understand the importance of tacit knowledge in solving complex problems. All of this requires trust. Leadership in a connected enterprise starts by building trust, embracing networks, and managing complexity.

Note: This is an update of several previous posts.

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9 Responses to “Build trust, embrace networks, manage complexity”

  1. Gregg Gullickson

    What a fun and thought provoking article Harold. Is there room for/a need for internal competition within your networked org (complex adaptive system) vision?

    Reply
    • Harold

      As long as it’s not artificial competition, like gamification, but rather people trying to better themselves, then I would say some type of competition would be good.

      Reply
  2. Sharon (joiningdots)

    Great article Harold!

    I would dare to disagree slightly on one point – I don’t think hierarchies are obsolete. We might wish them to be but even in networks, hubs form. It’s another form of hierarchy with a few stars and everyone else. Potentially emergent (see below) but once it forms, politics shift to protecting it and that is what I’d like to see become obsolete. Tho’ klout scores and ranks don’t help, they try to create an artificial hierarchy. (wrote about it here – Social networks do not need a hierarchy )

    The emergent element is the power law. As choice grows, it can become overwhelming and people tend to pick the defaults – what’s everyone else doing? As soon as stars begin to emerge, their popularity will accelerate – the more you are picked, the more likely you are to be picked by others, creating the exponential curve. Same applies to connections. Human nature seems addicted to the cult of celebrity in every sphere.

    The challenge is that, once the stars form it becomes increasingly more difficult for a new star to emerge in any way other than deliberately. Even if somebody arrives into a network with great knowledge and insight, they will have to try and game the system to become noticed. It’s another form of hierarchy. The potential upside with it versus the traditional ladder is that it can be more easily disrupted if mechanisms are put in place to keep encouraging diversity to form new hubs or more hubs of a smaller size to flatten out large ones that can skew power. But some artificial manipulation seems necessary to prevent ‘super-hubs’ from dominating.

    The tension and relationship between networks and hierarchies continues through the ages… :-)

    Reply
  3. Brigit Calame

    Hi Harold, thank you for enabling me to sharpen my thoughts on this complex topic! I have a question also: in your picture of WOL and LOL you relate ‘collaborative aspects’ to the intranet and I find it hard to see that connection. The intranet as I know it is mainly a top-down communications instrument and of course in that sense it may contribute to a shared sens of direction but why do you relate it to collabaration?

    Reply
  4. Harold

    Perhaps I should say “the best intranets” enable collaboration, as it is possible with platforms like Sharepoint. It is an organizational decision to make the intranet a top-down communications platform, as that was not the original promise of these tools.

    Reply

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