organisation design – Naomi Stanford

Work below the waterline

If you’re working with people who are being ‘restructured’ and are now in the process of transitioning to the new structure, it’s worth looking at the report The impact of restructuring on employee well-being: a systematic review of longitudinal studies. I remembered it in a meeting I was in recently where we were discussing the movement, due to a restructure, of people from one part of the organisation to another. The conversation stuck at the practical logistics – number of people, letters they would get about their move, dates, new reporting lines/managers, and so on. There was no discussion of their feelings, emotions, experiences of being moved, although someone noted that many people had left knowing that they would be moved and voting with their feet on it.

Co-author, of the report just mentioned, Karina Nielsen reminds us that ‘Restructuring is a significant characteristic of working life in both private and public companies and a large part of the working population will face one, but probably more restructuring events in their career. It is therefore important to understand the effects of restructuring and the impact of the way the process is managed on employee well-being, in order to reduce the negative effects for employees who continue to work at the organisation afterwards’.

She continues, ‘Our findings show that it doesn’t really matter whether people are laid off or not, it still has a negative impact. Those employees who stay on at the organisation might have to do tasks they are not familiar with and they don’t necessarily get the training. They need other competencies.’

These more negative responses are harder to deal with, and are often side-lined or ignored, as conversations stay focused on the way things are ‘supposed to be’. Just as was going on in the meeting I was in. But ignoring them is a risk. The tangled mass of informal systems, processes and interactions that frequently contravene, sometimes contradict, and often overrule what is supposed to be, the formal systems, are what can make or break a restructure.

A common way of visualizing this ‘supposed-to-be + tangled mess’ is as an iceberg. Dan Oestreich, in his blog At the Water-line explains: ‘The top part of the iceberg represents the visible, formal aspects of an organization, such as the stated goals, the technologies, structures, policies, and services of an enterprise. Below the water-line are the covert or so-called “hidden” aspects of an organization, the beliefs, assumptions, perceptions, attitudes, feelings and values that characterize the real-world interactions from which an organization is also built. If the top of the iceberg represents “the way we say we get things done,” the bottom and larger part is “the way we really get things done.” ‘

What is usually discussed and informs the ‘way we say things get done’ – is the above the waterline stuff: for example, written charts and hierarchies, role descriptions, strategic plans, disciplinary and other procedures, workflow maps, etc.

What is not discussed as much, is ‘the way we really get things done’ the below-the-waterline stuff of feelings, emotions, values, norms, interactions (positive and negative) and day-to-day ways of doing things.

The deeper the elements below the waterline, the harder it is to see, interpret and work with them. However, everyone is aware of the many different groups of people engaged in collaborations, conflicts and conversations to define the agenda of the organization and, in doing so, shape its course of action. As one writer says:

Some cultures are more open than others when it comes to expressing inner thoughts and feelings. Most situations have a ‘subtext’ of unspoken thoughts – the kind of conversation we are accustomed to keep inside our heads.

This was illustrated in the film Annie Hall, when Woody Allen and Diane Keaton meet at a party and the verbalized conversation between them is subtitled with their private, internal thoughts. Needless to say, the open conversation and the private ones are quite different, but it is interesting how their non-verbal communication reveals some of their inner thoughts.

Of course, there are inner thoughts which it is better not to reveal, but often it is the inner conversation which directs our actions, and for that reason we need to find ways of expressing the subtext openly, and encouraging others to reveal theirs.

Although it is possible to force through a change without acknowledging these inner conversations, the consequences are usually disruptive and hard to handle. It is in the transitioning phase – when the movement from/to is happening – that the below-the-waterline of the organization is the most powerful.

Successful transitioning from current state to planned state requires looking below the waterline – surfacing and working with it. Without open discussion defensive behaviour, blocking, non-compliance and other potential showstoppers are likely to emerge.

There are some techniques and tools you can use to to do this. Two that I use are:

Peter Senge’s ‘Left Hand Column’ activity, which is helpful in workshops.

Acting like a corporate anthropologist – developing and using skills in systematic ‘on the ground’ observation and ethnographic methods to comment on what’s going on. Ways of doing this include:

being and staying aware of responses to transitioning through feedback mechanisms like ‘pulse checks’ of morale, motivation and productivity (note these may record what people think they ought to say not what they want to say);
aiming to understand what is going on through dialogue, interaction and empathy;
working responsively to select and use appropriate tools and techniques that help people in transitioning;
monitoring what is working and what is not, and adjusting accordingly;
assessing how people are using technology and other tools in the course of the work day;
enquiring how workers extract meaning (or not) from their work;
noticing where conflicts arise and what causes them;
‘valuing the continuous process of people’s day-to-day interactions’ as they come to terms with the transitioning phase – that is, the informal conversations, the political realignments and the role of informal leaders;
And, as Chris Rodgers says, ‘stimulating and participating in meaning-making conversations, and seeking to mobilize the actions of people around important emerging themes during this period’

Key to mobilizing support from below the waterline, Nielsen (mentioned earlier) finds, are ‘the characteristics of the restructuring process, such as fairness of procedures, communication and change management [which] in general have been found to have an impact on worker well-being. Some groups of workers react less negatively, for example if they have more chance of influencing the process’

Much of the ‘noise’ about the design goes on below the waterline of the organization. Taking the anthropologist’s perspective and using their skills gives organisation designers and line managers the chance of finding out what is actually going on, developing interventions, and evaluating the intervention process and its impact on the effectiveness of transitioning to the new design.

How do you work ‘below the waterline’ in restructures you are involved in? Let me know.

NOTE: This piece is an edited extract from Chapter 7 of my book, Organization Design the Practitioner’s Guide.

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Image: The Sculpture Coralarium. Sirru Fen Fushi, Maldives, Jason deCaires Taylor

Too many projects, too much change

I may have mentioned that I’m taking a 5-week Coursera course, Bridging the Gap between Strategy Design and Delivery, developed by the Brightline Initiative. I’m going to write more about it when I’ve completed it but meanwhile one of the module topics I studied this week is particularly relevant to some work I am currently doing.

It’s about projects and change. Perry Keenan of BCG talks about the ‘increasingly artificial split– between running the business and changing the business’. (You can watch the four minute video here)

He talks about the issues with too many initiatives, saying ‘Arguably, it is in fact easier to add an initiative than it is to stop one because there’s a lot of connection – political, emotional, historic– a set of factors which means it’s not easy to stop initiatives. It’s often not easy even to slow them down.’ He goes on to advise, ‘If you’re going to add in new initiatives, then be very thoughtful about what it means for the initiatives that you already have in play and the demands that you’re placing on your people. Once again, we all too often, in theory, assume that there is an infinite pool of highly capable people available to deliver the strategic initiatives. It’s a finite resource. And therefore, it has to be managed in a very definitive way.’

This chimes with an article I read in the Harvard Business Review, Too Many Projects. It opens saying ‘it’s surprisingly hard for organizations to kill existing initiatives, even when they don’t align with new strategies. Instead, leaders keep layering on initiatives, which can lead to severe overload at levels below the executive team.’ The article cites six further reasons for why this change overload occurs

Impact blindness: executive teams can be oblivious to the number and cumulative impact of the initiatives they have in progress.
Multiplier effects: leaders have a line of sight into their own groups’ initiatives but a limited view of other groups’ activities. Because functions and units often set their priorities and launch initiatives in isolation, they may not understand the impact on neighbouring functions and units
Political logrolling: Executives tend to be strongly invested in some “signature” projects and may garner resources for them through implicit agreements to support their peers with their projects
Unfunded mandates. Leaders want a project to happen but don’t have the resources to put to it. Instead just adding it to the ‘business as usual work’.
Band-Aid initiatives; this is a proliferation of initiatives designed to solve a problem, but without address the root causes of the problem in the first place
Cost myopia; leaders fail to estimate, or underestimate the human cost of multiple initiatives on performance, motivation, morale, stress and so on.

In case you don’t know whether your organisation has too many change projects/initiatives, there is a 17 item yes/no questionnaire – one of the questions, for example, is ‘Does the organization lack processes for quantifying impact and prioritizing initiatives? Yes/No.’ The instructions read, ‘The first step in dealing with initiative overload is to honestly assess and acknowledge the [overload] problem. Ask yourself the questions below to gauge whether your organization is at risk. Then total up the yeses—those are red flags. If you have more than four, you may need to better manage the number or timing of initiatives.’

Since most of us completing the survey scored at least 10+ it served to confirm what we already knew (or at least, felt), that we are at risk and need to better manage the number and timing of initiatives.

The difficulties lie in converting a strong feeling that we are at risk into evidence proving that we are, and then doing something about it. Both Keenan, and the HBR authors highlight the problem and the impact of the problem, but don’t specify or hint at any practical guidance on mitigating the risks and/or stopping the overload.

One of the things we are feeling is a risk is discussed in an article The Long-Term Damage from Juggling Too Many Projects – it notes that ‘Scrambling to shift scant resources in order to meet deadlines can have a chaotic ripple effect.’ That ripple effect is not just on the timeline and delivery schedule of competing projects and ‘business as usual’ but also on the people involved.

That’s the area I’m interested in. I’m wondering if there’s a way we can look ahead to forecast the likely project load on people and take steps to even out the flow, slowing it down, speeding it up, or moving resources in a planned way and not a reactive way. It’s necessary as in our case many people are doing project work alongside their ‘day job’.

I want to create a ‘heat-map’ that forecasts what one writer describes as ‘change collision’: ‘Change collisions occur when there are multiple changes hitting individuals or a team of people over a common timeframe. Often, change collisions are a small number of high impact changes. In some cases, however, these collisions may be a high volume of low impact changes that didn’t garner attention until understood in the aggregate. Keep in mind that other “rhythm of the business” activities, driven by the organization’s calendar of events, should be taken into account as well when considering the volume of change activity.’

Talking with colleagues on the issues of project overload led to a number of interesting, still open, questions:

What’s the tipping point between projects that remain manageable and the point of overload? How could we recognise it?
Is project overload to do with leadership and communication as much as the demands of the projects themselves?
How do we reconcile change due to project delivery and implementation and change in ‘business as usual’? Does one feel more overloading than the other? Or is it the combination that causes overload? (In our case many people are doing project work alongside their ‘day job’.)
Is something we call ‘too much change’ related to projects, the general operating context changing, other factors changing and is the source of the ‘too much change’ feeling identifiable (and does the source matter?)

We are interested in the human indicators of overload and began to develop a list of metrics that we could track and link back to the project plans.

People suggested a range of other measures that fell into four impact categories: resilience, successful delivery outcomes, work/culture and resource. For example, in the successful delivery category, if we the rise of reports in bullying and harassment coincides with some project delivery target(s) is there any connection to investigate? Or on in the resource category, if we saw a sudden spike in people working weekends and logging overtime is there too little resource on the project?

Right now, we are playing around with the ideas of how to measure this cumulative impact of projects and associated change with a view to gathering data to test some of our ideas and convert them into an evidence based heatmap.

How do you measure the cumulative impact of change on your workforce members, and how to you use it to smooth the change flow? Let me know.

Image: Overloaded

Designing resilient teams

I’ve been working on a series of 4 x 20-minute on-line, in-house, masterclasses (see my related blog) on team resilience.

Their focus is on the design aspects of team resilience not the development aspects. The design aspects are the ‘hard’ or formal organisational elements that are easy to describe and capture in words. They are the structures, systems and business processes that help deliver the organisation’s products/services. ‘Hard’ elements include policies, structures, decision and authority rights, governance. This handout, Four elements of Nadler and Tushman model.HO1 helps explain.

These masterclasses are not about the development aspects of team resilience. The development aspects are the ‘soft’ or informal organisational elements that are difficult to describe and capture in words. They include behaviours, interpersonal relationships, culture, and lived values. (I maintain that design and development are very distinct and different disciplines although they inter-relate at points). See Exhibit 1 in this article that illustrates.

Here’s a summary of each of the four masterclasses. They each follow the same 3-part format: What’s the idea? How does it work? Try it out.

1 Designing resilient teams

What’s the idea? The idea is that teams can weather disturbances (positive and negative) like team members moving out or joining, sudden unexpected deadlines, technology glitches, and so on, if they are designed to do so. The things that make for resilience can be seen in ecological systems. Steven Forth explains this in his piece What Makes for a Resilient Team. The C S Holling article he mentions Resilience and Stability in Ecological Systems gives a much more detailed (23 dense pages) explanation. But summarises saying:

‘A management approach based on resilience … would emphasize the need to keep options open, the need to view events in a regional rather than a local context, and the need to emphasize heterogeneity. Flowing from this would be not the presumption of sufficient knowledge, but the recognition of our ignorance; not the assumption that future events are expected, but that they will be unexpected. The resilience framework can accommodate this shift of perspective, for it does not require a precise capacity to predict the future, but only a qualitative capacity to devise systems that can absorb and accommodate future events in whatever unexpected form they may take’.

How does it work? Six principles for team design come from this perspective:

Have overlapping skill sets on the team
Have lots of overlapping connections
Be open to new people and ideas – (discuss the design aspects of this)
Design good connections outside the team (both inside the organization and outside)
Have access to a ‘bench’ that can step in and refresh the team’s skills
Develop team autonomy through decision, delegation and authority rights

Try it out Assess your own team’s composition against the six principles. Agree how you can develop team resilience using the six principles. (Note Steven Forth has a useful graphic to illustrate).

2 Restructuring teams (changing the organisation chart)

What’s the idea? The idea is that managers trying to solve a problem tend, first, to look at an organisation chart and shift people around it, rather than looking at the work, the skills needed to do the work, and finally the people who could do the work. A Q5 Partner 3-minute video thinkpiece explains clearly why a chart-based approach to solving a problem is not going to work. An organisation chart only tells us certain things. It does not tell us, for example, how the work flows, where the handover points are, or what the linkages are between teams as the work flows – all part of designing effectively. See the handout What does an organisation chart tell us and not tell us

How does it work? Restructuring teams begins with thinking about what it is you are trying to solve and deciding whether or not it is a design issue or something else. Once you think it is a design issue the next step is agreeing the work your team is there to do (the purpose), developing some design criteria, mapping the activities that comprise the work of your team as it flows through the team, clustering the activities in a way that meets your design, criteria, developing design options, determining the linkages within your team and across to other teams, testing your options before planning to implement the new design.

Try it out In a team meeting watch the video Got a wicked problem? First tell me how to make toast (9 minutes). Discuss how the ideas in this are applicable to the issue you are trying to address. Assuming it is a design issue use your insights to follow the steps in the para above.

3 Designing collaborative teams

What’s the idea? The idea is that collaboration does not happen just by chance. Collaboration structures can be designed by using models of collaboration combined with the different stages of design methodology.

How does it work? Collaboration can be expressed in four modes (Note collaborative projects often use more than one of the modes during one project in order to achieve the desired goal).

Open & Hierarchical Anyone can contribute but the person, company or organisation in charge of the project decides which ideas or solutions to develop.

Open & Flat There is not an authority who decides which innovations will be taken further because anyone can contribute in the process and use delivered results.

Closed & Hierarchical The participants have been chosen by the authority who also decides which ideas will be chosen and developed.

Closed & Flat The group of participants chosen by an authority share ideas and make the decisions and contributions together.

Using a four-phase design methodology – discover the problem, define the problem and solution ideas, develop and refine the solution ideas, deliver the solutions – ask questions by phase. For example, in the discover phase ask: what is the challenge? Who are the stakeholders? Do you know who you want to collaborate with (closed) or do you need to allow anyone to contribute (open). Can only selected people join the decision making in this phase (hierarchical) or can anyone participate in making decisions (flat)?

Try it out: Identify a problem or opportunity your team is working one. Use the methods outlined to arrive at a collaborative structure that you can test.

4 Designing for remote team members

What’s the idea? If you are in a ‘team’ then there is an underlying assumption that some or all of the work you do requires working with others in your team to produce something – a paper, a policy, a design, a customer outcome, or similar. People who work in teams that comprise some face to face members and some remote members, or teams that comprise only geographically dispersed members often have difficulty in forming a cohesive, high performing team that effectively delivers the desired outcome. Paying attention to designing a supportive context for remote team members helps address issues of isolation, lack of community, and heading off-track. Implementing design solutions for working with remote coworkers results in better work and healthier communication with everyone.

How does it work? Designing a good working environment for remote team members involves:

Agreeing how to capture and store information that everyone needs access to.
Adjusting face to face methods and techniques for team community building to make them appropriate for remote workers. Moodthy Al-Ghorairi suggests ‘hold a Slack channel meeting where all key players in a project get to speak directly to each other. For multilingual teams, gmail and Workplace may be better options because of the auto-translate feature. Use systems that make it easy for team members to communicate frequently with each other to avoid misunderstandings and missed cues.’
Expecting and planning for asynchronous discussions and having the tools for doing this effectively (this includes teaching people to use the tools, expecting them to use them, and developing on-going learning tips for using them to full advantage)
Keeping team goals and tasks firmly in everyone’s view – some teams find Trello effective for this but there are multiple other options.

Try it out: Identify what Moodthy Al-Ghorairi, calls ‘a single source of truth for documenting procedures, workflows, how-to’s and on-boarding. Use a group password manager to manage logins. Set up a Slack bot for repeatable questions (status reports, who’s up for pizza on Friday) or turning conversations into shared knowledge easily.’ Agree how you will use it to develop team performance.

What design masterclasses would you offer in a series on team resilience? Let me know.

Image: Resilience, Lily Gordon

And now I’m Certified

‘Thank you for your CODP application and supporting materials. The review committee has evaluated the application and documentation combined, and found that you have provided all necessary means, as well as met all requirements for certification. Therefore, I am happy to inform you that the committee has granted you the certification – you can now refer to yourself as a Certified Organization Design Professional.’

That’s the email I got a few days ago. It came as the result of evidencing that I met the criteria for certification and sending in the application payment. (The 2018 payment is $150:00 but it is going up in 2019. So, if you are interested in applying – go for it now to get the current rate).

The criteria info states:

‘As an organization design professional, you can become certified if you meet a set of criteria divided into education and practice – both criteria are estimated based on your achievements through the past two years.

You might be asking why I decided to apply for Certification? I asked myself the same question – after all it’s a time and money commitment that is currently (as it’s a new certification) of uncertain value. And, in applying I’d be making myself vulnerable to peer review.

The rational part of me kept telling myself I’m already over-committed to stuff and l need to practice saying ‘no’ to taking on anything that will take time – I didn’t need the added pressure of applying for Certification. But as Mark Rowlands says, in his wonderful book, Running with the Pack ‘there was a small, sneaky, irrational part of me that always knew I was going to be standing at the starting line of this race’. Though in my case it wasn’t in the starting line of a race, but the starting section of the application form. (Helpfully this is ‘Your full name’ so I felt confident on that question).

The small, sneaky part of me that over-ruled the rational part of me did it by presenting four reasons why applying would be ‘a good thing’ to do. I’d be:

Participating in a new venture that which is worth supporting
Contributing to an effort to professionalize organisation design
Reflecting on what I have learned and developed in the past two years
Testing and learning from the application process and criteria for myself

I’ll discuss each of these in turn.

Participating in a new venture that is worth supporting. Organisation design is what academics call a fragmented field that (adapting from a paper on knowledge management) ‘lacks a common conceptual core; it is cross‐disciplinary, it addresses a wide variety of organisational phenomena, and it has difficulty distinguishing itself from many related areas of organisational/consulting practice’. In my view, any effort that in the words of the Organisation Design Community (ODC) helps ‘research, practice, and learning intersect to produce valuable design knowledge and applications’ is worth supporting. The Certification is a new part of the several activities orchestrated, individually and collectively, by the ODC, the Organization Design Forum, and the European Organization Design Forum designed to do that.

Contributing to an effort to professionalize organisation design. A definition of ‘a profession’ that I agree with says: A Profession is a disciplined group of individuals who adhere to ethical standards and who hold themselves out as, and are accepted by the public as possessing special knowledge and skills in a widely recognised body of learning derived from research, education and training at a high level, and who are prepared to apply this knowledge and exercise these skills in the interest of others.’ Over the years I’ve been involved in the field there has been no recognised endorsement of professionalism although there are numerous short and long programmes that teach organisation design (see my blog on this). However, now organisation design is the ‘hot topic’ it’s time that it became a recognised ‘profession’ with a code of ethics and a process for quality assuring the practitioners in a way that gives confidence to buyers of organisation design work. Note that this is early days on the ‘professionalizing’ road and the handbook of certification explicitly states ‘Certification does not warrant or guarantee the individual’s expertise in the field of organization design, nor does it signify that the individual is equipped to manage a given project within the field.’

Reflecting on what I have learned and developed in the past two years. I’ve been in the Organization Design field for over 20 years and I think I have expertise in it. With this, I’m conscious that, in the words of researcher Elizabeth Jones, ‘Expert professionals act at a level of automaticity with knowledge that enables efficient, effective and unselfconscious practice. They must also extend the theoretical and research knowledge that informs their practice and engage in critical enquiry into their own practice. Through these processes, professionals acquire new knowledge and skills as they develop a well-elaborated and improving theory of practice.’

My rational self pointed out that completing an application form hardly constitutes reflective practice. (For more on that read the classic, and excellent, Donald Schon book, The Reflective Practitioner: How Professionals Think In Action). However, it did require me to look back over two years, see what I’d been writing about, working on and learning. In that look-back process I did get some insights on how my practice has changed.

Testing the application process for myself. Having got myself across the start line of form completion and completed the name, education, etc sections I tackled the 4 questions that form the meat of the process:

Describe your general experience with organizational design
Describe below how you meet the education requirement by providing information in the table with educational activity you have participated in
Using the table below, please describe in detail how you have achieved 1040 hours practical organizational design experience within the past two years
Describe how your background has supported your work as an organization design professional

This turned out to take quite a bit of time and effort (as my rational self had predicted). Sifting through files, memories, and documents for the right combination of practical, theoretical, educational and developmental information resulted in a couple of trash-bags of documents I don’t know why I kept so long, a re-ordering of my on-line files to make info retrieval easier, and finally some paragraphs I felt happy enough with to submit.

In getting to this point I also ended up with ten questions about the Certification:

Do trainers facilitating the accredited courses need be certified practitioners? (I think not).
Who supervises the reviewer panel?
The requirements for course accreditation are very detailed. Are the reviewers looking for this type of information in the individual practitioner certification?
How much value does individual certification process and the course accreditation process add to organisations wanting organisation design skills?
Are there bursaries for people/organisations who can’t afford the certification/accreditation fees?
Is three years too long before individual re-certification given the current pace of organisational change?
Should the assessment process be more rigorous – for example the requirement to submit a portfolio of evidence?
Should there be more emphasis placed on the ‘reflective practitioner’ in the assessment process?
Should people being certified also agree to conform to a code of ethics? (Note: the ODC members agree to adhere to the Academy of Management Code of Ethics. The ODF and EODF do not have a response when the term ‘ethics’ is entered into their search box).
Is there a plan to start quality assuring the practitioners?

As I’m an Advisory Board Member of the EODF and ODC I can pick these up with the ‘relevant authorities’.

Meanwhile I can happily report that the certification process focused my mind on what matters in my OD work, encouraged me to reflect on my OD practice, and provided a lovely review point of the highs and lows in my recent OD career.

Do you think a Professional Certification in Organisation Design Practice is an individual or organisational value-add? Let me know.

Puzzling over the hidden matrix

I’ve been puzzling over a matrix organisation again. (See my earlier blog Matrix structures: the pessimism advantage) Talking about a matrix seems to elicit the Marmite response – love it or hate it. Apparently whether you love or hate Marmite is down to your genes. I wonder if the same can be said for a matrix organisation?

Marmite has an Australian equivalent, Vegemite, and they’re similar but different. That’s true for matrix organisations too. There are similar but different ones. I found a useful definition of terms on this:

Matrix Any organizational structure in which the project manager shares responsibility with the functional managers for assigning priorities and for directing the work of individuals assigned to the project.

Balanced matrix A matrix structure in which the project manager and functional managers share roughly equal authority over the project. The project manager decides what needs to be done; functional managers are concerned with how it will be accomplished.

Strong matrix A matrix structure in which the project manager has primary control over project activities and functional managers support project work.

Weak matrix A matrix structure in which functional managers have primary control over project activities and the project manager coordinates project work.

A formal matrix organisation of the type defined above is usually shown on an organisation chart as two dimensions – vertical and horizontal – with, for example, function or product on the vertical axis and project or geography on the horizontal. The intended purpose of this dual reporting is to increase lateral co-ordination at the levels below the leadership team.

Nicolay Worren in a 2012 blog asserts that ‘When you examine a particular firm more carefully, however, you usually don’t find that people report to more than one boss (formally), although they of course may work for multiple managers in a variety of different roles. Yet this [reporting to more than one boss] was the defining feature of the matrix organization when it was first conceived.’

(If you feel so inclined, you can take a quiz testing your knowledge of matrix structures – which could feel rather similar to taking a blind Marmite/Vegemite test).

What that list of types of matrix doesn’t show is one which I, like Nicolay Worren, think is the most common – the ‘hidden matrix’ as he calls it: ‘By that I mean governance processes and authority relationships that cross the formal units, but which are not shown on the official organization chart (and that are usually not deliberate)’.

In the Marmite/Vegemite test, the idea is that there’s a ‘winner’. You like Marmite more than Vegemite or vice versa. You’d think that this form of competition should not feature in a formal matrix organisation in which one-person reports to two ‘equal’ managers. But in practice people favour a hidden matrix (where they are working for, not reporting to, multiple managers) over a formal one because they favour whatever will allow them to get their work done in order to meet performance objectives. Often the hidden matrix develops as a sensible workaround to a faulty formal structure whether it’s matrix or another structural form.

Many organisations now comprise several dimensions, for example: functions, projects, geographies, and sectors (industry or product or service). Add in governance systems and then add in an element that requires collaboration with a completely different organisation if the product/service is to be successful delivered and you have six dimensions to structure. How can these be structured? Could they, for example, be structured as a formal matrix, like a mathematical one of rows and columns?

In this multi-dimensional organisation it is inevitable that the hidden matrix will be hard at work, aiming to combat some of the shortcomings of any formal organisation structure. However, a hidden matrix also has shortcomings.

Worren outlines three difficulties with the hidden matrix:

It creates a difficult role for the middle manager.
It makes it difficult for top executives to assign real accountability to a sub-unit.
It introduces a conflict of interest, or a goal conflict.

These are almost identical difficulties to those identified in a formal matrix (one person reporting to two managers). A research paper identifies multiple negative issues:

‘… the risks of loyalty conflicts and unclear accountabilities; and localised claims to authority (authority bias) and decisions and actions taken in isolation lead to the risk of poor decision-making. Overlaps in responsibility and authority can result in power struggles and conflict, leading to the risk of slow response time. Preoccupation with sectional interests and infighting can result in a tendency toward anarchy, leading to the risk of control problems. Dual reporting, role ambiguity and conflict, and competing objectives and priorities can lead to personnel issues, such as the risk of staff stress and turnover.’

My current puzzle is to do with multi-dimensional organisations. I’m puzzling over how to develop a formal structure and whether the ‘hidden matrix’ can emerge/be visible within a formal structure, in a way that people understand, that marries the hidden matrix with the formal structure and that makes work more efficient, effective and enjoyable in practice.

This would not be such an issue if people were less interested in the visual organisation chart and more interested in enabling work to get done effectively and efficiently. We could show organisational relationships, work flows, and interactions via network mapping or similar systems maps and then potentially adjust workflows and interactions in response to what we see. However, the current reality is that the majority of people cling to the idea that they need an organisation chart and that changing the chart will solve organisational issues.

That tendency aside, assuming that a formal organisation cannot be structured easily from the multi-dimensions and that the hidden matrix organization, inherent in any formal organization structure brings problems and risks, what can be done to make the hidden matrix visible, and the formal organization more accommodating of the matrix within it?

In the case I am working on, I’m going to recommend we do six things:

Brokering conversations about the attributes of the hidden matrix and the relationship of it to the current organisation structure
Developing the positive attributes of the hidden matrix
Minimizing the negative attributes of the hidden matrix
Assessing ways of making the hidden matrix visible
Encouraging people to stop looking at, then changing, organisation charts i.e. reporting lines as the sole means of solving issues
Identifying and then reporting on measures of organizational structure performance

Hidden matrix structures are here whether you love them or hate them. We’re not looking for a winner but for an ability to work with, what two researchers called the paradoxes of a matrix:

increased frequency of lateral communication vs ambiguity over roles, responsibility, and conflict between functional managers and project managers;
improved motivation and commitment vs heightened conflict among employees; and
high ability to process information vs decision strangulation and slow response times.

How would you approach making the hidden matrix visible in order to make a formal organisation structure more efficient, effective and enjoyable? Let me know

Image: Antony Gormley, Matrix II

A big issue

John Bird presents a stirring case for tackling poverty. ‘To me the really big thing in the world today that needs to be done is that we have to stop seeing things as ‘things in themselves’. We have to stop being separators of life into categories. That if you want to solve poverty, which I am rantingly struggling to do, you can’t separate poverty out into separate things. You have to hit poverty square in the eye. You have to give a cocktail of solutions to it, like you might zap a cancer. Yet the world is always dividing poverty up into different parts: literacy, housing, work, wellbeing, health … the world of thinking, of society, of government, always breaks things up into things’.

This ‘thingifyíng’ of issues – trying to tackle them separately rather than interdependently, collaboratively and/or as complex problems is a big issue – because people in organisations I work with ‘get’ interdependence in theory and understand that linear and cause/effect thinking won’t address re-ordering the tangle of variables that constitute the ‘design’ of the organisation. Yet they are unable to work with this in practice and continuously retreat to the organisation chart as the way to solve many organisational issues. (See a Q5 Partners short video Forget Personality: a thinkpiece of restructuring teams, that warns against an ‘org chart first’ approach, and goes down well when I’ve shown it).

I’ve had several different conversations during the past week on interdependence and the tendency to ‘thingify’. Various possibilities were put forward for the inability of organisational leaders to engage with complex, interdependent and problematic organisational design situations and address them systemically or holistically, rather than individually and in compartments. Among the reasons we discussed for the tendency to reach for the organisation chart, three came up in all the conversations:

1. The ‘tyranny of metrics’ (see my blog on this) that is performance targets that attempt to measure elements of a system’s performance, rather than the outcome of the performance. This frequently leads to gaming behaviour as organisational members try to reach the target rather than the intended outcome. An example of this is described in Max Moulin’s article Flawed targets and the ambulance service – is there a happy ending? which leads to questioning, ‘traditional assumptions about measurement, impact, and relationships’. There’s also a recent report that looks at flawed performance targets in the public sector A Whole New World — Funding and Commissioning in Complexity.

2. Believing that organisation design work is complicated rather than complex. David Snowden, explains the difference: ‘In a complicated context, at least one right answer exists. In a complex context, however, right answers can’t be ferreted out. It’s like the difference between, say, a Ferrari and the Brazilian rainforest. Ferraris are complicated machines, but an expert mechanic can take one apart and reassemble it without changing a thing. The car is static, and the whole is the sum of its parts. The rainforest, on the other hand, is in constant flux—a species becomes extinct, weather patterns change, an agricultural project reroutes a water source—and the whole is far more than the sum of its parts. This is the realm of “unknown unknowns,” and it is the domain to which much of contemporary business has shifted.’ Organisations are complex. Trying to redesign them as if they are complicated doesn’t work.

3. The almost impossibility of changing the infrastructure, systems and processes that have been set up over decades to reflect a mechanistic/deterministic view of an organisational universe. As Professor Karen Carr states: ‘The challenge is to implement a systems world view from within organisations that have evolved from deterministic world views. … making it difficult to take a systems approach. Issues such as health, training, leadership and information management are addressed within different partitions …. Finding a way to get these different areas to interact in an organic manner is in itself a problem, given the [organisational] political, social and economic contexts.

Other reasons we discussed for the lack of systems thinking included: power dynamics (‘my bit is ok, why should I worry about yours?’), financial/resource constraints leading to prioritising some parts over others without thinking through the consequences, and short-term thinking – ‘let’s fix this fast and now’, and not knowing how to apply systems thinking.

Going back to the issue of tackling poverty, John Bird tells us, ‘We cannot simply carry on in this brainless, unconverging bit here and bit there’, and it’s the same for organisational issues. How do we then create the conditions for systems and complexity thinking to become a natural part of the way we look at problems?

Answering this question as if it were a complicated problem yields a bits and bobs answer for example, send leaders and managers on systems thinking programmes (look at the Open University’s courses Systems Thinking in Practice, or discuss and then pin up the poster Habits of a Systems Thinker, show David Snowden’s video ‘How to organise a children’s party’ that shows ‘the promise of complexity theory for organizations and government alike’.

Answering the question as if it were a complex problem yields other responses. Donella Meadows offers some thinking on how to do this in ‘Dancing with Systems’ (warning: this is not written in standard management speak) and in another Leverage Points: Places to Intervene in a System

Perhaps the most useful response to the question ‘how do we encourage organisational leaders to engage with complex and problematic organisational design situations and address them systemically or holistically, rather than individually and in compartments?’ is to do so in both a complicated and a complex way. Maybe then we would see system thinkers emerging and a big issue would be resolved. What’s your view? Let me know.

Image: Systems thinking 101

Designing for aging

It was the headline on the torn-out article, pinned on the notice board, that caught my eye. ‘I did an Ironman at the age of 74’. It set me musing thinking on the several cases of people in their, 70’s, 80’s and 90’s doing counter-stereotypical things that I’ve noticed in the last few weeks. Perhaps these observations are prompted by the release of the film Edie, in which 83 year-old actress Sheila Hancock, climbs a mountain, the 2,398-foot-high Suilven in Lochinver, in Scotland.

I haven’t seen the film yet, but I’m intending to. I’ve been reading about Hancock’s experience of training and climbing it.

I also read about Aleksander Doba aged 70 who’s kayaked solo across the Atlantic 3 times, (among other kayaking feats). And in talking to someone about him I got the book recommendation Age is Just a Number by Charles Eugster. It’s a wonderful and cheering book. He took up weight lifting and athletics in his mid-eighties and became a ‘sprints sensation’ at the age of 95.

These active elders are not all athletes (or actresses). At the Royal Academy, Summer Exhibition is a striking portrait of artist and Royal Academician, Ken Howard, now 85, still painting and with his own paintings also in the Exhibition. The person I went to the exhibition with mentioned Lynn Ruth Miller, a comedienne, aged 85 and going strong.

Sensitised to incredible elders, I spotted a headline ‘Don’t brand over-60s old and doddery, BBC is told’. Age UK, submitting to OFCOM on the BBC’s portrayal of various ethnic and demographic groups is of the view that whereas the sensitivities of ethnic minorities and LBGT people are, in the main, vocally represented, there is a lack of consideration for older citizens in the way they are depicted on television and radio.

This tends to hold true in terms of workplace attitudes to older people. Earlier this year, the UK’s CIPD gave evidence to the Women and Equalities Select Committee as part of their inquiry on older people and employment. The session covered the barriers that older people face in the labour market and how both employers and the Government can do more to support them.

In January 2017 the UK Government published a report Older Workers and the Workplace (based on data collected betwee 2004 and 2011 – so somewhat dated now) which found that ‘while on average older employees fare better than employees aged 22-49 in terms of job satisfaction, wellbeing and perceptions of fair treatment, [they] were less likely to receive training. The better average outcomes in terms of job satisfaction, wellbeing and perceptions of fair treatment may reflect the fact that less satisfied employees have left employment by this age.’

Perhaps, combating the ‘old and doddery’ stereotype the researchers found ‘no significant associations between changes in the proportion of older workers employed between 2004 and 2011 and changes in workplace performance over the same period. … this suggests that overall the age composition of private sector workplaces does not have a sizeable role to play in explaining their performance. We do find some evidence that workplace labour productivity falls where the proportion of workers aged 22-49 falls, either due to a rise in the proportion of older or younger workers.’

They also found that ‘many employers value older workers, recognising their experience, loyalty and reliability. Furthermore, while we find no association between change in age diversity and change in workplace performance, age diversity may bring other benefits in the workplace; we find that job satisfaction was higher among young workers in workplaces which employed higher proportions of older workers.’

All that sounds promising. Summarising – older people who are in work are not old and doddery, they are good contributors to the workplace, enjoy what they do, and do not seem to have a negative impact on workplace productivity. (Although, this last needs more research).

But there are some caveats: ‘Existing evidence has suggested that while employers often recognise the benefits of retaining their existing older workers, they can be less willing to recruit ‘new’ older workers.’ Additionally, ‘Generating better outcomes for older workers may therefore require greater focus on other employer practices, such as provision of flexible working or job design.’

Echoing this view is the finding from researchers at the IES. In their report What do older workers value about work and why? They note that ‘There are very few differences between the preferences of older and young workers. However, there are a few factors that become more important with age. Health has the biggest effect on older workers’ decisions about continuing to work, more so than job satisfaction or job quality. Some older workers will therefore place greater value on flexibility at work, adjustments or part-time working hours to accommodate health needs or caring.’

With this in mind they offer 14 steps that employers can take to promote fulfilling work and create age-friendly workplaces. They’re worth a look as several are immediately relevant to organisation and job design, for example: ‘Ensure that older workers have variety and autonomy in their work’ and ‘Design roles for older people that maximise social contact and interaction’.

Looking in more detail at designing work for the mature worker, is the Centre for Transformative Work Design. They have a research stream aimed at understanding the role of work in successful aging – not only because the proportion of older workers is increasingly globally, but also because there is an imperative to minimize health costs by encouraging healthier aging. The health of nations, ‘will be served through creating work that preserves the wellbeing and social, psychological, and mental capital of older workers.’

They are specifically looking at ‘what types of work designs … and organisational supports promote healthy work for older people. … We will further investigate how cognitive, social, and psychological functioning is preserved or maintained through good work. The idea that work can be designed to facilitate such outcomes is part of an emerging perspective that mental and psychological capital can be enhanced across the lifespan.’

Tellingly, none of the extraordinary older people I mention at the start of this piece are in organisational work. They are all self-employed, pursuing their own interests and making a living at it. I wonder how organisational performance could be improved if we were able to design work that encouraged more older people to enter or stay in the workforce and fostered the drive and energy shown in those people? It seems likely to be for the benefit not just of older workers, but all workers.

What’s your view of designing work with the older working in mind? Let me know.

Image: Ken Howard, painted by Tim Hall

Large group interventions: theory and practice

On Thursday 7 June, I opened an email that read ‘Every year Tricordant sponsors a student to help further the theory and practice of organisation design. This year’s student is conducting a study to understand what the gap is between theory and practice in using Large Group Interventions (LGIs) to enable a successful organisation redesign. Could he interview you on this?’

It happened that on Saturday 9 June I was participating in the Edinburgh Moonwalk. As I was pondering LGIs I realised the Moonwalk is an LGI. It has the six critical distinguishing attributes

It is a collaborative, large scale, inquiry. On a Moonwalk thousands of people are engaged in finding out if, collectively, they ‘can save lives, raise awareness and get fit’,
It is creating alignment around strategic direction and system wide issues: in this case raising money to support ‘research into breast cancer for the future health of us all, to help improve the lives of those who have cancer now, and for prevention’.
It is demonstrating the imperative for inclusiveness and widespread participation in the change process: for the Moonwalkers it means following a well-planned and orchestrated programme of walking training, fundraising, and spreading the word. ‘With just a little commitment, a big helping of enthusiasm and a spoonful of energy everybody can take on The MoonWalk!’ (Note these are the attributes for employee engagement – moonshots or moonwalks – what’s the difference?)
It provides a means to put systems thinking into practice and to be part of a larger more holistic strategy for change. ‘Walk the Walk is the largest grant making breast cancer charity in the UK. … We grant the funds to other charities and organisations throughout the UK, to help them reach our united goals and ambitions of treating breast cancer.’
It is a large group. ‘Groups are defined as large groups when it becomes impossible for each group member to maintain eye-to eye contact. Large group dynamics begin once a group exceeds 15 to 20 participants.’ The Moonwalk has thousands of participants, they couldn’t all make eye contact with each other and they are probably avoiding it anyway, as they are ‘feeling a mixture of fear and excitement as you contemplate the hours ahead. Yes, it will be tough’. (I could use that sentence for the next LGI I facilitate).
It is a time-bound event. ‘Sign up now for our night walk and join the cast… get ready for this one night only sensational Walk the Walk’. One difference from most organisational LGIs where participants mill around in a hotel ballroom dressed in ‘business casual’, or sometimes, ‘smart business casual’, the moonwalk LGI requires participants to walk through the night dressed in a Hollywood themed decorated bra and bum-bag. ‘You’ve done the training, you’re feeling fit… it’s time to decorate your bra’. (There are lots of instructions on how to do this. I kept it simple. My contribution to our team’s decoration was my knitting six anemones. In other LGIs I participate in it is usually a bundle of Sharpies and packets of BluTack and post notes.)

A quick glance at the Moonwalk Event Guide indicates that its highly structured design is akin to that of Axelrod’s conference model, an LGI that ‘involves internal and external stakeholders in a series of integrated conferences and walkthrus, each conference lasting from two to three days separated by a month between each conference. The walkthrus that alternate with the conferences communicate results and gain further input.’ Each conference has a detailed agenda, group exercises, scheduled presentations, and discussion time for table groups.

Anyone walking a full series of Moonwalks and following the programme would feel at home in the Axelrod Conference Model. At the other end of the LGI spectrum is the Open Space Technology approach. Michael Arena notes that, ‘Open Space principles and framework are quite simplistic. There is one rule and four principles.’ The one rule is the “law of two feet.” As far as the Moonwalk goes that’s an ideal rule. And, on reflection, I find I’ve also adhered to the four principles in the 12-week run up to the event itself.

Rather than follow the training plan I can rest confident that “whatever happens is the only thing that could have”, so not training at all because other stuff intervened is probably ok. However, I did go for a walk on the Thursday before, so clearly I was following the principle ‘whenever it starts is the right time’, and when I got there and met the rest of my team and anyone else we happened to meet I ticked off compliance with the third principle “whoever comes are the right people”, walking through the huge pink Moonwalk finish arch is the fourth principle in action – ‘when it’s over it’s over’.

LGIs design and delivery are clearly based in systems theory, but do they work in practice? I took a look at the Walk the Walk’s annual report and accounts. (They organise the Moonwalks) which says that Walk the Walk aims to operate within 25% of the donations it receives, leaving 75% available for grants, and that 2016 this was not possible for a number of reasons. Nevertheless in 2016 the group’s total income was 9.8 million GBP, of which total expenditure on charitable activity (including grants made) was 5.1 million. Income was slightly up compared with 2015 and charitable activity slightly down. However, I’m not sure that measuring LGI success on the amount of money raised is sufficient indicator of working in practice.

On the Moonwalk, there is a ripple awareness-raising effect from the publicity, the growing supportive network of someone who knows someone walking in memory of a friend or family, the participation in an event that generates good-will and a ‘feel-good’ flavour – none which are easily measurable in terms of answering the question ‘do LGIs work in practice?’

LGI models could be measured and evaluated from many perspectives and I haven’t seen any evaluative framework for them. (Have you?)

Whether they work in practice depends on the reasons for choosing and using one in the first place. There are many types of LGI – the student I mentioned in in my first paragraph lists: The Conference Model, Real Time Work Design, Whole-Scale Organization Design, Fast Cycle Full Participation Work Design, Participative Design, The Search Conference, Future Search, Real Time Strategic Change, ICA Strategic Planning Process, Open Space Technology, Work-Out, Simu-Real.

LGIs have been in use over a good period of time. Barbara Benedict Bunker’s first book of them appeared in 1999. This variety of type and their longevity might be an indicator that they work in practice ‘in numerous organizational change efforts across a variety of applications, such as organization development, organization redesign, restructuring, strategic planning, visioning, values and principles clarification, process improvement, customer/supplier relations, global learning and development, and formation of collaborative alliances.’

What’s your view of the theory and practice of LGIs? Let me know.

PS: On Sunday 10 June. Our team of 3 successfully completed the 26.2 miles of the marathon, raised around 1500 GBP, spread awareness of cancer treatment and prevention in their communities, gained proficiency in knitting flowers, and felt an all-round sense of purpose achieved.

How do you change what it is that people value in a system?

At the breakfast briefing I was at last week, I heard John Manzoni, Chief Executive of the Civil Service ‘discussing the current {UK} Civil Service transformation agenda and offering his reflections on how the Civil Service and Private Sector can respectively learn from one another.’ During his talk, he posed the question ‘How do you change what it is that people value in a system?’

Hearing it, I remembered the time when I was working on an office move. We were asking (‘making’?) senior individuals to give up their individual offices – a perk of seniority – and work in open plan spaces. One man was appalled at this idea, asking me ‘How will people know that I am important?’ He valued his own office as a symbol of ‘importance’.

I was amazed. I hadn’t had my own office in years, I was used to roving around to find a hot desk or sitting in a cafe or working from home or other location. I valued the flexibility and ability to meet people I wouldn’t meet if I were in my own private space.

However, that incident led me to look more closely at why we want to change what people value, what they value, and how do you change it if that’s what seems to be needed by leaders.

Change and transformation programmes typically involve a lot of clashes between what leaders value and what employees do. For example, employees value having a job, leaders value automating the work . Employees value a permanent contract, leaders value contingent labour, etc. We want to change what people value in order to resolve this clash (in favour of the leader).

Manzoni talked about various aspects of transformation that he is involved with – they’re common to much of transformation work and they usually involve clashes of what people value. He mentioned:

Moving from hierarchy to flattening the organisation that erodes a grading structure or career ladder that people have often struggled up

Changing to regard expertise over generalists (or vice versa) that under-estimates the sense of professionalism and pride people feel in the role that they have done up to now

Relocating work which often involves more virtual/remote working that bites at the social network and sense of community, or local identification that people enjoy about work

This ‘transformation’ activity, sometimes thoughtlessly, attacks what people value in an organisation. Their response, which often comes across to leaders of the transformation charge, as resistance then stalls the process. Hence the question, ‘How do we change what it is that people value in a system?’

In our office move case, it was clear that people valued private space which wasn’t on offer in the move scenario. Typically, what happens next in this type of clash is activity of one type or another in which leaders try and ‘get’ people to ‘buy in’ to whatever the leader values at the expense of what the employee values. The language and intent can feel coercive or manipulative. See a Fast Company article How to Get Employee to Buy in to an Exceptional Culture

‘Getting people to buy in’ is hardly the stuff of most organisational values, and, I haven’t found lumping ‘people’ together a very productive route when I’ve been asked how to ‘get’ people to ‘buy-in’. People value different things. Some people in the office move loved the idea of giving up their private space because they’d felt isolated and looked forward to joining their team and colleagues in open plan, others took it as an opportunity to try out the various types of work spaces newly available freeing themselves from the idea of being tethered to a fixed desk.

I find a better approach is to try and understand the reasons why people value what they do and whether there are value substitutes that can be made or whether we (the transformation team) can adjust to respect what they value. In the office move having a private office was a sacred cow to several people, albeit for different reasons: for some as a symbol of power and for others as a symbol of their expertise, lawyers, for example, strongly valued the principle that they should meet their clients in their own private office.

In the office move case, I commissioned a team of academics to come in and look at the symbolic aspects of power and status. Their research and findings helped us think through a range of ways of managing the potential loss of what the CEO called ‘private real estate’.

I’ve found the question ‘How do you change what it is that people value in a system?’ to be one with no answer, many answers, and no right answers even if you think you have an answer. As with anything complex what people value is contingent on situation and circumstance. Behavioural economics has various theories on what people value which may help. Daniel Kahneman’s Thinking Fast and Slow is a good read that offers insights on what people value and why.

Over the weekend I read Stuart Heritage’s article on the stresses of parenting small children, what he values now – time to think, a respite from the relentless grind, etc. is not what he’s likely to value when his children are grown up. He sees that too and has what could be a sage answer to the question ‘How do you change what it is that people value in a system?’ (You’ll see I’ve made an edit to his statement): ‘Figuring this stuff out is a long-term goal, and the early years of parenthood and change and transformation projects are a mess of short-term firefighting. When the time comes, when basic autonomy kicks in and I don’t feel like I have to carry the whole world around on my shoulders, maybe then I’ll get this looked at. That’s become my mantra of late: dig in, see it through, this is just a phase, it isn’t for ever.

What’s your take on the question ‘How do you change what it is that people value in a system?’ Let me know.

Image: Flickr user John Lustig

Complexity and organisational processes

Do you have a criteria or approach for assessing/measuring the complexity of business functions? This question came to me from a consultant redesigning a business unit. The proposed new design increases the number of functions reporting into the current Director. He wondered if the size of the unit would be too much for him. The consultant suggested that the answer depends on the complexity‎ of the functions reporting in to the Director and now needs to find a way to identify and test functional complexity.

McKinsey tells us that ‘Companies must get three things right to manage complexity for value: organizational design, coordinating processes and systems, and capability building.’

In a later article they point out that ‘When pressed, many leaders cite the institutional manifestations of complexity they personally experience: the number of countries the company operates in, for instance, or the number of brands or people they manage. By contrast, relatively few executives consider the forms of individual complexity that the vast majority of their employees face—for example poor processes, confusing role definitions, or unclear accountabilities.’

Accepting that distinction, the number of different functions that a single Director can manage depends on both factors. The institutional complexity relates to the operating environment. A Deloitte paper quotes the example of regulators, ‘whose job has always been to protect the public from danger, exploitation, or insufficient competition in reasonably stable markets, now face another danger: that their own application of old rules to new realities might suppress innovations of tremendous potential value to the public.’

The article lists four ‘new realities’:

Change comes faster – the authors point out that ‘while innovation has always challenged regulatory authorities, its influence on society has historically spread more gradually, giving regulators more time to learn and adapt. Today, startups are more quickly reaching significant scale and impact, in some cases serving millions of customers and employing thousands of people’
Innovators find back doors – think how Uber challenged the regulation of taxi firms, and Air BnB of the hotel industry.
Ecosystems are full of unlike players – ‘once-clear industries dissolve into complex ecosystems full of unfamiliar entities and innovative offerings’.
Innovations cross lines of jurisdiction – for example people interested in investing their pension in cryptocurrencies cross more than one regulatory framework.

The individual complexity that employees face is commonplace in most organisations. Julian Birkinshaw in his TEDx talk ‘The Cost of Complexity’ gives vivid examples of individual complexity at work: workarounds, things falling into ‘a bit of a black hole’ where no one can retrieve them, duplication of activity, and poor customer service. He talks about the costs of this form of complexity, advocating instead ‘organising based on adhocracy not bureaucracy’.

There is an example of this adhocracy over bureaucracy thinking applied to traffic flow. Hans Monderman’s ‘designs emphasized human interaction over mechanical traffic devices. By taking away conventional regulatory traffic controls, he proved that human interaction and caution would naturally yield a safer, more pleasant environment for motorists, pedestrians and cyclists.’

The information above is useful in indicating that the Director needs to know:

The level of institutional complexity, and whether it is the same for each business unit
The types of individual complexity employees and customers experience in the organisation (and the costs of this)
The possible methods of addressing the two types of complexity to make the Director’s task manageable in the absence of being able to reallocate some of the management to another Director – for example, could the number of rules and policies be reduced?

Knowing the level of institutional complexity means keeping alert to the constantly changing external environment, perhaps introducing a horizon scanning function, keeping a close eye on competitors, looking for patterns in large data sets, and so on.

Knowing the level of individual complexity is usefully done by examining organisational processes. As David Garvin says, in an excellent article, ‘In the broadest sense, they [processes] can be defined as collections of tasks and activities that together — and only together — transform inputs into outputs. Within organizations, these inputs and outputs can be as varied as materials, information, and people.’ He tells us that ‘a process perspective gives the needed integration, because it emphasizes the ‘links among activities, showing that seemingly unrelated tasks — a telephone call, a brief hallway conversation, or an unscheduled meeting — are often part of a single, unfolding sequence’. Additionally, a process perspective can link the realities of work practice ‘explicitly to the firm’s overall functioning’.

He describes organisational processes in three categories: work processes (subdivided into operational and administrative), behavioural (he discusses decision-making, communication and organizational learning), and change. Processes operate at the institutional and individual level, emphasizing, ‘the links among activities, showing that seemingly unrelated tasks — a telephone call, a brief hallway conversation, or an unscheduled meeting — are often part of a single, unfolding sequence.’

Organisation designers take note of the point that there are ‘intimate connections among the different types of processes’ and it is futile to analyse them in isolation. As he says, ‘It is extraordinarily difficult – and, at times, impossible – to understand or alter a single process without first taking account of others on which it depends. Thus, in Garvin’s view, accountability must shift ‘to those with wide enough spans of control to oversee entire processes’.

Following the discussion of organisational processes, Garvin talks of managerial processes: direction setting, negotiation and selling, monitoring and control. He then presents a ‘Framework for Action’ that I haven’t yet used but intend to try. It looks to be a good starting point for making some judgements on whether the organisational and managerial processes are complex – in terms of work flow, behavioural interactions and degree of change – in the context of what is known about the institutional complexity.

How would you assess the degree of complexity in a business function and what is manageable for one Director? Let me know.

Image: Data complexity