Creating adaptive organisational designs

Organisational structure is a fascinating topic that has been the focus of much academic and practical research over the past century. The first metaphor I was taught as a representation of how a firm is organised was the “pyramid” where the workers at the base undertook operational activities that were coordinated by the next layer of management, who were guided by business strategy developed at “pointy end” of the pyramid of executive/senior management.

There were a lot of assumptions in this design:

1. The knowledge and expertise was at the top of the pyramid
2. The information flow was upward - management needed information to control operations and executives needed information to control the business.
3. The more knowledge an employee had, the more likely they would be able to move upwards.
4. Knowledge was trapped by systems (e.g. production lines, machines, etc.) and operational workers were employed as a component that undertook defined tasks within these systems. These tasks were “isolated” from each other and therefore workers became masterful at one part of the process, with little conversion between tasks.

The next step in organisational design was based on the advent of information and communication technologies that were seen to be able to “replace” line workers and provide better quality control through “business process re-engineering.” Furthermore, less workers meant less managers and considerable downsizing and flattening occurred to create sparse organisational designs where remaining managers had larger jurisdictions of control and authority and remaining workers were closer to strategy and executive. The results of this approach were mixed. While automation provided release to workers from mundane and dull tasks, much of the innovation potential and know-how of the firm was retired early, redeployed, resigned, or retrenched. While the bureaucracy of middle management had been slashed and operations were closer to strategy, most of the managers who had traditionally operationalised strategy were mid-career unemployed, struggling to find work, or taking up home maintenance franchise opportunities!

The flat organisation is still a major design artefact in many businesses today. However, more and more organisations are starting to obtain value through a network view of the organisation. The network view builds on the benefits of the flat organisation through providing “information and knowledge marketspaces” for stakeholders (customers, employees, suppliers, regulators, shareholders, etc.).  The networked organisation focuses on connectivity over control, enablement over isolation, and accountability over authority. The networked organisation creates a complex sense-making network where new ideas, information, and knowledge can be readily obtained because knowledge and information is dispersed across the organisation and beyond. The organisational boundary becomes very difficult to plot in these business environments and often “customer value” is obtained through the combined capabilities and outputs of multiple business partners or service providers. Furthermore, knowledge from these new alliances filters back to the organisation through interactions and “cross-fertilisation” of ideas between companies with shared interests, but different capabilities.

All characteristics of the networked organisational design point to a far more adaptive environment where people are central to processes because collaborative relationships are central to the business objective of sustained competitive advantage in existing markets and first-mover advantage in emergent markets.

Of course, there are many trade-offs with networked organisational designs and you should consider your business environment carefully before moving towards implementing these structures. Some of these trade-offs are:

1. Greater transparency - while this may sound good, careful preparation and management needs to be undertaken to ensure stakeholder support.

2. Spill-overs - opening up the boundaries means that security policies need to be invoked to ensure information and knowledge that is proprietary or secret is retained safely.

3. Head-hunting - employees often interact more with people outside of their organisation than inside at times and “going native” is more likely.

4. Reduced management control - information asymmetries are eased and therefore workers are more knowledgeable and more capable of finding “work-arounds” in the system. Enhanced ability to communicate gives workers a greater voice in the company and its operations. While the democratisation of the workplace can be a positive aspect of networked design, there are obvious negative repercussions if these liberties are abused.

In the end, I believe that diversity leads to adaptation, therefore,  the best organisational designs represent a fluid mix of pyramid, flat, and networked structures, which are knowingly invoked to satisfy particular strategic requirements.

Service-Dominant Logic – Exposing CPA Australia’s K-Strategy

Service-Dominant (S-D) Logic is an important new mindset in business. The fundamental premise of S-D Logic is that organisations, markets, and society are fundamentally concerned with exchange of service where a service is the application of competencies (knowledge and skills) for the benefit of a party. Thus, service is exchanged for service and all firms, markets and societies are service-based.

The fundamental difference between the more traditional Goods-Dominant logic and S-D logic is that S-D logic embraces value-in-use and co-creation of value and rather than value-in exchange and embedded-value concepts of G-D logic.

S-D logic advocates that rather than firms marketing to customers, customers are co-creators of value and the nature of that value can only be judged by the customer. Firms therefore can only make value propositions and these are either supported (translated) or rejected by the customer. Furthermore, firms must leverage the co-creation of value with alliance partners within their value network.

Let’s turn our attention to Tony’s post – CPA Australia and the Smart Enterprise. With a little analysis, we can see the strong threads of S-D logic and its innovativeness in CPA Australia’s knowledge strategy:

Co-creation of value with members:
• “Leveraging the IP of our members for the benefit of our members” (Connecting & Exchange)
Co-creation of value with alliance partners:
• “Provide a wider range of technical and non-technical knowledge largely sourced from high-quality education providers under alliance/partnership arrangements” (Relevance & Reach)
Value propositions:
• “Provide knowledge through innovative media” (Anytime, Anywhere)
• “Provide a compelling and market responsive CPA Program & flexible entry pathways for global career advantage” (Market Responsive CPA Program)

The strong ties with S-D logic and the CPA Australia knowledge strategy shows foresight by CPA Australia in making it’s services at one with membership needs. The key to it’s success will be how you as members will embrace the strategy and assist CPA Australia and your fellow members through adding your own value through participation in the program.

I strongly recommend you spend some time reviewing: http://www.sdlogic.net if you are unfamiliar with S-D logic. I believe this “mindset” will be at the centre of future organisational success. Particularly in a world that is Web 2.0 enabled (see Mick’s post below) for customers to take part actively in co-creation.

Delegation - The moral to the story

Earlier I wrote about an example of a manager unable to let go of control of their team’s tasks. While perhaps it was extreme this example provides us with clues about good practices in delegation:

1. Know the details of the task to a degree where you can make a good delegation decision.
2. Know the capabilities of your team members OR use the team to choose who has the best knowledge and skills for the task (you need to have set up a positive work culture first otherwise the task will become a “hot potato!”)
3. Know the performance requirements for success (based on your knowledge of the task) OR set these performance requirements with the team or team member.
4. Provide input or facilitate the team members’ execution of the task.
5. Assess the task outcome on the basis of the performance requirements.
6. Reflect on what went wrong and celebrate what went right in the task with the team member.
7. Enshrine these learnings with the team through discussion and perhaps case writing.
8. Pass these learnings onto other teams if they are generalisable and valuable across the wider organisational context.

The last three points of this list are essential for good knowledge management – these processes involve: self-reflection, group discussion, and generalisation to the broader organisational context through formal and informal social mechanisms.

In order to practice what I preach, I will be delegating aspects of this blog to my trusted and noble associate Mick Leyden, who is a Project Executive in CPA Australia’s Knowledge Exchange Team.

Mick will be discussing web 2.0 and other commonly available tools in the context of how they can support your business operations and strategy.

Delegation – understanding your team’s talents and leveraging them.

One aspect of successful leadership is knowing your team members and what they have to contribute. This point may sound self-evident, but you’d be amazed how often managers have no idea of what their team really can do – either in combination or separately.

Why is do managers fall into this trap? Perhaps managers in this situation are:

• Too busy and pay “lip service” to their team.
• Self-isolated in the sense they have created a social structure where there is a strong distinction between who “on-top” and who’s “below.”
• More interested in the “divide and conquer” principle of management – where the manager maintains high levels of competition within their team to ensure they maintain control of the team.
• Focussed on centring the workflow around themselves so they can keep control and feel like they are “managing.”

Often managers who partake in these activities use “ad hoc” delegation. Ad hoc delegation works like this:

1. The manager needs someone to “do a job” for them – perhaps this job is menial or the manager doesn’t like the task.
2. The manager chooses one of his team for the task on the basis of favours – who they like or dislike, depending on the role.
3. The team member undertakes the job. No performance expectation is given and often there is a lot of missing information the team member has to construct to understand what the job is (sometimes the manager has all of this information and makes in unavailable for reasons fuelled by their own agenda).
4. The job outcomes become known and the manager makes a subjective judgement on the team member’s performance.
5. Often this performance was not as good as the manager wished it to be or was not up to the managers’ expert standard.

The outcome of this scenario reinforces:

• The managers’ dominance in the team as the objectives setter, controller, and evaluator.
• The team members’ subservience to the manager.
• The managers’ belief of his capability over the less-experienced team.
• The team members’ belief the manager is not working with them and at worst, is actively working against them.
• The managers’ belief that he can’t delegate real responsibility to his team members because they “aren’t ready,” or at worst they are “incompetent.”
• The team members’ belief that working for this manager is a waste of time and there are better opportunities elsewhere.

While you may be thinking the example is extreme and perhaps a stereotype, reflect for a moment on whether you have subconsciously led your subordinates to similar outcomes. I know I have and I should know better!

Leadership Bank Account: Understanding the Dynamics of a Learning Culture

In the past few posts, I have focused on extra-ordinary situations where an organisation is in crisis and how a manager can best deal with the crisis in holistic terms.

I have expressed these views in management forums and I often get a “hot-cold” response.

• Hot - managers can see the value of the approach given.
• Cold - managers question whether their team has the emotional and intellectual skills and resilience to act inter-dependently and behave accountably during the time of crisis.

My retort is always the same – If your team isn’t up to the mark, whose fault is that?

Of course, there is always stock defences such as “employees expect more and do less these days,” or “Gen Y don’t care,” or “the employee turnover in our organisation is chronic.” But my refrain stays consistent – Whose responsibility is to ensure the team works productively to obtain required outcomes?

I suppose I have led these managers into a trap – where they are pressured to realise that performance at any point of time isn’t about “managing the moment.” Rather, performance is grounded in consistent and continued preparation through coaching, grooming, and mentoring, which is equivalent to a Learning Environment.

Surviving crisis is not only about actions undertaken at the time of the crisis. Surviving crisis is about all actions and events that have shaped the organisation up to and including the crisis.

Furthermore, a crisis is just another “event” or “happening” in the life of an organisation. Thus, every new “event” in an organisation is based on the sum of all past “events” experienced by the organisation and its people.

To understand these profound insights is to understand the basis of knowledge-based leadership and management. Let’s distil the message I am trying to give into a simple analogy: “The Leadership Bank Account.”

The rules of the Leadership Bank Account are very simple:

• Every time a manager does something to build a positive and resilient culture, the Leadership Bank Account gets credited.
• Every time a manager does something that directly or indirectly harms a positive and resilient culture, the Leadership Bank Account gets debited.
• Maintaining credit in the leadership bank account is far more difficult than going into debit. That is, credit is accumulated via small deposits, whereas debits to the account are generally large withdrawals.

At the root of the leadership bank account is the degree of loyalty, trust, and capability (resilience) a party brings to a relationship. In a knowledge-based organisation, if managers leadership bank accounts are “in the red” (debit) with their employees, then it is likely that a prevailing culture of blame, avoidance, and selfishness is in force. Alternatively, if managers have developed an account that is “in the black” then a positive and resilient culture will flourish.

The notion of the leadership bank account can be scaled from interactions between individuals to interactions between governments and even country alliances such the European Union and OPEC.

At a practical level, what can managers do on a daily basis to ensure small credits are going into their leadership bank account rather than large withdrawls? I will attempt to provide some sort of an answer to this question in the next post.

Learning the lessons and building community – debriefing after crisis

In previous posts I have described my beliefs regarding the management of crisis and the rewards associated with good crisis management. The final point I would like to raise about crisis management is the importance of “debriefing” after a crisis has receded.

You may recall that I had just been part of a specialist team that had formed through a well-negotiated process of requirements. However, when the team met for the first time, the original agenda and business expectations had completely changed and our fledgling team had to adapt very quickly to provide the new outcomes in the time it had. 

The professionalism displayed in calmly setting about the task set was a credit to all concerned. However, there was a significantly different end to the team’s time together than what you would normally expect. This difference came from a spontaneous “debriefing” that occurred as soon as the main deliverables were achieved for the four day session. 

This debriefing session was started when one of the participants passed comment about how well the team had measured up to the task. One interesting observation was the credit given to a team member for “taking the heat” of the main team by removing outside communication to create a “bubble” where the team would be able to “do what they were there to do.” This team member left the room with the promise they would field any calls made to the group and they would not allow the group to be interrupted again. Removing the “stimulus” of all the anxiety gave the team time to focus and really think deeply about the new problem space, which led to the revised solution. 

Other team members then started to give positive support and praise to each other about how they had all managed the situation and how they were humbled by each other’s capabilities to act under pressure. While this process may sound a little “over the top,” it provided a mechanism for the group members to release the pressure. The debriefing process also gave the group members the time to think about the success of the session and the success of the group itself. 

I suppose when we all came together, we knew that we had been hand-picked for a reason (i.e., we were good at what we did), but we did not know how well we could convert our knowledge into action as a team. The adversity of the crisis and the ability of all team members to open up and give each other genuine praise was the moment when we turn into a real team. 

You might be thinking – yeah, I can see how debriefing works when the team works together well, but what happens when it doesn’t? In this situation, debriefing should follow the principles laid out in the “crisis management list” I gave a few posts ago. For trust to grow, people have to be honest in acknowledging their weaknesses. On the other hand, team members also need to be understanding of each other’s circumstances and realise that whatever happened, each person was doing the best with what they had at time. 

When we realise this last point, it becomes much harder to criticise the other person because we all have our weaknesses, we all contributed in some way to the problem occurring, and we all contributed to its solution. These sentiments build a stronger team and closer heart-felt relationships between members. Also, humbly revealing our strengths and weaknesses makes us stronger and more able to cope with crisis next time it inevitably comes knocking.

A personal account of a business crisis and its aftermath

They say that what you think about often happens to you. Well, after writing the blogs last week, I found myself in a similar crisis situation, where plans that were a long time in development and negotiation were completely uprooted by a new set of fast emerging business imperatives and requirements.

While things have settled a little, the ramifications of the crisis are yet to be understood fully, so it would be unwise for me to give much more detail about the crisis itself. However, I can give you the details of the team that faced the crisis:

• A hand-picked group of 9 people brought in from Europe, SE Asia, and Australia
• Experience and professional backgrounds were all different
• One of the leaders was not present and participated via video conference like a “talking-head in a laptop” (at lunch we would take the laptop into the kitchenette at the office and he would have a break with us – a little surreal really!)
• We didn’t know each other prior to the engagement.

After I had left the scene, I went back to my list of suggestions for crisis management from the last two blogs. It was amazing to read these suggestions and relate them to the behaviours of the people who were present at this team meeting. The following is a personal analysis of the outcome of the crisis:

When the crisis hit us, there was so much that could have gone wrong outside of the actual crisis itself. The differences in culture and religion in the room were diverse, the potential for disagreement and fragmentation was high, misunderstanding based on different language and meanings to words could have created enormous friction and destroyed group cohesion, etc.

You can see how the list of possible problems could have been endless, but the amazing thing was – every member of the team lived up to the actions and behaviours I listed in the previous blog by experience and nature.

I can now report what the aftermath is when these suggestions are enacted by each individual across the group: Intense social cohesion, bonding, and trust

Adversity and crisis has a silver lining when people act with vision and responsibility for each other – even in environments where initial social connections are not strong.

My feelings and respect for the people whom I suffered with during that crisis are strong and I would trust and work with them at another occasion. In fact, I would go out of my way to work with them because rather than being a team of stars, we proved we could be a star team. I feel fortunate to have met them and worked with them and I look forward to a long association with them. These sentiments were shared by the whole group and there is a stronger sense of purpose than if everything went right.

So my key observation about crisis is that when it is well managed, good things happen for those involved, regardless of the outcome. The important point here is that each participant in the crisis I describe all shared a common belief system and a common approach – even though we had never really met and we were separated by culture, professional background, and distance. If we can get positive outcomes out of these complex and potentially adverse circumstances, there is no reason why work teams within organisations can not do the same.

In the end, success or failure is a state of mind, while I do not know what the outcome of my crisis experience is, I can definitely say that I have gained much more through the experience than if things had gone to plan

Even if the project we were engaged to deliver looks like collapsing, I have a feeling we will find a way to get it back on track – because we believe in each other, and we believe the project can still be viable. Through adversity, our goals have become clearer and our intention and commitment stronger.

Leading and managing in crisis – Part 2

I started to list essential conditions for success in disruptive situations. I will continue to elaborate on these conditions in this post:

Further essential conditions that are required to maximise the opportunity for success in wicked and disruptive situations are:

6. Harmonise rather than disenfranchise outsiders

Develop a clear understanding of the larger social implications of the larger organisation. Seek counsel with stakeholders. Give “one view” of the situation to the outside world.

7. Simplify the problem – go back to basics  

Seek the “higher ground” of abstraction. Don’t get caught in the detail. 

8. Be honest, but know the difference between science fact and fiction 

Remember that you are dealing in a situation where you don’t know the outcome. Therefore, be honest, be positive, and show integrity in your intentions. Tell your team the target is to survive and thrive. However, don’t be overly optimistic or pessimistic because these sentiments are based on old rather than new knowledge. 

9. Be authentic, reinforce all you do with clear values 

Match your rhetoric with real action. Make sure your decisions reflect shared values. Accept that you are not perfect and know that some decisions you make are going to lead suffering. When you bring sorrow, be gentle. 

10. Use a soft but firm hand 

Leadership is borne from compassion. At the same time, leadership requires direct communication, which reinforces the need for your team to know when it is time to challenge and when it is time to act with faith of your ability to coordinate the campaign. 

11. Know when you have enough data – don’t wait for perfection 
 
Fear of making a decision leads to a “need for data.” Often the data we seek is impossible to obtain because it lies in the consequences of our decision. 

12. Be courageous, but don’t be fool-hardy 
 
The situation requires new approaches, decisions, actions. All of these components of the problem are fraught with risk. However, you have to make your best decision based on what is in front of you, not by betting on “the odds.” 

13. Don’t waiver – show clear intention and direction 

When you make a decision, put yourself into it, commit. Be open and flexible to change, but maintain the intent of your purpose. Inconsistency leads to fragmentation and confusion. 

14. Let go and open yourself to the field of possibilities

The only way out of disruptive change is to keep an options-based view of the scenario as it arises. As the situation evolves, new options come to light and old options are extinguished. Match these options with your intent and the path may become clearer. The common thread that runs through each of these conditions is: 

How we manage and lead others is based on how we can lead and manage ourselves. 

Self-knowledge and meta-cognition (thinking about our thinking) are essential to good leadership, whether it be in crisis or through daily interaction. The greatest leaders are those who command a deep understanding of themselves and what they must do. These leaders imbue self-discipline and self-control, which is a model of behaviour for their followers. 

I believe we all have these abilities within us, if only we would believe enough in ourselves to release them for the good of the situation. 

Therefore, leadership and management in crisis is about each team member’s ability to lead and manage themselves with integrity and shared intent. 

When these forces coalesce, the likelihood of survival is increased radically through an emergent and overriding sense of group purpose.

In truth, there is always a solution as long as we have the tenacity and wisdom to seek it out. 

Leading and Managing in Crisis

Each day need to learn and apply new knowledge to ever-evolving contexts. Most of the time, this process is incremental, . we build upon our existing assumptions and apply the same thinking to solve problems that arise through business activity. We don’t really notice the moment-by-moment accretion of new experience and understanding; this change is within our comfort zone.

At times this steady rate of change is shattered by disruptive circumstances that create radical disequilibrium.

States of disequilibrium in a system are unsustainable in nature. Therefore something’s gotta give!

These moments occur when our current knowledge and understanding is unable to solve the emergent wicked problems associated with the new environment and we are forced to go outside of what is known to seek a solution.

These moments bring great discomfort to those involved.

These moments are when the greatest human triumphs or failures occur. We either rise to the occasion or we are sent to oblivion.

What strategy can we use to weigh the odds of success in our failure when we are faced with these disruptive circumstances? While every situation is different, I believe there are essential conditions we must create to maximise the likelihood of success:

1. Don’t panic!

Use self-knowledge and control to repress our instinctive urge to either fight or flee from the situation.

2. Slow down, be still, and refocus! Timing is imperative to success.

We often feel we have to respond right away at all levels of a problem. Taking control of our reflex to act without direction can often save us. I have also found that spending a moment to completely clear my mind leads to a more comfortable and less stressed state where I feel more empowered to do what is right.

3. Don’t blame or start finding excuses

Every moment you are shirking responsibility and finding reasons for failure puts you one more step towards your subconscious intent – failure. You must attend to the issue.

4. Keep the team focussed and motivated

Your one greatest asset is your team. You must ensure they stay together and keep focussed. All is lost when we start acting individually (all hands for themselves) rather than as a group.

5. Keep the core team together

Sometimes, the problem is so large that we need to re-engage it with more people, processes, and technology that are brought in from outside. When this situation occurs, ensure that the core-team remains intact, either by literally keeping them together or by giving each original member a leadership/coordination role in each of their areas of specialisation.

Establishing knowledge flows to solve “unexpected” problems

The plot I described in the last post shows how complete loss of meaning can occur in chaotic environments created by completely new and unexpected events. Let’s reinterpret the events as they unfolded:

The first scenario dealt with the common situation where we are personally uncertain of a situation and call for a “life-line” from our trusted colleagues or team to obtain advice built on a pool of talent and experience.

I believe this is a completely valid way of dealing with the problem because regular communication in teams and between knowledgeable colleagues is necessary for continued organisational growth and learning:
Highly experienced staff have the opportunity to influence important outcomes and connect their expertise with others.

1. Managers obtain enhanced opportunities to learn and influence others outside of their direct area of concern. Managers also show their leadership trump card in acknowledging the fact they are not infallible and they value the meaningful contributions of others.
2. Junior staff obtain invaluable experience in working closely with others in the formulation of a response. Junior staff are also provided with positive role models in both the administration of the group towards a solution and the calibre of the senior personnel in facing the problem.
3. “Knowledge flows” occur between participants and if the group is successful, positive outcomes will be enshrined in the hearts and minds of the participants and the organisational culture itself through stories, myths and legends.

Suggestions for action:

The development of informal and formal social networks does not occur “overnight.”  Therefore managers should take the following preparatory steps to enhance their team’s performance in preparation for the unexpected:

• Managers need to provide significant opportunities for their staff to interact and develop the personal skills and trust to interact in such an environment. These opportunities come primarily from on-the-job routines. For example, meetings reflect a “facilitated” rather than “manager -to-direct-report” style, with responsibilities shared, protocols developed, and contributions valued and enacted when purposeful. Therefore, the group trains under the same conditions as it “plays.”

• More advanced mediation and facilitation training or coaching will also improve outcomes. However, it is imperative that training is well selected and the outcomes are discussed, demonstrated, and integrated for the benefit of the group as a whole.

• Managers should be able to develop good relationships with experienced senior staff. These relationships can be created and enhanced through the use of web-based technologies such as social-media (blogs, wikis, discussion boards, recommender systems, personal pages, etc) as a resource.

The routinisation of these social processes create close social ties between the group members. These ties are stronger than most of us think. Social routines positively influence the way that participants construct their reality and meaning. Furthermore, the schema of each participant are overlapping in the sense they can “imagine” different roles and actions of their fellow group members even when they are not present to view or interpret them first hand.

The next post will deal with the next scenario in our sequence, which shows a significant escalation in the “unexpected” problem.