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.

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.

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.

Uncertainty and the unexpected

A clear point made in previous posts has been that we should “expect the unexpected,” in the new order of things. While “expecting the unexpected” may sound like a cliché, there are a host of important leadership and knowledge management issues represented:

• How do we deal with events that we have no prior knowledge or experience of?

I think that most of us would say, “We’d ask someone we thought could provide the basis of a solution based on their experience.” Or, “I’d call my team together and work through the issues to find a solution.”

The implication:

Dealing with the unexpected requires participants to have good informal or formal social networks that can be enacted quickly.

• What if the “wicked” problem we are facing continues to increase in magnitude through events our of your direct control and others your networks fail? At the same time, others from outside of our network are brought in “to provide additional support” because the problem is becoming more dire to the firms’ (and your) continuity.

At this stage, responses would be more difficult to represent. People would have their own approach to the problem and how it should be solved. However, many people would comment that the “incursion” of outside assistance may not improve the situation.

The implication:

As pressure to perform increases, managerial actions that essentially throw resources at the problem is likely to lead to more confusion and sub-optimal outcomes.

• The next stage of the unexpected occurs when the group is frustrated in its attempts to resolve the issue and a sense of panic starts to take hold. Your leadership is threatened and traditional allies seem to be focusing on trivialities or self-preservation. 

The implication:

The group begins to disintegrate when it fails to attend to the unexpected. Disintegration drives fear. Fear drives a wide variety of self-survival behaviours that loop back to create further friction, lost opportunity, and desertion. 

The scenario I have described is extreme to make a point. However, we are often faced by similar “accidents and emergencies” during our careers. Unfortunately, the prognosis for the story is not a happy one because continuing on the current trajectory will lead to further shocks that will lead inevitably to total collapse. 

If only a miracle can redeem the situation, could the likelihood of it occurring have been reduced in the first place? My answer is YES and I will tell you why in my next post.

KM, self-Knowledge, and Transcendence

I have been focussed on personal aspects of organisational behaviour because we need to understand ourselves before we can lead and manage others. Leadership in today’s organisation is about capturing people’s trust and belief, harnessing their professional capability, opening their imagination, and motivating their efforts with passion and enthusiasm for the cause.

To me, this is the essence of knowledge management – developing business environments where all participants can reach their personal potential and attain their goals. Participants is a general term that caters for organisations (the value network), groups (business units, teams, external interest groups, communities of practice), and individuals (shareholder, board member, employee, public).

How we develop this KM environment is a decision based on the particular context. Earlier beliefs surrounding KM centred on the use of repository-style technologies to gather, codify, store, distribute (push and pull), and retire or refresh “knowledge.”  (Actually, I would argue what is “managed” is data or information at best, but that is another post to be written!)

This approach was based on the notion of “quick wins” and “one size fits all”. Quick wins – because we thought we could miraculously trap and share “implicit” or “tacit” knowledge through “explicit” or “externalised” knowledge. The outcome was that we created a mountain of unstructured information (documents, emails, reports), all of which had dubious search-ability and reusability.

“One size fits all” in the sense that we thought we could apply the same principal to all business environments to yield a new organisational “homogeneity” with respect to knowledge. The outcome of this belief was a poorly adopted and scarcely-used, redundant set of expensive repository technologies that were nothing more than “glorified databases.”

You will note the early belief saw people as secondary in the process. Once knowledge is trapped, the technology takes over. Thus the firm’s value model was based on the premise that people were present to improve the technology and therefore, technology was more important than people. This is an “industrial” value model – where the knowledge is held by the technology and the people are seen as functional “necessities” that ensure the technology uses the knowledge efficiently (i.e., via repeatable processes that create mass-market products).

There is no doubt, business in-general has moved on from these primitive and simplistic notions of organisational wealth and value. As individuals, I hope we would strongly deny or support any notion of a “production line” where the technology is valued more than the people in our knowledge-based world.

However, I believe there is an “underworld” of beliefs that are strongly imprinted into our thinking that steer us subconsciously towards this industrial mindset. Let me give an example: We all have a preference for tangibility and we are even more attuned to some sort of quantification of that tangible. Therefore, it is relatively easy to make purchasing decisions which lead to increasing material assets. However, it becomes much harder to justify expenditures that do not have any material asset value.

Therefore, my purpose in focussing on exploring our own personal assumptions and dispositions as individuals, leaders, and managers is to better improve and prepare the “ground” in which next-generation knowledge management is cultivated.

Riding the bull or fighting the bear – competing in a world of change.

Change is fundamental to our being and therefore we should embrace it.

Change applies equally to the groups and teams we are a part of and the organisation, industry, nation, and global community in general. It is all a matter of scope.

There are four omnipotent laws that guide our lives in business and in general:

The Law of Impermanence:
This law is stated simply as “nothing lasts forever.” Life is flux and a necessary cycle of birth, growth, decay, and death is an inevitable consequence of life itself.

The Law of Uncertainty:
We never know what our fate will be and we can never predict anything with absolute certainty.

The Law of Centricity:
Life is balance – we experience joy as equally as we do suffering. Nature always seeks equilibrium or centeredness.

The Law of Active Participation:
Life learning and adaptation is not passive – we only maintain our currency and vigour through continued active participation in life by effort and activity, which leads to first-hand experience and ultimately wisdom.

I have tried to provide a balanced view of the forces that continually shape our life. While impermanence and uncertainty conjures “negative” sentiments (depending on your perspective of course), Centricity and Active Participation provides hope through external (centricity and natural equilibrium) and self-induced (active participation) transcendence.

These axioms combine to provide a number of significant insights that I would like to share with you:

1. If change is inevitable, we need to learn to deal with change as a fundamental and necessary part of our business environment and our careers.
2. The success of our enterprise is based on our ability to comprehend, predict, and adapt  to an ever-changing global business environment.
3. If our life and our career are transient and we don’t know how long either will last, we must make the most of each opportunity presented to us. Lost opportunity and wasted time detracts from our ability to reach our true personal and business potential.
4. If our managing and leading a modern enterprise is fraught with risk and uncertainty, then break-through innovation is based in accepting (and hoping for) the unexpected.
5. If our business and career strategy is not working, we need to go back to first principles and learn from our mistakes to avoid the systemic mistakes that keep placing us behind where our stakeholders believe we should be.

How does change impact on your business? How do you deal with it? And how do you overcome resistance?

In the next post, I will discuss why we often don’t like to embrace change and how we can improve on this situation – at both a personal and organisational level.

Technology, Truth, Integrity, and Honesty – Keys to success in the new order – Part 3

Finally, I would like to discuss counterfactual thinking for high expectations. At face, high expectations would seem to be a positive driver in the current order. However, high expectation or a desire for excellence is only of real value if the goals are realistic and obtainable.

Question: How do we deal with high expectations?

Answer: Think low expectations!

Often, we exaggerate what we can deliver to make the sale. However, exaggeration leads to heightened expectations that cannot be fulfilled, leading to dissatisfaction. Ironically, even if we deliver on our exaggerated promises, our customer’s expectations were at that same level, leading to marginal satisfaction or dissatisfaction. Unfortunately we know we can’t “under-sell” (develop Low Expectation) because the customer won’t easily see the benefits and probably won’t be motivated to buy. So, what do we do?

The answer is simple – we tell the truth.

The “truth” is more valuable now than any other time in human history. The truth creates trust and loyalty. Most people would prefer to know the truth (good and bad) before entering into any relationship or business transaction. All of us have been marketed up to the eye-balls and are weary of false claims from false prophets. Low expectations are about authentic and honest communication at all times. Furthermore, in long-term relationships, maining realistic expectations is about regular communication.

I see this communication occurring as a matter of business process and at times when “direct interventions” are required. Communication can be provided via information access (i.e., the customer can log-in and access the current state of their transaction or file), through automated responses (e.g., letting customer know their particular order is being fulfilled and it has not been forgotten), or through 1:1 communication (e.g., via email, discussion list, or telephone). Overly high expectations can only be managed with honesty. This may seem like poor market positioning in the short term (against those who do overly exaggerate and can’t deliver). However, in the long-term, your products and services will be valued because you do what you say you can do consistently, nothing more, nothing less.

Knowing and doing

As a business researcher, I often wonder why people know what they should do, but don’t! My challenge to you is simple – are you taking conscious steps to change yourself? Counterfactual thinking is a process of “destructive creation” where we go back to first assumptions and try to see the world in a different way. Managers must model these behaviours in an organisation and processes need to be remodelled to accommodate innovation and change. Furthermore, employees who actively seek to express these values should be encouraged. These sentiments may sound obvious, but many managers in many organisations work actively against fundamental change – even when it is sorely required.

I intend to look at change a little closer in the next couple of posts, with the view of providing you, as managers with insight as to how we can turn the tables on this problem and reap the reward of greater productivity and economy of effort.

Technology, Truth, Integrity, and Honesty – Keys to success in the new order – Part 2

I am currently involved with a group that is developing a B2C portal with Web 2.0 functionality. The lead software engineer in this project is on the road constantly. When I call him, he is in Malaysia, France, London, or Sydney. Sometimes, he is at two of these destinations in one working week. When he gets to those destinations, I get a flurry of email responses and I am just one of the stakeholders. He is often talking to me at 2.00am in his time zone and vice-versa. I often wonder if and when he sleeps, let alone finds time to have “a life.” With this in mind, let’s consider distance compression.

Question: How do we deal with distance compression?

Answer: Think distance decompression!

Business travel is a funny thing – at first it is a “junket”, then it becomes necessary, and often it leads to be habitual. Distance decompression is working against the notion that we are all one flight away from being anywhere we want to be. The first tenet of distance decompression is thinking where we want to go is a long way away. Thus, distance decompression is re-assessing the need to travel, particularly for those of us who travel habitually. Secondly, distance decompression is about considering alternatives to business travel when it is not mandatory. The World Wide Web offers a vast array of rich-media communication tools to replace regular travel. Global companies have been quick to seize on this media and have developed purpose-built facilities to cater for these requirements. However, it is my experience that these facilities are never used to their full potential. In an age where increasing focus is placed on sustainability, we will need to start thinking more about how we can decompress distance and travel less.

Is my friend the software engineer doing the right thing? Are we slaves to our own machine? I think we are to some degree. However, I am not advocating “doing less.” Rather, we all should strive to reach our “potential” and therefore, we need to do more with less. A big step in attaining this goal is by simplifying our approach.

Question: How do we deal with complexity?

Answer: Think simplicity!

A key focus in business decision making is data gathering and analysis. We are constantly encouraged to keep digging deeper to find greater meaning. We are often deceived by an assumption that more data and more analysis will yield better outcomes. These notions become even less plausible in a world where there is virtually limitless information (e.g., Google yields 3,700,000,000 hits on a search for “information”)! Conventional wisdom has driven us to the point where we know more about less (I should know – I’ve got a PhD!) and complexity and paradox abound. Rather than solving the problem, we are paralysed by our analysis. There are two solutions to this problem. The first lies in the use of technology (business intelligence) that assists us to “mine” large amounts of data to discover new associations. The second, which is far more contentious, lies with our need to reconnect with our environment and trust our intuitions. My personal opinion is the battle will be lost and won on the second rather than the first. We know more than we will ever be able to say and this knowledge arises as wisdom and intuition, which is based on very little (if any) information. Therefore, simplicity is about:

• Understanding the level of analysis we need to undertake to solve the problem.
• Seeing things as they are and not over interpreting them.
• “Chunking” complex problems.
• Using advanced technologies that simplify our view.
• Trusting our wisdom and intuition when there is little or no information to guide our decisions.

Technology, Truth, Integrity, and Honesty – Keys to success in the new order – Part 1

Last week I discussed counterfactual thinking as a technique used to create new answers or break-throughs to old problems.

Edward De Bono gives a great example of counterfactual thinking at Volkswagen. A design team was considering how they could improve the comfort and ride of their vehicles over rough or uneven surfaces. They had refined the “spring and leaf” single axle suspension to a degree where there was no obvious way forward and they were still unsatisfied with the results. At this point, one of the engineers suggested the team try and solve the problem from the point of view that the wheels on the vehicle were square rather than round. This change in perception led to a fundamental shift in key assumptions about the problem at hand and the group’s efforts were rewarded with the invention of the independent suspension, where each wheel was able to move vertically around a fixed point from the differential at the centre of the vehicle.

Counterfactual thinking is taking a key element of a problem and “inverting” its characteristics and behaviours. Changing the properties of the problem, challenges us to re-examine our assumptions related to the problem, leading to new assumptions, hypotheses and outcomes.

Let’s think counterfactually about the problems we face today.

Question: How do we deal with time compression?

Answer: Think time decompression!

We would all agree that life is likely to get faster rather than slowing down. Furthermore, our personal effectiveness will decrease if time compression continues. Therefore, we need to decompress time with the assistance of technology. At work we often waste time:

• Attending to routine processes.
• Reworking trivial mistakes and human errors.
• Searching for important information.
• Using systems improperly or ineffectively.

Time decompression is about developing information technologies that take the “process” load off us, to give us time to do what we do best – socialise and learn from each other.

Having a set of core information systems is imperative for effective work (process) at the technical level, and learning (innovation) at the higher human level. Technology is available that can assist us in these tasks and the rapidly developing open-source and Web 2.0 environments hold further promise.

However, success will be found by those individuals and organisations that can orchestrate these technologies to match their requirements.

Throughout  this week I will discuss some more common  problems that we face today and how we can think counterfactually to find success.

Paradox, New Wisdom, and “Counter-Factual” Thinking

In the previous post I said a “shrinking, expanding world” where time compression, distance compression, emergent complexity, and high individual expectations is fuelling fundamental changes in our society.

I also made the claim that the answer to surviving and thriving in this new global order is based on building our capability to access, understand, and apply new knowledge as innovation.

In order to delve further, lets consider “conventional” versus new wisdom.

Conventional wisdom informs us:

• “What has been will be again” or “the past is the key to the future.”

• Good decision making is based on a detailed understanding of past relationships between a reduced set of “critical factors”, to yield a defined and “theoretically” supported result.

• Expect logic to prevail and refine your decision model with experience.

New wisdom suggests:

• “What has been has gone forever”

• Good decision making is built on an appreciation of past relationships but a flexibility of mind to look beyond the “known” to assess emergent relationships and factors with similar weight.

• Expect chaos to prevail and adjust/regenerate your beliefs (decision model) with new information and experience.

Conventional wisdom served us well until the Web-age because it focuses on finding the most explanatory, probable, and therefore average circumstance. Selling to the “average market segment” and forgetting outliers was the most effective strategy prior to the Web. Moreover, the strategy was consistent with the economic context, technology, and cultural beliefs around power and authority at that time.

When the world began to shrink and expand, new channels opened and the outlier market segments became economic. A global economy reduced manufacturing costs and opened up incredible opportunity in diverse, fast-growing markets. Improvements in educational standards and information accessibility led to a shift away from “one size fits all” and conventional wisdom’s power to predict and interpret our world was swamped by complexity. It is likely these conditions will continue to evolve, fuelled by a ever-reducing cycle of change, where the past will be less able to predict the future.

All of us have been taught the conventional approach to life and business. Most of us are still either naïve or grappling with the new wisdom as we find it hard to adjust or regenerate our beliefs. Change is hard – even for those of us who yearn for personal change! Habits are difficult to break and to depart from. Our old decision model incites uncertainty.

However, thriving in this new order requires new wisdom – an example of which is counter-factual thinking:

• Question: How do we deal with time compression?
  Answer: Think time decompression!

• Question: How do we deal with distance compression?
  Answer: Think distance decompression!

• Question: How do we deal with complexity?
  Answer: Think simplicity!

• Question: How do we deal with high expectations?
  Answer: Think low expectations!

I will elaborate on these intriguing counter-factual insights and connect these insights to organisational information and knowledge systems in my next post.