We've been seeking enterprise 2.0 and social business for several years now with some notable success, but still quite a lot of “vague” and some level of fatigue.
We have found some easy fixes (employee social streams), and discovered devilishly difficult challenges (aligned and coordinated, but still autonomous action and decision-making, or convincing boards of directors that sometimes employees and customers need to precede shareholder value).
The recent announcement by Zappos that it was changing its organizational structure to a “holacracy” suggests that forward-thinking companies are taking it all very seriously. They recognize the emerging proof that a more collaborative organization is a more profitable one.
What does this mean for the rest of us? Can big, hierarchical, traditional organizations -- especially public ones -- change? Should they? How can we make this happen? Command and control is now only one of several recognized models of leadership and organizational design. Alternatives are no longer fringe ideas, but increasingly mainstream.
Organizational design has a huge impact on decision-making and collaboration, and both reflects, and often creates, the level of collaboration and autonomy with and amongst the workforce. Culture may eat strategy for lunch but decision-making, reporting and budgeting structures can either birth or strangle both culture and strategy with both hands tied behind its back.
At this stage we have four primary organizational models along a continuum from command and control to cooperative and anarchic. From GM to Valve we might call it, with a Basecamp and a Zappos thrown in to complete the picture. Each has strengths and weaknesses.
This diversity of models is a good thing, and in the long run different organizations will benefit from different models. What works in an R&D environment may not work in retail or restaurants (or maybe it will, eventually).
What are their relative strengths and weaknesses? What could catalyze a shift from one model to the next?
1. Command and Control (Push) Hierarchies
We all know this one. One or a few people at the top make decisions and then push them down to people who are expected to act on orders, not question them. Input is rarely asked of those below the point of decision-making. Discipline is strict. Fear is the primary motivator along with the potential to rise in the ranks.
- Consistency: Reliable, repeatable systems.
- Rapid, if not always optimal, decision-making.
- Efficiency of scale, in many domains.
- Thrive in highly stable environments and can use relatively unskilled or illiterate workers (some will argue that they are “exploiting” rather than “making use of”)
- Inflexible. These organizations learn slowly, and fail to change in response to new events. This depresses innovation, along with most employees that have achieved any level of consciousness themselves. There are exceptions of course.
- Employees are only rarely engaged or committed to the work. They may or may not be aligned with a mission that they may or may not understand.
- Capabilities are generally limited by the decision-makers themselves. So the strengths and weaknesses of the oligarchy are in effect the strengths and weaknesses of the entire organization, for better or worse.
2. Pull Hierarchies
Decision-making is still concentrated at the top with pull hierarchies. Management style and communications pathways make up the main differences between push and pull. Management “pulls” insight and contributions from the team. Leadership approach is another key difference. Leaders ask their teams to inform answers and decisions. Leaders are meant to help their teams collaborate, grow as individuals, do great work, build mastery and commitment in service to a mission or broadly recognized purpose.
Strengths: More rapid learning, high(er) employee engagement, more flexibility and innovation than pull hierarchies. Leaders encourage and value collaboration, recognizing the difference between leadership and management. The potential of collaboration and diversity are better captured. Employees receive more respect for having information and capabilities that management doesn’t.
Weaknesses: Success depends on the leadership capabilities and philosophies of each manager. Decision-making can be complex, slow and ambiguous. Conflict has the potential to undermine the model -- it works well when things are going well, and can seize up when times are hard. There are few formalized practices for dealing with conflict, so a lot depends on people’s willingness to cooperate. These organizations are often uneven, with some managers or leaders understanding their role well, and others taking a more command and control approach.
How to transform a Push to a Pull Hierarchy
To make the change from push to pull, one must either change the hearts and minds of existing leadership or replace them wholesale. This is almost always a gradual and uneven process, difficult to measure and can create lots of conflict in the transition. The transition depends on the conversion of the former command and control leadership. While some grassroots efforts have impact in some teams and some organizations, ultimately it is the commander in chief -- in whatever guise -- that must buy in to make it work.
Holacracy is new to me. Like most of you, I learned about it at the time of Zappos' announcement that it was going hole. Many fine writers have commented on this structure. I read Steven Denning’s somewhat skeptical review of Holacracy first, and followed a number of his links to original sources of Holacratic thinking.