The “organization as machine” philosophy has become fundamentally flawed in today’s knowledge age, especially in the digital environment. Dismantling the centuries-old “organization as machine” model and replacing it with a new management technology that unleashes the creativity and productivity of humans is the greatest opportunity and challenge now faced by companies seeking the much needed agility essential to leading in a digitally pervasive world.
In the knowledge economy, organizations must perform as part of a market ecosystem.
Unlike a machine, an Organization is NOT merely the sum of its parts
The parts (people, processes, and departments) of an organization do not interact in a linear fashion. They are connected, interdependent and part of a dynamic complex ecosystem. The larger market ecosystem in which business is embedded includes suppliers, partners, customers, and competitors. Success and longevity happen when organizations leverage their connections within the ecosystem. We call this co-opetition and co-creation.
Look at the software application industry – it used to be that we all waited eagerly for the next release of our favorite games, software, etc. from a small group of companies. But now new apps can be written by anyone, anywhere, and released immediately. The whole market ecosystem (hardware, software, apps, UX) is innovating so rapidly that all participants have had to shorten their development cycle times to be more responsive and lean out their processes to be more adaptive. This Sense and Respond approach is actually very similar to the way your body works.
There are millions of cells in our body. They are extraordinarily diverse and yet all share common characteristics that allow them to communicate, coordinate, and cooperate. Think of the last time you were late for the bus; you sensed that you were running out of time, your attention focused on the task at hand, all else was forgotten. Your pace increased, supported by your heart, lungs, and large muscles (allowing you to dodge crowds efficiently); resources were shifted to where they were needed most (digestion slows); your perception increased (blocking out everything but the crowd of people milling and the bus approaching around the corner); laser focus on the final sprint to the goal (locating a token and finding a seat). As a systemic process, this is what complex adaptive organizations do to reach their goals in the marketplace.
Knowledge is shared across the entire ecosystem
Individuals in organizations are like cells (cardiac muscle cells), teams and groups like organs (heart and blood vessels), functions and divisions are the overarching fully-functional system (cardiovascular system). All people and parts of this network are necessary and must perceive, on some level, that they are part of a whole and not operating alone.
Just like the human body, the human networks in an organization enable the company to perceive the whole system – communicate, coordinate, cooperate and collaborate to reach a common goal. No individual, team or department works alone. Business, management, development, deployment and customer support are all connected in one end2end ecosystem. Hierarchies may exist on paper, but in reality, they are too slow and inaccurate to sense and respond to complex change in the market ecosystem.
Workers are not widgets
If we look at an organization as an ecosystem, we see that workers within teams, departments, and business partnerships are unique, as are the ways in which they are interconnected. Removing any one individual affects the network and often (in the case of Boundary Spanners and Information Brokers) has wide-reaching structural and functional implications. The impact of reorganization on human networks, for example, radically impacts their effectiveness and efficiency until people re-establish or create the relations they need to perform and flow work through the system. These are often hidden or ignored adaptive challenges that can be addressed proactively when executives see the organization as more than boxes on the org chart.
Ecosystems are self-organizing
Much has been said about self-organization by the agile community, and it’s critical to understand that at the enterprise level, self-organization produces agility. However, self-organization isn’t something that’s “implemented.” Human networks are inherently self-organizing. Downstream results of self-organization already exist: workarounds for poorly-designed processes, information flow, and problem-solving. In highly-functioning corporations, even decision-making is self-organizing (more on this in a future article).
Transformation occurs when executives realize that they don’t have to be the designer of the organizational machine, that the forces of nature are actually working with them, and they can relax, lean back, and lead instead of trying to control.
Self-organization also occurs at higher levels, in market ecosystems and economies. In the stock market, for example, no one person makes a decision; everyone does. Market trends, the global economy, and now sources of funding and investment are all leaderless, self-organizing systems of humans.
Ecosystems can evolve
Finally, the organizational ecosystem evolves to better fit its market ecosystem.
In nature, evolution is not slow and glacial. It’s fast and adaptive, occurring constantly when evolutionary pressures are high. Organizations in the digital age are faced with these same pressures. Leaders use mental models, norms, structures and functions, and cultural narratives to adapt human behavior and increase agility. These are manifest in the five Surge Pattern Libraries and twelve Levers of Agility (which we’ll detail in a future article).
To use the tools of adaptation, we need to learn to see networks and understand how we can cultivate them – nourish their members, plant seeds of connection, and harvest the energy and knowledge they contain.