Saturday 16 January 2010

The Social Revolution - isn’t hierarchy to networks


The big shift 2   The second point (see my first point) I want to make about the social revolution is that:


2.   It’s possible to have self-organizing and -governing networks AND strong corporate hierarchies

Organisation Design

When I used to do more work in organisation design, I’d focus on the following elements of an organisation:

  • strategy
  • structure
  • processes
  • people
  • culture.


Each of these different elements need to support each other, but if I had the choice, the first aspect I would want to work on would be the business processes.  Why?  because it’s the process that describes the work that needs to be done.  Structure is simply the way this work is organised, through reporting relationships, once the business processes are clear.  And the rest follows out of this.

Of course, reflecting Josh’s second comment in my first post, there is then, typically, an ongoing battle against business leaders’ and managers’ tendency to forget about processes, and to think straight away in structural terms.

Also, reflecting on my previous experience now, if I was still doing much organisation design work, I’d also want to think about the opportunities to put people first – and to design business processes that enable people to do work well (an HCM perspective on organisation design), but that’s another story (or blog post…).

The point I want to make here is that what was missing from this list of elements organisation design was networks.  I just didn’t see them as that important.  Or perhaps that they couldn’t be identified or controlled.


Structure Design

But when I got onto structure design, I’d emphasise the choice organisations have to structure themselves differently – that structures don’t have to be hierarchical (functional / divisional), but can also be based upon one of these main (or other) options:


Ie organisations can also structure themselves by process, or by a combination of hierarchy and process (matrix) – or as a network (or as a combination of this and something else).  (Or as one of a variety of other forms eg modular, starburst, virtual etc.)

So I saw networks as a structural option but not a separate element of organisation design.  Although I suppose if I had worked with an organisation to develop a network structure, I would then have had to go on to design the network.  But this requirement never came up.

This was and is clearly wrong.  Networks need to be considered alongside people, processes, structures, and cultures as different and important aspects of organisations.  And it’s not just organisations that structure themselves as a network that need them – they’re an important element of design for all organisations, regardless of their structure.


The Supremacy of Hierarchy 

The choice of structure depends on what’s most important for the organisation.  So, for example, if they really want to emphasise the process aspect, then they can structure themselves along process lines.  The fact is of course, that very few organisations do this.  And so I would find that most structural designs I worked on ended up being a straight forward, or some adaptation of a, hierarchy.

I expect I’d still find the same today – that even with the addition of networks to the overall organisation design mix, it’s not going to mean that many organisations want to move away from hierarchical structures.  They’re still going to want the functional clarity that hierarchy provides.  And there’s no reason why they can’t manage, or at least influence their networks, and have hierarchical structures too.

Networks aren’t an alternative to hierarchies (meaning structures).  They’re two different aspects of organisation design.  We don’t want to move from hierarchies or other structures to networks – we need both.


The Network Matrix

I suppose what many people mean when they say that networks need to replace hierarchies is that more network structures should be used.

And to an extent I agree with this.  Structure is about how work gets managed.  So if you want your networks for to be self-organising and –governing (as McAfee suggests), you’ve got to include networks as a basis for your structure.

But even then, I’d suggest most most organisations are going to want to add the network as an additional element of their structure, ie as part of a matrix, rather than to introduce a network structure as a replacement to their existing hierarchy.

This would be mean splitting the management of the organisation along network and eg functional lines.  One dimension would provide the strong corporate hierarchy and the other dimension allow a degree of self-organising and –governing within the network.


Networks and the Social Revolution

I’d also add that that changing structure is never enough to change the way an organisation works.  And to change the way that people work with each other, and that work gets done, we need to redesign the networks, or at least the way the networks work, more than we need to redesign the structures of our organisations.

Plus remember that organisation design is only one of several different enablers to bring about the social revolution.  So this revolution really has very little to do with moving from hierarchical to network structures.


I’m going to come back and post more about this later in the week.


Picture credit: Leon Benjamin (amended!)


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