I recently found my old thesis, and yes, some of its topics and content are (still) relevant, as this one: the evolution of organization and work structures. The very same topic Esko Kilpi is researching. The discussion in my old thesis and Esko’s blog posts inspire me to learn more about this topic.
One chapter in my thesis starts with a quote by Michael Porter:
“Industries are profitable not because they are sexy or high tech; they are profitable only if their structures are attractive.”
Well put. Many industries and organizations are trying to score right under the constant change requiring new type of more adaptable structures. The development has been very rapid and raises increased demand for choice, chance, change and flexibility.
A number of concepts have been proposed and developed over the years. Earlier we spoke about Virtual Organizations, and now about Enterprise 2.0 and Social Business.
The evolution of organization and the work structures has been fascinating. More and more of our core business processes are cross-functional; and cutting company borders. And we all have seen that it can open up for aggressiveness and resistance to change.
If you put fences around people you get sheep
This quote above by William L. McKnight suits well for many organizations. Are we social wolfs in sheep’s clothing? The silo-like organization cannot act any better than a flock of sheep, and the genuine value creation requires a larger ecosystem. Esko Kilpi writes beautifully about this in his post “From systems to ecosystems”:
“Minimal hierarchy, organizational diversity and responsiveness characterize ecosystems. Ecosystems are a response to the increasing complexity of strategic horizons and short half-life of designs. To cope with the uncertainties firms see themselves and the world around them as ecosystems, where every unit, every node in the network, should engage with learning. Instead of centralized design and planning, the activities of exploration are the responsibility of the whole network. Because of greater complexity, coordination and communication cannot be planned in advance, controlled or managed hierarchically.
Authority needs to be distributed; it is no longer delegated vertically but emerges horizontally in the networked ecosystem. Under distributed authority work teams and knowledge workers need to be accountable to other work teams and other knowledge workers instead of a single boss. You need to have many “bosses”. Success at ecosystems depends on learning by mutual accountability and responsiveness. This is much more than matrix organizations or internal markets.”
He ends his post with wise words: “Value creation cannot be understood as industrial systems any more, but as continuously developing, complex, responsive ecosystems of connected people.” I warmly recommend you read the entire post.
This discussion also reminds me of old article of Normann and Ramírez (From Value Chain to Value Constellation: Designing Interactive Strategy, Harvard Business Review, 1993). They stated that organizations that are going to survive in the changing environment are:
“[…] those looking beyond their immediate boundaries to the social and business systems in which they are enmeshed and discover new ways to reconfigure those systems in order to reinvent value for their customers.”
And this article is 18 years old.
Crisis? What Crisis?
Yes, it is a name of an excellent album by progressive rock band Supertramp, but also a question Larry E. Greiner raises up. Related to the issues described above I’ll find Greiner’s model of organizational growth and development very interesting. The model describes the way organizations change over time and how these changes can shape not only organizational structures but also management practices.
His model consists of five development phases, which are made of two stages; evolution and revolution. What he means is that each evolution stage causes its own revolution (crisis). The original phases and the following crisis are:
- Phase of evolutionary creativity followed by leadership crisis;
- Phase of directed evolutionary growth followed by an autonomy crisis;
- Phase of evolutionary growth through delegation followed by a control crisis;
- Phase of evolutionary growth through coordination followed by a crisis in bureaucracy; and
- Phase of evolutionary growth through collaboration followed by another crisis of unknown origin.
In 1998 Greiner added a 6th phase into his model: growth through extra-organizational solutions. It suggests that outsourcing, mergers, networks and other solutions involving other companies come into the picture.
However, the Greiner model emphasizes the age and size of the organization and the growth rate of the industry – but now we have a special addition to that, the paradigm change in the way we communicate.
Do you have the personality structure for the social business?
Associated with the fifth phase of collaboration Greiner speculated that the following crisis could be around the psychological saturation of the employees. He says:
“Intensive teamwork can dissipate employee efforts on the other hand, while on the other some may find the new behavioral concepts and techniques incompatible with their personality structure”.
What an interesting point of view! Think about the development and the challenges many Enterprise 2.0/Social Business initiatives are facing. Indeed, evolution and revolution on-going: on the system, ecosystem, and the personal level. Could we apply Greiner’s phases to the adoption of the Enterprise 2.0/Social Business?
Ha, I think my personality structure is made for social business. How about yours?
PS. For my Finnish readers, another natural association from Greiner’s model & Supertramp is, of course, Ismo Alanko’s song “Kriisistä kriisiin” (a Finnish song called From crisis to crisis).