New organization designs

This past week I've come across several pieces concerned with either new or emerging forms of organization design. What follows are some examples:

The latest MIT Challenge is 'The Unlimited Human Potential Challenge'. This makes the point that:

'The Social Web and other digital technologies and platforms offer a robust set of alternatives to industrial-era forms of organizing. We now can imagine organizations

  • where coordination happens without centralization
  • where power is the product of contribution rather than position,
  • where the wisdom of the many trumps the authority of the few,
  • where novel viewpoints get amplified rather than squelched,
  • where communities form spontaneously around shared interests,
  • where opportunities to "opt-in" blur the line between vocation and hobby, where titles and credentials count for less than value-added,
  • where performance is judged by your peers
  • where influence comes from sharing information, not from hoarding it.'

Challenge organizers are 'seeking the most progressive practices and innovative ideas for unleashing human capability to produce radically new approaches to organizing, competing, and creating advantage.'

This sounds tremendously upbeat and worth going for and they have an example of someone who is thinking in this direction. Her idea is:

The Mesh
'For Lisa Gansky, that future is all about sharing. The Sharing Economy, what Lisa calls "the Mesh," is taking root around the world in the form of thousands of businesses and organizations that understand and cleverly exploit the perfect storm of mobile, location-based technology, social networks, and an evolving ethos of community and citizenship.

The Mesh isn't just about offering consumers more choices, more tools, more information, and more power-—it's also fundamentally transforming what it means to win, the nature of competition, and how value is created. Just as in kindergarten, sharing is not an optional activity. The Sharing Economy is infiltrating every realm of endeavor with inventive solutions in sync with the values of community, connection, sustainability, generosity, quality, and simplicity.'

The Mesh idea of everyone sharing is great but contrast it with Eric Schmidt's view (he is the Google Chairman) that:

New technologies were creating "lots of part-time work and growth in caring and creative industries [but] the problem is that the middle class jobs are being replaced by service jobs."
He went on to say that governments needed to invest in education systems to improve skill levels and human cognition. "It is pretty clear that work is changing and the classic nine to five job is going to have to be redefined. Without significant encouragement, this will get worse and worse."

If there is job replacement (very likely in my view) and all sorts of new skills are called for what would things look like in a 'Wirearchy'? Wirearchy is 'an emergent organizing principle that informs the ways that purposeful human activities and the structures in which they are contained is evolving from top-down direction and supervision (hierarchy's command-and-control) to champion-and-channel … championing ideas and innovation, and channeling time, energy, authority and resources to testing those ideas and the possibilities for innovation carried in those ideas … through connection and collaboration … taking responsibility individually and collectively rather than relying on traditional hierarchical status.'

So how do we take individual and collective responsibility rather than relying on those with traditional hierarchical status to be responsible? Maybe we'll learn something from Tony Hsieh (CEO Zappos) bold move into Holacracy. John Bunch, the Zappos person leading the move into holacracy explains what it is on the Zappos Insight blog:

'The HolacracyOne refers to Holacracy as a "distributed authority" system, but I think it goes further. It is a system which incorporates: distributed accountability, authority, and leadership.

First, it distributes accountability. It allows each person to understand clearly who is expected to do what throughout the organization.

After that understanding is gained, Holacracy distributes authority. The authority distributed is to make whatever decisions each role filler deems will best fulfill the accountability, or responsibilities, of each role.

Distribution of accountability and authority, taken together, enable something very powerful: distributed leadership.'

But will a distributed leadership system work in a 'micro-multinational' start-up which is, according to the Economist article, 'in a constant feedback loop very different from the old start-up model of 'build it and they will come'. Now start-ups 'should start with a "minimum viable product", or MVP, a sort of trial balloon to gauge the audience's interest. They should always test their assumptions, aiming for "validated learning". And if their strategy does not work, they should "pivot": in essence, throw in the towel and start again with a different product.'

A one person start-up might cope with this fine but how about if they are in an 'ecosystem', a term for economic clusters, that some describe as 'made up of "domains", including markets, policy and culture. [And] others describe as collections of actors that play certain roles, such as providing talent, finance and infrastructure. Yet others talk about them as a set of "resources" entrepreneurs can draw on.'

And what happens in a more established company if they are trying to compete with these pivoting micro-multinationals? Here we can look to Tesla and Adobe for possible learning (about what to do and not do). These two companies have changed their business models in order to compete more via 'continuous feedback' but as an unintended consequence appear to be alienating their customers – much as Netflix did when it changed its business model in 2011. In Netflix's case, however, it seems to have managed a bounce-back perhaps because 'It went beyond its original capabilities and developed skills to win in online streaming. Specifically, Netflix decided to compete with content providers like HBO and develop its own content.'

This sounds good, but read on and you'll find that this commentator on Netflix puts its success in overcoming customer disillusion down to Reed Hastings, the CEO, explaining 'What makes Hastings so special is that he has been able to maintain the tireless reinvention that is required of a startup in the context of a publicly-traded company. A big part of that is that he is a founder -— like Amazon's Jeff Bezos – who has been able to go the distance of starting a company and running it after it went public.' So not really distributed leadership then?

Or maybe the Netflix bounce-back is due to their 'travel light' talent management approach which apparently makes the human capital side of organizations more agile. Basically it is centred 'on "temporary" relationships between individuals and organizations. Responsibility for an individual's career and skills shifts from the organization to the individual. Employment is "guaranteed" for only as long as an individual has the skills the organization needs.'

I'm not sure that 'travel light' is a new form of organization design as it seems to bear a close resemblance to the old fashioned 'hire and fire', with strong implications around Schmidt's point reported by the BBC that the jobs problem will be "the defining one" for the next two-three decades.

Schmidt said given the constant development of new technology, more and more middle class workers would lose their jobs, and those that had jobs would have stagnant wages resulting in global economic damage because according to Business Insider's report 'the middle-class folks whose wages are stagnant are the global economy's biggest spenders. And when they don't have money to spend, their lack of spending hurts not just them but all the companies that depend on them for revenue.'

Further 'The stagnation in middle-class wages is not just a middle-class problem. It's an economic problem. And it's one of the main reasons that global economic growth is so lousy.'

This brought me to thinking about what Frans van Houten, CEO, Royal Philips advocates – A circular economic system which 'would ensure that products were designed to be part of a value network, within which the reuse and refurbishment of products, components, and materials would ensure the continual re-exploitation of resources.'

Apart from the delightful understatement that 'building a circular economy would require a fundamental restructuring of global value chains' (not a small piece of organization design work) Van Houten notes that 'At the same time, consumers must be open to using products that they do not own. 'Because the circular economy is inherently systemic, it can succeed only if all stakeholders co-design, co-create, and co-own products and services.'

So here I am at the end of the week considering the viability of 'The Mesh', Wirearchy', 'Holacracy', 'Micro-multinationals', 'Ecosystems', 'Travel light' talent management, and a circular economic system comprising value networks and inherent systems.

Maybe it's time for a cup of tea and a scone consumed while I am considering whether they're basically all saying we (individual and/or organization) need to share more, keep learning and developing skills, pay close attention to what's going on, and respond appropriately to our changing context. What's your view? Let me know.

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